Part 6: Staffing System and
Retention Management
Chapter 14: Retention Management
Staffing Organizations Model
Organization
Mission
Goals and Objectives
Organization Strategy
HR and Staffing Strategy
Staffing Policies and Programs
Support Activities
Core Staffing Activities
Legal compliance
Planning
Recruitment:
Selection:
External, internal
Measurement, external, internal
Job analysis
Employment:
Decision making, final match
Staffing System and Retention Management
13-2
Chapter Outline

Turnover and Its
Causes
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


Nature of the
Problem
Types of Turnover
Causes of Turnover
Analysis of Turnover



Measurement
Reasons for Leaving
Costs and Benefits

Retention Initiatives:
Voluntary Turnover





Retention Initiatives:
Discharge

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Current Practices
Desirability of Leaving
Ease of Leaving
Alternatives
Performance Management
Progressive Discipline
Retention Initiatives:
Downsizing
Legal Issues


Separation Laws and
Regulations
Performance Appraisal
13-3
Learning Objectives for This
Chapter

Be able to differentiate among the types and causes of
employee turnover
 Recognize the different reasons employees leave their
jobs
 Evaluate the costs and benefits of turnover
 Learn about the variety of techniques companies use
to limit turnover
 See how performance management and progressive
discipline limit discharge turnover
 Understand how companies manage downsizing
 Recognize a variety of legal issues that affect
separation policies and practices
13-4
Discussion Questions for This
Chapter





For the three primary causes of voluntary turnover
(desirability of leaving, ease of leaving, alternatives), might
their relative importance depend on the type of employee or
type of job? Explain.
Which of the costs and benefits of voluntary turnover are
most likely to vary according to type of job? Give examples.
If someone said to you, “It’s easy to reduce turnover—just
pay people more money,” what would your response be?
Why should an organization seek to retain employees with
performance or discipline problems? Why not just fire
them?
Discuss some potential problems with downsizing as an
organizations’ first response to a need to cut labor costs.
13-5
Turnover and Its Causes

Nature of the problem



Minimize costs of turnover
Acknowledge benefits of turnover
Types of turnover

Voluntary: initiated by employees
Avoidable
 Unavoidable


Involuntary: initiated by the company
Discharge
 Downsizing

13-6
Exhibit 14.1 Types of Employee
Turnover
13-7
Exhibit 14.2 Causes of Voluntary
Turnover
13-8
Causes of Turnover

Discharge turnover


Employee fails to
follow rules and
procedures
KSAO/job
requirements
mismatch

Downsizing turnover



Lack of forecasting
and planning
Inaccuracies in
forecasting and
planning
Unanticipated
changes in labor
demand and/or labor
supply
13-9
Reasons for Leaving

Exit interviews



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Formal discussions
with departing
employees
Conducted by a neutral
person
Follow a clear structure
prepared in advance
Knowledgeable
interviewers
Conducted in private

Post-exit surveys



Cover the same
material as a typical
exit interview
Can involved both
numerical and openended responses
Satisfaction surveys

Evaluate why current
employees do not
leave
13-10
Ex. 14.5: Voluntary Turnover
Costs and Benefits

Separation costs




HR and managerial
time
Temporary coverage
Reduced
performance
Replacement costs
 Training costs

Benefits






Superior replacement
New KSAOs
Restructuring
opportunities
Savings from not
replacing employee
Transfer or promotion
opportunities for others
Replacement is less
costly
13-11
Ex. 14.7: Discharge Costs and
Benefits

Separation costs




May be even more
time consuming than
voluntary turnover
Can lead to lawsuits
Conflicts with
remaining workers
Replacement costs
 Training costs

Benefits




Departure of lowvalue employee
Higher value
replacements
Reduced disruption
for manager and
work unit
Improved
performance
management
13-12
Ex. 14.8: Downsizing Costs and
Benefits

Separation costs




Time in managing
and implementing
layoffs
Severance, early
retirement, and
contract buyout costs
Increased
unemployment
insurance
Potential damage in
financial markets

Benefits





Lower payroll and
benefits
Ability to relocate
Improved promotion
and transfer
opportunities for
stayers
Flatter hierarchy
Increased per-person
productivity
13-13
Retention Initiatives: Voluntary
Turnover



Reviews of
organizational
practices show some
key factors that reduce
turnover
Results come from
1,000s of different
workplaces
Other results from
WorldatWork Survey
and 100 Best
Companies

Most effective initiatives:



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
Retention bundles
Benefits
Dispute resolution
Participative work design
Least effective
initiatives:



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Relative pay
Sophisticated selection
systems
Variable pay
Training
13-14
Retention Bundles

Individual practices in isolation aren’t as
powerful as systems of practices



Rewards for performance matched with wide
communication reduce turnover of high
performers
Neither rewards nor communication are
especially effective in isolation
Integrated systems include careful
selection, adequate training, satisfying
conditions, and rewards for retention
13-15
Ex. 14.10 Retention Initiative
Examples
13-16
Retention Initiatives: Desirability of
Leaving

Extrinsic rewards



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Make rewards
meaningful and
unique
Match to individual
preferences
Link to retention
behaviors
Link rewards to
performance

Intrinsic rewards




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Assign employees to
jobs that meet their
needs
Provide clear
communication
Design fair reward
allocation systems
Ensure supervisors
provide a positive
environment
Provide work/life
balance programs
13-17
Retention Initiatives: Ease of
Leaving and Alternatives

Ease of leaving


Provide
organizational
specific training
Cost of leaving


Provide deferred
compensation (e.g.,
long-term bonuses or
pensions)
Provide difficult to
replace amenities

Alternatives


Provide internal
promotion
opportunities
Respond to outside
job offers
13-18
Retention Initiatives: Discharge

Performance
management
process


Work with employees
to minimize need for
involuntary turnover
Document
performance
problems in advance,
with clear
consequences
communicated
13-19
Retention Initiatives: Downsizing

Alternatives to
downsizing






No-layoff strategies
Attrition (not
replacing those who
leave)
Hiring freezes
Non-renewal of
contract workers
Salary reduction
Early retirement

Retaining and
motivating those who
remain



Communicate
downsizing decisions
clearly
Involve the current
workforce in
redesigning jobs
Provide job search
assistance
13-20
Legal Issues

Separation laws and regulations
Public policy restrictions on employment at
will
 Employment discrimination laws
 Employment contract principles
 Labor contracts
 Advance warnings
 Severance agreements

13-21
Legal Issues

Performance appraisal
Criteria should be job related, specific, and
communicated in advance
 Manager should be competent in rating
performance relative to job requirements
 Multiple raters should be used
 Ratings must be documented
 Ratings should be frequent
 Appeals systems should be in place

13-22
Ethical Issues

Issue 1


Imagine your organization is doing exit interviews and has promised
confidentiality to all who respond. You are responsible for conducting the
exit interviews. Your supervisor has asked you to give her the name of
each respondent so she can assess the information in conjunction with
the person’s supervisor. What obligations do corporate HR employee
have to keep information confidential in such circumstances?
Issue 2

Firing an employee has numerous potential negative organizational
consequences, including the discomfort of the supervisor who delivers
the termination information, conflict or sabotage from the departing
employee, and the filing of a lawsuit. To avoid this, many supervisors
give problem employees unpleasant work tasks, reduce their working
hours, or otherwise negatively modify their jobs in hopes that they will
simply quit. What are the ethical issues raised by this strategy?
13-23