1. Employee Separation and Retention
Chapter 10
Employee Separation and Retention
Chapter 10 focuses on employee separation and retention. It discusses what can be done to retain high-performing employees who warrant further development as well as managing the separation process for low-performing employees who have not responded well to developmental opportunities and examines involuntary and voluntary turnover.
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

2. Learning Objectives
Distinguish between involuntary and voluntary turnover and discuss how each can be leveraged for competitive advantage.
List and apply major elements that contribute to the perception of justice to discipline and dismissal.
Specify the relationship between job satisfaction and job withdrawal and identify sources of job satisfaction.
Design and use a survey feedback intervention program to promote retention of key personnel.
Learning objectives include:
Distinguish between involuntary and voluntary turnover and discuss how each can be leveraged for competitive advantage.
List and apply major elements that contribute to the perception of justice to discipline and dismissal.
Specify the relationship between job satisfaction and job withdrawal and identify sources of job satisfaction.
Design and use a survey feedback intervention program to promote retention of key personnel.
10-2

3. Introduction To compete, organizations must ensure:
Good performers are motivated to stay.
Chronically low performers are allowed, encouraged
or if necessary, forced to leave.
2 Types of Turnover:
Involuntary turnover—initiated by the organization
(often among those who would prefer to stay).
Voluntary turnover—initiated by employee
(often those the company would prefer to keep).
To compete, organizations must ensure good performers are motivated to stay and chronically low performers are allowed, encouraged or if necessary, forced to leave.
Involuntary turnover is initiated by the organization, often among people who would prefer to stay. Voluntary turnover is initiated by employees, often whom the company would prefer to keep.
10-3

4. Managing Involuntary Turnover
Employment-at-will doctrine - in the absence of a specific contract, either an employer or employee could sever the employment relationship at any time.
Violence in the workplace caused by involuntary turnover has become a major organizational problem.
A standardized, systematic approach to discipline and discharge is necessary.
Despite a company’s best efforts in the area of personnel selection, training, and design, some employees will occasionally fail to meet performance requirements or will violate company policies while on the job. In addition to the financial risks associated with a dismissal, there are issues related to personal safety. The increased willingness of people to sue their employer, combined with an unprecedented level of violence in the workplace, has made discharging employees who lack talent legally complicated and personally dangerous. Violence in the workplace has become a major organizational problem in recent years.
10-4

5. Wrongful Discharge
A wrongful discharge suit attempts to establish that the discharge either
(1) violated an implied contract or covenant (that is, the employer acted unfairly) or
(2) violated public policy (that is, the employee was terminated
because he or she refused to do something illegal, unethical, or unsafe).
Legal aspects to this decision can have important repercussions for the organization. Given the critical financial and personal risks associated with employee dismissal, it is easy to see why the development of a standardized, systematic approach to discipline and discharge is critical to all organizations. These decisions should not be left solely to the discretion of individual managers or supervisors.

6. Principles of Justice
Outcome fairness - the judgement that people make regarding outcomes received relative to outcomes received by others with whom they identify.
Procedural justice - focuses on methods used to determine the outcomes received.
Interactional justice - the interpersonal nature of how the outcomes were implemented.
A standardized, systematic approach to discipline and discharge is necessary.
Outcome fairness refers to the judgment that people make with respect to the outcomes received relative to the outcomes received by other people with whom they identify.
Procedural justice is a concept of justice focusing on the methods used to determine the outcomes received (Table 10.1). Lack of bias and informational accuracy are critical.
Interactional justice is a concept of justice referring to the interpersonal nature of how the outcomes were implemented (Table 10.2).
10-6

7. Six Determinants of Procedural Justice Table 10.1
(1) Consistency. The procedures are applied consistently across time and other persons.
(2) Bias suppression. The procedures are applied by a person who has no vested interest in the outcome and no prior prejudices regarding the individual.
(3) Information accuracy. The procedure is based on information that is perceived to be true.
(4) Correctability. The procedure has built-in safeguards that allow one to appeal mistakes or bad decisions
(5) Representativeness. The procedure is informed by the concerns of all groups or stakeholders (co-workers, customers, owners) affected by the decision, including the individual being dismissed.
(6) Ethicality. The procedure is consistent with prevailing moral standards as they pertain to issues like invasion of privacy or deception.
Table 10.1 details six key principles that determine whether people perceive procedures as being fair. Even given all the negative ramifications of being dismissed from one’s job, the person being dismissed may accept the decision with minimum anger if the procedures used to arrive at the decision are consistent, unbiased, accurate, correctable, representative, and ethical. When the procedures for the decisions are perceived in this fashion, the individual does not feel unfairly singled out, and this helps maintain his or her faith in the system as a whole, even if he or she is unhappy with the specific decision that was triggered by the system

8. 4 Determinants of Interactional Justice
1. Explanation
2. Social Sensitivity
3. Consideration
Interactional justice refers to the interpersonal nature of how the outcomes were implemented. When the decision is explained well and implemented in a fashion that is socially sensitive, considerate, and empathetic, t\This helps defuse some of the resentment that might come about from a decision to discharge an employee.
4 Determinants of Interactional Justice
(1) Explanation. Emphasize aspects of procedural fairness that justify the decision.
(2) Social sensitivity. Treat the person with dignity and respect.
(3) Consideration. Listen to the person’s concerns.
(4) Empathy. Identify with the person’s feelings.
4. Empathy

9. Progressive Discipline
Documentation
Progressive Punitive Measures
Except in the most extreme cases, employees should generally not be terminated for a first offense. Rather, termination should come about at the end of a systematic discipline program.
Effective discipline programs have two central components: documentation (which includes specific publication of work rules and job descriptions that should be in place prior to administering discipline) and progressive punitive measures. Punitive measures should be taken in steps of increasing magnitude, and only after having been clearly documented. At some point, later offenses may lead to a temporary suspension.
10-9

10. Example of Progressive Discipline Program Table 10.3
OFFENSE
FREQUENCY ORGANIZATIONAL RESPONSE DOCUMENTATION
First offense Unofficial verbal warning Witness present
Second Official written warning Document filed
Third Second official warning, with threat
of temporary suspension Document filed
Fourth Temporary suspension and “last
chance notification Document filed
Fifth Termination with right to go to
Arbitration Document filed
As shown in Table 10.3 , punitive measures should be taken in steps of increasing magnitude, and only after having been clearly documented. This may start with an unofficial warning for the first offense, followed by a written reprimand for additional offenses. Later offenses may lead to a temporary suspension. Before a company suspends an employee, it may want to issue a “last chance notification,” indicating that the next offense will result in termination. Such procedures may seem slow, but when problem employees are discharged, the chance that they can prove they were discharged for poor cause has been minimized.

11. 4 Stages of ADR Arbitration Mediation Peer Review Open Door Policy
Table 10.4 Alternative dispute resolution (ADR) is a method of resolving disputes that does not rely on the legal system and show promise in resolving disputes in a timely, constructive, cost-effective manner. ADR proceeds through four stages: open door policy, peer review, mediation, and arbitration. Each stage reflects a broader involvement of different people, and the hope is that the conflict will be resolved at earlier steps. The last step may include binding arbitration, where an agreed upon neutral party resolves the conflict unilaterally if necessary.
Stage 1: Open-door policy
The two people in conflict (e.g., supervisor and subordinate) attempt to arrive at a settlement together. If none can be reached, they proceed to
Stage 2: Peer review
A panel composed of representatives from the organization that are at the same level of those people in the dispute hears the case and attempts to help the parties arrive at a settlement. If none can be reached, they proceed to
Stage 3: Mediation
A neutral third party from outside the organization hears the case and, via a nonbinding process, tries to help the disputants arrive at a settlement. If none can be reached, the parties proceed to
Stage 4: Arbitration
A professional arbitrator from outside the organization hears the case and resolves it unilaterally by rendering a specific decision or award.
Open Door Policy
10-11

12. Employee Assistance Programs
EAPs attempt to ameliorate problems encountered by workers who are drug dependent, alcoholic, or psychologically troubled.
EAPs are usually identified in official documents published by the employer.
Employee wellness programs take a proactive and preemptive focus on trying to prevent health-related problems in the first place.
An employee assistance program (EAP) is a referral service that supervisors or employees can use to seek professional treatment for various problems. EAPs vary, but most share basic elements. First, the programs are usually identified in official documents published by the employer (such as employee handbooks). Supervisors (and union representatives, where relevant) are trained to use the referral service for employees whom they suspect of having health related problems. Employees are also trained to use the system to make self referrals when necessary. The key to EAP effectiveness is striking the right balance between collecting information that can be used to promote employee and the employee’s right to privacy on the other. Employee wellness programs take a proactive and preemptive focus on trying to prevent health-related problems in the first place.
10-12

13. Outplacement Counseling
Helps displaced employees manage the transition from one job to another.
Services such as job search support, résumé critiques, job interviewing training and networking opportunities may be provided in- house or through an outside source.
Aimed at helping people realize that other opportunities exist.
Outplacement counseling is counseling to help displaced employees manage the transition from one job to another. Services such as job search support, résumé critiques, job interviewing training, and networking opportunities may be provided in-house or through an outside source
10-13

14. Managing Voluntary Turnover – Job Withdrawal
Progression of Withdrawal Theory-dissatisfied individuals enact a set of behaviors in succession to avoid their work situation.
3 categories:
behavior change
physical job withdraw
psychological job withdraw
Withdrawal behaviors are related to one another, and partially caused by job dissatisfaction.
Best and worst performers tend to leave more frequently than average performers. An employee's first response to dissatisfaction would be to try to change conditions that generate dissatisfaction. Turnover results in lowered work unit performance, which harms the firm’s financial performance. Withdrawal behaviors are clearly related to one another, and all at least partially caused by job dissatisfaction.
Replacing workers is expensive; estimates for 2008 place this cost at roughly $50,000 for professional or managerial workers and $25,000 for clerical or manufacturing employees. Replacement costs reflect just a tip of the iceberg, however, when it comes to the costs of job dissatisfaction and turnover. There is a relationship between employee satisfaction and customer satisfaction at the individual level, and turnover rates and customer satisfaction at the organizational level.
10-14

15. Job Dissatisfaction-Job Withdrawal Process
Causes -
Job dissatisfaction
- Personal
disposition
- Tasks & roles
- Supervisors and
coworkers
- Pay and benefits
Manifestations -
job withdrawal
- Behavioral change
- Physical job
withdrawal
- Psychological job
Job
Dissatisfaction
Job
Withdrawal
Job withdrawal is a set of behaviors that dissatisfied individuals enact to avoid the work situation. Progression of Withdrawal is a theory that dissatisfied individuals enact a set of behaviors in succession to avoid their work situation. If the source of dissatisfaction relates to organization wide policies, organizational turnover is likely.
(Reference Figure 10.2 text) This shows a model grouping the overall set of behaviors into three categories: behavior change, physical job withdrawal, and psychological job withdrawal. Withdrawal behaviors are clearly related to one another, and they are all at least partially caused by job dissatisfaction
10-15

16. Behavior Change
An employee's first response to dissatisfaction would be to try to change conditions that generate dissatisfaction.
When employees are unionized, dissatisfaction leads to increased grievances.
Employees sometimes initiate change through whistle-blowing-making grievances public by going to the media or government.
An employee's first response to dissatisfaction would be to try to change the conditions that generate dissatisfaction. Although at first this type of conflict can feel threatening to the manager, this is really an opportunity for the manager to learn about and perhaps solve an important problem. Behavior change could lead to supervisor‑subordinate confrontation, perhaps even conflict, as dissatisfied workers try to bring about changes in policy or upper‑level personnel. Sometimes going to the media or government, through whistle-blowing, is enough to initiate the change.
10-16

17. Physical Withdrawal
4 ways a dissatisfied worker can physically withdraw from the organization:
Leave the job
Internal transfer
Absenteeism
Tardiness
Companies spend 15 % of payroll costs to make up for absent workers on average.
A dissatisfied worker may be able to solve his or her problem by leaving the job. This could take the form of an internal transfer. Another way of physically removing oneself from dissatisfying work short of is to be absent. On average, companies spend 15 percent of their payroll costs to make up for absent workers.
10-17

18. 2 Forms of Psychological Withdrawal
Job involvement
Organizational Commitment
When disgruntled employees re unable to change their situation or remove themselves physically from their jobs, they may psychologically withdraw through two forms-low job involvement and or low organizational commitment. Job involvement is the degree to which people identify themselves with their jobs.
Organizational commitment is the degree to which an employee identifies with the organization and is willing to put forth effort on its behalf. They may also respond to perceived unjust treatment by trying to get back at the employer via theft, fraud, or sabotage.

19. Job Satisfaction and Job Withdrawal
Job satisfaction is a pleasurable feeling that results from the perception that one's job fulfills one's important job values. Three aspects of job satisfaction
Values
Perceptions
Importance
A frame of reference is a standard point that serves as a comparison for other points and thus provides meaning.
Job satisfaction is a pleasurable feeling that results from the perception that one's job fulfills or allows for the fulfillment of one's important job values. Three important aspects of job satisfaction are values, perceptions, and importance. This definition reflects three important aspects of job satisfaction. First, job satisfaction is a function of values, defined as “what a person consciously or unconsciously desires to obtain.” Second, different employees have different views of which values are important, and this is critical in determining the nature and degree of their job satisfaction. One person may value high pay above all else; another may value the opportunity to travel; another may value staying within a specific geographic region. An important aspect of job satisfaction is perception. An individual’s perceptions may not be a completely accurate reflection of reality, and different people may view the same situation differently. People’s perceptions are often strongly influenced by their frame of reference. A frame of reference is a standard point that serves as a comparison for other points and thus provides meaning.
10-19

20. Unsafe Working Conditions Personal Dispositions Job Dissatisfaction
Negative
Affectivity
Job
Dissatisfaction
Sources
Pay and
Benefits
Tasks and
Roles
Sources of job dissatisfaction include unsafe working conditions, personal disposition, task complexity, co‑workers and supervisors and pay satisfaction. Turnover is more likely to be an issue for employees who are low in emotional stability, low in conscientiousness, and low in agreeableness. The most important aspect of work in terms of generating satisfaction is the degree to which it is meaningfully related to core values of the worker.
Supervisors
and
Coworkers
Job Enrichment
Job Rotation
10-20

21. Unsafe Working Conditions
Each employee has a right to safe working conditions under the Occupational Safe and Health Act of 1970 (OSHA).
Financial bonuses linked to specific safety related goals help keep employees focused and pay for themselves over time.
Firms that emphasize safety send workers a clear signal that they care about them.
Each employee has a right to safe working conditions under the Occupational Safety and Health Act of 1970 (OSHA). Financial bonuses to attaining specific safety related goal over time pay for themselves. Upper level management needs to continually emphasize and stress compliance with worker safety regulations and carefully monitor statistics related to workplace accidents. Many employers link financial bonuses to attaining specific safety-related goals. This helps keep employees focused on doing the job the right way every day and sends workers a clear signal that they care about them. This is an important aspect of organizational culture which strengthens the employee–employer relationship and promotes both attraction of new employees and retention of current employees.
10-21

22. Sources of Job Dissatisfaction
Personal Dispositions
Negative affectivity is a dispositional dimension that reflects pervasive individual differences in satisfaction with any and all aspects of life.
Tasks and Roles
The nature of the task itself is the key predictor of job dissatisfaction.
Job Rotation
Pro-social Motivation
Negative affectivity reflects pervasive individual differences in satisfaction with any and all aspects of life. Individuals who are high in negative affectivity report higher levels of aversive mood states, including anger, contempt, disgust, guilt, fear, and nervousness across all contexts (work and non-work). They tend to focus extensively on negative aspects of themselves and others and persist in their negative attitudes even in the face of organizational interventions, such as increased pay levels, that generally increase the levels of satisfaction of others. Some bring low satisfaction with them to work and may be relatively dissatisfied regardless of what steps the organization or manager takes.
The nature of the task itself is the key predictor of job dissatisfaction There is a strong positive relationship between task complexity and job satisfaction. That is, the boredom generated by simple, repetitive jobs that do not mentally challenge the worker leads to frustration and dissatisfaction. One of the major interventions aimed at reducing job dissatisfaction by increasing job complexity is job enrichment. Job rotation, the process of systematically moving a single individual from one job to another over the course of time, increases work complexity, provides valuable cross-training, makes for a more flexible workforce and increases workers’ appreciation of the other tasks.
The most important aspect of work in terms of generating satisfaction is the degree to which it is meaningfully related to core values of the worker. Pro-social motivation is often used explicitly to capture the degree to which people are motivated to help other people. When people believe that their work has an important impact on other people, they are much more willing to work longer hours.
10-22

23. Sources of Job Satisfaction
Supervisors and Coworkers
A person may be satisfied with his or her supervisor and coworkers due to:
shared values, attitudes, and philosophies,
strong social support
Pay and Benefits
Pay is a reflection of self-worth, so pay satisfaction is significant when it comes to retention.
Two primary sets of people in an organization who affect job satisfaction are co‑workers and supervisors. A person may be satisfied with his or her supervisor and co­workers for one of two reasons: the person may have many of the same values, attitudes, and philosophies that the co‑workers and supervisors have or the person may be satisfied with his or her supervisor and co‑workers because they provide social support, the degree to which the person is surrounded by other people who are sympathetic and caring. Social support is a strong predictor of job satisfaction and lower employee turnover.
Pay is also seen as an indicator of status within the organization as well as in society at large. For many individuals, the standing of their pay relative to those within their organization, or relative to others doing similar work for other employers, becomes even more important than the level of pay itself.
To make costs better reflect revenues, organizations are increasingly adopting variable pay schemes that reward employees for specific accomplishments related to either individual or organizational performance.
10-23

24. Survey Feedback Interventions
Surveys:
emphasize overall satisfaction.
assess the impact of policy changes.
allow the company to benchmark “best practices.”
If people fail to see timely actions taken on matters identified as problems in the survey, satisfaction is likely to be lower than it would be in the absence of a survey.
Any strategic retention policy has to consider surveying people who are about to become ex-employees.
A systematic, ongoing program of employee survey research should be a prominent part of any HR strategy. Most attempts to measure job satisfaction rely on workers' self reports such as pay, the work itself, supervision, co‑workers, and promotions). Engaging in an ongoing program of employee satisfaction assesses the impact of changes in policy and personnel.
Surveys:
emphasize overall satisfaction.
assess the impact of policy changes.
allow the company to compare itself to benchmark “best practices.”
If people fail to see timely actions taken on matters identified as problems in the survey, satisfaction is likely to be even lower than it would be in the absence of a survey. Any strategic retention policy also has to consider surveying people who are about to become ex-employees. Exit interviews with departing workers can be a valuable tool for uncovering systematic concerns that are driving retention problems. If properly conducted, an exit interview can reveal the reasons why people are leaving, and perhaps even set the stage for their later return.
10-24

25. Summary
Involuntary turnover reflects a separation initiated by the organization.
Voluntary turnover reflects a separation initiated by the individual. It can be minimized by measuring, monitoring and surveying, then addressing problems found in the surveys.
Organizations can gain competitive advantage by strategically managing the separation process.
Retaliatory reactions to organizational discipline and dismissal decisions can be minimized.
Involuntary turnover reflects a separation initiated by the organization, often when the individual would prefer to stay a member of the organization. Voluntary turnover reflects a separation initiated by the individual, often when the organization would prefer that the person stay a member. Voluntary turnover can be minimized by measuring and monitoring employee levels of satisfaction with critical facets of job and organization, and then addressing any problems identified by such surveys.
Organizations can gain competitive advantage by strategically managing the separation process so that involuntary turnover is implemented in a fashion that does not invite retaliation, and voluntary turnover among high performers is kept to a minimum.
Retaliatory reactions to organizational discipline and dismissal decisions can be minimized by implementing these decisions in a manner that promotes feelings of procedural and interactive justice.
10-25