Human Resource SECTION 1

Nature of
Management Human
Resource
Management
TENTH EDITON

Robert L. Mathis  John H. Jackson

Chapter 3

Individual Performance
and Retention

PowerPoint Presentation
© 2003 Southwestern College Publishing. All rights reserved.
by Charlie Cook
 Learning Objectives

After you have read this chapter, you should be

able to:
– Discuss how motivation is linked to individual
performance.
– Identify the changing nature of the psychological
contract.
– Describe several types of absenteeism and turnover.
– List the five major retention determinants and
identify activities related to them.
– Outline the retention management process and how
to measure and assess turnover.

© 2002 Southwestern College Publishing. All rights reserved. 3–2

 Individual Employee Performance

 Individual Performance Factors

– Individual ability to do the work
– Effort level expended
– Organizational support

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

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 Components of Individual Performance

Figure 3–1
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 Individual Motivation

 Motivation
– The desire within a person causing that person to
act to reach a goal.
 Maslow’s Hierarchy of Needs
– Categories of needs that ascend in order; lower
needs must be fulfilled before person will strive to
meet higher needs.
• Physiological needs
• Safety and security needs
• Belonging and love needs
• Esteem needs
• Self-actualization needs

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 Individual Motivation (cont’d)

 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

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 Equity as a Motivator

 Equity
– The perceived fairness of what the person does
compared to what the person receives.
– The perception of the fair value of rewards
(outcomes) for efforts (inputs) that individuals
make when comparing their results to others in the
organization.

Inputs Individual Inputs Other


Outcomes Individual Outcomes Other

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 Expectancy Theory

 Expectancy
– Individuals base decisions about their behaviors on
their expectations that one or another behaviors is
more likely to lead to needed or desired outcomes.
– Effort-to-Performance Expectations
• Belief in the ability to perform the task well
– Performance-to-Reward Linkage
• Belief that high performance will result in receiving
rewards
– Value of Rewards
• The rewards have value to the individual

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 Simplified Expectancy Model of Motivation

Figure 3–2
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 Management Implications for
Motivating Performance

 The need for comprehensive strategies and tactics to

address both equity and expectations of employees.
 The provision of training to encourage high
performance.
 The development of evaluation methods that properly
appraise and reward performance.
 An understanding of what kinds of rewards are
desired and valued by employees.

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 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.
– Employers provide:
• Competitive compensation and benefits
• Career development opportunities
• Flexibility to balance work and home life
– Employees contribute:
• Continuous skill improvement
• Reasonable time with the organization
• Extra effort when needed
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 Job Satisfaction and
Organizational Commitment

 Job Satisfaction
– A positive emotional state resulting from evaluating
one’s job experience.
 Organization Commitment
– The degree to which employees believe in and
accept organizational goals and desire to remain
with the organization.

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 Factors Affecting Job Performance
and Organizational Commitment

Figure 3–3
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 Job Satisfaction and
Organizational Commitment

 Absenteeism
– Involuntary absenteeism
• Unavoidable with understandable cause (e.g., actual
illness)
– Voluntary absenteeism
• Avoidable without justifiable cause (e.g., feigning
illness)
– Measuring absenteeism
Number of person - days lost throu gh job absence during period
 100
(Average number of employees)  (Number of work days)

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 Reasons for
Unscheduled
Absences

Source: Based on data from CCH Absenteeism Survey, CCH

Human Resources Management, November 1, 2000. Figure 3–4
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 Job Satisfaction and
Organizational Commitment

Controlling Absenteeism
Disciplinary approach Increasingly severe disciplinary action leading
eventually to dismissal

Positive reinforcement Rewarding attendance with prizes and

bonuses

Combination approach Use of both discipline and rewards to motivate

employee attendance.

“No fault” absenteeism Reasons for absence do not matter.

Absenteeism in excess on normal limits can
trigger disciplinary action and lead to
eventually to dismissal

Paid time-off programs Time-off is not categorized by type. Absences

in excess of employer-paid time-off are
unpaid.
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 Job Satisfaction and
Organizational Commitment

 Turnover
– The process in which employees leave the
organization and have to be replaced.
 Types of Turnover
– Involuntary turnover—terminations for poor
performance or work rule violations.
– Voluntary turnover—employee leaves the
organization by choice.

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 Job Satisfaction and
Organizational Commitment

Turnover Types
Functional turnover Lower-performing or disruptive employees
leave the organization.

Dysfunctional turnover Key individuals and high performers leave at

critical times.

Uncontrollable turnover Occurs for reasons outside the impact of the

organization.

Controllable turnover Occurs due to factors that could be

influenced by the employer

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 Retention of Human Resources

 Impact of Retention Failure

– Inability to achieve business goals
– Loss of “image” to attract other individuals
– High costs of turnover and replacement

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 Retention of Human Resources

 Why People Stay

– Great company
• Value and culture, well-managed, and offers exciting
challenges
– Great 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

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 Most Common Reasons Why
Employees Voluntarily Leave

Source: Based on 2000 SHRM Retention Practices Survey (Alexandria, VA:

Society for Human Resource Management, 2000). Permission requested. Figure 3–5
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 Retention
Determinants

Figure 3–6
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 Desired Organizational Characteristics

Source: The Right Communiqué, First

Quarter 2001, 7. Used with permission Figure 3–7
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 Work Schedule Flexibility

Source: Based on 2000 SHRM Retention Practices Survey (Alexandria, VA:

Society for Human Resource Management, 2000). Permission requested. Figure 3–8
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 The Retention
Management
Process

Figure 3–9
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 The Retention Management Process

 Measuring Turnover
– Ways in which 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
 Computing the turnover rate:
Number of employee separation s during the month
 100
Total number of employees at midmonth

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 Simplified Turnover Costing Model

Figure 3–10
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 The Retention Management Process

 Costs of Turnover
– Hiring costs –Training costs
– Productivity costs –Separation costs
 Employee Surveys
– Attitude survey—focuses on employees’ feelings
and beliefs about their jobs and the organization.
 Exit Interviews
– An interview in which individuals are asked to
identify reasons for leaving the organization.

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 The Retention Management Process

 Retention Interventions
– Provide realistic job previews during the recruiting
process
– Improve the selection process so that there is a
better person-job fit for new hires
– Conduct effective job orientation and initial training
– Offer competitive, fair, and equitable compensation
– Provide an adequate benefits package
– Offer career development and training
– Engage in fair and nondiscriminatory employee
relations

© 2002 Southwestern College Publishing. All rights reserved. 3–29