Discussion 3

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Managing Employee

Retention, Engagement,

and Careers

10-1

IBM recently celebrated 100 years since its creation. Few companies stay in business that long.

Most credit IBM’s longevity to its ability to adapt to changing customer needs.

Today, for instance, technology is changing so fast that IBM will soon need a workforce with dramatically

different skills than its current employees have.

In many companies, that would signal impending turnover and huge turnover costs, as new employees

replace old. What should IBM do to build that new workforce, and to retain the employees it needs to

move ahead? We’ll see what they did.

Learning Objectives

Describe a comprehensive approach to retaining employees.

Explain why employee engagement is important, and how to foster such engagement.

Discuss what employers and supervisors can do to support employees’ career development needs.

10-2

After studying this chapter, you will be able to:

1. Describe a comprehensive approach to retaining employees.

2. Explain why employee engagement is important, and how to foster such engagement.

3. Discuss what employers and supervisors can do to support employees’ career development needs.

List and briefly explain the main decisions employers should address in reaching promotion and other employee life-cycle career decisions.

Explain each of the main grounds for dismissal.

Learning Objectives

10-3

After studying this chapter, you will be able to:

4. List and briefly explain the main decisions employers should address in reaching promotion

and other employee life-cycle career decisions.

5. Explain each of the main grounds for dismissal.

Describe a comprehensive approach to retaining employees.

10-4

Experts from a top consulting company suggest building comprehensive retention programs around the steps below.

Using effective selection techniques

Offering professional growth opportunities

Providing career direction

Offering meaningful work and

Encouraging ownership of goals

Let’s discuss these in a bit more detail.

IMPROVING PERFORMANCE:

HR as a Profit Center

10-5

Studies show link when turnover rates rise financial performance is at risk

HR practices can lower turnover

Opportunities

Training

Development

Turnover and Performance

Combining voluntary and involuntary turnover produces some astounding statistics. For example, the turnover

in many food service firms is around 100% per year. In other words, many restaurants need to

replace just about all their employees every year!

The researchers say, “Organizations must recognize that when turnover rates rise, their workforce and financial performances are at risk.”

How to cut turnover? Another study focused on turnover intentions among government technology workers. It

concluded that human resource managers could influence turnover through practices such as promotion

opportunities, training and development, pay and reward satisfaction, and family-friendly policies. The bottom

line is that HR practices can have a big influence on employee turnover, and thereby on the company’s profitability.

Discussion Question 10-1: Discuss three steps you would take to reduce the need to dismiss employees.

Managing Employee Turnover

Costs of turnover

Managing voluntary turnover

Reducing voluntary turnover

10-6

Turnover is an expensive cost for organizations. Understanding more about the costs and causes of turnover is important.

There are tangible and intangible costs associated with turnover. Reducing turnover requires identifying and managing the reasons for both voluntary and involuntary turnover.

Voluntary turnover occurs for many reasons. Top reasons include job dissatisfaction, poor pay or health-care benefits, few promotional opportunities, and inadequate work-life balance.

See FIGURE 10-1 Reasons Top-Performing Employees Leave an Organization

Identify issues with surveys

Compensation

Selection

Professional growth

Meaningful work/ownership

Managing Employee Retention

10-7

Experts from the consulting company Development Dimensions International (DDI) and the employment

firm Robert Half International suggest building comprehensive retention programs around the following steps.

Any retention strategy begins with identifying the specific causes of turnover within a particular company.

Use exit interviews and surveys to identify issues.

Manage high performers and key employees with enhanced pay.

Remember, “retention starts up front, in the selection and hiring of the right employees.” The process begins with

a thorough understanding of the jobs to be filled. It includes a solid job analysis and an effective and efficient

hiring process.

Professional growth is a well-thought-out training and career development program that can provide a strong

incentive for staying with the company.

Providing career direction means discussing employee’s career preferences and prospects at your firm, and helping

them lay out potential career plans. Furthermore, “don’t wait until performance reviews to remind top employees

how valuable they are to your company.”

An important part of retaining employees is making it clear what your expectations are regarding their performance

and responsibilities. This helps employees “own” their behaviors and results. A job is meaningful if the incumbent

understands its relationship to the company goals and sees his or results as part of the bigger picture.

10-8

Work–life balance

High engagement

Data analytics

Counter offers

Workforce planning

Managing Employee Retention

Robert Half and careerbuilder.com surveys found employees are looking for flexible work

arrangements and telecommuting.

Employee empowerment, problem-solving groups, and self-directed teams has a positive

effect and reduced turnover.

It takes sifting through data to provide Nationwide Mutual Insurance Co. managers with

monthly “scorecards” of turnover data.

Employers who allow counter offers need a policy that specifies what people and positions

are eligible for counteroffers.

Identifying and preparing for skills gaps can help reduce the turnover that unexpected skills

gaps can trigger.

IMPROVING PERFORMANCE:

HR Practices Around the Globe

IBM technology training program is improving

Employee retention

Minimizing layoffs

Resignations and

Turnover costs

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IBM Dodges an Employee Turnover Problem

IBM put in place an “on-demand” staffing strategy. This aims to ensure that its current employees get

the training and coaching they need to play roles in IBM’s future.

To do this, IBM budgeted $700 million per year to identify needed skills, spot gaps for skills that are in

short supply, and train and assess its executives, managers, and rank-and-file employees. IBM’s on-demand

staffing effort is supporting IBM’s strategy, which depends on offering the fast-evolving technological services

its customers need, at once, on demand.

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Talent Management and Employee Retention

Job withdrawal

Dealing with job withdrawal

Managing Employee Retention

Talent management best practice suggests focusing augmented retention efforts on the company’s most important employees.

Job withdrawal is any action which places physical or psychological distance between the employee and the organization.

It’s a means of escape for someone who is dissatisfied or fearful. Managing the almost limitless reasons an employee can become

dissatisfied requires a complete and effective human resource system.

People tend to move toward situations that make them feel good, and away from those that make them feel bad. People

are repelled by situations that produce unpleasant, uncomfortable emotions, and are attracted to those that produce pleasant,

comfortable ones.

The manager can therefore think of withdrawal-reducing strategies in terms of reducing the job’s negative effects, and/or of raising

its positive effects.

Potential negatives include boring jobs, poor supervision, low pay, bullying, lack of career prospects, and poor working conditions.

Potential positives include job enrichment, supportive supervision, equitable pay/ family-friendly benefits, disciplinary/appeals

processes, career development opportunities, safe and healthy working conditions, and having high-morale colleagues. Interviews,

surveys, and observation can help identify issues to address.

10-11

Identify issues with surveys

Compensation

Selection

Professional growth

Meaningful work/ownership

Review

As we discussed experts from the consulting company Development Dimensions International (DDI) and the

employment firm Robert Half International suggest building comprehensive retention programs around

the steps discussed here.

10-12

Review

Work–life balance

High engagement

Data analytics

Counter offers

Workforce planning/ Talent Management

Job withdrawal

We continued our discussion of the researched based steps for building comprehensive retention

programs.

Talent management best practice suggests focusing augmented retention efforts on the company’s

most important employees.

Lastly, this objective stated voluntary turnover is one way that employees withdraw. Withdrawal in

general means separating oneself from one’s current situation—it’s a means of escape for someone

who is dissatisfied or fearful. At work, job withdrawal has been defined as “actions intended to place

physical or psychological distance between employees and their work environments.”

Explain why employee engagement is important, and how to foster such engagement.

10-13

Engagement refers to being psychologically involved in, connected to, and committed to getting one’s job done.

Poor attendance, voluntary turnover, and psychological withdrawal often reflect diminished employee engagement.

Let’s discuss.

IMPROVING PERFORMANCE:

HR Practices Around the Globe

Rio Tinto is a global mining corporation

Using metrics and measures, consulting firm Towers Watson conducted an employee engagement survey so Rio Tinto could take the steps to:

Employee engagement and

Performance

10-14

Employee Engagement at Rio Tinto

The consulting firm Towers Watson conducted an employee engagement survey and analyzed the results.

They began by collecting extensive employee engagement survey data from Rio Tinto employees around

the world. The Towers Watson consultants then used a statistical process they called linkage analysis to

analyze how employee engagement measures related to dozens of performance and maintenance measures

in Rio Tinto’s plants and mines around the world.

The analysis compared Rio Tinto’s employee engagement scores with benchmark scores from other

companies in Towers Watson’s database. The engagement metrics focused on things like understanding

and support for the vision of the company, support for company values, “willingness to go the extra mile

to ensure business success.” Rio Tinto was better able to understand how taking specific steps to improve

employee engagement would translate into improved organizational performance.

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Managing Employee Engagement

Gallup survey

Business units that have employee engagement have 83% chance of performing above the company median

Those with the lowest employee engagement have a 17% chance

Watson Wyatt Worldwide survey

Highly engaged employees generate 26% higher revenue per employee

Employee engagement is important because both employee behavior (including turnover) and

organizational performance reflect whether employees are “engaged.”

One study by Towers Watson, conclude that only about 21% of the global workforce is engaged,

while almost 40% is disengaged.42 In one large survey, 57% of respondents were disengaged

within 2 years after hiring.

See FIGURE 10-2 Employee Actions That Make Employees Feel More Engaged

10-16

Employee Actions That Foster Engagement

Understanding how their department contributes to company success

Seeing how their efforts contribute to achieving company goals

Get a sense of accomplishment from work at the company

Managing Employee Engagement

Employee participation also improves engagement. For example, Milliken & Co. uses employee participation safety teams at one plant. The safety process consists of 16 employees on the plant’s safety steering committee, which in turn governs 8 employee safety subcommittees. The program appears to produce high levels of safety engagement among employees, and significant improvements in the plant accident rates.

Perhaps the best way to improve engagement is to remember that engagement is a two-way street. Employees tend to be committed to and engaged in companies that are committed to them. Such companies demonstrate what psychologists call “perceived organizational support,” wherein the employee perceives that the employer values his or her contribution and cares about his or her well being. Researchers measure such organizational support with survey items such as, “The organization values my contribution to its well-being”; “The organization would understand a long absence due to my illness”; and “The organization really cares about my well being.”

10-17

Review

Employee Engagement and Performance

Employee Actions That Foster Engagement

Withdrawal and turnover often reflect diminished employee engagement. Engagement refers to being psychologically involved in, connected to, and committed to getting one’s jobs done. Engaged employees “experience a high level of connectivity with their work tasks,” and therefore work hard to accomplish their task-related goals.

As far as employee engagement is concerned, many employee behaviors, including turnover, reflect the degree to which employees are “engaged.”

We discussed the studies show engagement and performance are related and three actions that foster employee

engagement.

10-18

Discuss what employers and supervisors can do to support employees’ career development needs.

While each individual employee may have different interests and career aspirations, employers and managers should provide career development support and training. Let’s discuss these important concepts in more detail.

10-19

Career terminology

Careers today

Psychological contract

The employee’s role

Career Management

We may define a career as the “occupational positions a person has had over many years.”

Career management is a process for enabling employees to better understand and develop their career skills and interests and to use these skills and interests most effectively both within the company and after they leave the firm.

Career development is the lifelong series of activities (such as workshops) that contribute to a person’s career exploration, establishment, success, and fulfillment.

Career planning is the deliberate process through which someone becomes aware of personal skills, interests, knowledge, motivations, and other characteristics; acquires information about opportunities and choices; identifies career-related goals; and establishes action plans to attain specific goals.

What the employer and employee expect of each other is part of what psychologists call a psychological contract. The psychological contract identifies each party's mutual expectations.

As in other parts of life, an individual must accept responsibility for his/her own career. He or she should assess his/her own interests, skill, and values. Finally, the employee must take the steps required to ensure a happy and fulfilling career. One of these steps is finding a mentor who can be a sounding board. Mentoring programs can be informal or formal.

10-20

Career Management

The Employer’s Role

Depends on length of time employee is employed

Employer Career Management Options

Employee career planning form suggested

Managers Role

Actively train, mentor, review performance

An experienced mentor who can help the person learn the ropes is recommended for employee career development.

Some employers create Web-based or offline libraries of career development materials, and offer career workshops and perhaps individual career coaches for career guidance. First USA Bank has its “Opportunity Knocks” program. In addition to career development training and follow-up support, the program includes career development centers at work sites that employees use on company time. The latter contain materials such as career assessment and planning tools. WorkforceVision from Criterion, Inc., supplies online systems that help the employer analyze an employee’s training

needs.

A career planning workshop is “a planned learning event in which participants are expected to be actively involved, completing career planning exercises and inventories and participating in career skills practice sessions.” A typical workshop includes self-assessment exercises (skills, interests, values, and so on), an assessment of important occupational trends, and goal-setting and action-planning segments.

Career coaches generally help employees create 1- to 5-year plans showing where their careers with the firm may lead. Then, the employer and employee base the latter’s development plans on what he or she will need to move up.

The manager can support his or her subordinates’ career development needs by ensuring they have the right skills and scheduling a regular performance appraisal. Managers must also make expectations clear. Finally, managers must focus on the extent to which the employee’s current skills and performance match career aspirations.

Schedule regular performance appraisals; at these reviews, cover the extent to which the employee’s current skills and performance are consistent with the person’s career aspirations.

Provide the employee with an informal development plan like that in Figure 10-4. Keep subordinates informed about how they can utilize the firm’s current career related benefits, and encourage them to do so.

10-21

Career terminology

Careers today

Psychological contract

The employee’s role

Employer’s and Manager role

Employer Career Management Options

Review

We can define a career as the “occupational positions a person has had over many years.” Today, employees

often find themselves having to reinvent themselves.

A psychological contract is what the employer and employee expect of each other.

As in other parts of life, an individual must accept responsibility and take an active role in his/her own career.

Finally, we looked at career development and the role of the employer and manager.

List and briefly explain the main decisions employers should address in reaching promotion

and other employee life-cycle career decisions.

10-22

Promotions usually provide opportunities to reward the exceptional performance of tested and loyal employees. However, unfairness, arbitrariness, or secrecy can diminish the effectiveness of the promotion process for all concerned. Let’s discuss.

10-23

Making Promotion Decisions

Is seniority or competence the rule?

How should we measure competence?

Is the process formal or informal?

Vertical, horizontal, or other?

Employee Life-Cycle Career Management

An employee’s tenure with a firm tends to follow a life-cycle, from employment interview to first job, promotion, transfer, and perhaps retirement. We’ll look here at the latter three.

Four important rules impact the effectiveness of promotion decisions.

Decision 1: Is Seniority or Competence the Rule? Today’s focus on competitiveness favors competence. However, union agreements and civil service regulations often emphasize seniority.

Decision 2: How Should We Measure Competence? Start by defining the job, setting standards, and using one or more appraisal tools to record the employee’s performance. Then, use a valid procedure for predicting a candidate’s potential for future performance.

Decision 3: Is the Process Formal or Informal? Each firm will determine whether the promotional process will be formal or informal.

Decision 4: Vertical, Horizontal, or Other? Promotions can be vertical (within the same functional area) or horizontal (in different functional areas).

There are practical steps to take in formulating promotion policies. Establish eligibility requirements, for instance, in terms of minimum tenure and performance ratings. Require the hiring manager to review the job description, and revise if necessary. Vigorously review all candidates’ performance and history. Preferably hire only those who meet the job’s requirements.

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Making Promotion Decisions

The Gender Gap

Eliminate barriers

Improve networking, mentoring

Break the glass ceiling

Have flexible career tracks

Today women constitute more than 40% of the workforce, but hold less than 2% of top management positions.

Women report greater barriers (such as being excluded from informal networks) than do men. They also have more difficulty getting developmental assignments and geographic mobility opportunities. Many call this combination of subtle and not-so-subtle barriers to women’s progress the glass ceiling. Organizations need to be aware of it and try to eliminate it.

In one example the flexible/reduced work schedule enabled many working mothers who might otherwise have left to stay with the firm and gave this group a flexible career path.

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Look at Practical Considerations

Managing transfers

Managing retirements

Making Promotion Decisions

Transfers are moves from one job to another, usually with no change in salary or grade. Frequent relocation of transferred employees has been assumed to have a damaging effect on transferees’ family life. Transfers are also financially costly.

Some employers are instituting formal pre-retirement counseling aimed at easing the passage of their employees into retirement. As you might suspect, a large majority of employees have said they expect to continue to work beyond the normal retirement age. For some, part-time employment is an alternative to outright retirement.

Finally, employers can benefit from retirement planning by becoming able to anticipate or plan for future labor shortages.

10-26

Review

Look at Practical Considerations

Gender Gap

Managing transfers

Managing retirements

Promotion decisions

Measurement

Formal vs. informal

Vertical or horizontal

The rules for promotion decisions include issues of seniority or competence, how to measure, and whether the process is formal or informal. In addition, consideration is given to whether the promotion is vertical or horizontal and who is eligible. Practical issues include bias such as the glass ceiling, legal compliance, and managing transfers and formal pre-retirement counseling.

Women have to be more proactive than men to get stretch assignments. Employers need to eliminate the barriers that impede women’s career progress. Some specific steps were discussed.

Explain each of the main grounds for dismissal.

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Not all employee separations are voluntary. Some career plans and appraisals end not in promotion

or graceful retirement but in dismissal—involuntary termination of an employee’s employment

with the firm.

Many dismissals are avoidable. For example, many dismissals flow from bad hiring decisions. Using

assessment tests, background checks, drug testing, and clearly defined jobs can reduce such dismissals.

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Grounds for Dismissal

Avoiding Wrongful Discharge Suits

Supervisor Liability

Managing Dismissals

There are four bases for dismissal: unsatisfactory performance, misconduct, lack of qualifications

for the job, and changed requirements of (or elimination of) the job.

Unsatisfactory performance refers to a persistent failure to perform assigned duties or to

meet prescribed standards on the job.96 Specific reasons include excessive absenteeism,

tardiness, a persistent failure to meet normal job requirements, or an adverse attitude.

Misconduct is deliberate and willful violation of the employer’s rules and may include stealing

and rowdy behavior.

Lack of qualifications for the job is an employee’s inability to do the assigned work, although

he or she is diligent. Because this employee may be trying to do the job, it is reasonable to

try to salvage him or her—perhaps by assigning the employee to another job.

Changed requirements of the job is an employee’s incapability of doing the job after the nature

of the job has changed. Similarly, you may have to dismiss an employee when his or her job is

eliminated. Again, the employee may be industrious, so it is reasonable to retrain or transfer

this person, if possible.

Insubordination, a form of misconduct, is sometimes the grounds for dismissal. The two basic

categories of insubordination are unwillingness to carry out the manager’s orders, and disrespectful

behavior toward the manager.

To avoid suits: First allow the employee to explain why he (or she) did what he did.

Second, have a formal multistep procedure (including warning) and an appeal process.

Third, the person who actually does the dismissing is important. Fourth, dismissed employees

who feel they’ve been treated unfairly financially are more likely to sue.

Wrongful discharge (or termination) occurs when an employee’s dismissal does not comply with

the law or with the contractual arrangement stated or implied by the employer.

To avoid liability: First, have employment policies including grievance procedures that help show

you treat employees fairly. Second, review and refine all employment-related policies, procedures,

and documents to limit challenges. Follow outlines procedural steps and ask the questions in

Figure 10-6.

Have a security checklist to collect all keys, laptops and also security measure need to include disabling

passwords.

To avoid having personal liability become an issue.

● Follow company policies and procedures. An employee may initiate a claim against a

Supervisor who he or she alleges did not follow policies and procedures.

● Administer the dismissal in a manner that does not add to the employee’s emotional hardship

(as would having the employee publicly collect his or her belongings and leave the office).

● Do not act in anger, since doing so undermines the appearance of objectivity.

● Finally, utilize the HR department for advice regarding how to handle difficult dismissal

situations.

10-29

The Exit Process and Termination Interview

Layoffs and the Plant Closing Law

Adjusting to Downsizings and Mergers

Managing Dismissals

Follow company guidelines for the termination interviews. Have exit interviews with employees leaving the firm.

These are interviews, usually conducted by a human resource professional just prior to the employee leaving.

Senior management plans all aspects of a layoff. A layoff, in which the employer sends workers home for a time for lack of work, is usually not a permanent dismissal.

Downsizing means reducing, usually dramatically, the number of people employed by a firm. The basic idea is to cut costs and raise profitability.

1. First is making sure the right people are let go; this requires having an effective appraisal

system in place.

2. Second is compliance with all applicable laws, including WARN.

3. Third is executing the dismissals in a manner that is just and fair.

4. Fourth is security, for instance, retrieving keys and ensuring that those leaving don’t take

prohibited items with them.

5. Fifth is reducing the remaining employees’ uncertainty and addressing their concerns.

This typically involves a post-downsizing announcement and program, including meetings

where senior managers field questions from the remaining employees.

10-30

Managing dismissals

Avoiding suits

Liability

Exit process

Downsizing and mergers

Review

We discussed steps to manage dismissals, avoid suits, and avoid supervisor liability.

The exit process can be organized with the steps outlined.

Turnover is especially disruptive, so it may be particularly important to avoid layoffs. Options here include:

Implement pay freezes or cuts; introduce a hiring freeze before reducing the workforce; provide candid

communications about the need for the downsizing; give employees an opportunity to express their

opinions about the downsizing; and be fair and compassionate in implementing the downsizing.

Improving Performance at The Hotel Paris

“Many hotel jobs are ‘dead end’; for example, maids and valets with no aspirations to move up, or are using these jobs temporarily, for instance, to help out with household expenses.”

First, do you agree with this statement—why, or why not? Second, list three more specific career activities you would recommend Lisa implement for these employees.

10-31

The New Career Management System

If the hotel wanted satisfied guests, they had to have engaged employees who did their jobs as if they owned the company, even when the supervisor was nowhere in sight. But for the employees to be engaged, Lisa knew the Hotel Paris had to make it clear that the company was also committed to its employees.

From Lisa’s experience, she knew that one way to do this was to help her employees have successful and satisfying careers, and she was therefore concerned to find that the Hotel Paris had no career management process at all.

Lisa and her team knew that they already had most of the building blocks in place, thanks to the new performance management system they had instituted just a few weeks earlier. For example, the new performance management system already required that the supervisor appraise the employee based on goals and competencies that were driven by the company’s strategic needs; and the appraisal itself produced new goals for the coming year and specific development plans for the employee. These development plans had to make sense in terms of both the company’s and the employee’s needs and preferences.

In addition to the new performance management elements already in place, Lisa and her team created an online “Hotel Paris Career Center.” With links to a choice of career assessment tools such as the Self-Directed Search, www.self-directed-search.com, and wizard-based templates for developing one’s own career plan, the site went far toward providing the Hotel Paris’s employees with the career assistance that they required.

Also on the site, a new “International Job Openings” link made it easier for Hotel Paris employees to identify positions for which they might be qualified. The results exceeded Lisa and the CFO’s expectations. Virtually every employee produced a career plan within the first 6 months. The appraisal interviews often turned into animated, career-oriented development sessions, and soon the various measures of employee commitment and guest service were trending up.

Questions

Build on the company’s new system by recommending two more specific career development activities the hotel

should implement.

2. What other specific career development activities would you recommend in light of the fact that the Paris’s hotels

and Employees are disbursed around the world?

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Hotel Paris

Strategy

Chapter 10

Hotel Paris Strategy Chapter 10

10-33

14TH EDITION

GARY DESSLER

HUMAN RESOURCE

M ANAGEM

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14TH EDITION

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