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11
Individual/Organizational Individual/Organizational RelationshipsRelationships
The Psychological ContractThe Psychological ContractUnwritten expectations employees and Unwritten expectations employees and
employers have about the nature of their employers have about the nature of their relationship.relationship.
Psychological OwnershipPsychological OwnershipWhen individuals feel that they have some When individuals feel that they have some
control and perceived rights in the control and perceived rights in the organization, they are more likely to be organization, they are more likely to be committed to the organization.committed to the organization.
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Components of the Components of the Psychological ContractPsychological Contract
Employers provide:
• Competitive compensation and benefits
• Flexibility to balance work and home life
• Career development opportunities
Employees contribute:
• Continuous skill improvement and increase productivity
• Reasonable time with the organization
• Extra effort when needed
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Job Satisfaction and CommitmentJob Satisfaction and Commitment
Job SatisfactionJob SatisfactionPositive emotional state resulting from Positive emotional state resulting from
evaluating one’s job experience.evaluating one’s job experience. Organization Commitment (Loyalty)Organization Commitment (Loyalty)
Degree to which employees believe in and Degree to which employees believe in and accept organizational goals and desire to accept organizational goals and desire to remain with the organization.remain with the organization.
Continuance commitment:Continuance commitment: the likelihood that an the likelihood that an individual will stay with rather than withdraw individual will stay with rather than withdraw from the organization.from the organization.
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Individual Employee PerformanceIndividual Employee Performance
Individual Performance FactorsIndividual Performance Factors1.1. Individual ability to do the workIndividual ability to do the work
2.2. Effort level expendedEffort level expended
3.3. Organizational supportOrganizational support
Performance Performance (P) (P) = = AbilityAbility (A)(A) x x Effort Effort (E)(E) x x SupportSupport (S)(S)
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Individual MotivationIndividual Motivation
Desire within a person causing him/her to Desire within a person causing him/her to act to reach a goal.act to reach a goal.
Management Implications related to Management Implications related to MotivationMotivation
Consistency in organizational rewardsConsistency in organizational rewards Organizational support for employee effortsOrganizational support for employee efforts Accurate measurement of employee Accurate measurement of employee
performanceperformance Desirability of rewards by employeesDesirability of rewards by employees
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Retention of Human ResourcesRetention of Human ResourcesMyths About RetentionMyths About Retention
1.1. Money is the main reason people leave.Money is the main reason people leave.
2.2. Hiring has nothing to do with retention.Hiring has nothing to do with retention.
3.3. If you train people, you are only training If you train people, you are only training them for another employer.them for another employer.
4.4. Don’t be concerned about retention Don’t be concerned about retention during a merger.during a merger.
5.5. If solid performers want to leave, the If solid performers want to leave, the company cannot hold them.company cannot hold them.
I’m Gone
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Retention of Human ResourcesRetention of Human Resources
Why People Stay or Leave—Links, Fit, and Why People Stay or Leave—Links, Fit, and SacrificeSacrifice Culture and valuesCulture and values
Positive, distinctive company that is well-managed, Positive, distinctive company that is well-managed, and offers exciting challenges.and offers exciting challenges.
Attractive jobAttractive job Compensation and lifestyleCompensation and lifestyle
Differentiated pay package, high total Differentiated pay package, high total compensation, geographic location, and respect compensation, geographic location, and respect for lifestyle for lifestyle
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Employee AbsenteeismEmployee Absenteeism
Any failure to report for work as Any failure to report for work as scheduled or to stay at work when scheduled or to stay at work when scheduled.scheduled.
Involuntary absenteeismInvoluntary absenteeism
Unavoidable with understandable cause Unavoidable with understandable cause (e.g., actual illness)(e.g., actual illness)
Voluntary absenteeismVoluntary absenteeism
Avoidable without justifiable Avoidable without justifiable cause (e.g., feigning illness)cause (e.g., feigning illness)
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Reasons for Unscheduled Absences
Source: Based on data from “2006 CCH Unscheduled Absence Survey,” CCH, Inc., October 26, 2006, www.cch.com/press/news/2006. All Rights Reserved. Reprinted with permission.
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Controlling AbsenteeismControlling Absenteeism
Disciplinary approach
Positive reinforcement
Combination approach
Paid time-off (PTO)
“No fault” policy
Controlling Absenteeism
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Employee TurnoverEmployee Turnover
The process in which employees leave an The process in which employees leave an organization and have to be replaced.organization and have to be replaced.
Impact of TurnoverImpact of Turnover
Inability to achieve business goalsInability to achieve business goals
Loss of “image” to attract other individualsLoss of “image” to attract other individuals
High costs of turnover and replacementHigh costs of turnover and replacement
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Types of TurnoverTypes of Turnover
Turnover
Involuntary
Voluntary
Functional
Dysfunctional
Uncontrollable
Controllable
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HR Metrics: Measuring AbsenteeismHR Metrics: Measuring Absenteeism
Measuring AbsenteeismMeasuring AbsenteeismU.S. Department of Labor formulaU.S. Department of Labor formula
Other Measures of Absenteeism:Other Measures of Absenteeism:Incidence rateIncidence rate——absences per 100 employees each dayabsences per 100 employees each day
Inactivity rateInactivity rate——percentage of time lost to absenteeismpercentage of time lost to absenteeism
Severity rateSeverity rate——average time lost per absent employee average time lost per absent employee during a specified period of timeduring a specified period of time
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HR Metrics: Measuring HR Metrics: Measuring Absenteeism (cont’d)Absenteeism (cont’d)
Costs of absenteeism:Costs of absenteeism:Lost wagesLost wagesBenefitsBenefitsOvertime for replacementsOvertime for replacementsFees for temporary employees, if incurredFees for temporary employees, if incurredSupervisor’s timeSupervisor’s timeSubstandard productionSubstandard productionOverstaffing necessary to cover absencesOverstaffing necessary to cover absences
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HR Metrics: Measuring HR Metrics: Measuring TurnoverTurnover
Computing the Turnover RateComputing the Turnover Rate
Costs of TurnoverCosts of TurnoverSeparation costsSeparation costs
Replacement costsReplacement costs
Training costsTraining costs
Hidden costsHidden costs
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HR Metrics: Measuring Turnover HR Metrics: Measuring Turnover
Ways to Measure TurnoverWays to Measure Turnover::Job and job levelsJob and job levelsDepartment, units, and locationDepartment, units, and locationReason for leavingReason for leavingLength of serviceLength of serviceDemographic characteristicsDemographic characteristicsEducation and trainingEducation and trainingKnowledge, skills and abilitiesKnowledge, skills and abilitiesPerformance ratings/levelsPerformance ratings/levels
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Possible Retention Interventions
• Spot cash awards for good work• Develop profiles of successful
employees and hire to the profile• Learning bonuses• Focus groups on employee issues• Voluntary job sharing• Realist job avenues• Excellent employee development• Payback agreement for moving
expenses• Clear goals• Accurate performance appraisals• Competitive benefits• Career counseling• Mentoring• Diverse workplace• Sabbatical leaves
• Facilitate promotion/transfer• Reward managers with low turnover• “Fair” pay• Fulfilling work• Avoid hiring those with a history of
turnover• Tuition reimbursement and
promotion for education• Retention bonuses• Subsidized child/elder care• Retrain for promotion/transfer• Pay tied to performance• Telecommuting• Recognize good work• Good working conditions• Friendly work culture/co-workers• Considerate supervisors
Improved Retention