Managing Employee Retention and Separation

MODULE V

STRATEGIC EMPLOYEE RETENTION AND SEPARATION

Employee retention is the act of keeping employees and retaining good workers.

Employee separation is the process of efficiently and fairly terminating workers.

Separations - Final way in which an employee leaves a position

Voluntary – employee resignso Exit Interview – pinpoints reasons why an employee is leaving

Involuntary – employee is laid-off or terminatedo Layoffs – there is not enough work for all employeeso Termination – employee is asked to leave because of poor

• Employees are a primary asset of almost every organization, but identifying, hiring, and training good employees can be costly. Replacing an employee who quits costs an organization between one and two times the annual salary of the position.

• The expense of replacing workers requires most organizations to focus effort on employee retention, a set of actions designed to keep good employees once they have been hired

• Whereas retaining good employees is beneficial, organizations lose money when they retain poor employees.

• Assuring that nonproductive employees don’t continue with the organization is often just as important as retaining productive workers.

• Changes in economic conditions and product demand sometimes force organizations to reduce the size of their workforce.

• Employee separation is the process of efficiently and fairly terminating workers.

Procedure of Separation Discharge:It is the process of terminating the service of an employee due to any

serious misconduct It is a permanent separation of an employee from the pay-roll for violation of company rules

or for inadequate performance. CAUSES OF DISCHARGE:

a) FREQUENT CAUSES: Inefficiency, dishonesty, drunkenness, carelessness.

b) INFREQUENT CAUSES: Accidents, insubordination, personal conduct, un-cleanliness, infraction of rules, negligence.

c) OTHERS: Laziness, lack of cooperation

Steps to discharge an employee Preliminary disciplinary action Final written warning Notice of discharge Post- discharge.

Discharging an Employee

Discharging employees is one of the most difficult tasks that a manager faces.

Many organizations offer outplacement to the employees laid off. Outplacement services provide employees who

have been dismissed from an organization with assistance in finding new jobs. Examples: resume writing, practice interviewing and support groups.

The Discharge Meeting A few guiding principles

1. Tell the employee directly that she is being discharged.

2. Make the meeting brief.3. Listen to the employee who is being discharged.

This is an emotional moment, and some individuals will simply need to talk.

4. Summarize the meeting in writing, particularly severance compensation, benefits and services that will be provide to the employee.

5. Have security personnel close at hand just in case the person being terminated vents their frustration in an violent manner.

Retirement It is the process of leaving the organization permanently on the ground of

attaining the age of superannuation or voluntarily. Retirement has been characterized by some as a ‘role less role ‘

Kinds of Retirement – 1. Compulsory retirement:

Employee must retire compulsory on attaining on specific age. Central government Offices, the age is 58; In private firm, employees may be

given extension up till they are suitable to do work. 2. Forced Retirement:

If employee found on guilty either in court of law or violated conditions of organization.

He may force to retire from the service without any benefit. 3. Premature Retirement:

If an employee become disabled in an accident , or due to some disease , he may given option of retiring by management

Voluntary Retirement / Separation Schemes, Golden handshake:

One of the techniques of trimming the workforce is Voluntary Retirement Scheme (VRS). This is generous, tax-free severance payment to persuade the employees to voluntarily retire from the company. The scheme has its origin during early 1990s in USA . this scheme is also known as ‘Golden hand Shake’ as it is the golden route to retrenchment. The VRS is most Human technique for downsizing the workforce.

Eligibility for VRS: It varies from company to company. Incase public sector company,

employees who have attained 40 years of age or completed 10 years of service are eligible for VRS

Merits: It offers best and human route to retrenching excess of employee Lucrative settlement prevents resentment

Demerits: It creates a sense of fear and uncertainty among the employees who stay with the

organization Operation of the scheme creates bad reputation of the company

Layoff

It is the temporary reduction in the workforce due to the inability of the employer to provide work as a result of the shortage of coal, power, raw material, machinery breakdown or a natural calamity.

Employer has to pay 50% of the basic wage to the employees during the layoff period

Section 25-C of Industrial Disputes Act (IDA) 1947, does not confer the right on employers to layoff workers for whatever reasons they deem fit

According to section 25-M of IDA , unless the layoff is due to shortage of power or natural calamity ,no work men can be laid off without the prior permission of the labour commissioner

Maximum period of layoff is 45 days If employer offers alternative employment , it will not be consider a

layoff even if the worker does not opt for it The penalty stipulated for not complying with the provisions of the

IDA : imprisonment for period of up to one month or a fine up to Rs. 1000 or both

PROMOTIONS

PROMOTION:

‘A movement to a position in which responsibilities

and presumably , prestige are increased’

- Dale Yoder.

Purpose / Objective of Promotion:

Promotions have a positive impact on the employees. Beside higher wages they also satisfy the higher order needs of employees.

Purpose / Objective of Promotion:

To recognise an individual’s performance and reward him for his work.

To put the employee in a position where he will be of greater value to the company.

To promote job satisfaction among the employees and give them an opportunity for unbroken continuous service.

To build up morale , loyalty and a sense of belonging on the part of the employees.

To demonstrate effective career development plans.

To attract suitable and competent employees for the organization.

To create among employees a feeling of contentment with their present conditions and encourage them to succeed in the company.

Types of Promotion:

Open promotions: An organization or a company considers all individuals within it as a potential candidate and announces it to various aspirants internally.

Closed promotions: An organization or company in which the candidate for higher position opening or vacancies is restricted and not open for all the individuals ,within the organization and also does not announce the vacancies internally.

Frequently companies follow a combination of both the systems.

Types of Promotion:

Multiple Chain promotions: Which provides for a systematic linkage of each position to several others. Such promotions identify multi-promotional opportunities through clearly defined avenues of approach.

Dry promotions :Dry promotions are those that are given in lieu of increase in compensation.

Horizontal promotion :Promotions have similar kind of work. Ex – lower grade to higher grade without any change in work content.

Vertical promotion : Those which change the nature of the work. Ex – Supervisor to Manager.

Turnover

There are three types of turnover.voluntary turnover, in which the employee

makes the decision to leave. involuntary turnover, in which the

organization terminates the employment relationship.

dysfunctional turnover occurs when an employee whose performance is at least adequate voluntarily quits.

Organizational practices(strategies) that reduce turnover

Frequently measure job satisfaction through surveys such as the Job Descriptive Index.

Another method for retaining employees is through socialization, this is the process of acquiring the knowledge and behaviors needed to be a member of an organization. As employees acquire information during the socialization process, their feelings of fit with the organization increase, and employees who perceive that they fit are more likely to stay with an organization.

Perceived organizational support is another factor that influences employee turnover

Reducing Turnover

Source: Information from Thomas W. Lee and Steven D. Maurer, ‘‘The Retention of Knowledge Workers with the Unfolding Model of Voluntary Turnover,’’ Human Resource Management Review 7 (1997): 247–275.

Employee retention is all about keeping good people.’

Getting our compensation and benefits into line with the marketplace.

It’s about culture and how employees are treated.

It’s about presenting a consistent, effective employer proposition across the entire employee life cycle, thus ensuring that the employer source, hire, manage, and develop employees who partner with them in achieving the organizational goals.’

Integrate core values about people and a mission and vision

Performance development Plan Training in Core Management Skills Management development coaching and feedback. Schedule and hold learning organization events. Funding for conferences and educational development. 360 degree feedback recognize and value employees, Coach employee performance, Handle employee complaints and problems, Provide a motivating work environment, and Hold career development discussions with employees.