Chapter 4
Individual/ Organization
Relations and Retention
Individual Performance Factors
Individual’s ability to do the work
Effort expended
Organizational support
Performance (P) = Ability (A) x Effort (E) x Support (S)
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Components of Individual Performance
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Individual Motivation
Motivation: Desire within a person
causing that person to act
Influences of motivation
Performance
Reaction to compensation
Turnover
Other HR concerns
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Approaches to Understanding
Motivation
Need theory
Maslow classified human needs into five categories
Physiological needs
Safety and security needs
Belonging and love needs
Esteem needs
Self-actualization needs
Until the more basic needs are adequately fulfilled,
a person will not fully strive to meet higher needs
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Approaches to Understanding
Motivation
Two factor theory
Frederick Herzberg’s motivation/hygiene theory
assumes that one group of factors, motivators,
accounts for motivation
But hygiene factors can cause dissatisfaction with work
Implication of Herzberg’s research
Employees may not be motivated to work together
even when managers address hygiene factors
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Need Theory and Two Factor Theory
Compared
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Approaches to Understanding
Motivation
Equity theory
People want to be treated fairly at work
Equity: Perceived fairness of what the person does
compared with what the person receives for it
Inputs - What a person brings to the organization
Outcomes - Rewards obtained in exchange for
inputs
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Approaches to Understanding
Motivation
Expectancy theory
Brought about by Lyman Porter and E. E. Lawler
Indicates that motivation is also influenced by
people’s expectations
Individuals base decisions about their behaviors on
their expectations
One or another alternate behavior is more likely to
lead to needed or desired outcomes
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Simplified Expectancy Model of Motivation
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Motivation by Organizations
Financial rewards
Performance management
Others
Praise, trust, and recognition
Autonomy to do one’s job
Motivational speakers
T-shirts, mugs, books, and videos
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Motivation by Organizations
Motivation requires diagnosis of
organization’s efforts and employee’s:
Efforts
Abilities
Expectations
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Psychological Contract
Unwritten expectations employees and
employers have about the nature of their
work relationships
Useful in understanding individuals’ relationships
with their employers
Create positive or negative relationship between
the employer and individual
Based on trust that leads to meeting employer’s
and employee’s expectations and needs
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Expectation of a Psychological
Contract
Employers will Employees will
Provide Contribute
Competitive Continuous skill
compensation and improvement and
benefits increased
Flexibility to balance productivity
work and home life Reasonable time
Career with the
development Organization
opportunities Extra efforts and
results when needed
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Global Psychological Contract
Concerns
Psychological contracts vary between
foreign country employees and those from
domestic country
Psychological contract expectations of
employees from different cultures need to be
met by multinational firms
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Job Satisfaction and Commitment
Job satisfaction: Positive emotional state
resulting from evaluating one’s job
experience
Morale - Job satisfaction of a group or organization
Attitude survey: Focuses on employees’
feelings and beliefs about their jobs and the
organization
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Components of Job Satisfaction
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Commitment and Engagement
Organization commitment: Degree to
which employees believe in and accept
organizational goals and desire to remain
with the organization
Employee engagement: Extent to which an
employee feels linked to organizational
success
Loyalty: Being faithful to an institution or employer
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Engaged and Disengaged Employees
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Employee Absenteeism
Any failure by an employee to report for work
as scheduled or to stay at work when
scheduled
Effective absence management is a
balance between:
Supporting employees who are legitimately not at
work
Keeping operational needs covered
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Employee Absenteeism
Types
Involuntary absences
Voluntary absences
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Methods of Addressing Absenteeism
Disciplinary approach
People who are absent the first time receive an oral
warning
Subsequent absences bring written warnings,
suspension, and finally dismissal
Positive reinforcement
Giving rewards for meeting attendance standards
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Methods of Addressing Absenteeism
Combination approach
Rewards desired behaviors and punishes undesired
behaviors
No-fault policy
Employees must manage their own attendance
unless they abuse that freedom
Paid-time-off (PTO) programs
Employees use days from their accounts at their
discretion a paid-time-off account
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Measuring Absenteeism
Number of person-days lost through job absence during
period (Average number of employees) (Number
100
of workdays)
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Measuring Absenteeism
Other measures of absenteeism
Incidence rate - Number of absences per 100
employees each day
Inactivity rate - Percentage of time lost to
absenteeism
Severity rate - Average time lost
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Employee Turnover
Process in which employees leave an
organization and have to be replaced
Impact of turnover
Negative impact on several dimensions of
organizational performance
Safety
Productivity
Financial performance
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Types of Turnover
Involuntary Turnover
Employees are terminated for poor performance
or work rule violations
Voluntary Turnover
Employees leave by choice Functional Turnover
• Lower-performing or disruptive employees leave
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Types of Turnover
Dysfunctional Turnover
Key individuals and high performers leave at
critical times
Uncontrollable Turnover
Employees leave for reasons outside the control of
the employer
Controllable Turnover
• Employees leave for reasons that could be
influenced by the employer
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Employee Turnover
Churn: Hiring new workers while laying off
others
Employers sometimes complain about not being
able to find skilled workers while they are laying off
other employees
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Computing the Turnover Rate
Number of employee separations during the month
100
Total number of employees at midmonth
Categories in which data is gathered and
analyzed
Job and job level
Demographic characteristics
Department, unit, and location
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Computing the Turnover Rate
Education and training
Reason for leaving
Knowledge, skills, and abilities
Length of service
Performance ratings/levels
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Determining Turnover Costs
Separation costs
Vacancy costs
Replacement costs
Training costs
Hidden/indirect
costs
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Optimal Turnover
Turnover costs and benefits can be
calculated separately
More turnover in certain segments of
the organization can be beneficial if:
It costs very little
Those leaving are less valuable than their
replacements
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Drivers of Retention
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Retention Assessment and Metrics
Some of the first areas to consider
when analyzing data for retention
Work
Pay/benefits
Supervision
Occupations
Departments
Demographics of those leaving and staying
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Process for Managing Retention
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Retention Assessment and Metrics
Employee surveys - Used to:
Diagnose specific problem areas
Identify employee needs or preferences
Reveal areas in which HR activities are well
received or viewed negatively
Exit interview: Individuals who are leaving
the organization are asked to give their
reasons
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Retention Assessment and Metrics
Effective first-year efforts lead
to:
Future career development
Higher performance
Other positive retention factors
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Retention Evaluation and Follow-Up
Organizations must:
Track intervention results
Adjust intervention efforts
Some firms use pilot programs to see how
changes affect retention before extending
them to the entire organization
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THANK YOU
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