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Every organization recognizes that it needs satisfied, loyal customers' In addition'
,";.;;.dres satisfieJ, iJvuL .r'.,ptov.es. Research provides evidence that retaining
ernployees heips retain ..rr,orl}"rr-nr-rcl increase suler.Z Orgar'rizations with low turr-i-
.r,er a'd sarisfied "*pi.V*r ,.r-rd to p".forrn better.s On the other side of the coin'
organizations ha'e *', u.r-",h.r-, u.r "iopioy."'s performance co'sistently falls short'
Somerimes r".,-,',ir-,atir-ri;;;il;tt""iit in" or-,ly *uy to show fairness' ensure qual-
ity, and maintain cllstolner satisfaction' This cl,rapter explores rhe dual challenges of separatil-rg
ar-rd retaining employees'
We begin by distinguis;t;;";;i"".urf ur-,1a.""t.,r-,ru.y.r.,ri''oue1.le1ribing hou' each
affects the organizari.;. 1i; ,,," .*piot'. the separation process' i.rcludi'g ways to
maltage this process rulrly. rir^r"tly,,n" dir..,r, *.ur.,.", the organization can take to
encolrrage ernployees to sray. These topics provide a transition tttto't"t'' Parts 3 and 4'
The pre'iou, .hupr.rrli p^rt: .or-rrid..".1 how lo assess and impro'e perforrna.ce'
ar-rd this cl'rapter a"r..iir., ,t-r"ur.,r., to take depending orr wl]ether performance is
high or lorv. Part 4 dir.;;;, p',ay a'd benefits, boil-, of r'virich piay a* irnpo'tant role in
ernployee retention.
ffiar:agxrtg V*&a;nx*ary *ffi d Env*[*n**ryr Yun*e*v*n c)rganizations n-rllst ,ry ,o
"r-rr_.,r. that good performers \\rant to stal' rvith the organi-
zarion and thar emplJy.", *,t-ro." p.rflrr'-r"r-r.. is chronicall)' lou' are euc.uraged-
or forced-to lea'e. g"il", "f these challenges involve emplolee tltrl..oL'e1'. that
is,
;rr;l.r."t 1"",rir'rg rh" otgn'-'i'^tion' ryhen lhe o'gar-'i'atio'r initiates the turnover
i"ii." *trf-, "r',;-'1Jy".s 'uhJ r.,o,.,ld prefer to stay), the tesr-rll is involuntary turnover'
Exarnples include r"r-t""rt"g ^r-, "*f"y""
foi ,'1rug r-rse or laf ir-rg t'[f emplo)'ees cluring
a downturn. Most organizatiJns ur" ,l'r.'t"or.l t.r.inofioir to refer onl1' to a discharge
related to a cliscipline problem, but sorne organizations cali an-v invt'rhtntary tLunover
a tenninarion. W'hen tlt. "nrploy=es iniriare fhe frtnrovet- {ofien n'lre;'' Ihe otganiza-
;i;;;;.JJ;t.fer to keep thern), it is voluntary turnover. Ernployees may leave to
retire or to take a job rvith a different organization'
l. general, o'gu.'i'uii; i'l' to ""oii the neecl for i.r-ol'ntarv turnover and to
mit-iirnize voluntary tufllovef, especially among top perfbrmers' Botl-r kinds of turr-r-
o\/ef aLe costly, as rurorourir"d ln'lable fO.t."n"ilu.iirg $'orkers is expensive' and
new employees need ;;;;l;";; ,n.lr 1ot t ancl b*iLl tJarnt''ork skills'a ln addition'
people today are more ready to slre a former ernployer ii rhey.feei tl-rey t'ere un{aitly
discharged. rn" p.ori*"r*;i;;.;k;;." uiot"t't.. alsc, raises the risk associated with
clischarging "r-,-rpioy""r.
Effective h,-,r-t'r"r-, resoLlrce managemeilt can heltr-t the organlza'
ia" ,ri.iriir" borh ki.rcls of turnover, as *'e11 as carrlr it .r-rt effecti'e1r' r'r'hen llecessary' O"rpir" a compa|ry's best efforts at personnel selection, lraining'
:rr-rd compensation'
,-.r; .*1.y.", *,i11 fail to meet p.rforr,'"r-r." requirerner-rts or u'i1l r-iolate colnpany
policies. When this hap;'ens, organizaLions need to ap;]11' a discipline pfogram that
io.,l.'l .,lti,ontely iead to discharging the individual'
CHAPTER 10 Separating and Retaining Employees 793
l.*t Distinguish between involuntarY
and voluntarY
turnover, and describe
their effects on an
orga nization.
lnvoluntarY Turncver
Turnover initiated bY
an emploYer {often
vrrrth emploYees who
would Prefer to staY)'
VoluntarY Turnover
Turnover initiated bY
employees (often when
the organization would
prefer to keeP them).
]"*bi* 1*.1 Costs Associated with Turnover
Recruiting. selecting, and training
re placements
Lost productivitY
Lawsuits
Workplace violence
Recruiting, selecting, and traintng
repla cements
Lost productivitY
Loss of talented emPloYees
a
ar\::trii: iiaa:i: i:':
During the recent economic down- one-fourth of employees identified Sources: Patricia o,Connell,
,,Don,t Let
turn, as companies scrambred to ov tireir emplovers as havins hish HBJ1il,?"otSTI;,I*n):fi;.-*, cutcostswherevertheycould,potentialwereplanningtoqultlculuolyL|Lvv many hoped they coutd count ti,ei, jon wi*'in *'e voar. s'llfl'f, ilj,Sni'ihi,..Y"ffI;1,'",i"T'"'*" on their top talent to stick around an annual survey of emp,lo,yees ;;;l"y;;r " wall streetJourna!, in spite oi tfr" belt tightening- conducted byWatsonWyatt\ lofldl Nou"mb"r. 16,2oo9, http://online. aftei all, they should 6e gratelul wide and worldatwork found that wsj.com. to have a job- employees' commitment to thelr
Some evidence suggests that employers has fallen, with the Questions this hope may have
-6een mis- largest drop registered amono the placed. worse, the most valuable highest performers'
""u -"- 1' what would be the costs to
employees seem to be the ones Part of the problem may be u un o-fg^?.nization of losing top
who are least grateful for the iuf"" ;'op" that compa"'';;; executives or high-potential
chance to stay with their employ- meet employees' desires"-in# employees as the economy
ers through hard times. Accord- p*n'i"Jv''rn u "'-"v Ou ton"tl:l , ililtatff:u think a companv
ingtoa*-"ybytheCorporateCorporation,employerssaidworr--...-,^^., Executive Board, the percent- ers' satisfaction depende; ;;;
can keeptop performers
age of senior executives ,,winins on a-pisitive work "*ir:lt":t ilff';l;i'r.J;#''t't
to- go above and beyond what and good relationships *i'l-t"l^:: ;;;;r;t, at least in the near is Jxpected., fell by more than visors. Employees, however, sato
-*" ^
--'
half since before the financial cri- they cared most about pay and term/
sis. The same survey found that benefits'
:.j;
Retr this m, responl volunt at eacl becam, downtr
ErnF Becaus it is ea to disc of indi should ways t(
Prinr The se obviou sions a the wa summ2 justice and inr cal tha catego:
Peo conseqFor a number of reasons, discharging empioyees can be very
difficult' First'
the decision fru, t.gui*"rp".r, ,hu, ".uri
"ff".t the organization' Historically' if
the organization and ;*;Lt; do not. have a specific t*ploy*ettt contract' the
employeroremployee*"'""a,r.'"employmentrelatlonshipatanytime.Thisisthe ;;;;;;r;";r;itt'dor}ilr, Jescribed' in chapter s. rhis .doctrine has
eroded
significa'tly, ho*"'r"r. E;;"y;;t who ha1'e been terminated sometimes sue their
;fr;il;;;, i;r wrongful Jir.t-,urg.. Some judges have considered that emplovment at
will is limited where lnanagers Lak. ,tut"*ents that amount to an implied contract;
; ilh"rC" ;lso can b" foJt"a illegal if it violates a law (such as antidiscrimination laws) or public poli.y lfo. "*"*pi!,
firing an employee {or refusing to do something
;l;;;ii"l" u-rvpt ui 1u*r,rir f* *ro,-,gf,rl discharge, the former employee tries to
establish rhat the dir.^[..;;iotut"a .ith", u. implied agreement.or public poiicy'
M;;pftrs settle th.l. .lui*, out of court. Even though few former employees rvin rvrongful-dirchargeruits, and employers usually *'-tt.*.|* they appeal'
the cost of
defendinithe lawsuif can be hundreJs of thousands of dollars'o-- Ai."g *ith the fin",,.lut risks of dismissing an employee' there are issues
of per-
sonal safety. nhtr.rrrr]g u' ii it 'n" so-e fot*er employees go to the courts' far worse
;;;'rh. ;nLy"", *h"o react to a termination decision with violence' Violence in
the $,orkplace has become a major organizational problem' Although any number of
organizational actions or decisions may incite violence among employees' the "noth'
ing else to lose" aspect of u.t "*ployee's dismissal makes rhe situation dangerous' espe-
cially u,hen ,h. ,-tur,rr" of th" *ttk'udds other risk factors'7
Ou Cor Knt
Ou tc
294
n't Let NS,
roo.com; 'lesses
sto g top ntial )my
'lpany
S
is
near
CHAPTER 10 Separating and Retaining Employees 295
Retaining top performefs is not always easy either, and recent trends have made
this more alfi..,ti rhan ever. Today's psychological contract, in which workers feei ,esponslbittty for their own cafeers rather thun ioyalty to a particular employer, makes
voluntary tumovef more likely. Aiso, competing organizations are c.onstantly looking
at each other,s top performerr; rh..r the labor market tightened, "poaching talent" became an art form.B In fact, as the "HR Oops" box illustrates, not even an economic
downtum takes away the chailenges.
Employee Separation Because of the critical firrancial and personal risks associated with employee dismissal,
it is easy to see rvhy organizarion, ,n.rr, develop a standardized, systematic approach to discipline a.rd dlscha".ge. These decisions should not be left solely ro the discretion
of indi;idual managers o1 supervisors. Policies that can lead to ernpioyee separation
should be based on principles of justice and law, and they should allow for various
ways to intervene.
Principles of Justice The sensitivity of a system for disciplining and possibiy terminating ernployees- is
obvious, and it is critical that the ,yrr"t-', b. ,."., as fair. Employees form conclu' sions about the system's fairness based on the system's outcomes and procedures and
rhe way managers treat employees when carrying oLlt those procedures. Figure i0.1
,.,**urir., these principles as outcome faimess, procedural justice, and interactional
i"rii... Ourcome ful*.r. involves the ends of a discipline process' rvhile procedural ur-rd i.rt"ru.tionai justice focus on the means to those ends. Not only is behavior ethi-
cal that is in accord with these principles, but research has aiso lir-rked the last two
caregories of justice with employ".,utlrfu.tion a'd producti'ity.9 P-eople's perception of outcome fairness depends on their judgment that the
.o,.rr"q.r"r-r."s of a decision to employees are just. As shorvn in Figure 10.1, one
Outcome Fairness Consistent outcomes r Knowledge of outcomes Outcomes in ProPortion
Procedural Justice Consistent Procedures Avoidance of bias Accurate information Way to correct mistakes Representation of all
interests Ethical standards
lnteractional Justice Explanation of decision Respectful treatment
L*? Discuss how employees determine
whether the organization treats
them fairly.
0utcome Fairness
A judgment that the
consequences given to
employees are iust.
Figure 10.1 Principles of Justice
.l!;lar,at..li::trl:1S:
t. First, :ally, if 1ct, the is is the eroded
re their ment at ontract; rinatiolr nething tries to : policy. rployees : cost of
; of per- 1r worse ence in Lmbet of e "noth- us, espe-
to behaviors \ :
ir..:;ti,i,,;:ii,ti:.;3 r*#f;i