Hiring and Retention MANA 4328 Dr. George Benson

Types of Contracts  Legal  Employment contract  Employment-at-will  Psychological  An implied contract  Employee promises: Hard work, extra effort, commitment to company goals.  Employee expects in return: Job security, fair treatment, development, pay and benefits.

 Employment-at-will  VS.  Employment Contract

 Employment-at-will  Employer not obligated to retain for specific time  Termination for any legitimate reason without liability  Disclaimers in applications and offer letter  Employment Contract  Employment for a definite period of time  Entitlements for compensation / benefits

Offer Letter  Legal document  Should be carefully worded  Creates obligations (intended or unintended)  Letter from HR or legal  Attraction tool  Final incentive for prospective hire  Should make new employee feel welcome  Letter from manager or company president

Job Offer Content Start date  Usually allows notice for previous employer Benefits  Usually a blanket statement and refer to HR documents Conditions of employment  Reference checks, drug screen, I-9, medical exam etc. Other conditions  Confidentiality / Non-compete / Arbitration Working hours Acceptance date

Job Offer Content Base compensation  Based on payroll schedule rather than annual salary  Payment schedule (especially if monthly)  FLSA designation Bonuses  As specific as possible including dates and criteria Stock options  Consult an expert  Grant price / criteria / vesting / contingencies

Job Offer Content  Integration clause  Letter contains all terms and conditions  Letter supercedes all other documents or conversations  Employment-at-will disclaimer  Employment is not for a specific duration  Employment terminable by either party at any time  Include the “magic words” but don’t go overboard

Responses Yes  Follow immediately with positive communication  Instructions for start day (when, where, etc) No  Try to find out why  Working conditions vs. $$$ Maybe / More time....  Find out when  Answer any questions

Those Not Selected Maintain positive relations with fair treatment  Inform promptly  Thank them for applying and acknowledge the effort  Tell them they were a finalist with good skills to offer Most companies do not provide details of decision Keep applications on file Notify by mail or by phone for higher jobs

Independent Contractors “You have been retained as an independent contractor for the XYZ project to be completed by ABC date.” “As a contractor you are not entitled to any benefits company will not withhold any taxes, FICA or other deductions.”

Pricing Jobs – Point Systems Point System  A quantitative job evaluation procedure that determines the relative value of a job by the total points assigned to it. Point-factor systems – Managerial jobs  Hay System Know-how Problem solving Accountability  More points equals higher salary

Pricing Jobs – Market Pricing Market Pricing  Salary surveys  Salary.com  Watson Wyatt  Trade associations

How much is a job worth?  What is the median income in the U.S. (50% above/below)?  What income puts you in the:  Top 20% of annual income in the U.S.?  Top 5% of annual income in the U.S.?  What is the average starting salary for new college grads in Business Administration?  What percent of people in Tarrant county hold at least a Bachelor’s degree?

Managing Retention Cost of turnover and replacement Types of Turnover  Involuntary turnover  Voluntary turnover out of company control  Voluntary turnover that company can control Turnover and performance  Increases costs  Decreases productivity Positive vs. Negative Turnover

Analyzing Turnover Diagnosing retention problems  Active: Employee surveys  Active: Exit interviews  Passive: Research and HRIS data mining How much is too much turnover?  Depends on the organization  Depends on the position

Federal Human Capital Survey  34.6% of federal employees said they were considering leaving their jobs. Half of these will retire, half plan to quit.  68 % of workers are satisfied with their jobs  64 % are satisfied with their pay  65 % are happy with their retirement benefits  91 % believe they do important work  Less than 50% are satisfied with recognition for doing a good job  30 % saying awards programs provide real motivation.  27 % said steps have been taken to deal with poor performers  36 % said their leaders generate high levels of motivation among workers.

Why Do People Leave? Desirability of Leaving  Job satisfaction  “Shocks”  Switching costs  Career progression General Ease of Leaving  Labor market conditions  Human capital (education and training)  Job offers