1. Part 6: Staffing System and Retention Management
Chapter 14: Retention Management

2. Staffing Organizations Model
Mission
Goals and Objectives
Organization Strategy
HR and Staffing Strategy
Staffing Policies and Programs
Support Activities
Core Staffing Activities
Legal compliance
Recruitment: External, internal
Planning
Selection: Measurement, external, internal
Job analysis
Employment: Decision making, final match
Staffing System and Retention Management
13-2

3. Chapter Outline Turnover and Its Causes Analysis of Turnover
Nature of the Problem
Types of Turnover
Causes of Turnover
Analysis of Turnover
Measurement
Reasons for Leaving
Costs and Benefits
Retention Initiatives: Voluntary Turnover
Current Practices
Desirability of Leaving
Ease of Leaving
Alternatives
Retention Initiatives: Discharge
Performance Management
Progressive Discipline
Retention Initiatives: Downsizing
Legal Issues
Separation Laws and Regulations
Performance Appraisal

4. Learning Objectives for This Chapter
Be able to differentiate among the types and causes of employee turnover
Recognize the different reasons employees leave their jobs
Evaluate the costs and benefits of turnover
Learn about the variety of techniques companies use to limit turnover
See how performance management and progressive discipline limit discharge turnover
Understand how companies manage downsizing
Recognize a variety of legal issues that affect separation policies and practices

5. Discussion Questions for This Chapter
For the three primary causes of voluntary turnover (desirability of leaving, ease of leaving, alternatives), might their relative importance depend on the type of employee or type of job? Explain.
Which of the costs and benefits of voluntary turnover are most likely to vary according to type of job? Give examples.
If someone said to you, “It’s easy to reduce turnover—just pay people more money,” what would your response be?
Why should an organization seek to retain employees with performance or discipline problems? Why not just fire them?
Discuss some potential problems with downsizing as an organizations’ first response to a need to cut labor costs.

6. Turnover and Its Causes
Nature of the problem
Minimize costs of turnover
Acknowledge benefits of turnover
Types of turnover
Voluntary: initiated by employees
Avoidable
Unavoidable
Involuntary: initiated by the company
Discharge
Downsizing

7. Exhibit 14.1 Types of Employee Turnover

8. Exhibit 14.2 Causes of Voluntary Turnover

9. Causes of Turnover Discharge turnover Downsizing turnover
Employee fails to follow rules and procedures
KSAO/job requirements mismatch
Downsizing turnover
Lack of forecasting and planning
Inaccuracies in forecasting and planning
Unanticipated changes in labor demand and/or labor supply

10. Reasons for Leaving Post-exit surveys Satisfaction surveys
Exit interviews
Formal discussions with departing employees
Conducted by a neutral person
Follow a clear structure prepared in advance
Knowledgeable interviewers
Conducted in private
Post-exit surveys
Cover the same material as a typical exit interview
Can involved both numerical and open-ended responses
Satisfaction surveys
Evaluate why current employees do not leave

11. Ex. 14.5: Voluntary Turnover Costs and Benefits
Separation costs
HR and managerial time
Temporary coverage
Reduced performance
Replacement costs
Training costs
Benefits
Superior replacement
New KSAOs
Restructuring opportunities
Savings from not replacing employee
Transfer or promotion opportunities for others
Replacement is less costly

12. Ex. 14.7: Discharge Costs and Benefits
Separation costs
May be even more time consuming than voluntary turnover
Can lead to lawsuits
Conflicts with remaining workers
Replacement costs
Training costs
Benefits
Departure of low-value employee
Higher value replacements
Reduced disruption for manager and work unit
Improved performance management

13. Ex. 14.8: Downsizing Costs and Benefits
Separation costs
Time in managing and implementing layoffs
Severance, early retirement, and contract buyout costs
Increased unemployment insurance
Potential damage in financial markets
Benefits
Lower payroll and benefits
Ability to relocate
Improved promotion and transfer opportunities for stayers
Flatter hierarchy
Increased per-person productivity

14. Retention Initiatives: Voluntary Turnover
Reviews of organizational practices show some key factors that reduce turnover
Results come from 1,000s of different workplaces
Other results from WorldatWork Survey and 100 Best Companies
Most effective initiatives:
Retention bundles
Benefits
Dispute resolution
Participative work design
Least effective initiatives:
Relative pay
Sophisticated selection systems
Variable pay
Training

15. Retention Bundles
Individual practices in isolation aren’t as powerful as systems of practices
Rewards for performance matched with wide communication reduce turnover of high performers
Neither rewards nor communication are especially effective in isolation
Integrated systems include careful selection, adequate training, satisfying conditions, and rewards for retention

16. Ex. 14.10 Retention Initiative Examples

17. Retention Initiatives: Desirability of Leaving
Extrinsic rewards
Make rewards meaningful and unique
Match to individual preferences
Link to retention behaviors
Link rewards to performance
Intrinsic rewards
Assign employees to jobs that meet their needs
Provide clear communication
Design fair reward allocation systems
Ensure supervisors provide a positive environment
Provide work/life balance programs

18. Retention Initiatives: Ease of Leaving and Alternatives
Provide organizational specific training
Cost of leaving
Provide deferred compensation (e.g., long-term bonuses or pensions)
Provide difficult to replace amenities
Alternatives
Provide internal promotion opportunities
Respond to outside job offers

19. Retention Initiatives: Discharge
Performance management process
Work with employees to minimize need for involuntary turnover
Document performance problems in advance, with clear consequences communicated

20. Retention Initiatives: Downsizing
Alternatives to downsizing
No-layoff strategies
Attrition (not replacing those who leave)
Hiring freezes
Non-renewal of contract workers
Salary reduction
Early retirement
Retaining and motivating those who remain
Communicate downsizing decisions clearly
Involve the current workforce in redesigning jobs
Provide job search assistance

21. Legal Issues Separation laws and regulations
Public policy restrictions on employment at will
Employment discrimination laws
Employment contract principles
Labor contracts
Advance warnings
Severance agreements

22. Legal Issues Performance appraisal
Criteria should be job related, specific, and communicated in advance
Manager should be competent in rating performance relative to job requirements
Multiple raters should be used
Ratings must be documented
Ratings should be frequent
Appeals systems should be in place

23. Ethical Issues Issue 1 Issue 2
Imagine your organization is doing exit interviews and has promised confidentiality to all who respond. You are responsible for conducting the exit interviews. Your supervisor has asked you to give her the name of each respondent so she can assess the information in conjunction with the person’s supervisor. What obligations do corporate HR employee have to keep information confidential in such circumstances?
Issue 2
Firing an employee has numerous potential negative organizational consequences, including the discomfort of the supervisor who delivers the termination information, conflict or sabotage from the departing employee, and the filing of a lawsuit. To avoid this, many supervisors give problem employees unpleasant work tasks, reduce their working hours, or otherwise negatively modify their jobs in hopes that they will simply quit. What are the ethical issues raised by this strategy?