Individual/Organization Relations and Retention

MN 301 – Human Resource Management

Craig W. Fontaine, Ph.D.Pine Manor College

Fall 2014

Individual Performance Factors

Individual’s ability to do the work Effort expended Organizational support

Performance (P) = Ability (A) x Effort (E) x Support (S)

Components of Individual Performance

Individual Motivation

Motivation: Desire within a person causing that person to act

Influences of motivation Performance

Reaction to compensation

Turnover

Other HR concerns

Approaches to Understanding Motivation

Need theory Maslow classified human needs into five categories

Physiological needs

Safety and security needs

Belonging and love needs

Esteem needs

Self-actualization needs

Until the more basic needs are adequately fulfilled, a person will not fully strive to meet higher needs

Approaches to Understanding Motivation

Two factor theory Frederick Herzberg’s motivation/hygiene theory

assumes that one group of factors, motivators, accounts for motivation But hygiene factors can cause dissatisfaction with

work

Implication of Herzberg’s research…

Need Theory and Two Factor Theory Compared

Approaches to Understanding Motivation

Equity theory (Social Comparison Theory) People want to be treated fairly at work

Equity: Perceived fairness of what the person does compared with what the person receives for it

Inputs - What a person brings to the organization

Outcomes - Rewards obtained in exchange for inputs

Approaches to Understanding Motivation

Expectancy theory (Cognitive Theory) Brought about by Lyman Porter and E. E. Lawler

Indicates that motivation is also influenced by people’s expectations

Individuals base decisions about their behaviors on their expectations…

Simplified Expectancy Model of Motivation

Motivation by Organizations

Financial rewardsPerformance managementOthers

Praise, trust, and recognition

Autonomy to do one’s job

Motivation by Organizations

Motivation requires diagnosis of organization’s efforts and employee’s: Efforts

Abilities

Expectations

Psychological Contract

Unwritten expectations employees and employers have about the nature of their work relationships Useful in understanding individuals’ relationships

with their employers

Create positive or negative relationship between the employer and individual

Based on trust that leads to meeting employer’s and employee’s expectations and needs

Expectation of a Psychological Contract

Employers will Provide

• Competitive compensation and benefits

• Flexibility to balance work and home life

• Career development opportunities

Employees will Contribute

• Continuous skill improvement and increased productivity

• Reasonable time with the Organization

• Extra efforts and results when needed

Global Psychological Contract Concerns

Psychological contracts vary differ by country

Psychological contract expectations of employees from different cultures need to be met by multinational firms

Job Satisfaction and Commitment

Job satisfaction: Positive emotional state resulting from evaluating one’s job experience Morale - Job satisfaction of a group or

organization

Attitude survey: Focuses on employees’ feelings and beliefs about their jobs and the organization

Components of Job Satisfaction

Commitment and Engagement

Organization commitment: Degree to which employees believe in and accept organizational goals and desire to remain with the organization

Employee engagement: Extent to which an employee feels linked to organizational success Loyalty: Being faithful to an institution or

employer

Engaged and Disengaged Employees

Employee Absenteeism

Any failure by an employee to report for work as scheduled or to stay at work when scheduled

Effective absence management is a balance between: Supporting employees who are legitimately not at

work

Keeping operational needs covered

Employee Absenteeism

Types Involuntary absences

Voluntary absences

Sources of Direct and Indirect Costs of Absenteeism

Methods of Addressing Absenteeism

Disciplinary approach People who are absent the first time receive an

oral warning

Subsequent absences bring written warnings, suspension, and finally dismissal

Positive reinforcement Giving rewards for meeting attendance standards

Methods of Addressing Absenteeism

Combination approach Rewards desired behaviors and punishes

undesired behaviors

No-fault policy Employees must manage their own attendance

unless they abuse that freedom

Paid-time-off (PTO) programs Employees use days from their accounts at their

discretion a paid-time-off account

Measuring Absenteeism

Formula suggested by the U.S. Department of Labor

Number of person-days lost through job absence during period 100

(Average number of employees) (Number of workdays)

Measuring Absenteeism

Other measures of absenteeism Incidence rate - Number of absences per 100

employees each day

Inactivity rate - Percentage of time lost to absenteeism

Severity rate - Average time lost

Employee Turnover

Process in which employees leave an organization and have to be replaced

Impact of turnover Negative impact on several dimensions of

organizational performance Safety

Productivity

Financial performance

Types of Turnover

• Employees are terminated for poor performance or work rule violations

Involuntary Turnover

• Employees leave by choice

Voluntary Turnover

• Lower-performing or disruptive employees leave

Functional Turnover

Types of Turnover

• Key individuals and high performers leave at critical times

Dysfunctional Turnover

• Employees leave for reasons outside the control of the employer

Uncontrollable Turnover

• Employees leave for reasons that could be influenced by the employer

Controllable Turnover

Employee Turnover

Churn: Hiring new workers while laying off others Employers sometimes complain about not being

able to find skilled workers while they are laying off other employees

Computing the Turnover Rate

Categories in which data is gathered and analyzed Job and job level

Demographic characteristics

Department, unit, and location

Number of employee separations during the month 100

Total number of employees at midmonth

Computing the Turnover Rate Education and training

Reason for leaving

Knowledge, skills, and abilities

Length of service

Performance ratings/levels

Determining Turnover Costs

Separation costs Vacancy costs Replacement costs Training costs Hidden/indirect costs

Optimal Turnover

Turnover costs and benefits can be calculated separately

More turnover in certain segments of the organization can be beneficial if: It costs very little

Those leaving are less valuable than their replacements

Myths about Retention

Money is the main reason people leave Hiring has little to do with retention If you train people, you are only

training them for another employer Do not be concerned about retention during

organizational change If high performers want to leave, the

company cannot hold them

Drivers of Retention

Figure 5.11 - Comment from High Performers as to Why They Stay

Source: Adapted from John P. Hausknecht, et al., “Targeted Employee Retention: Performance Based and Job-related Differences in Reported Reasons for Staying,” Human Resource Management, 48, March–April 2009, pp. 269–288.

Retention Assessment and Metrics

Some of the first areas to consider when analyzing data for retention Work

Pay/benefits

Supervision

Occupations

Departments

Demographics of those leaving and staying

Process for Managing Retention

Retention Assessment and Metrics

Employee surveys - Used to: Diagnose specific problem areas

Identify employee needs or preferences

Reveal areas in which HR activities are well received or viewed negatively

Exit interview: Individuals who are leaving the organization are asked to give their reasons

Retention Assessment and Metrics

Effective first-year efforts lead to: Future career development

Higher performance

Other positive retention factors

Retention Evaluation and Follow-Up

Organizations must: Track intervention results

Adjust intervention efforts

Some firms use pilot programs to see how changes affect retention before extending them to the entire organization