fundamentals of

Human Resource Management 4th edition

by R.A. Noe, J.R. Hollenbeck, B. Gerhart, and P.M. Wright

CHAPTER 10
Separating and Retaining
Employees

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All Rights Reserved. 10-1
 What Do I Need to Know?

1. Distinguish between involuntary and

voluntary turnover, and describe their effects
on an organization.
2. Discuss how employees determine whether
the organization treats them fairly.
3. Identify legal requirements for employee
discipline.

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 What Do I Need to Know? (continued)

4. Summarize ways in which organizations can

fairly discipline employees.
5. Explain how dissatisfaction affects employee
behavior.
6. Describe how organizations contribute to
employees’ job satisfaction and retain key
employees.

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 Introduction

• Every organization recognizes that it needs

satisfied, loyal customers.
• In addition, success requires satisfied, loyal
employees.
• Research provides evidence that retaining
employees helps retain customers and
increase sales.
• Organizations with low turnover and satisfied
employees tend to perform better.

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 Managing Turnover

• What was the primary reason you’ve ever quit

a job?
a) I Didn’t like my boss or coworkers
b) I wasn’t a fit with the company culture
c) Better pay somewhere else
d) More interesting or challenging work
somewhere else
e) I was fired or laid off
f) Other

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 Managing Voluntary and
Involuntary Turnover
Involuntary Turnover Voluntary Turnover
• Turnover initiated by an • Turnover initiated by
employer. employees.
• Often with employees • Often when the
who would prefer to stay. organization would prefer
to keep them.

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Table 10.1: Costs Associated with Turnover

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 Test Your Knowledge

True (A) or False (B)

1.A manager who decides to fire an employee
should quietly take action alone and then let
others know afterwards.
2.Separating employees has financial and
personal risks.

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 Employee Separation

• Organizations must develop a standardized,

systematic approach to discipline and discharge.
• These decisions should not be left solely to the
discretion of individual managers or supervisors.
• Policies should be based on principles of justice
and law.
• Policies should allow for various ways to
intervene.

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 Principles of Justice

Outcome Procedural Interactional

Fairness Justice Justice
• A judgment • A judgment • A judgment
that the that fair that the
consequences methods were organization
given to used to carried out its
employees are determine the actions in a
just. consequences way that took
an employee the employee’s
receives. feelings into
account.

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Figure 10.1: Principles of Justice

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 Test Your Knowledge

• A company whose earnings are very low has to reduce

the amount given in raises to avoid laying people off.
The amount of the raise for each employee is
determined objectively based on their performance.
An employee working for this company will most likely
feel ____________ and _________________.
a) High outcome fairness; high interactional injustice
b) Low outcome fairness; high procedural justice
c) Low interactional justice, high outcome fairness
d) Low outcome fairness, low procedural justice

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 Legal Requirements

Wrongful Discharge Discrimination

• The discharge may not • Employers must make
violate an implied discipline decisions without
agreement.
regard to a person’s age,
– e.g., employer had promised
job security sex, race, or other protected
– e.g., the action is inconsistent status.
with company rules
• Evenhanded, carefully
• The discharge may not
documented discipline can
violate public policy.
– e.g., terminating the avoid such claims.
employee for refusing to do
something illegal or unsafe.

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 Legal Requirements (continued)

Employees’ Privacy:
• Employers need to ensure that the
information they gather and use for discipline
is relevant.
• Privacy issues also concern the employer’s
wish to search or monitor employees.
• Employers must be prudent in deciding who
will see the information.

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Organizations such as
day care facilities and
schools must protect
employees’ right to
privacy in their lives and
on the job while
balancing the need to
protect children from
harm.

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Table 10.2: Measures for Protecting
Employees’ Privacy

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 Test Your Knowledge
• Pam Jones worked for 41 years at the same company and had
positive performance ratings and personnel records. She
needed a calculator for work which she purchased with her
own money but was not reimbursed because she lost the
receipt. Later, a security guard stopped her as she was leaving
work and discovered the calculator in her belongings. After a
brief internal investigation, she was fired and it was
announced through internal notices that she had committed a
theft. The employee sued for libel, saying the company used
her as an example to prevent other thefts.
A. What are the key issues in this case?
B. As an HR Director, how would you have handled this case?

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 Legal Requirements (continued)

Notification of Layoffs:
• Organizations that plan broad-scale layoffs
may be subject to the Workers’ Adjustment,
Retraining and Notification Act (WARN).
• Employers covered by the law are required to
give notice before any closing or layoff.

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 Test Your Knowledge

• After hiring Bob for a newly created marketing

specialist position, his boss assures him that he will
be secure in the job until he retires. A year later, that
department is eliminated. Bob complains he was
guaranteed employment until retirement. Is he
right?
a) No, an employer can hire or fire someone whenever they
want.
b) No, there was no written contract.
c) Yes, he was given a verbal contract.

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 Progressive Discipline

Hot-Stove Rule Progressive Discipline

• Principle of discipline • A formal discipline
that says discipline process in which the
should be like a hot consequences become
stove, giving clear more serious if the
warning and following employee repeats the
up with consistent, offense.
objective, and
immediate
consequences.

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Figure 10.2: Progressive Discipline
Responses

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 Progressive Discipline (continued)

• The rules of behavior • Tardiness

should cover • Absenteeism
disciplinary problems • Unsafe work practices
such as the following • Poor quantity or quality of
work
behaviors encountered
• Sexual harassment of
in many organizations:
coworkers
• Coming to work impaired by
alcohol or drugs
• Theft of company property
• Cyberslacking

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Figure 10.3: Typical
Stages of Alternative
Dispute Resolution
Alternative dispute
resolution (ADR) –
methods of solving a
problem by bringing in
an impartial outsider
but not using the
court system.

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 Alternative Dispute Resolution

Open-Door Policy Peer Review

• An organization’s policy • Process for resolving
of making managers disputes by taking them
available to hear to a panel composed of
complaints. representatives from
the organization at the
same levels as the
people in the dispute.

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 Alternative Dispute Resolution (continued)

Mediation Arbitration
• Nonbinding process in • Binding process in
which a neutral party which a professional
from outside the arbitrator from outside
organization hears the the organization
case and tries to help (usually a lawyer or
the people in a conflict judge) hears the case
arrive at a settlement. and resolves it by
making a decision.

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 Employee Assistance Programs

• Employee assistance program (EAP) – a

referral service that employees can use to
seek professional treatment for emotional
problems or substance abuse.
• Many EAPs are fully integrated into employers’
overall health benefits plans.

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 Outplacement Counseling

• Outplacement counseling – a service in which

professionals try to help dismissed employees
manage the transition from one job to
another.
• The goals for outplacement counseling are to
help the former employee address the
psychological issues associated with losing a
job while at the same time helping the person
find a new job.
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 Job Withdrawal

• Job Withdrawal – a set of behaviors with

which employees try to avoid the work
situation physically, mentally, or emotionally.
• Job withdrawal results when circumstances
such as the nature of the job, supervisors and
coworkers, pay levels, or the employee’s own
disposition cause the employee to become
dissatisfied with the job.

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Figure 10.4: Job Withdrawal Process

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 The Causes of Job Dissatisfaction

Personal • Negative affectivity

Dispositions • Core self-evaluations

• Role
• Role ambiguity
Tasks and Roles • Role conflict
• Role overload

Supervisors and • Negative behavior by managers

Coworkers • Conflicts between employees

• Pay is an indicator of status in the organization

Pay and Benefits • Pay and benefits contribute to self-worth

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• Military reservists who
are sent overseas often
experience role conflict
among three roles:
1. soldier
2. family member
3. civilian employee
• Overseas assignments
often intensify role
conflicts.

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Actions Employees Take When Dissatisfied

• Behavior changes
– Change the condition
– Whistle-blowing
– Bring a lawsuit
– Lodge complaints
• Physical job withdrawal
• Psychological withdrawal
– Decrease in job involvement
– Decrease in organizational commitment
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Unpleasant Employees Are Bad for
Business

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 Job Satisfaction
• Job satisfaction – a pleasant feeling resulting from
the perception that one’s job fulfills or allows for the
fulfillment of one’s important job values.
• The three important components are:
– Values
– Perceptions
– Ideas of what is important
• People will be satisfied with their jobs as long as they
perceive that their jobs meet their important values.

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Figure 10.5: Increasing Job Satisfaction

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 Appropriate tasks
and roles include
safety precautions,
especially when
work could involve
risks to workers’
health and safety.

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Figure 10.6:
Steps in the Role
Analysis Technique
Role analysis
technique: A process
of formally identifying
expectations
associated with a role.

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Job Satisfaction:
Supervisors and Co-workers
• The two primary people in an organization who
affect job satisfaction are co-workers and supervisors.
• A person may be satisfied with these people for one
of three reasons:
1. The people share the same values, attitudes, and
philosophies.
2. The co-workers and supervisor may provide social
support, meaning they are sympathetic and caring.
3. The co-workers or supervisor may help the person attain
some valued outcome.

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 Co-worker relationships can contribute to job
satisfaction, and organizations therefore try to
provide opportunities to build positive
relationships.

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 Test Your Knowledge

• Serena feels her job processing payroll checks

is boring and uninteresting. Which
intervention would be most appropriate to
retain Serena?
a) Communicating the companies values
b) Increasing her pay
c) Expanding her job
d) Hiring someone she can chat with during the day

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 Monitoring Job Satisfaction

• Employers can better retain employees if they are

aware of satisfaction levels, so they can make
changes if employees are dissatisfied.
• The usual way to measure job satisfaction is with
some kind of survey.
• A systematic, ongoing program of employee surveys
should be part of the organization’s human resource
strategy.
• This allows the organization to monitor trends and
prevent voluntary turnover.
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Figure 10.7: Example of Job Descriptive
Index (JDI)

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Figure 10.8: Example of a Simplified,
Nonverbal Measure of Job Satisfaction

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 Exit Interview

• Exit interview: a meeting of a departing

employee with the employee’s supervisor and/or
a human resource specialist to discuss the
employee’s reasons for leaving.
• A well-conducted exit interview can uncover
reasons why employees leave.
• When several exiting employees give similar
reasons for leaving, management should consider
whether this indicates a need for change.

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 Summary

• Involuntary turnover occurs when the organization

requires employees to leave, often when they would
prefer to stay.
• Voluntary turnover occurs when employees initiate
the turnover, often when the organization would
prefer to keep them.
• Both are costly because of the need to recruit, hire,
and train replacements.
• Involuntary turnover can also result in lawsuits and
even violence.
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 Summary (continued)

• Employees draw conclusions based on the outcomes

of decisions regarding them, the procedures applied,
and the way managers treat employees when
carrying out those procedures.
• Employee discipline should not result in wrongful
discharge, such as a termination that violates an
implied contract or public policy.
• Discipline should be administered evenhandedly,
without discrimination.

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 Summary (continued)
• Discipline should follow the principles of the hot-
stove rule, meaning discipline should give warning
and have consequences that are consistent,
objective, and immediate.
• A system that can meet these requirements is
progressive discipline, in which rules are established
and communicated, and increasingly severe
consequences follow each violation of the rules.
• Organizations may also resolve problems through
alternative dispute resolution.

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 Summary (continued)

• Circumstances involving the nature of a job,

supervisors and coworkers, pay levels, or the
employee’s own disposition may produce job
dissatisfaction. When employees become
dissatisfied, they may engage in job withdrawal.
• To prevent job withdrawal, organizations need to
promote job satisfaction.
– Job satisfaction is related to a person’s values.
– Different employees have different views of which values
are important.
– Job satisfaction is based on perception.
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