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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