Individual/Organizational Relationships

1. Individual/Organizational Relationships • The Psychological Contract • Unwritten expectations employees and employers have about the nature of their relationship. • Psychological Ownership • When individuals feel that they have some control and perceived rights in the organization, they are more likely to be committed to the organization.

2. Employers provide: Employees contribute: • Competitive compensation and benefits • Flexibility to balance work and home life • Career development opportunities • Continuous skill improvement and increase productivity • Reasonable time with the organization • Extra effort when needed Components of the Psychological Contract

3. Factors Affecting Job Satisfaction and Organizational Commitment

4. Job Satisfaction and Commitment • Job Satisfaction • Positive emotional state resulting from evaluating one’s job experience. • Organization Commitment (Loyalty) • Degree to which employees believe in and accept organizational goals and desire to remain with the organization. • Continuance commitment: the likelihood that an individual will stay with rather than withdraw from the organization.

5. 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)

6. Components of Individual Performance

7. Individual Motivation • Desire within a person causing him/her to act to reach a goal. • Management Implications related to Motivation • Consistency in organizational rewards • Organizational support for employee efforts • Accurate measurement of employee performance • Desirability of rewards by employees

8. I’m Gone Retention of Human Resources • Myths About Retention • Money is the main reason people leave. • Hiring has nothing to do with retention. • If you train people, you are only training them for another employer. • Don’t be concerned about retention during a merger. • If solid performers want to leave, the company cannot hold them.

9. Retention of Human Resources • Why People Stay or Leave—Links, Fit, and Sacrifice • Culture and values • Positive, distinctive company that is well-managed, and offers exciting challenges. • Attractive job • Compensation and lifestyle • Differentiated pay package, high total compensation, geographic location, and respect for lifestyle

10. Some Characteristics of People and Jobs

11. Employee 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)

12. Reasons for Unscheduled Absences Source: Based on data from “2006 CCH Unscheduled Absence Survey,” CCH, Inc., October 26, 2006, www.cch.com/press/news/2006. All Rights Reserved. Reprinted with permission.

13. Disciplinary approach Positive reinforcement Controlling Absenteeism Paid time-off (PTO) Combination approach “No fault” policy Controlling Absenteeism

14. Employee Turnover • The process in which employees leave an organization and have to be replaced. • Impact of Turnover • Inability to achieve business goals • Loss of “image” to attract other individuals • High costs of turnover and replacement

15. Involuntary Controllable Voluntary Turnover Uncontrollable Functional Dysfunctional Types of Turnover

16. HR Metrics: Measuring Absenteeism • Measuring Absenteeism • U.S. Department of Labor formula • Other Measures of Absenteeism: • Incidence rate—absences per 100 employees each day • Inactivity rate—percentage of time lost to absenteeism • Severity rate—average time lost per absent employee during a specified period of time

17. HR Metrics: Measuring Absenteeism (cont’d) • Costs of absenteeism: • Lost wages • Benefits • Overtime for replacements • Fees for temporary employees, if incurred • Supervisor’s time • Substandard production • Overstaffing necessary to cover absences

18. HR Metrics: Measuring Turnover • Computing the Turnover Rate • Costs of Turnover • Separation costs • Replacement costs • Training costs • Hidden costs

19. HR Metrics: Measuring Turnover • Ways to Measure Turnover: • Job and job levels • Department, units, and location • Reason for leaving • Length of service • Demographic characteristics • Education and training • Knowledge, skills and abilities • Performance ratings/levels

20. Teller 20,000 (40%) 8,000 28,000 20 3 3,500 70,000 Simplified Turnover Costing Model

21. FIGURE 3-8Managing Retention

22. Improved Retention • Spot cash awards for good work • Develop profiles of successful employees and hire to the profile • Learning bonuses • Focus groups on employee issues • Voluntary job sharing • Realist job avenues • Excellent employee development • Payback agreement for moving expenses • Clear goals • Accurate performance appraisals • Competitive benefits • Career counseling • Mentoring • Diverse workplace • Sabbatical leaves • Facilitate promotion/transfer • Reward managers with low turnover • “Fair” pay • Fulfilling work • Avoid hiring those with a history of turnover • Tuition reimbursement and promotion for education • Retention bonuses • Subsidized child/elder care • Retrain for promotion/transfer • Pay tied to performance • Telecommuting • Recognize good work • Good working conditions • Friendly work culture/co-workers • Considerate supervisors Possible Retention Interventions