Organization/

Individual Relatio
ns
& Retentions
Lecture 3
Lecture Outline

1 Identify the changing nature of the psychological contract.

Discuss how motivation is linked to individual performance.

2 List the five major drivers of retention and activities related to them.

Describe different kinds of absenteeism and turnover.

3 Explain two ways to measure absenteeism and turnover.

4 Outline the steps in managing retention.

 HR Headline
Applebee’s Turnover Recipe

Applebee’s International of Overland Park, Kansas, is a large “casual

dining” chain with more than 1,600 restaurants, 25% of which are
company owned and 75% franchised. Applebee’s has been adding
about 100 restaurant locations a year. However, like many businesses in
a low-wage environment, Applebee’s has been plagued by high turnover
among the more than 29,000 company employees. Among
The key to their success has been a system based on the working knowledge that the loss of a top
20% performing and experienced hourly employee costs $2,500, the loss of a middle 60% employe
e costs $1,000, but the loss of a bottom 20% employee makes the company $500. Of course, to f
ocus retention on good performers the company needs a good way of tracking performance. Their
“people metrics” approach is based on hiring hourly employees based on their competencies, rating
managers in the three groups, and rewarding managers who are able to keep high performers. The
decisions are based on a software program that reports specific data on turnover, sales, and profits,
as well as details on customer satisfaction ratings and performance reviews.
Managers have retention targets set: keep 80% of the top 20%
group, 70% of the middle 60% segment, and none of the bottom
20%. The company does not require that the bottom 20% be fired
as some companies do, but the low performers must be informed of
their status and the need to improve their performance results.
As a result of the corporate program, franchisees have begun asking
about the “people metrics” approach and have suggested that it
become mandatory for all sites. Thus, Applebee’s focus on turnover
and retention has been a key part of its strategic growth.
INDIVIDUAL/ORGANIZATIONAL RELATIONSHIPS
The Psychological Contract

The unwritten expectations employees and employers

have about the nature of their work relationships.

Expectations about both tangible items (such as wages, benefits, employee

productivity, and attendance) and intangible items (such as loyalty, fair treatment, and
job security) are encompassed by unwritten psychological contracts between employers
and employeesEmployers Provide: Employees Contribute:
■ Competitive ■ Continuous skill
compensation and benefits improvement
■ Flexibility to balance work and increased productivity
and home life ■ Reasonable time with the
■ Career development organization
opportunities  Matures (born
■before
Extra effort when needed
Generational Differences 1945)
 Baby boomers (born
1945– 1965)
 Class Activity – 10 Minutes
Describe your expectations for a
job. How well
is your employer meeting the
expectations you
bring to the psychological
contract?
 JOB SATISFACTION, Job satisfaction A positive emotional state resulting
from evaluating one’s job Experiences.
LOYALTY, AND Dimensions of job satisfaction frequently mentioned
include work, pay, promotion opportunities, supervision,
COMMITMENT and co-workers.

“Loyal” employees are more than just satisfi ed with their

jobs; they are pleased with the relationships with their
employers.

Organizational commitment The degree to which employees

believe in and accept organizational goals and desire to remain
with the organization.

Figure depicts, the interaction of the individual and the job determines levels of job satisfaction and
 Your Picture Here

Individual
Performance Individual Motivation
Motivation is the desire
within a person causing
Factors that person to act. People
usually act for one reason:
to reach a goal. Thus,
The three major factors that affect how a motivation is a goal-
given individual performs are illustrated directed drive, and it
in Figure 3-2. seldom occurs in a void.
The words need, want,
They are: (1) individual ability to do the
desire, and drive are all
work, (2) effort expended, and (3)
organizational support. similar to motive, from
which the word motivation
Performance (P) = Ability (A) x Effort (E) is derived. Understanding
x Support (S) motivation is important
because performance,
reaction to compensation,
turnover, and other HR
 Infographic Style
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 RETENTION OF HUMAN RESOURCES

1. Money is the main reason people leave.

2. Hiring has nothing to do with retention.
3. If you train people, you are only training them for another e
mployer.
4. Do not be concerned about retention during a merger.
5. If solid performers want to leave, the company cannot hold t
hem.
 Why People Stay or Leave
People often leave jobs for reasons that have nothing to do
with the jobs themselves.
• Mergers, unsolicited job offers, family responsibilities, a
spouse’s relocation, a poor performance appraisal, and
administrative changes are all “shocks” that can bring
on serious thoughts of leaving, even when people are not
dissatisfied with their jobs. Further, people sometimes
stay with jobs for non-work reasons.
• Some factors that limit individuals’ willingness to leave
the jobs are links between themselves and others;
compatibility or fit with the job/organization/ community;
and potential
sacrifice, or what they would have to give up if they left
Why People Stay or Leave
Insert Your Image
 EMPLOYEE ABSENTEEISM
Absenteeism is any failure to report
for work as
scheduled or to stay at work when
scheduled. Types of Absenteeism
Involuntar

01
Voluntary
Absences 02 y
Absences

Controlling Absenteeism
Disciplinar Positive
01 y
Approach 02 Reinforce
ment
Combinatio

03 n
Approach 04 “No Fault”
Policy

05
Paid-time-off (PTO) programs
 Employee Turnover
Turnover The process in which employees leave an
organization and have to be replaced.
Involuntary Turnover Uncontrollable Turnover
Employees are terminated for
Employees leave for reasons
poor outside the control of the
performance or work ruleemployer
violations Controllable Turnover
Voluntary Turnover Employees leave for reasons that
Employees leave by choice
could be influenced by the
Functional Turnover employer Turnover and
Lower-performing or disruptive
“Churn”
employees leave
Dysfunctional Turnover Hiring new
workers
HR METRICS: MEASURING ABSENTEEISM AND
TURNOVER
Measuring Absenteeism

Measuring Turnover
 Your Picture Here Your Picture Here

MANAGING
RETENTION
Your Picture Here Your Picture Here Your Picture Here Retention Measurement and Assessment

1. Exit Interviews
2. Employee Survey

Your Picture Here

Retention Management Intervention
Retention Evaluation and Follow-Up
Regular review of turnover data can identify when turnover increases
or decreases among different employee groups classified by length of
service, education, department, and gender, etc.

Tracking of intervention results and adjustment of intervention

efforts also should be part of evaluation efforts.
Some firms may use pilot programs to see how changes affect
turnover before extending them to the entire organization.
For instance, to test the effect of flextime scheduling on employee
turnover, a firm might try flexible scheduling in one
department. If the turnover rate in that department drops in
comparison with the turnover rates in other departments still
working set schedules, then the experimental project may indicate
that flexible scheduling can reduce turnover. Next, the firm might
extend the use of flexible scheduling to other
Thank you
Any Questions?
 Assignment - 1
If you managed
a
restaurant with
Individual assignment for 5 marks.
high
absenteeism
and high
turnover, what
actions would
you
take to get
those issues
under control?