Human Resource Management

Individual Performance and Retention

Individual Employee Performance [ Performance (P) = Ability (A) x Effort (E) x Support (S) ]

ü Individual ability to do the work

· Talents

· Interests

· Personality

ü Effort level expended

· Motivation [desire within a person causing that person to act to reach a goal]

· Attendance

· Work ethic

· Job design

ü Organizational support

· Training and development

· Equipment and technology

· Performance standards [People will do what is measured and rewarded.]

· Management climate

Motivation Theories

ü Maslow’s Hierarchy of Needs

– Categories of needs that ascend in hierarchical order

• Physiological needs

• Safety and security needs

• Belonging and love needs

• Esteem needs

• Self-actualization needs

– Lower needs must be fulfilled before person will strive to meet higher needs.

ü Herzberg’s Motivation/Hygiene Theory

– Motivators—account for job satisfaction and motivation

• Achievement • Recognition • Work itself

• Responsibility • Advancement

– Hygiene factors—cause dissatisfaction with work

• Interpersonal relationships • Company policy/administration

• Supervision • Salary • Working conditions

ü Equity Theory

s Equity is the perceived fairness of what the person does compared to what the person receives.

Motivation Theories

ü Equity Theory (continued)

s Equity, then is the perception of the fair value of rewards (outcomes) for efforts (inputs) that individuals make when comparing their results to others in their organization and within the industry.

ü Expectancy Theory: Individuals base decisions about their behaviors on their expectations that one or another behavior is more likely to lead to needed or desired outcomes.

s Effort-to-performance expectations is the belief in the ability to perform the task well

s Performance-to-reward linkage is the belief that high performance will result in receiving rewards

s Value of rewards is the extent to which the rewards have value to the individual

Management Implications for Motivating Performance

§ Organizations need comprehensive strategies and tactics to address both equity and expectations of employees.

§ Organizations must provide training to encourage high performance.

§ Organizations must develop evaluation methods that properly appraise and reward performance.

§ Managers must have an understanding of what kinds of rewards are desired and valued by employees.

Individual/Organizational Relationships

§ A psychological contract is the unwritten expectations employees and employers have about the nature of their work relationships. Affected by age of employee and changes in economic conditions.

ü Employers provide:

• Competitive compensation and benefits

• Career development opportunities

• Flexibility to balance work and home life

ü Employees contribute:

• Continuous skill improvement

• Reasonable time with the organization

• Extra effort when needed

§ Job Satisfaction and Organizational Commitment

ü Job satisfaction is positive emotional state resulting from evaluating one’s job experience.

ü Organization commitment is the degree to which employees believe in and accept organizational goals and desire to remain with the organization.

§ Job Satisfaction and Organizational Commitment (continued)

ü Factors affecting job performance

[Job satisfaction or dissatisfaction -- links to -- organizational commitment]

s Individual

- Ability

- Motivation

- Support

s Job

- Design

- Job elements

ü Absenteeism

s Involuntary absenteeism is unavoidable with understandable cause (e.g., actual illness)

s Voluntary absenteeism is avoidable without justifiable cause (e.g., feigning illness)

s

Measuring absenteeism

s Reasons for unscheduled absences

- Personal illness (40%)

- Family issues (21%)

- Personal needs (20%)

- Entitlement mentality (14%)

- Stress (5%)

s Controlling absenteeism

- Discipline--increasingly severe disciplinary actions, eventually leading to dismissal

- Positive reinforcement—rewarding good attendance with prizes and bonuses

- Combination of discipline and positive reinforcement

- “No fault” absenteeism policy—reasons for absences don’t matter; exceeding policy limits may led to disciplinary action and possible dismissal

- Paid time off (PTO) policy—absences are not categorized by type. Employer pays for specific number of hours or days; above policy limits it becomes time off without pay

ü Turnover is the process in which employees leave the organization and have to be replaced.

s Involuntary turnover—terminations for poor performance or work rule violations.

s Voluntary turnover—employee leaves the organization by choice.

Retention of Human Resources

§ Impact of Retention Failure

ü Inability to achieve business goals

ü Loss of “image” to attract other individuals

ü High costs of turnover and replacement

§ Why people stay

ü Great company

• Value and culture, well-managed, and offers exciting challenges

ü Great job

• Freedom and autonomy, exciting challenges, and career advancement and growth

ü Compensation and lifestyle

• Differentiated pay package, high total compensation, geographic location, and respect for lifestyle

§ Why people voluntarily leave

ü Career opportunities (78%)

ü Better compensation, including pay and benefits (65%)

ü Poor management (21%)

ü Partner relocation (18%)

ü Returning to school (15%)

ü Retirement (14%)

ü Poor relationships with co-workers (10%)

ü Job security issues (10%)

ü Child-care issues (8%)

ü Perception of discriminatory treatment (5%)

ü Health issues (4%)

Retention Determinants

§ Organizational components

ü Values and culture

ü Strategies and opportunities

ü Well managed; results-oriented

s Visionary leadership

s Effective management; sound decision-making

s Valuing employee input and ideas

s Open, honest communication

ü Job security

§ Job design and work activities

ü Responsibilities and autonomy

ü Working conditions

ü Work/life balance

§ Job design and work activities (continued)

ü Work schedule flexibility

s Flextime

s Compressed workweeks

§ Rewards

§ Relationships with managers and co-workers

§ Career opportunities

The Retention Management Process

1. Measurement and assessment

s Turnover measurement considerations

• Job and job levels • Department, units, and location

• Reason for leaving • Length of service

• Education and training • Knowledge, skills and abilities

• Demographic characteristics • Performance ratings/levels

s

Computing the turnover rate:

s Costs of Turnover

• Hiring costs • Training costs

• Productivity costs • Separation costs

s Employee attitude surveys focus on employees’ feelings and beliefs about their jobs and the organization.

s Exit interviews are conducted to identify individual reasons for leaving the organization.

2. Retention intervention

s Recruitment and selection [RJP; person-job fit]

s Orientation and training

s Compensation and benefits [competitive, fair, and equitable compensation]

s Career development

s Employee relations [fair and nondiscriminatory employee relations]

3. Evaluation and follow-up

s Review turnover data regularly

s Track intervention results

s Adjust intervention activities