Organization/IndividualRelations and Retention

Individual/Organizational Relationships

The Psychological ContractThe unwritten expectations employees and

employers have about the nature of their work relationships.

Affected by age of employee and changes in economic conditions.

Focuses on expectations about “fairness” that may not be defined clearly by employees.

Psychological OwnershipWhen individuals feel that they have some control

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

Components of the Psychological 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

FIGURE 3-1 Factors Affecting Job Satisfaction and Organizational Commitment

© 2008 Thomson/South-Western. All rights reserved.

Job Satisfaction, Loyalty, and Commitment

Job SatisfactionA positive emotional state resulting from

evaluating one’s job experience.

Organization Commitment (Loyalty)The degree to which employees believe

in and accept organizational goals and desire to remain with the organization.

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

Individual Employee Performance

Individual Performance Factors

1. Individual ability to do the work

2. Effort level expended

3. Organizational support

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

FIGURE 3-2 Components of Individual Performance

Individual Motivation

Motivation The desire within a person causing that person to

act to reach a goal.

Management Implications for Motivating Individual Performance Broad-based strategies and tactics to address

individual employee concerns about:

Consistency in organizational rewards

Organizational support for employee efforts

Accurate measurement of employee performance

Desirability of rewards by employees

Retention of Human Resources

Myths About Retention

1. Money is the main reason people leave.

2. Hiring has nothing to do with retention.

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

4. Do not be concerned about retention during a merger.

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

I’m Gone

Retention of Human Resources

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

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

Attractive job

Freedom and autonomy, exciting challenges, and career advancement and growth

Compensation and lifestyle

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

FIGURE 3-3 Drivers of Retention

FIGURE 3-4 Some Characteristics of People and Jobs

Employee Absenteeism

Absenteeism

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

Involuntary absenteeism

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

Voluntary absenteeism

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

FIGURE 3-5 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.

Controlling Absenteeism

Disciplinary approach

Positive reinforcemen

t

Combination approach

Paid time-off (PTO)

“No fault” policy

Controlling Absenteeis

m

FIGURE 3-6 Employee Absenteeism Control Actions

Employee Turnover

Turnover

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

Impact of Turnover

Inability to achieve business goals

Loss of “image” to attract other individuals

High costs of turnover and replacement

Churn—hiring new workers while laying off others

Types of Turnover

Turnover

Involuntary

Voluntary

Functional

Dysfunctional

Uncontrollable

Controllable

HR Metrics: Measuring Absenteeism

Measuring Absenteeism

U.S. Department of Labor formula:

100days) work of(Number employees) ofnumber (Average

period during absence jobgh lost throu sperson-day ofNumber

• 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

HR Metrics: Measuring Absenteeism (cont’d)

Calculations of the costs of absenteeism should usually include:

Lost wages

Benefits

Overtime for replacements

Fees for temporary employees, if incurred

Supervisor’s time

Substandard production

Overstaffing necessary to cover absences

HR Metrics: Measuring Turnover

Computing the Turnover Rate:

100 midmonthat employees ofnumber Total

month theduring sseparation employee ofNumber

• Costs of TurnoverCosts of TurnoverSeparation costsSeparation costs

Replacement costsReplacement costs

Training costsTraining costs

Hidden costsHidden costs

HR Metrics: Measuring Turnover (cont’d)

Ways to Measure Turnover: Job and job levels

Department, units, and location

Reason for leaving

Length of service

Demographic characteristics

Education and training

Knowledge, skills and abilities

Performance ratings/levels

FIGURE 3-7 Simplified Turnover Costing Model

20,000

8,000(40%)

28,000

20

3

3,500

70,000

Teller

FIGURE 3-8

Managing Retention

FIGURE 3-9 Possible Retention Interventions

© 2008 Thomson/South-Western. All rights reserved.

• 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