1. Human Resource Management
By Laura Portolese Dias

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3. Retention and Motivation
Chapter 7
Retention and Motivation
This chapter will discuss employee motivation and retention strategies.

4. Learning Objectives
Be able identify the difference between direct and indirect turnover costs.
Describe some of the reasons why employees leave.
Explain the components of a retention plan.

5. The Costs of Turnover
Cost of turnover can range from % of the employee’s salary
Turnover
The loss of an employee
Involuntary turnover
Employee has no choice in termination
i.e., employer initiated due to non-performance
Point out that turnover is costly, but some turnover (involuntary turnover) can be OK if the employee is not performing.

6. The Costs of Turnover Calculating turnover
Separations during the period/total number of employees x 100 = % of turnover
For example, let’s assume there were three separations during the month of August, and 115 employees midmonth. We can calculate turnover in this scenario by:
3/115 x 100 = 2.6% turnover rate.

7. The Costs of Turnover
Yearly turnover statistics from the Bureau of Labor Statistics.

8. The Costs of Turnover Examples of turnover costs
Recruitment of replacements
Administrative hiring costs
Lost productivity associated with the time between the loss of the employee and hiring of replacement
Lost productivity due to a new employee learning the job
Lost productivity associated with coworkers helping the new employee
Costs of training
Costs associated with employee’s lack of motivation before leaving
The costs of trade secrets and proprietary information shared by the employee who leaves
Public relations costs
These can be divided into direct and indirect costs, shown on the next slide.

9. The Costs of Turnover
Indirect turnover costs are those that can be directly related to the separation. Indirect are those which are more difficult to measure, but are still a cost.

10. The Costs of Turnover
Voluntary turnover is when the employee chooses to leave the organization. The most common reasons include:
1. A poor match between the job and the skills of the employee. This issue is directly related to the recruitment process. When a poor match occurs, it can frustrate the employee and the manager. Ensuring the recruitment phase is viable and sound is a first step to making sure the right match between job and skills occurs.
2. Lack of growth. Some employees feel “stuck” in their job and don’t see a way to have upward mobility in the organization. Implementing a training plan and developing a clearly defined path to job growth is a way to combat this reason for leaving.
3. Internal pay equity. Some employees, while they may not feel dissatisfied with their own pay initially, may feel dissatisfaction when comparing their pay with others. Remember the pay equity theory discussed in Chapter 6? This theory relates to one reason why people leave.
4. Management. Many employees cite management as their reason for leaving. This can be attributed to overmanaging (micromanaging) people, managers not being fair or playing favorites, lack of or poor communication by managers, and unrealistic expectations of managers.
5. Workload. Some employees feel their workloads are too heavy, resulting in employees being spread thin and lacking satisfaction from their jobs, and possibly, lack of work-life balance as a result.

11. Learning Objectives
Be able to discuss some of the theories on job satisfaction and dissatisfaction.
Explain the components of a retention plan.

12. Retention Plans High Performance Work Systems (HPWS)
Set of systematic practices that create an environment where the employee has greater involvement and responsibility for the success of the organization
A strategic approach
Keeping HPWS in mind, we can begin to develop retention plans with employee involvement.

13. Retention Plans
HR should be heavily involved in creating High Performance Work Systems.

14. Retention Plans Progression of Job Withdrawal
Although most students have problem learned about motivational theories in other classes, we feel it is important to mention in this chapter on retention. This slide shows Farrell and Petersen’s progression of job withdrawal.

15. Retention Plans Hawthorne Studies Conducted in 1927-1932
Designed to see how physical and environmental factors affected motivation
Lighting and break times
Research found that worker improvement occurred no matter which experiments were performed
Workers were happy to receive attention
This was the start of research on motivation at work
The Hawthorne studies really set the groundwork for human motivation at work research.

16. Self Actualization needs
Retention Plans
Self Actualization needs
Esteem Needs
Social Needs
Safety Needs
Physiological needs
Maslow’s Hierarchy of Needs
Maslow said that people must have lower level needs met before they can move up the hierarchy. Ramifications include that if people have lower level needs met, a pay raise, for example, may not necessarily motivate.

17. Retention Plans Hertzberg Two-Factor Theory
Studies determined which aspects at work caused satisfaction or dissatisfaction
Resulted in motivation factors and hygiene factors
Hygiene factors are those things that don’t motivate, but if not present, will cause dissatisfaction.

18. Retention Plans McGregor Carrot and Stick approach X-Y Theory
Starting point to understanding how management style impacts motivation
Carrot and Stick approach
“Stick” is used to poke and prod “if you don’t increase sales by 10%, you will be fired”
Carrot approach offers a reward “If you increase sales by 10%, you will receive a bonus”
Theory X managers believe:
• The average person dislikes work and will avoid it.
• Most people need to be threatened with punishment to work toward company goals.
• The average person needs to be directed.
• Most workers will avoid responsibility.
Theory Y managers, on the other hand, believe:
• Most people want to make an effort at work.
• People will apply self-control and self-direction in pursuit of company objectives.
• Commitment to objectives is a function of expected rewards received.
• People usually accept and actually welcome responsibility.
• Most workers will use imagination and ingenuity in solving company problems.

19. Retention Plans Sources of Employee Satisfaction Data Exit interviews
Job Descriptive Index (JDI) Survey
Exit interviews focus on someone leaving, while the JDI focuses on current employees. Either way, the more inputs the better and more reliable the data. Considerations when developing satisfaction surveys:
1. Communicate the purpose and goal of the survey.
2. Once the survey is complete, communicate what changes have been made as a result of the survey.
3. Assure employees their responses will be anonymous and private.
4. Involve management and leadership in the survey development.
5. Ask clear, concise questions that get at the root of morale issues.

20. Learning Objective
Explain the strategies and considerations in development of a retention plan.

21. Implementing Retention Strategies
Salaries and Benefits
Standard process
Pay communication strategy
Paid time off
1. Instituting a standard process. Many organizations do not have set pay plans, which can result in unfairness when onboarding (the process of bringing someone “on board” with the company, including discussion and negotiation of compensation) or offering pay increases. Make sure the process for receiving pay raises is fair and defensible, so as not to appear to be discriminatory. This can be addressed in both your compensation planning process as well as your retention plan.
2. A pay communication strategy. Employees deserve to know how their pay rates are being determined. Transparency in the process of how raises are given and then communicating the process can help in your retention planning process.
3. Paid time off. Is your organization offering competitive PTO? Consider implementing a PTO system based on the amount of hours an employee works. For example, rather than developing a policy based on hours worked for the company, consider revising the policy so that for every X amount of hours worked, PTO is earned. This can create fairness for the salaried employee, especially for those who may work more than the required forty hours.

22. Implementing Retention Strategies
Training and Development
Allows employees to experience growth
Performance appraisals
Formalized process to assess how well an employee is performing
Can be used as goal-setting opportunities
Succession planning
Allows employees to see a “path” for job growth
Succession planning:
• Identify high-potential employees capable of advancing to positions of higher responsibility.
• Ensure the development of these individuals to help them be “ready” to earn a promotion into a new position.
• Ensure diversity in the talent bench by creating a formal succession planning process.

23. Implementing Retention Strategies
Flextime, telecommuting, sabbaticals
Ability to work from home or flexible can entice employees
Management training
Training managers to be better managers
Conflict management and fairness
Fairness is a perception
Procedures and consistency are key
REI in Seattle offers 12 weeks of unpaid sabbatical leave to pursue travel or volunteer activities.
Management is one of the main reasons why employees leave, so it makes sense to train them to be better managers, and can help retention.
Employees use six main standards to determine fairness
1. Consistency. The employee will determine if the procedures are applied consistently to other persons and throughout periods of time.
2. Bias suppression. The employee perceives the person making the decision does not have bias or vested interest in the outcome.
3. Information accuracy. The decision made is based on correct information.
4. Correctability. The decision is able to be appealed and mistakes in the decision process can be corrected.
Representativeness. The employee feels the concerns of all stakeholders involved have been taken into account.
Ethicality. The decision is in line with moral societal standards.

24. Implementing Retention Strategies
Job design, job enlargement, and empowerment
Designing a more rewarding job, adding duties to help with growth, and allowing employees to make decisions
Pay-for-performance strategies
Employees are rewarded for achieving set objectives
Work-life balance
Ensuring employees have satisfying home and work lives
Job satisfaction
• Skill variety, or many different activities as part of the job
• Task identity, or being able to complete one task from beginning to end
• Task significance, or the degree to which the job has impact on others, internally or externally
• Autonomy, or freedom to make decisions within the job
• Feedback, or clear information about performance
Employee empowerment
• Encourage innovation or new ways of doing things.
• Make sure employees have the information they need to do their jobs; for example, they are not dependent on managers for information in decision making.
• Use management styles that allow for participation, feedback, and ideas from employees.

25. Implementing Retention Strategies
Other Strategies
On-site daycare or daycare assistance
Gym memberships or on-site gyms
On-site dry cleaning drop-off and pickup
Car care, such as oil changes, on-site once a week
On-site yoga or Zumba classes
“Summer Fridays,” when all employees work half days on Fridays during the summer
Various support groups for cancer survivors, weight loss, or caring for aging parents
Other examples besides those listed on slide:
Allowance for fertility treatment benefits
On-site life coaches
Peer-to-peer employee recognition programs
Management recognition programs
On-site doggie daycare
Concierge service to assist in party planning or dog grooming, for example