Recruiting Talent Paper

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CHAPTER 5

Individual/ Organization Relations and Retention

Learning Objectives

Discuss five different views of motivation at work

Explain the nature of the psychological contract

Define the difference between job satisfaction and engagement

Learning Objectives (continued)

Identify a system for controlling absenteeism

Classify different kinds of turnover and explain how turnover can be measured

Summarize various ways to manage retention

Individual Performance Factors

Performance factors

Ability to do the work

Effort expended

Organizational support

The relationship between the performance factors is

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

Figure 5-1: Components of Individual Performance

Individual Motivation

Motivation: Desire that exists within a person that causes that individual to act

Approaches to Understanding Motivation:

Need Theory

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

Two-Factor Theory

Assumes that one group of factors, motivators, accounts for individual motivation

Hygiene factors can cause dissatisfaction with work

Figure 5-2: Need Theory and Two-Factor Theory Compared

Individual Motivation (continued 1)

Expectancy Theory

Individuals base decisions about their behaviors on their expectations that one or another alternate behavior is more likely to lead to desired outcomes

Includes three relationships: Effort–performance expectations, performance–reward linkage, and value of rewards

Figure 5-3: Simplified Expectancy Model of Motivation

Individual Motivation (continued 2)

Equity Theory

People want to be treated fairly at work

Equity: The perceived fairness of what the person does compared with what the person receives for doing it

Inputs: What a person brings to the organization

Outcomes: Rewards obtained in exchange for inputs

Employee’s view of fair value is critical to the relationship between performance and satisfaction

Motivating Individual Performance

Top Motivators

Being appreciated

Respect in the workplace

Being able to utilize personal capabilities

Liking the job

Other Motivators

Pay and employment security

Good managers/leaders

Feedback, training, and benefits

Motivational speakers, T-shirts, mugs, books, and videos

Individual Workers and Organizational Relationships

Psychological contract

Job satisfaction and commitment

Employee engagement

Loyalty and organizational citizenship

Organizational trust

Figure 5-5: The Individual–Organizational Relationship

Psychological Contract

Unwritten expectations employees and employers have about the nature of their work relationships

Expectations of 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 length of service

Extra efforts and results when needed

Global Psychological Contract Concerns

Psychological contract expectations vary between foreign country employees and those from the United States

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

Job Satisfaction

Job satisfaction: Positive feelings and evaluations derived from an individual’s employment in a job

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

Job Satisfaction

Adequacy of the pay

Opportunity for advancement

Supervision

Coworkers

Nature of the work

Commitment and Engagement

Organizational commitment: Degree to which workers believe in and accept organizational objectives and want to remain employed at a company

Employee engagement: The extent to which an employee’s thoughts and behaviors are focused on his or her work and their employer’s success

Loyalty: Being faithful to an institution or employer

Engaged and Disengaged Employees

Engaged Employees

Put in extra effort

Are highly involved in their jobs

Employ both effort and thought

Are active/busy

Are fully invested in their jobs

Disengaged Employees

Simply put in time

Do not do best work

Are “checked out”/apathetic

Do only their basic jobs

React only to pay

Organizational Citizenship Behavior (O C B)

Organizational citizenship behavior (O C B): When an employee acts in a way that improves the psychological well-being and social environment of an organization

Motives for organizational citizenship

Leads to a more desirable workplace

Gratitude, appreciation, and recognition

Employee Absenteeism

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

Types

Involuntary absences

Voluntary absences

Sources of Direct and Indirect Costs of Absenteeism

Direct Costs

Replacement for absent worker and salary/benefits for absent worker

Indirect Costs

Overstaffing to cover anticipated absences

Lost productivity with replacement and lower productivity/quality

Replacement training and supervisor’s lost time

Customer dissatisfaction and overtime

Late deliveries and slower work pace

Methods of Addressing Absenteeism

Disciplinary Approach

People who are absent in excess of policy limits receive warnings

Severe discipline if attendance does not improve

Positive Reinforcement

Rewards for meeting attendance standards

Combination Approach

Rewards desired behaviors and punishes undesired behaviors

Methods of Addressing Absenteeism (continued)

No-Fault Policy

Employees must manage their own attendance unless they abuse that freedom

Paid-Time-Off (P T O) Programs

Employees use days from their paid-time-off accounts at their discretion

Measuring Absenteeism

Formula suggested by the U.S. Department of Labor follows:

Number of persons subtracted by the days lost through job absence during period

The resultant value is divided by the product of average number of employees and number of workdays

The resultant value is multiplied by 100

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 per absent employee during a specific period of time

Employee Turnover

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

Signs of Possible Turnover

Low interest in getting promoted and low motivation to keep managers happy

Reluctance to be involved in long-term opportunities and decreased motivation to be enrolled in training and development opportunities

Fewer contributions in meetings and just getting by or working only enough to get work done

Types of Employee Turnover

Involuntary Turnover

Employees are terminated for poor performance or work rule violations, or through layoffs

Voluntary Turnover

Employees leave by choice

Functional Turnover

Lower-performing or disruptive employees leave

Types of Employee Turnover (continued)

Dysfunctional Turnover

Key individuals and high performers leave at critical times

Uncontrollable Turnover

Employees leave for reasons outside the control of the employer

Controllable Turnover

Employees leave for reasons that could be influenced by the employer

Turnover and Churn

Churn: Hiring new workers while laying off others

Employers sometimes complain about not being able to find workers with the right skills while they are laying off other employees

Computing Turnover Rate

Number of employee separations during the year divided by total number of employees at midyear

The resultant value is multiplied by 100

Gathering and analysis of data

Job and job level and performance ratings/levels

Department, unit, work shift, and location

Reason for leaving and length of service

Demographic characteristics; education and training; and knowledge, skills, and abilities

Determining Turnover Costs

Turnover cost is the sum of the following:

Separation costs

Vacancy costs

Replacement costs

Training costs

Hidden and indirect costs (including lost productivity)

Optimal Turnover

Turnover costs and benefits can be calculated separately for various organizational segments

More turnover in certain segments of the organization can be beneficial if:

It costs very little

Those leaving are less valuable than their replacements

Minimal training is needed

Good replacements are available

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

Figure 5-10: Drivers of Retention

Retaining Top Performers

Executive mentoring

Challenging job assignments

Development of management competencies

Regular performance feedback

Retention Assessment and Metrics

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

Work

Pay and benefits

Supervision

Occupations

Departments

Demographics of those leaving and staying

Figure 5-12: Process for Managing Retention

Retention Assessment and Metrics

Employee surveys are used to:

Diagnose specific problem areas and identify employee needs or preferences

Evaluate attitudes of employees and satisfaction

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

Stay interview: Focuses on why employees want to continue working for the organization

Retention Evaluation and Follow-Up

Organizations must:

Review turnover data

Track intervention results

Adjust intervention efforts

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

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