Human resrouce management 12th mathis jacson chapter 003

CHAPTER 3

Organization/Individual
Relations and Retention
© 2008 Thomson/South-Western All rights reserved.

PowerPoint Presentation by Charlie Cook
The University of West Alabama


Chapter
Chapter Objectives
Objectives
After you have read this chapter, you should be able to:
■ Identify the changing nature of the psychological
contract.
■ Discuss how motivation is linked to individual
performance.
■ List the five major drivers of retention and activities
related to them.
■ Describe different kinds of absenteeism and turnover.
■ Explain two ways to measure absenteeism and turnover.
■ Outline the steps in managing retention.
© 2008 Thomson/South-

3–2


Individual/Organizational Relationships
• The Psychological Contract
The unwritten expectations employees and employers

have about the nature of their work relationships.
Affected by age of employee and changes in
economic conditions.
Focuses on expectations about “fairness” that may
not be defined clearly by employees.

• 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.

© 2008 Thomson/South-

3–3


Components of the Psychological Contract
Employers provide:

Employees contribute:

• Competitive compensation
and benefits

• Continuous skill improvement
and increase productivity

• Flexibility to balance work

and home life

• Reasonable time with the
organization

• Career development
opportunities

• Extra effort when needed

© 2008 Thomson/South-

3–4


FIGURE 3-1

Factors Affecting Job Satisfaction and Organizational Commitment

© 2008 Thomson/South-

3–5


Job Satisfaction, Loyalty, and Commitment
• Job Satisfaction
 A positive emotional state resulting from evaluating

one’s job experience.

• Organization Commitment (Loyalty)
 The 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.

© 2008 Thomson/South-

3–6


Individual Employee Performance
• Individual Performance Factors
1. Individual ability to do the work
2. Effort level expended
3. Organizational support

Performance (P) = Ability (A) x Effort (E) x Support (S)

© 2008 Thomson/South-

3–7


FIGURE 3-2

Components of Individual Performance

© 2008 Thomson/South-

3–8


Individual Motivation
• Motivation
 The desire within a person causing that person to act

to reach a goal.

• Management Implications for Motivating
Individual Performance
 Broad-based strategies and tactics to address

individual employee concerns about:
 Consistency

in organizational rewards

 Organizational
 Accurate

support for employee efforts

measurement of employee performance

 Desirability

of rewards by employees

© 2008 Thomson/South-

3–9


Retention of Human Resources
• Myths About Retention
1. Money is the main reason people

leave.
2. Hiring has nothing to do with

retention.
3. If you train people, you are only

o
I’m G

ne

training them for another employer.
4. Do not be concerned about retention

during a merger.
5. If solid performers want to leave, the

company cannot hold them.
© 2008 Thomson/South-

3–10


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
 Freedom and autonomy, exciting challenges, and
career advancement and growth
 Compensation and lifestyle
 Differentiated pay package, high total
compensation, geographic location, and respect for
lifestyle
© 2008 Thomson/South-

3–11


FIGURE 3-3

Drivers of Retention

© 2008 Thomson/South-

3–12


FIGURE 3-4

Some Characteristics of People and Jobs

© 2008 Thomson/South-

3–13


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)

© 2008 Thomson/South-

3–14


FIGURE 3-5

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.

© 2008 Thomson/South-

3–15


Controlling Absenteeism
Disciplinary
approach

Positive
reinforcement

Controlling
Absenteeism
Paid time-off
(PTO)

Combination
approach

“No fault”
policy

© 2008 Thomson/South-

3–16


FIGURE 3-6

Employee Absenteeism Control Actions

© 2008 Thomson/South-

3–17


Employee Turnover
• 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

 Churn—hiring

new workers while laying off others

© 2008 Thomson/South-

3–18


Types of Turnover
Involuntary

Controllable

Voluntary

Turnover

Uncontrollable

Functional

Dysfunctional

© 2008 Thomson/South-

3–19


HR Metrics: Measuring Absenteeism

• Measuring Absenteeism
 U.S. Department of Labor formula:

Number of person-days lost through job absence during period
×100
(Average number of employees) × (Number of work days)

• 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
© 2008 Thomson/South-

3–20


HR Metrics: Measuring Absenteeism
(cont’d)
• Calculations of the costs of absenteeism should
usually include:
 Lost wages
 Benefits
 Overtime for replacements
 Fees for temporary employees, if incurred
 Supervisor’s time
 Substandard production
 Overstaffing necessary to cover absences

© 2008 Thomson/South-

3–21


HR Metrics: Measuring Turnover
• Computing the Turnover Rate:
Number of employee separations during the month
× 100
Total number of employees at midmonth

• Costs of Turnover
Separation costs
Replacement costs
Training costs
Hidden costs

© 2008 Thomson/South-

3–22


HR Metrics: Measuring Turnover (cont’d)
• 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

© 2008 Thomson/South-

3–23


FIGURE 3-7

Simplified Turnover Costing Model

Teller

(40%)

20,000
8,000
28,000
20
3
3,500
70,000

© 2008 Thomson/South-

3–24


FIGURE 3-8

Managing
Retention

© 2008 Thomson/South-

3–25