B203-B

Business functions in context II

CHAPTER 12
STAFF RETENTION
Turnover analysis and costing

Need to understand the reasons why employees are leaving

 Exit interviews – but will those leaving give the real reasons
for leaving?
 Analysis of turnover rates between different departments
and different job groups
 Attitude surveys
Reasons for staff turnover

People leave jobs for a variety of reasons:

 Outside factors

 Functional turnover

 Push factors

 Pull factors
Outside Factors
 Largely unrelated to work
 Geographical moves
 Ambition to travel
 Demands of family and illness
 Hard to avoid but may be reduced by
 Career breaks
 Flexible working
 Childcare facilities
Functional turnover
 Favourable to both employer and employee
 Poor performance
 Failure to fit into organisational culture
 Can be reduced by improving recruitment and
selection
 Can be created by poorly managed organisational
change programmes
Push and pull factors
 Push – dissatisfaction with work or the organization
leading to unwanted turnover
 e.g. lack of career development or poor employee
involvement

 Pull – attraction of rival employers, e.g. better salary.

Employees move to improve their living standards.
Common reasons for leaving
 Research by Taylor (2002) found a mix of factors

 Push factors more prevalent than pull factors

 Alternative employment sought when employees no longer
enjoy working for current employer
 Few people leave for financial reasons
 Poor management was the overwhelming reason
 Dissatisfaction with the conditions of work, especially hours.
 A perception that they were not being given sufficient career
development opportunities
 A bad relationship with their immediate supervisor.
‘Hidden reasons’ why employees leave

 Job or workplace not living up to expectations

 Mismatch between the person and the job
 Too little coaching or feedback
 Too few growth and advancement opportunities
 Feeling devalued and unrecognised
 Stress from overwork and work–life imbalance
 Loss of trust and confidence in senior leaders
-- Branham (2005)
Engagement and retention strategies

 How to provide employees with a ‘better deal’, than they

perceive they could get by working for alternative employers:
1. Pay
2. Managing expectations
3. Induction
4. Family-friendly HR practices
5. Training and development
6. Improving the quality of line management
1- Pay
 Debate over extent to which raising pay levels reduces staff
turnover
 Pay plays a satisfier role, but does not usually have an
effect when other factors are pushing someone to quit
 Pay is a ‘hygiene factor’ rather than a motivator
 Pay increases – an approach that can be easily matched by
competitors
 ‘Reward’ in the boarder sense plays a more significant role
 Providing more rewarding work is a good deal harder for
managers to achieve because different people find different
aspects of their work to be rewarding.
 Enhanced benefits if appreciated by staff are more likely to have a positive
effect on staff retention

 Staff discounts
 Holiday entitlements
 Private healthcare
 Pensions
2 - Managing expectations

 Benefits employees by gaining a ‘realistic job preview’

before starting their job
 Job dissatisfaction is having one’s high hopes of new
employment dashed by unmet expectations
 Work experience before starting work can help
establish realistic expectations of work
 There is a need to strike a balance at the recruitment
stage between sending messages that are entirely
positive and sending out those which are realistic.
 It’s important not to mislead candidates about the
nature of the work that they will be doing.
3 - Induction
 The presence of an effective and timely induction.
 High proportion of resignations are from those with less than one
year’s service
 Helps starters to adjust emotionally to new role
 Understand where things are, and who to ask when unsure
about what to do
 Provides a forum for information giving
 Suitable occasion to discuss health and safety regulations,
organizational policies etc.
4 - Family-friendly HR practices

 Research had shown that 33% of women quit jobs to

devote more time to their families.
 Statistics show that average job tenure among women
with children in the UK is over a year shorter than that
of women without children and almost two year shorter
than that of men.
 As staff retention became more important, these
statistics were taken more into consideration, and led to
a series of family-friendly practices: ‘minimum floor
of rights’.
 This included paid and optional unpaid maternity
and paternity leaves, reasonable unpaid time off for
employees to deal with family emergencies,
Examples of other provisions
by employers
 More paid maternity leave than is required by law
 Right for mothers, where possible, to return on a part-
time or job-share basis
 Childcare vouchers
 Career breaks
 Flexitime systems
 Elder-care arrangements
5 - Training and development
 Two opposed perspectives on the link between training
and turnover
 training opportunities enhance commitment to an
employer making employees less likely to leave
 training makes people more employable and they
will leave to develop careers
6 - Improving the quality of line managers

 Select people for roles following an assessment of

their supervisory capabilities

 Provide training in effective supervision

 Appraise line managers on their supervisory skills

 Chapter 12
EMPLOYEE PERFORMANCE MANAGEMENT
Performance management systems

 Performance management systems are seen as the way to

manage employee performance, and have incorporated the
appraisal/review process into this.
 The concept behind performance management relies on the
fact that the clarity of goals is key in enabling the
employee to understand what is expected and the order
of priorities.
 This will motivate employees to work towards certain
goals, and will keep them focused to get done with
specific projects.
 Typically requires line managers to appraise
performance of their staff
4 Stages in a performance management system
Business mission, values, objectives and competencies

 Management should identify the performance required of

the organization as a whole before it is able to plan and
manage individual performance.
 This will involve:
 A mission statement (“To Bring Inspiration and
innovation to every athlete in the world”, Nike)
 Core values of the business (“Focus on the user and all
else will follow”, Google)
Business mission, values, objectives and
competencies

 It will also involve:

 Strategic business objectives that are required
within the current business context to be competitive
and to be in line with the missions statement. (Ex:
increased profit, increased market share, have happy
customers, etc..)
 The key competencies required. (Ex: Design and
technology, Apple)
 An objective-setting cascade

Figure 12.3: An objective-setting cascade

Planning performance: a shared view of expected performance

• Individual objectives derived from team objectives and

a agreed job description can be jointly devised by
manager and employee.
• Objectives are outcome or results oriented
• Objectives are tightly defined and include measures to
be assessed
• Objectives designed to stretch individuals and offer
potential for development
SMART Objectives

• Objectives need to be SMART:

• Specific
• Measurable
• Appropriate
• Relevant
• Timed
Objectives
 The timescale for each objective will need to reflect
the content of the objective.
 As objectives are met, managers and their staff need to have a brief
review meeting to look at progress in all objectives and decide what
other objectives should be added, changed or deleted.
 Five or six ongoing objectives are generally sufficient for
one individual to work at anytime.
Role of Objectives

 Allow the development of a shared understanding of

what is expected, allowing for the employee’s
contribution
 Allow employees to decide on an appropriate approach
by using a ‘what’ rather than a ‘how’ statement
 Generate greater degree of ownership and thus
commitment to achieving the objective
Delivering and Monitoring Performance

The manager’s role

• Enabling role while staff are working to achieve the
performance agreed
• Organising resources
• Organising off-job training
• Being accessible
• Providing ongoing coaching
• Providing support and guidance
Delivering and monitoring performance

• Employees carry out ongoing reviews to plan their

work and priorities and also to advise the manager if
the agreed performance will be delivered by the
agreed dates.
• This ensures that information is shared
• Manager needs to be kept up to date on employee
progress, and employee needs to be kept up to date on
any organizational changes that could affect his
objectives.
Reviews

These reviews are:

 Normally informal
 Need not be part of any formal system, so could
happen at anytime as needed, and not
according to a pre-set schedule.
 Provides an opportunity to ensure that the
employee is ‘on track’. It allows the manager to
redirect him if necessary.
Formal Performance Review and Assessment

• Regular formal reviews are needed to concentrate on

developmental issues and to motivate the employee.
• Annual review and assessment is needed and the extent
to which objectives have been met, will affect pay or
bonus received.
Reward
• Some systems still include link to money
– May be unpopular and the amount may be too small to
motivate

• Promotion and development often used as a reward.

This provides more satisfaction to the employees than
being rewarded with money.