Staffing System and Retention Management

Chapter Outline

• Staffing system management

• Turnover and its causes

• Retention initiatives voluntary

• Discharge and downsizing.14-2

Turnover and Its Causes

• Nature of problem

• Types of turnover

• Causes of turnover

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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

– Who is retained

• Turnover is inevitable

• Approach to retention management– Gather and analyze employees’ reasons for leaving

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Types of Turnover

• 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

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Types of Employee Turnover -Voluntary -- Employee Initiated

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Types of Employee Turnover -Involuntary -- Organization Initiated

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Causes of Turnover: Voluntary

• 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

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Causes of Voluntary Turnover

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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

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Analysis of Turnover

• Measurement

• Reasons for leaving

• Costs and benefits

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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

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Measurement of Turnover:Reasons for Leaving

• Important to ascertain, record, and track reasonswhy employees leave

• Tools– Exit interviews

• Formal, planned interviews with departing employees

– Postexit 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

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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

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Major Turnover Costs and Benefits

• Costs of turnover– Separation costs

• Staff time and loss of productivity

– Replacement costs• Recruiting and selecting

new employee

– Training costs• Teaching new

employees the job

• Benefits of turnover– Potentially better new

employees

– Short term labor cost savings

– Opportunities to restructure work units

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Most and Least Effective Retention Initiatives

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Guidelines for Increasing Job Satisfaction and Retention

• Extrinsic rewards– Rewards must be

meaningful and unique– Rewards must match

individual preferences– Link rewards to retention

behaviors– Link rewards to

performance

• Intrinsic rewards– Assign employees to jobs

that meet their needs– Provide clear

communication– Design fair reward

allocation systems– Ensure supervisors provide

a positive environment– Provide programs to

enhance work-life balance

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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

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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 Counseling and Disciplinary Process

– Identify performance problems

– Assess causes

– Develop corrective actions

– Develop and discuss clear consequences for failure to improve

– Document incident, corrective actions, and consequences for continued problems

– Termination if problem is not resolved

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Retention Initiatives: Discharge• Progressive discipline

– Five requirements of a progressive discipline system• Give employees notice of the rules of conduct and

misconduct

• Give employees notice of the consequences of violation of the rules

• Provide equal treatment for all employees

• Allow for full investigation of the alleged misconduct and defense by the employee

• Provide employees the right to appeal a decision

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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”

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Retention Initiatives: Downsizing(continued)

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

• 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

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