14-1 MG350 Human Resource -- STAFFING RETENTION MANAGEMENT Professor H. Michael Boyd, Ph.D. Bentley University Waltham, Massachusetts 14-2 Retention Management 14-4 Chapter Outline Turnover and Its Causes Retention Initiatives: Nature of Problem Discharge Types of Turnover Initiatives: Retention Causes of Turnover Downsizing Analysis of Turnover Legal Issues Measurement Reasons for Leaving Costs and Benefits Initiatives: Retention Voluntary Turnover 14-5 Turnover and Its Causes Nature of problem Types of turnover Causes of turnover 14-6 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 14-7 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 Involuntary Discharge Downsizing 14-8 Types of Employee Turnover - Voluntary -- Employee Initiated Avoidable Unavoidable (could prevent) (could not prevent) Try to Prevent: Do not Prevent: No attempt to Prevent: High-Value Employees Low-Value Employees Regardless of Value • High performance • Low performance • Retirement • Strong KSAOs • Weak KSAOs • Dual career • Valued intellectual • Little intellectual • New career capital capital • Health • High promotion • Low promotion • Child care or potential potential pregnancy • High training • Low training • Elder care investment investment • Return to school • High experience • Low experience • Leave country • Difficult to find • Easy to find • Take a break replacement replacement 14-9 Types of Employee Turnover - Involuntary -- Organization Initiated Discharge Downsizing • Discipline • Permanent layoff • Poor performance • Temporary layoff • Site or plant closing, relocation • Redundancy due to merger or acquisition 14-10 Causes of Turnover: Voluntary 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 14-11 Causes of Voluntary Turnover Desirability of Leaving Low job satisfaction Shocks to employee + Personal (nonjob) reasons Ease of Leaving Favorable labor market conditions + Intention + Quit General, transferable KSAOs to Quit Low cost of leaving Alternatives Internal: New job possibilities + External: Job offers 14-12 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 14-13 Analysis of Turnover Measurement Reasons for leaving Costs and benefits 14-14 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 14-15 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 14-16 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 Post-exit surveys Surveys sent to employees soon after their last day Employee 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 14-17 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 interviewee’s personnel file Interview should be conducted in private, before employee’s last day Interviewee should be told interview is confidential 14-18 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 14-19 Costs and Benefits for Types of Turnover Voluntary turnover Costs Benefits Discharge Downsizing 14-20 Retention Initiatives: Voluntary Turnover Current practices and deciding to act What do organizations do? Decision process Desirability of leaving Ease of leaving Alternatives 14-21 Guidelines for Increasing Job Satisfaction and Retention Extrinsic rewards Intrinsic rewards Rewards must be Assign employees to jobs meaningful and unique that meet their needs for Rewards must match work characteristics individual preferences Provide clear Link rewards to retention communication with behaviors employees Link rewards to Design fair reward performance allocation systems Ensure supervisors provide a positive environment 14-22 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? 14-23 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 Increase cost of leaving by providing Above-market pay and benefits Deferred compensation Retention bonuses Desirable location of company’s facilities 14-24 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 14-25 Retention Initiatives: Discharge Performance management Performance Management Process Manager training and rewards Progressive discipline progressive discipline system Actions to take 14-26 Performance Management Process Organization Strategy Work-Unit Plans (1) Performance Planning Goals Competencies (4) Decisions (2) Performance Execution Pay Resources Training/career plans Coaching Performance problems Feedback Retention (3) Performance Appraisal Goal attainment Competency ratings Written comments Feedback 14-27 Retention Initiatives: Downsizing Weigh advantages and disadvantages Staffing levels and quality View 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” 14-28 Retention Initiatives: Downsizing (continued) Alternatives to downsizing No layoff or guaranteed employment policy Layoff minimization programs 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 14-29 Legal Issues Separation laws and regulations Performance appraisal 14-30 Legal Issues: Separation Basic tenet of employee separation Fair and consistent treatment of employees Laws and regulations governing separation process 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 14-31 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 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 14-32 Ethical Issues Issue There are numerous negative organizational consequences to firing employees, including the discomfort of the supervisor who delivers the termination information, conflict or sabotage from the departing employee, and the potential for a lawsuit. In response, many supervisors provide problem employees unpleasant work tasks, reduced working hours, or otherwise negatively modify their jobs in hopes that the problem employees will simply quit. What are the ethical issues raised by this strategy?