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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

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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