Part 6: Staffing System and Retention Management
Chapter 14: Retention Management
McGraw-Hill/Irwin
Copyright 2009 by The McGraw-Hill Companies, Inc., All Rights Reserved.
Staffing Organizations Model
Organization
Mission Goals and Objectives
Organization Strategy
HR and Staffing Strategy
Staffing Policies and Programs Support Activities Core Staffing Activities
Legal compliance Planning Recruitment: Selection:
External, internal
Measurement, external, internal
Job analysis
Employment:
Decision making, final match
Staffing System and Retention Management
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Chapter Outline
Turnover and Its Causes
Retention Initiatives: Discharge
Nature of Problem Types of Turnover Causes of Turnover Measurement Reasons for Leaving Costs and Benefits
Performance Management Progressive Discipline Weighing Advantages and Disadvantages Staffing Levels and Quality Alternatives to Downsizing Employees Who Remain Separation Laws and Regulations Performance Appraisal
Retention Initiatives: Downsizing
Analysis of Turnover
Retention Initiatives: Voluntary Turnover
Legal Issues
Current Practices and Deciding to Act Desirability of Leaving Ease of Leaving Alternatives
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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 a person says to you, Its easy to reduce turnover, just pay people more money, what is your response? 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.
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Turnover and Its Causes
Nature of problem
Types of turnover
Causes of turnover
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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
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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 Discharge Downsizing
Involuntary
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Exhibit 14.1: Types of Employee Turnover Voluntary -- Employee Initiated
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Exhibit 14.1: Types of Employee Turnover Involuntary -- Organization Initiated
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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 Represents lack of barriers to leaving and Of being able to likely find a new job
Perceived ease of leaving
Available alternatives
Depends on other job options both within and outside organization
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Exhibit 14.2: Causes of Voluntary Turnover
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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
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Analysis of Turnover
Measurement
Reasons for leaving
Costs and benefits
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Measurement of Turnover: Formula
Turnover rate
Number of employees leaving average number of employees x 100
Data and decisions
Identify time period of interest Determine type of employees that count Determine method to calculate average number of employees over the time period
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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
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Measurement of Turnover: Reasons for Leaving
Important to ascertain, record, and track reasons why employees leave Tools
Exit interviews
Formal, planned interviews with departing employees
Surveys sent to employees soon after their last day 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
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Postexit surveys
Employee satisfaction surveys
Guidelines: Conducting Exit Interviews
Interviewer should be a neutral person who has been 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 interviewees personnel file Interview should be conducted in private, before employees last day Interviewee should be told interview is confidential
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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
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Major Turnover Costs and Benefits
Costs of turnover
Benefits of turnover
Separation costs
Staff time and loss of productivity
Replacement costs
Recruiting and selecting new employee Teaching new employees the job
Training costs
Potentially better new employees Short term labor cost savings Opportunities to restructure work units
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Costs and Benefits for Types of Turnover
Voluntary turnover
Exh. 14.5: Voluntary Turnover: Costs and Benefits Exh. 14.6: Example of Financial Cost Estimates for One Voluntary Turnover
Discharge
Exh. 14.7: Discharge: Costs and Benefits Exh. 14.8: Downsizing: Costs and Benefits
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Downsizing
Ex. 14.9 Most and Least Effective Retention Initiatives
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Exh. 14.11: Decision Process for 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?
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Guidelines for Increasing Job Satisfaction and Retention
Extrinsic rewards
Intrinsic rewards
Rewards must be meaningful and unique Rewards must match individual preferences Link rewards to retention behaviors Link rewards to performance
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
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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 Above-market pay and benefits Deferred compensation Retention bonuses Desirable location of companys facilities
Increase cost of leaving by providing
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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
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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 a person says to you, Its easy to reduce turnover, just pay people more money, what is your response?
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Exh. 14.13: Performance Management Process
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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
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Retention Initiatives: Discharge
Progressive discipline
Five requirements of a progressive discipline system
Give employees notice of the rules of conduct and misconduct Give employees notice of the consequences of violation of the rules Provide equal treatment for all employees Allow for full investigation of the alleged misconduct and defense by the employee Provide employees the right to appeal a decision
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Retention Initiatives: Downsizing
Weigh advantages and disadvantages
See Exh. 14.8
View retention in two ways
Staffing levels and quality
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 Retain most senior employees Make performance-based decisions Retain high-value employees and layoff low-value employees
Determine who should be retained, if cuts are made
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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
Enhanced communication programs Morale-boosting events Promotion of EAPs Stress-related training
Provide programs to meet needs of survivors
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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 organizations first response to a need to cut labor costs.
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Legal Issues: Separation
Basic tenet of employee separation
Fair and consistent treatment of employees 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
Laws and regulations governing separation process
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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 employees job description and actual performance Agreement should exist among different raters in evaluating an employees 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 employees appraisal Provide appeal system for employees dissatisfied with their evaluations
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