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14-1
McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
CHAPTER FOURTEENCHAPTER FOURTEEN
Retention ManagementRetention Management
Screen graphics created by:Jana F. Kuzmicki, PhD
Troy State University-Florida and Western Region
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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, internalEmployment:Decision making, final match
OrganizationVision and Mission
Goals and Objectives
Staffing Organizations ModelStaffing Organizations Model
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Chapter OutlineChapter Outline
Turnover and Its CausesNature of Problem
Types of Turnover
Causes of Turnover
Analysis of TurnoverMeasurement
Reasons for Leaving
Costs and Benefits
Retention Initiatives: Voluntary Turnover
Retention Initiatives: Discharge
Retention Initiatives: Downsizing
Legal Issues
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Turnover and Its CausesTurnover and Its Causes
Nature of problem
Types of turnover
Causes of turnover
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Nature of the ProblemNature 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 andWho is retained
Turnover is inevitable Approach to retention management
Gather and analyze employees’ reasons for leaving
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Types of TurnoverTypes of Turnover
Exhibit 14.1: Types of Employee Turnover Voluntary
Avoidable - Could be prevented Try to prevent Do not try to prevent
Unavoidable - Could not be prevented
InvoluntaryDischargeDownsizing
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Exhibit 14.1: Types of Employee Turnover -Exhibit 14.1: Types of Employee Turnover -Voluntary -- Employee InitiatedVoluntary -- Employee Initiated
Try to Prevent:High-Value Employees
Try to Prevent:High-Value Employees
• High performance• Strong KSAOs• Valued intellectual
capital• High promotion
potential• High training
investment• High experience• Difficult to find
replacement
• High performance• Strong KSAOs• Valued intellectual
capital• High promotion
potential• High training
investment• High experience• Difficult to find
replacement
Do not Prevent:Low-Value Employees
Do not Prevent:Low-Value Employees
• Low performance• Weak KSAOs• Little intellectual
capital• Low promotion
potential• Low training
investment• Low experience• Easy to find
replacement
• Low performance• Weak KSAOs• Little intellectual
capital• Low promotion
potential• Low training
investment• Low experience• Easy to find
replacement
No attempt to Prevent:Regardless of Value
No attempt to Prevent:Regardless of Value
• Retirement• Dual career• New career• Health• Child care or
pregnancy• Elder care• Return to school• Leave country• Take a break
• Retirement• Dual career• New career• Health• Child care or
pregnancy• Elder care• Return to school• Leave country• Take a break
Avoidable(could prevent)
Avoidable(could prevent)
Unavoidable(could not prevent)
Unavoidable(could not prevent)
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Exhibit 14.1: Types of Employee Turnover -Exhibit 14.1: Types of Employee Turnover -Involuntary -- Organization InitiatedInvoluntary -- Organization Initiated
• Permanent layoff
• Temporary layoff
• Site or plant closing, relocation
• Redundancy due to merger or acquisition
• Permanent layoff
• Temporary layoff
• Site or plant closing, relocation
• Redundancy due to merger or acquisition
DownsizingDownsizing
• Discipline
• Poor performance
• Discipline
• Poor performance
DischargeDischarge
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Causes of Turnover: VoluntaryCauses 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
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Exhibit 14.2: Causes of Voluntary TurnoverExhibit 14.2: Causes of Voluntary Turnover
QuitQuit
AlternativesInternal: New job possibilities
External: Job offers
AlternativesInternal: New job possibilities
External: Job offers+
Desirability of LeavingLow job satisfactionShocks to employeePersonal (nonjob) reasons
Desirability of LeavingLow job satisfactionShocks to employeePersonal (nonjob) reasons
+
Ease of LeavingFavorable labor market conditionsGeneral, transferable KSAOsLow cost of leaving
Ease of LeavingFavorable labor market conditionsGeneral, transferable KSAOsLow cost of leaving
+ Intentionto Quit
Intentionto Quit
+
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Causes of Turnover:Causes of Turnover:Discharge and DownsizingDischarge and Downsizing
Discharge turnoverMismatch between job requirements and KSAOs
Employee fails to follow rules and procedures Unacceptable job performance
Downsizing turnoverMismatch in staffing levels which leads to an
overstaffing situationFactors 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 TurnoverAnalysis of Turnover
Measurement
Reasons for leavings
Costs and benefits
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Measurement of Turnover: Formula 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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BreakoutsAnalysis of turnover data aided by deciding on
categories of data Type of turnover Type of employee Job category Geographic location
BenchmarksInternal - Trend analysisExternal - Compare internal data with external data
Exh. 14.3: Sample Annual Separation (Turnover) Data
Measurement of Turnover:Measurement of Turnover:Breakouts and Benchmarks Breakouts and Benchmarks
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Important to ascertain, record, and track reasonswhy employees leave
ToolsExit interviews
Formal, planned interviews with departing employeesPostexit surveys
Surveys sent to employees soon after their last dayEmployee 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
Measurement of Turnover:Measurement of Turnover:Reasons for Leaving Reasons for Leaving
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Interviewer should be a neutral person who hasbeen trained in how to conduct exit interviews
Training issuesHow to put employee at ease and explain purposeHow to follow structured interview format and take notesHow 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
Guidelines: Conducting Exit Interviews Guidelines: Conducting Exit Interviews
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Measurement of Turnover:Measurement of Turnover:Costs and BenefitsCosts and Benefits
Costs and benefits can be estimated for each of the three turnover types
Types of costsFinancialNonfinancial
Some costs and benefits can be estimated financially
Nonfinancial costs and benefits may outweigh financial ones in importance and impact
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Costs Benefits
Costs and Benefits for Types of TurnoverCosts and Benefits for Types of Turnover
Voluntary turnoverExh. 14.5: Voluntary Turnover:
Costs and Benefits
Exh. 14.6: Example of Financial CostEstimates for One Voluntary Turnover
DischargeExh. 14.7: Discharge: Costs and Benefits
DownsizingExh. 14.8: Downsizing: Costs and Benefits
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Retention Initiatives: Voluntary TurnoverRetention Initiatives: Voluntary Turnover
Current practices and deciding to actWhat do organizations do?
Exh. 14.9: Retention Initiatives: Usage and EffectivenessDecision process
Exh. 14.10: Decision Process for Retention Initiatives
Desirability of leavingExh. 14.11: Guidelines for Increasing Job
Satisfaction and Retention Ease of leaving Alternatives
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Exh. 14.10: Decision ProcessExh. 14.10: Decision Processfor Retention Initiativesfor 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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Exh. 14.11: Guidelines for IncreasingExh. 14.11: Guidelines for IncreasingJob Satisfaction and RetentionJob Satisfaction and Retention
Match rewards to employee preferences Make rewards unique Rewards must be meaningful Link rewards to retention behaviors Deliver on rewards that are promised Reward permanency is important Remember intrinsic rewards Fairness and justice are key Communicate continuously The manager matters
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Ease of LeavingEase of Leaving
Two points of attackProvide 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
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AlternativesAlternatives
Approaches to make internal alternatives more desirable than outside alternativesInternal staffing
Encourage employees to seek internal job opportunities Provide attractive internal options outside of traditional
internal staffing systemResponding 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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Performance managementExh. 14.12: Performance Management Process
Manager training and rewards
Progressive disciplineFive requirements of a progressive discipline system -
P. 701
Actions to take Exh. 14.13: Progressive Discipline Examples: Misconduct
and Penalties
Retention Initiatives: DischargeRetention Initiatives: Discharge
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Exh. 14.12: Performance Management ProcessExh. 14.12: Performance Management Process
Organization StrategyOrganization Strategy
Work-Unit PlansWork-Unit Plans
(1) Performance Planning(1) Performance Planning
GoalsCompetencies
GoalsCompetencies
(2) Performance Execution(2) Performance Execution
ResourcesCoachingFeedback
ResourcesCoachingFeedback
(3) Performance Appraisal(3) Performance Appraisal
Goal attainmentCompetency ratingsWritten commentsFeedback
Goal attainmentCompetency ratingsWritten commentsFeedback
(4) Decisions(4) Decisions
PayTraining/career plansPerformance problemsRetention
PayTraining/career plansPerformance problemsRetention
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Weigh advantages and disadvantagesSee Exh. 14.8
Staffing levels and qualityView 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”
Retention Initiatives: DownsizingRetention Initiatives: Downsizing
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Alternatives to downsizing No layoff or guaranteed employment policy Layoff minimization programs
Exh. 14.14: 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
Retention Initiatives: DownsizingRetention Initiatives: Downsizing(continued)(continued)
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Legal IssuesLegal Issues
Separation laws and regulations
Performance appraisal
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Legal Issues: SeparationLegal Issues: Separation
Basic tenet of employee separationFair and consistent treatment of employees
Laws and regulations governing separation processPublic policy restrictions on employment-at-willEmployment discrimination laws and regulationsAffirmative action requirementsEmployment contract principlesLabor contract provisionsCivil service laws and regulationsNegligent supervision and retentionAdvanced warning about plant closings
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Legal Issues: Suggestions forLegal Issues: Suggestions for Performance Appraisal Systems 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 description
and 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
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