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Part 6: Staffing System and Retention Management
Chapter 14: Retention Management
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Organization StrategyOrganization Strategy HR and Staffing StrategyHR and Staffing Strategy
Staffing Policies and Programs
Staffing System and Retention Management
Support Activities
Legal compliance
Planning
Job analysis
Core Staffing Activities
Recruitment: External, internal
Selection:Measurement, external, internal
Employment:Decision making, final match
OrganizationMission
Goals and Objectives
Staffing Organizations Model
14-2
14-3
Chapter Outline
Turnover and Its Causes Nature of Problem Types of Turnover Causes of Turnover
Analysis of Turnover Measurement Reasons for Leaving Costs and Benefits
Retention Initiatives: Voluntary Turnover
Current Practices and Deciding to Act
Desirability of Leaving Ease of Leaving Alternatives
Retention Initiatives: Discharge Performance Management Progressive Discipline
Retention Initiatives: Downsizing Weighing Advantages and
Disadvantages Staffing Levels and Quality Alternatives to Downsizing Employees Who Remain
Legal Issues Separation Laws and
Regulations Performance Appraisal
14-4
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
14-5
Turnover and Its Causes
Nature of problem
Types of turnover
Causes of turnover
14-6
Nature of the Problem
Employee retention can contribute to organizational effectiveness
Turnover is not only costly but may be beneficial
Focus of retention strategies Number of employees retained and Who is retained
Turnover is inevitable Approach to retention management
Gather and analyze employees’ reasons for leaving
14-7
Types of Turnover
Exhibit 14.1: Types of Employee Turnover Voluntary
Avoidable - Could be prevented Try to prevent for high value employees Do not try to prevent for low value employees
Unavoidable - Could not be prevented
Involuntary Discharge Downsizing
14-8
Exhibit 14.1: Types of Employee Turnover -Voluntary -- Employee Initiated
14-9
Exhibit 14.1: Types of Employee Turnover -Involuntary -- Organization Initiated
14-10
Causes of Turnover: Voluntary
Exhibit 14.2: Causes of Voluntary Turnover Behavior of leaving preceded by intention to quit Factors affecting intention to quit
Perceived desirability of leaving Often results from a poor person/job or Person/organization match
Perceived ease of leaving Represents lack of barriers to leaving and Of being able to likely find a new job
Available alternatives Depends on other job options both within and
outside organization
14-11
Exhibit 14.2: Causes of Voluntary Turnover
14-12
Causes of Turnover:Discharge and Downsizing
Discharge turnover Mismatch between job requirements and KSAOs
Employee fails to follow rules and procedures Unacceptable job performance
Downsizing turnover Mismatch in staffing levels which leads to an
overstaffing situation Factors related to overstaffing
Lack of forecasting and planning Inaccuracies in forecasting and planning Unanticipated changes in labor demand and/or supply
14-13
Analysis of Turnover
Measurement
Reasons for leaving
Costs and benefits
14-14
Measurement of Turnover: Formula
Turnover rateNumber of employees leaving
average number of employees x 100Data and decisions
Identify time period of interestDetermine type of employees that countDetermine method to calculate average
number of employees over the time period
14-15
Measurement of Turnover:Breakouts and Benchmarks
Breakouts Analysis of turnover data aided by deciding on
categories of data Type of turnover Type of employee Job category Geographic location
Benchmarks Internal - Trend analysis External - Compare internal data with external data
Exh. 14.3: Data from job openings and labor turnover survey
14-16
Measurement of Turnover:Reasons for Leaving
Important to ascertain, record, and track reasonswhy employees leave
Tools Exit interviews
Formal, planned interviews with departing employees Postexit surveys
Surveys sent to employees soon after their last day Employee satisfaction surveys
Surveys of current employees to discover sources of dissatisfaction which may become reasons for leaving
Results can provide information to pre-empt turnover Require substantial resources
14-17
Guidelines: Conducting Exit Interviews
Interviewer should be a neutral person who hasbeen trained in how to conduct exit interviews
Training issues How to put employee at ease and explain purpose How to follow structured interview format and take notes How to end interview on positive note
Structured interview format should contain questions about unavoidable and avoidable reasons for leaving Exh. 14.4: Examples of Exit Interview Questions
Interviewer should prepare by reviewing interview format and interviewee’s personnel file
Interview should be conducted in private, before employee’s last day
Interviewee should be told interview is confidential
14-18
Measurement of Turnover:Costs and Benefits
Costs and benefits can be estimated for each of the three turnover types
Types of costs Financial Nonfinancial
Some costs and benefits can be estimated financially
Nonfinancial costs and benefits may outweigh financial ones in importance and impact
14-19
Major Turnover Costs and Benefits
Costs of turnover Separation costs
Staff time and loss of productivity
Replacement costs Recruiting and
selecting new employee
Training costs Teaching new
employees the job
Benefits of turnover Potentially better
new employees Short term labor
cost savings Opportunities to
restructure work units
14-20
Costs and Benefits for Types of Turnover
Voluntary turnoverExh. 14.5: Voluntary Turnover:
Costs and BenefitsExh. 14.6: Example of Financial Cost
Estimates for One Voluntary TurnoverDischarge
Exh. 14.7: Discharge: Costs and BenefitsDownsizing
Exh. 14.8: Downsizing: Costs and Benefits
14-21
Ex. 14.9 Most and Least Effective Retention Initiatives
14-22
Exh. 14.11: Decision Processfor Retention Initiatives
Do We Think Turnover Is a Problem?
How Might We Attack the Problem?
What Do We Need to Decide?
Should We Proceed?
How Should We Evaluate the Initiatives?
14-23
Guidelines for Increasing Job Satisfaction and Retention
Extrinsic rewards Rewards must be
meaningful and unique Rewards must match
individual preferences Link rewards 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 programs to enhance work-life balance
14-24
Ease of Leaving
Two points of attack Provide organization-specific training
Should organization invest in training to provide general or organization-specific KSAOs?
Combine training strategy with a selection strategy focused on assessing and selecting general KSAOs
Increase cost of leaving by providing Above-market pay and benefits Deferred compensation Retention bonuses Desirable location of company’s facilities
14-25
Alternatives
Approaches to make internal alternatives more desirable than outside alternatives Internal staffing
Encourage employees to seek internal job opportunities Provide attractive internal options outside of traditional
internal staffing system Responding to external job offers entails developing
appropriate policies Decide whether to provide counteroffers or not Determine types of employees to provide counteroffers Decide who will develop counteroffer and nature of
approval process
14-26
Exh. 14.13: Performance Management Process
14-27
Retention Initiatives: Discharge
Ex. 14.14: Performance Counseling and Disciplinary Process Identify performance problems Assess causes Develop corrective actions Develop and discuss clear consequences for failure
to improve Document incident, corrective actions, and
consequences for continued problems Termination if problem is not resolved
14-28
Retention Initiatives: Discharge
Progressive disciplineFive requirements of a progressive
discipline systemGive employees notice of the rules of conduct
and misconductGive employees notice of the consequences of
violation of the rulesProvide equal treatment for all employeesAllow for full investigation of the alleged
misconduct and defense by the employeeProvide employees the right to appeal a decision
14-29
Retention Initiatives: Downsizing
Weigh advantages and disadvantages See Exh. 14.8
Staffing levels and quality View retention in two ways
Balance a financial quick fix against unlikely return of downsized employees if economic conditions improve
Approach reductions in selective or targeted terms, rather than across the board
Determine who should be retained, if cuts are made Retain most senior employees Make performance-based decisions Retain “high-value employees” and layoff “low-value
employees”
14-30
Retention Initiatives: Downsizing(continued)
Alternatives to downsizing No layoff or guaranteed employment policy Layoff minimization programs
Exh. 14.15: Layoff Minimization Examples Employees who remain
Potential results of ignoring survivors Increased stress levels Critical appraisals of downsizing process Examples of “survivor sickness”
Provide programs to meet needs of survivors Enhanced communication programs Morale-boosting events Promotion of EAPs Stress-related training
14-31
Discussion Questions for This Chapter
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 organization’s first response to a need to cut labor costs.
14-32
Legal Issues: Separation
Basic tenet of employee separation Fair and consistent treatment of employees
Laws and regulations governing separation process Public policy restrictions on employment-at-will Employment discrimination laws and regulations Affirmative action requirements Employment contract principles Labor contract provisions Civil service laws and regulations Negligent supervision and retention Advanced warning about plant closings
14-33
Legal Issues: Suggestions for Performance Appraisal Systems
Appraisal criteria should be job-related, specific, and communicated in advance
Manager/rater should receive training in overall performance appraisal process and how to avoid rating errors
Manager should be familiar with employee’s job descriptionand actual performance
Agreement should exist among different raters in evaluating an employee’s performance
Evaluations should be in writing Employee should be able to review evaluation and make comments
before it becomes final Employee should receive timely feedback about the evaluation and an
explanation for any outcome decision Provide upward review of employee’s appraisal Provide appeal system for employees dissatisfied with their evaluations