Individual/Organization Relations and Retention MN 301 – Human Resource Management Craig W. Fontaine, Ph.D. Pine Manor College Fall 2014

Individual Performance Factors  Individual’s ability to do the work  Effort expended  Organizational support Performance (P) = Ability (A) x Effort (E) x Support (S)

Components of Individual Performance

Individual Motivation  Motivation : Desire within a person causing that person to act  Influences of motivation  Performance  Reaction to compensation  Turnover  Other HR concerns

Approaches to Understanding Motivation  Need theory  Maslow classified human needs into five categories  Physiological needs  Safety and security needs  Belonging and love needs  Esteem needs  Self-actualization needs  Until the more basic needs are adequately fulfilled, a person will not fully strive to meet higher needs

Approaches to Understanding Motivation  Two factor theory  Frederick Herzberg’s motivation/hygiene theory assumes that one group of factors, motivators, accounts for motivation  But hygiene factors can cause dissatisfaction with work  Implication of Herzberg’s research…

Need Theory and Two Factor Theory Compared

Approaches to Understanding Motivation  Equity theory (Social Comparison Theory)  People want to be treated fairly at work  Equity : Perceived fairness of what the person does compared with what the person receives for it  Inputs - What a person brings to the organization  Outcomes - Rewards obtained in exchange for inputs

Approaches to Understanding Motivation  Expectancy theory (Cognitive Theory)  Brought about by Lyman Porter and E. E. Lawler  Indicates that motivation is also influenced by people’s expectations  Individuals base decisions about their behaviors on their expectations…

Simplified Expectancy Model of Motivation

Motivation by Organizations  Financial rewards  Performance management  Others  Praise, trust, and recognition  Autonomy to do one’s job

Motivation by Organizations  Motivation requires diagnosis of organization’s efforts and employee’s:  Efforts  Abilities  Expectations

Psychological Contract  Unwritten expectations employees and employers have about the nature of their work relationships  Useful in understanding individuals’ relationships with their employers  Create positive or negative relationship between the employer and individual  Based on trust that leads to meeting employer’s and employee’s expectations and needs

Expectation of a 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 time with the Organization Extra efforts and results when needed

Global Psychological Contract Concerns  Psychological contracts vary differ by country  Psychological contract expectations of employees from different cultures need to be met by multinational firms

Job Satisfaction and Commitment  Job satisfaction : Positive emotional state resulting from evaluating one’s job experience  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

Commitment and Engagement  Organization commitment : Degree to which employees believe in and accept organizational goals and desire to remain with the organization  Employee engagement : Extent to which an employee feels linked to organizational success  Loyalty : Being faithful to an institution or employer

Engaged and Disengaged Employees

Employee Absenteeism  Any failure by an employee to report for work as scheduled or to stay at work when scheduled  Effective absence management is a balance between:  Supporting employees who are legitimately not at work  Keeping operational needs covered

Employee Absenteeism  Types  Involuntary absences  Voluntary absences

Sources of Direct and Indirect Costs of Absenteeism

Methods of Addressing Absenteeism  Disciplinary approach  People who are absent the first time receive an oral warning  Subsequent absences bring written warnings, suspension, and finally dismissal  Positive reinforcement  Giving rewards for meeting attendance standards

Methods of Addressing Absenteeism  Combination approach  Rewards desired behaviors and punishes undesired behaviors  No-fault policy  Employees must manage their own attendance unless they abuse that freedom  Paid-time-off (PTO) programs  Employees use days from their accounts at their discretion a paid-time-off account

Measuring Absenteeism  Formula suggested by the U.S. Department of Labor

Measuring Absenteeism  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

Employee Turnover  Process in which employees leave an organization and have to be replaced  Impact of turnover  Negative impact on several dimensions of organizational performance  Safety  Productivity  Financial performance

Types of Turnover Employees are terminated for poor performance or work rule violations Involuntary Turnover Employees leave by choice Voluntary Turnover Lower-performing or disruptive employees leave Functional Turnover

Types of Turnover Key individuals and high performers leave at critical times Dysfunctional Turnover Employees leave for reasons outside the control of the employer Uncontrollable Turnover Employees leave for reasons that could be influenced by the employer Controllable Turnover

Employee Turnover  Churn : Hiring new workers while laying off others  Employers sometimes complain about not being able to find skilled workers while they are laying off other employees

Computing the Turnover Rate  Categories in which data is gathered and analyzed  Job and job level  Demographic characteristics  Department, unit, and location

Computing the Turnover Rate  Education and training  Reason for leaving  Knowledge, skills, and abilities  Length of service  Performance ratings/levels

Determining Turnover Costs  Separation costs  Vacancy costs  Replacement costs  Training costs  Hidden/indirect costs

Optimal Turnover  Turnover costs and benefits can be calculated separately  More turnover in certain segments of the organization can be beneficial if:  It costs very little  Those leaving are less valuable than their replacements

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

Drivers of Retention

Figure Comment from High Performers as to Why They Stay Source: Adapted from John P. Hausknecht, et al., “Targeted Employee Retention: Performance Based and Job-related Differences in Reported Reasons for Staying,” Human Resource Management, 48, March–April 2009, pp. 269–288.

Retention Assessment and Metrics  Some of the first areas to consider when analyzing data for retention  Work  Pay/benefits  Supervision  Occupations  Departments  Demographics of those leaving and staying

Process for Managing Retention

Retention Assessment and Metrics  Employee surveys - Used to:  Diagnose specific problem areas  Identify employee needs or preferences  Reveal areas in which HR activities are well received or viewed negatively  Exit interview : Individuals who are leaving the organization are asked to give their reasons

Retention Assessment and Metrics  Effective first-year efforts lead to:  Future career development  Higher performance  Other positive retention factors

Retention Evaluation and Follow-Up  Organizations must:  Track intervention results  Adjust intervention efforts  Some firms use pilot programs to see how changes affect retention before extending them to the entire organization