Retention Management

1
Chapter 14

• Retention Management

2
Chapter Outline

• Turnover and Its Causes
• Nature of Problem
• Types of Turnover
• Causes of Turnover
• Analysis of Turnover
• Measurement
• Reasons for Leaving
• Costs and Benefits
• Retention Initiatives Voluntary Turnover
• Current Practices and Deciding to Act
• Desirability of Leaving
• Ease of Leaving
• Alternatives

• Retention Initiatives Discharge
• Performance Management
• Progressive Discipline
• Retention Initiatives Downsizing
• Weighing Advantages and Disadvantages
• Staffing Levels and Quality
• Alternatives to Downsizing
• Employees Who Remain
• Legal Issues
• Separation Laws and Regulations
• Performance Appraisal

3
Turnover and its Causes

• Nature of problem
• Types of turnover
• Causes of turnover

4
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

5
Voluntary Turnover

• Exhibit 14.1 Types of Employee Turnover
• Exhibit 14.2 Causes of Voluntary 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

6
Causes of Turnover

• 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

7
Analysis of Turnover

• Measurement
• Reasons for leaving
• Costs and benefits

8
Measurement of Turnover

• 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

9
Breakout 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
• Exhibit14.3 Data from job openings and labor
  turnover survey

10
Reasons for Leaving

• Important to ascertain, record, and track
  reasonswhy employees leave
• Tools
• Exit interviews
• Formal, planned interviews with departing
  employees
• Post-exit 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

11
Conducting Exit Interviews

• Interviewer should be a neutral person who
  hasbeen 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
• Exhibit 14.4 Examples of Exit Interview
  Questions
• Interviewer should prepare by reviewing interview
  format and interviewees personnel file
• Interview should be conducted in private, before
  employees last day
• Interviewee should be told interview is
  confidential
• Exhibit 14.4 Examples of Interview Questions

12
Cost and Benefits

• Costs and benefits can be estimated for each of
  the three turnover types
• Types of costs
• Financial
• Non-financial
• Some costs and benefits can be estimated
  financially
• Non-financial costs and benefits may outweigh
  financial ones in importance and impact

13
Cost Benefits for Types of Turnover

• Voluntary turnover
• Exhibit 14.5 Voluntary TurnoverCosts and
  Benefits
• Exhibit 14.6 Example of Financial
  CostEstimates for One Voluntary Turnover
• Discharge
• Exhibit 14.7 Discharge Costs and Benefits
• Downsizing
• Exhibit 14.8 Downsizing Costs and Benefits

14
Retention Initiatives Voluntary Turnover

• Current practices and deciding to act
• What do organizations do?
• Exhibit 14.9 Retention Initiatives Usage and
  Effectiveness
• Exhibit14.10 Retention Initiative Examples
• Decision process
• Exhibit 14.11 Decision Process
• Desirability of leaving
• Exhibit 14.12 Guidelines for Increasing Job
  Satisfaction and Retention
• Ease of leaving
• Alternatives

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Guidelines for Increasing Job Satisfaction
Retention

• Extrinsic rewards
• Rewards must be meaningful and unique
• Rewards must match individual preferences
• Link rewards to retention behaviors
• Link rewards to performance

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Guidelines for Increasing Job Satisfaction
Retention

• Intrinsic rewards
• Assign employees to jobs that meet their needs
  for work characteristics
• Provide clear communication with employees
• Design fair reward allocation systems
• Ensure supervisors provide a positive environment

17
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 companys facilities

18
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

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Retention Initiatives Discharge

• Performance management
• Exhibit 14.13 Performance Management Process
• Manager training and rewards
• Progressive discipline
• Five requirements of a progressive discipline
  system - P. 701
• Actions to take
• Exhibit 14.14 Progressive Discipline Examples
  Misconduct and Penalties

20
Retention Initiatives Downsizing

• 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

21
Retention Initiatives Downsizing

• Alternatives to downsizing
• No layoff or guaranteed employment policy
• Layoff minimization programs
• Exhibit 14.15 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

22
Legal Issues

• Separation laws and regulations
• Performance appraisal

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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

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Suggestions for Performance Appraisals

• 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 employees job
  descriptionand actual performance
• Agreement should exist among different raters in
  evaluating an employees 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 employees appraisal
• Provide appeal system for employees dissatisfied
  with their evaluations

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Discussion Ethical Questions

• For the three primary causes of voluntary
  turnover (desirability of leaving, ease of
  leaving, alternatives), might their relative
  importance depend on the type of employee or type
  of job? Explain.
• If a person says to you, Its easy to reduce
  turnover, just pay people more money, what is
  your response?
• Discuss some potential problems with downsizing
  as an organizations first response to a need to
  cut labor costs.
• Consider a circumstance where your organization
  is doing exit interviews and has promised
  confidentiality to all who respond. Your
  supervisor has asked you to give the name of each
  respondent so she can assess the information in
  conjunction with the persons supervisor. What
  obligation to corporate HR employees have to keep
  information confidential in such circumstances?