10-1McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All Rights Reserved.

fundamentals of

Human Resource Management 4th editionby R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright

CHAPTER 10

Separating and Retaining Employees

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What Do I Need to Know?

1. Distinguish between involuntary and voluntary turnover, and describe their effects on an organization.

2. Discuss how employees determine whether the organization treats them fairly.

3. Identify legal requirements for employee discipline.

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What Do I Need to Know? (continued)

4. Summarize ways in which organizations can fairly discipline employees.

5. Explain how dissatisfaction affects employee behavior.

6. Describe how organizations contribute to employees’ job satisfaction and retain key employees.

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Introduction

• Every organization recognizes that it needs satisfied, loyal customers.

• In addition, success requires satisfied, loyal employees.

• Research provides evidence that retaining employees helps retain customers and increase sales.

• Organizations with low turnover and satisfied employees tend to perform better.

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Managing Turnover

• What was the primary reason you’ve ever quit a job?a) I Didn’t like my boss or coworkersb) I wasn’t a fit with the company culturec) Better pay somewhere elsed) More interesting or challenging work

somewhere elsee) I was fired or laid offf) Other

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Managing Voluntary andInvoluntary Turnover

Involuntary Turnover• Turnover initiated by an

employer.• Often with employees

who would prefer to stay.

Voluntary Turnover• Turnover initiated by

employees.• Often when the

organization would prefer to keep them.

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Table 10.1: Costs Associated with Turnover

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Test Your Knowledge

True (A) or False (B)1.A manager who decides to fire an employee

should quietly take action alone and then let others know afterwards.

2.Separating employees has financial and personal risks.

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Employee Separation

• Organizations must develop a standardized, systematic approach to discipline and discharge.

• These decisions should not be left solely to the discretion of individual managers or supervisors.

• Policies should be based on principles of justice and law.

• Policies should allow for various ways to intervene.

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Principles of Justice

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Figure 10.1: Principles of Justice

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Test Your Knowledge

• A company whose earnings are very low has to reduce the amount given in raises to avoid laying people off. The amount of the raise for each employee is determined objectively based on their performance. An employee working for this company will most likely feel ____________ and _________________.a) High outcome fairness; high interactional injusticeb) Low outcome fairness; high procedural justicec) Low interactional justice, high outcome fairnessd) Low outcome fairness, low procedural justice

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Legal Requirements

Wrongful Discharge• The discharge may not

violate an implied agreement.– e.g., employer had promised

job security– e.g., the action is inconsistent

with company rules• The discharge may not

violate public policy.– e.g., terminating the

employee for refusing to do something illegal or unsafe.

Discrimination• Employers must make

discipline decisions without regard to a person’s age, sex, race, or other protected status.

• Evenhanded, carefully documented discipline can avoid such claims.

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Legal Requirements (continued)

Employees’ Privacy:• Employers need to ensure that the

information they gather and use for discipline is relevant.

• Privacy issues also concern the employer’s wish to search or monitor employees.

• Employers must be prudent in deciding who will see the information.

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Organizations such as day care facilities and schools must protect employees’ right to privacy in their lives and on the job while balancing the need to protect children from harm.

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Table 10.2: Measures for Protecting Employees’ Privacy

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Test Your Knowledge

• Pam Jones worked for 41 years at the same company and had positive performance ratings and personnel records. She needed a calculator for work which she purchased with her own money but was not reimbursed because she lost the receipt. Later, a security guard stopped her as she was leaving work and discovered the calculator in her belongings. After a brief internal investigation, she was fired and it was announced through internal notices that she had committed a theft. The employee sued for libel, saying the company used her as an example to prevent other thefts.

A. What are the key issues in this case?B. As an HR Director, how would you have handled this case?

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Legal Requirements (continued)

Notification of Layoffs:• Organizations that plan broad-scale layoffs

may be subject to the Workers’ Adjustment, Retraining and Notification Act (WARN).

• Employers covered by the law are required to give notice before any closing or layoff.

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Test Your Knowledge

• After hiring Bob for a newly created marketing specialist position, his boss assures him that he will be secure in the job until he retires. A year later, that department is eliminated. Bob complains he was guaranteed employment until retirement. Is he right?a) No, an employer can hire or fire someone whenever they

want.b) No, there was no written contract.c) Yes, he was given a verbal contract.

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Progressive Discipline

Hot-Stove Rule• Principle of discipline

that says discipline should be like a hot stove, giving clear warning and following up with consistent, objective, and immediate consequences.

Progressive Discipline• A formal discipline

process in which the consequences become more serious if the employee repeats the offense.

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Figure 10.2: Progressive Discipline Responses

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Progressive Discipline (continued)

• The rules of behavior should cover disciplinary problems such as the following behaviors encountered in many organizations:

• Tardiness• Absenteeism• Unsafe work practices• Poor quantity or quality of

work• Sexual harassment of

coworkers• Coming to work impaired by

alcohol or drugs• Theft of company property• Cyberslacking

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Figure 10.3: Typical Stages of Alternative Dispute Resolution

Alternative dispute resolution (ADR) – methods of solving a problem by bringing in an impartial outsider but not using the court system.

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Alternative Dispute Resolution

Open-Door Policy• An organization’s policy

of making managers available to hear complaints.

Peer Review• Process for resolving

disputes by taking them to a panel composed of representatives from the organization at the same levels as the people in the dispute.

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Alternative Dispute Resolution (continued)

Mediation• Nonbinding process in

which a neutral party from outside the organization hears the case and tries to help the people in a conflict arrive at a settlement.

Arbitration• Binding process in

which a professional arbitrator from outside the organization (usually a lawyer or judge) hears the case and resolves it by making a decision.

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Employee Assistance Programs

• Employee assistance program (EAP) – a referral service that employees can use to seek professional treatment for emotional problems or substance abuse.

• Many EAPs are fully integrated into employers’ overall health benefits plans.

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Outplacement Counseling

• Outplacement counseling – a service in which professionals try to help dismissed employees manage the transition from one job to another.

• The goals for outplacement counseling are to help the former employee address the psychological issues associated with losing a job while at the same time helping the person find a new job.

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Job Withdrawal

• Job Withdrawal – a set of behaviors with which employees try to avoid the work situation physically, mentally, or emotionally.

• Job withdrawal results when circumstances such as the nature of the job, supervisors and coworkers, pay levels, or the employee’s own disposition cause the employee to become dissatisfied with the job.

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Figure 10.4: Job Withdrawal Process

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The Causes of Job Dissatisfaction

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• Military reservists who are sent overseas often experience role conflict among three roles:

1. soldier2. family member3. civilian employee

• Overseas assignments often intensify role conflicts.

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Actions Employees Take When Dissatisfied

• Behavior changes– Change the condition– Whistle-blowing– Bring a lawsuit– Lodge complaints

• Physical job withdrawal• Psychological withdrawal– Decrease in job involvement– Decrease in organizational commitment

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Unpleasant Employees Are Bad for Business

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Job Satisfaction

• Job satisfaction – a pleasant feeling resulting from the perception that one’s job fulfills or allows for the fulfillment of one’s important job values.

• The three important components are:– Values– Perceptions– Ideas of what is important

• People will be satisfied with their jobs as long as they perceive that their jobs meet their important values.

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Figure 10.5: Increasing Job Satisfaction

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Appropriate tasks and roles include safety precautions, especially when work could involve risks to workers’ health and safety.

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Figure 10.6: Steps in the Role Analysis Technique

Role analysis technique: A process of formally identifying expectations associated with a role.

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Job Satisfaction:Supervisors and Co-workers• The two primary people in an organization who affect

job satisfaction are co-workers and supervisors.• A person may be satisfied with these people for one

of three reasons:1. The people share the same values, attitudes, and

philosophies.2. The co-workers and supervisor may provide social

support, meaning they are sympathetic and caring.3. The co-workers or supervisor may help the person attain

some valued outcome.

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Co-worker relationships can contribute to job satisfaction, and organizations therefore try to provide opportunities to build positive relationships.

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Test Your Knowledge

• Serena feels her job processing payroll checks is boring and uninteresting. Which intervention would be most appropriate to retain Serena?a) Communicating the companies valuesb) Increasing her payc) Expanding her jobd) Hiring someone she can chat with during the day

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Monitoring Job Satisfaction

• Employers can better retain employees if they are aware of satisfaction levels, so they can make changes if employees are dissatisfied.

• The usual way to measure job satisfaction is with some kind of survey.

• A systematic, ongoing program of employee surveys should be part of the organization’s human resource strategy.

• This allows the organization to monitor trends and prevent voluntary turnover.

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Figure 10.7: Example of Job Descriptive Index (JDI)

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Figure 10.8: Example of a Simplified, Nonverbal Measure of Job Satisfaction

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Exit Interview

• Exit interview: a meeting of a departing employee with the employee’s supervisor and/or a human resource specialist to discuss the employee’s reasons for leaving.

• A well-conducted exit interview can uncover reasons why employees leave.

• When several exiting employees give similar reasons for leaving, management should consider whether this indicates a need for change.

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Summary

• Involuntary turnover occurs when the organization requires employees to leave, often when they would prefer to stay.

• Voluntary turnover occurs when employees initiate the turnover, often when the organization would prefer to keep them.

• Both are costly because of the need to recruit, hire, and train replacements.

• Involuntary turnover can also result in lawsuits and even violence.

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Summary (continued)

• Employees draw conclusions based on the outcomes of decisions regarding them, the procedures applied, and the way managers treat employees when carrying out those procedures.

• Employee discipline should not result in wrongful discharge, such as a termination that violates an implied contract or public policy.

• Discipline should be administered evenhandedly, without discrimination.

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Summary (continued)

• Discipline should follow the principles of the hot-stove rule, meaning discipline should give warning and have consequences that are consistent, objective, and immediate.

• A system that can meet these requirements is progressive discipline, in which rules are established and communicated, and increasingly severe consequences follow each violation of the rules.

• Organizations may also resolve problems through alternative dispute resolution.

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Summary (continued)

• Circumstances involving the nature of a job, supervisors and coworkers, pay levels, or the employee’s own disposition may produce job dissatisfaction. When employees become dissatisfied, they may engage in job withdrawal.

• To prevent job withdrawal, organizations need to promote job satisfaction.– Job satisfaction is related to a person’s values.– Different employees have different views of which values

are important.– Job satisfaction is based on perception.