11

Individual/Organizational Individual/Organizational RelationshipsRelationships

The Psychological ContractThe Psychological ContractUnwritten expectations employees and Unwritten expectations employees and

employers have about the nature of their employers have about the nature of their relationship.relationship.

Psychological OwnershipPsychological OwnershipWhen individuals feel that they have some When individuals feel that they have some

control and perceived rights in the control and perceived rights in the organization, they are more likely to be organization, they are more likely to be committed to the organization.committed to the organization.

22

Components of the Components of the Psychological ContractPsychological Contract

Employers provide:

• Competitive compensation and benefits

• Flexibility to balance work and home life

• Career development opportunities

Employees contribute:

• Continuous skill improvement and increase productivity

• Reasonable time with the organization

• Extra effort when needed

33

Factors Affecting Job Satisfaction and Organizational

Commitment

44

Job Satisfaction and CommitmentJob Satisfaction and Commitment

Job SatisfactionJob SatisfactionPositive emotional state resulting from Positive emotional state resulting from

evaluating one’s job experience.evaluating one’s job experience. Organization Commitment (Loyalty)Organization Commitment (Loyalty)

Degree to which employees believe in and Degree to which employees believe in and accept organizational goals and desire to accept organizational goals and desire to remain with the organization.remain with the organization.

Continuance commitment:Continuance commitment: the likelihood that an the likelihood that an individual will stay with rather than withdraw individual will stay with rather than withdraw from the organization.from the organization.

55

Individual Employee PerformanceIndividual Employee Performance

Individual Performance FactorsIndividual Performance Factors1.1. Individual ability to do the workIndividual ability to do the work

2.2. Effort level expendedEffort level expended

3.3. Organizational supportOrganizational support

Performance Performance (P) (P) = = AbilityAbility (A)(A) x x Effort Effort (E)(E) x x SupportSupport (S)(S)

66

Components of Individual Performance

77

Individual MotivationIndividual Motivation

Desire within a person causing him/her to Desire within a person causing him/her to act to reach a goal.act to reach a goal.

Management Implications related to Management Implications related to MotivationMotivation

Consistency in organizational rewardsConsistency in organizational rewards Organizational support for employee effortsOrganizational support for employee efforts Accurate measurement of employee Accurate measurement of employee

performanceperformance Desirability of rewards by employeesDesirability of rewards by employees

88

Retention of Human ResourcesRetention of Human ResourcesMyths About RetentionMyths About Retention

1.1. Money is the main reason people leave.Money is the main reason people leave.

2.2. Hiring has nothing to do with retention.Hiring has nothing to do with retention.

3.3. If you train people, you are only training If you train people, you are only training them for another employer.them for another employer.

4.4. Don’t be concerned about retention Don’t be concerned about retention during a merger.during a merger.

5.5. If solid performers want to leave, the If solid performers want to leave, the company cannot hold them.company cannot hold them.

I’m Gone

99

Retention of Human ResourcesRetention of Human Resources

Why People Stay or Leave—Links, Fit, and Why People Stay or Leave—Links, Fit, and SacrificeSacrifice Culture and valuesCulture and values

Positive, distinctive company that is well-managed, Positive, distinctive company that is well-managed, and offers exciting challenges.and offers exciting challenges.

Attractive jobAttractive job Compensation and lifestyleCompensation and lifestyle

Differentiated pay package, high total Differentiated pay package, high total compensation, geographic location, and respect compensation, geographic location, and respect for lifestyle for lifestyle

1010

Some Characteristics of People and Jobs

1111

Employee AbsenteeismEmployee Absenteeism

Any failure to report for work as Any failure to report for work as scheduled or to stay at work when scheduled or to stay at work when scheduled.scheduled.

Involuntary absenteeismInvoluntary absenteeism

Unavoidable with understandable cause Unavoidable with understandable cause (e.g., actual illness)(e.g., actual illness)

Voluntary absenteeismVoluntary absenteeism

Avoidable without justifiable Avoidable without justifiable cause (e.g., feigning illness)cause (e.g., feigning illness)

1212

Reasons for Unscheduled Absences

Source: Based on data from “2006 CCH Unscheduled Absence Survey,” CCH, Inc., October 26, 2006, www.cch.com/press/news/2006. All Rights Reserved. Reprinted with permission.

1313

Controlling AbsenteeismControlling Absenteeism

Disciplinary approach

Positive reinforcement

Combination approach

Paid time-off (PTO)

“No fault” policy

Controlling Absenteeism

1414

Employee TurnoverEmployee Turnover

The process in which employees leave an The process in which employees leave an organization and have to be replaced.organization and have to be replaced.

Impact of TurnoverImpact of Turnover

Inability to achieve business goalsInability to achieve business goals

Loss of “image” to attract other individualsLoss of “image” to attract other individuals

High costs of turnover and replacementHigh costs of turnover and replacement

1515

Types of TurnoverTypes of Turnover

Turnover

Involuntary

Voluntary

Functional

Dysfunctional

Uncontrollable

Controllable

1616

HR Metrics: Measuring AbsenteeismHR Metrics: Measuring Absenteeism

Measuring AbsenteeismMeasuring AbsenteeismU.S. Department of Labor formulaU.S. Department of Labor formula

Other Measures of Absenteeism:Other Measures of Absenteeism:Incidence rateIncidence rate——absences per 100 employees each dayabsences per 100 employees each day

Inactivity rateInactivity rate——percentage of time lost to absenteeismpercentage of time lost to absenteeism

Severity rateSeverity rate——average time lost per absent employee average time lost per absent employee during a specified period of timeduring a specified period of time

1717

HR Metrics: Measuring HR Metrics: Measuring Absenteeism (cont’d)Absenteeism (cont’d)

Costs of absenteeism:Costs of absenteeism:Lost wagesLost wagesBenefitsBenefitsOvertime for replacementsOvertime for replacementsFees for temporary employees, if incurredFees for temporary employees, if incurredSupervisor’s timeSupervisor’s timeSubstandard productionSubstandard productionOverstaffing necessary to cover absencesOverstaffing necessary to cover absences

1818

HR Metrics: Measuring HR Metrics: Measuring TurnoverTurnover

Computing the Turnover RateComputing the Turnover Rate

Costs of TurnoverCosts of TurnoverSeparation costsSeparation costs

Replacement costsReplacement costs

Training costsTraining costs

Hidden costsHidden costs

1919

HR Metrics: Measuring Turnover HR Metrics: Measuring Turnover

Ways to Measure TurnoverWays to Measure Turnover::Job and job levelsJob and job levelsDepartment, units, and locationDepartment, units, and locationReason for leavingReason for leavingLength of serviceLength of serviceDemographic characteristicsDemographic characteristicsEducation and trainingEducation and trainingKnowledge, skills and abilitiesKnowledge, skills and abilitiesPerformance ratings/levelsPerformance ratings/levels

2020

Simplified Turnover Costing Model

20,000

8,000(40%)

28,000

20

3

3,500

70,000

Teller

2121

FIGURE 3-8

Managing

Retention

2222

Possible Retention Interventions

• Spot cash awards for good work• Develop profiles of successful

employees and hire to the profile• Learning bonuses• Focus groups on employee issues• Voluntary job sharing• Realist job avenues• Excellent employee development• Payback agreement for moving

expenses• Clear goals• Accurate performance appraisals• Competitive benefits• Career counseling• Mentoring• Diverse workplace• Sabbatical leaves

• Facilitate promotion/transfer• Reward managers with low turnover• “Fair” pay• Fulfilling work• Avoid hiring those with a history of

turnover• Tuition reimbursement and

promotion for education• Retention bonuses• Subsidized child/elder care• Retrain for promotion/transfer• Pay tied to performance• Telecommuting• Recognize good work• Good working conditions• Friendly work culture/co-workers• Considerate supervisors

Improved Retention