2–1
The Psychological Contract
• Employers
provide:
Competitive
compensation and
benefits
Flexibility to balance
work and home life
Career development
opportunities
• Employees contribute:
 Continuous skill
improvement and
increased productivity
 Reasonable time with
the organization
 Extra effort when
needed
2–2
Job Satisfaction, Loyalty, and Commitment
• Job Satisfaction
 A positive emotional state resulting from evaluating
one’s job experience.
• Loyalty and Organization Commitment
 The degree to which employees believe in and accept
organizational goals and desire to remain with the
organization.
Employee engagement: the extent to which an employee is
willing and able to contribute.
 Continuance commitment: the likelihood that an individual will
stay with rather than withdraw from the organization.

2–3
Figure 2.1 Factors Affecting Job Satisfaction and
Organizational Commitment
2–4
Individual Employee Performance
• Individual Performance Factors
 Individual ability to do the work
 Effort level expended
 Organizational support
Performance (P) =
Ability (A) x Effort (E) x Support (S)
2–5
Components of Individual Performance
2–6
FIGURE 2.2 Drivers of Retention
2–7
Jobs and Retention
Job
Performance
Job
Satisfaction
Job Design and
Person/Job Fit
Physical and
Mental Health
2–8
Approaches to Job Design/Redesign
• Job enlargement
• Job enrichment
• Job rotation
• Person/job fit
2–9
Figure 2-3 Some Characteristics of People and
Jobs
2–10
Using Teams in Jobs
• Jobs assigned to teams of employees
 Team leaders develop
• Global teams
 Meet electronically
• Teams are likely to be successful if:
 They have authority to make decisions
2–11
Figure 2-3 Managing Retention
2–12
Employee Absenteeism
• Absenteeism
 Any failure to report for work as scheduled or to stay
at work when scheduled.
 Involuntary absenteeism

Unavoidable with understandable cause (e.g., actual illness)
 Voluntary absenteeism

Avoidable without justifiable cause (e.g., feigning illness)
2–13
Figure 2-5 Employee Absenteeism Controls
2–14
Employee Turnover
• Turnover
 The process in which employees leave the organization and have to be
replaced.
• Types of Turnover
• Involuntary turnover—terminations for poor performance or work
rule violations.
• Voluntary turnover—employees leave by choice.
• Functional turnover—lower-performing or disruptive employees
leave the organization.
• Dysfunctional turnover—key individuals and high performers
leave at critical times.
• Uncontrollable turnover—employees leave for reasons outside the
control of the organization.
• Controllable turnover—occurs due to factors that could be
influenced by the employer.
2–15
Employee Turnover
• Reasons for Turnover
1. The employee moves out of the geographic area.
2. The employee decides to stay home with young
children or elder relatives.
3. The employee’s spouse is transferred.
4. The employee is a student worker who graduates
from college.
2–16
HR Metrics
• HR Metrics: Measuring Absenteeism
 Incidence rate
 Inactivity rate
 Severity rate
Number of person - days lost throu gh job absence during period
100
(Average number of employees)  (Number of work days)
2–17
HR Metrics
• Ways to Measure Turnover:
 Job and job levels
 Department, unit, and location
 Reason for leaving
 Length of service
 Demographic characteristics
 Education and training
 Knowledge, skills, and abilities
 Performance ratings/levels
• Computing the Turnover rate:
Number of employee separation s during the month
 100
Total number of employees at midmonth
2–18
HR Metrics
• Costs of Turnover
Separation costs
Replacement costs
Training costs
Hidden costs
2–19
Figure 2-6 Simplified Turnover Costing
Model
2–20