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The Psychological ContractThe Psychological Contract

• Employers Employers provide:provide:Competitive Competitive

compensation and compensation and benefitsbenefits

Flexibility to balance Flexibility to balance work and home lifework and home life

Career development Career development opportunitiesopportunities

• Employees contribute:Employees contribute: Continuous skill Continuous skill

improvement and improvement and increased productivityincreased productivity

Reasonable time with Reasonable time with the organizationthe organization

Extra effort when Extra effort when neededneeded

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Job Satisfaction, Loyalty, and Job Satisfaction, Loyalty, and CommitmentCommitment• Job SatisfactionJob Satisfaction

A positive emotional state resulting from evaluating A positive emotional state resulting from evaluating one’s job experience.one’s job experience.

• Loyalty and Organization CommitmentLoyalty and Organization Commitment The degree to which employees believe in and accept The degree to which employees believe in and accept

organizational goals and desire to remain with the organizational goals and desire to remain with the organization.organization. Employee engagement:Employee engagement: the extent to which an employee is the extent to which an employee is

willing and able to contribute.willing and able to contribute. Continuance commitment:Continuance commitment: the likelihood that an individual will the likelihood that an individual will

stay with rather than withdraw from the organization.stay with rather than withdraw from the organization.

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Figure 2.Figure 2.11 Factors Affecting Job Satisfaction and Factors Affecting Job Satisfaction and Organizational CommitmentOrganizational Commitment

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Individual Employee PerformanceIndividual Employee Performance

• Individual Performance FactorsIndividual Performance Factors Individual ability to do the workIndividual ability to do the work Effort level expendedEffort level expended Organizational supportOrganizational support

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

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Components of Individual Components of Individual PerformancePerformance

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FIGURE 2.FIGURE 2.22 Drivers of Retention Drivers of Retention

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Jobs and RetentionJobs and Retention

Physical and Physical and Mental HealthMental Health

JobJobPerformancePerformance

Job Job SatisfactionSatisfaction

Job Design andJob Design andPerson/Job FitPerson/Job Fit

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Approaches to Job Design/RedesignApproaches to Job Design/Redesign

• Job enlargementJob enlargement• Job enrichmentJob enrichment• Job rotationJob rotation• Person/job fitPerson/job fit

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Figure 2-3 Some Characteristics of People Figure 2-3 Some Characteristics of People and Jobsand Jobs

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Using Teams in JobsUsing Teams in Jobs

• Jobs assigned to teams of employeesJobs assigned to teams of employees Team leaders developTeam leaders develop

• Global teamsGlobal teams Meet electronicallyMeet electronically

• Teams are likely to be successful if:Teams are likely to be successful if: They have authority to make decisionsThey have authority to make decisions

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Figure 2-3 Managing RetentionFigure 2-3 Managing Retention

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Employee AbsenteeismEmployee Absenteeism

• AbsenteeismAbsenteeism Any failure to report for work as scheduled or to stay Any failure to report for work as scheduled or to stay

at work when scheduled.at work when scheduled. Involuntary absenteeismInvoluntary absenteeism

Unavoidable with understandable cause (e.g., actual illness)Unavoidable with understandable cause (e.g., actual illness)

Voluntary absenteeismVoluntary absenteeism Avoidable without justifiable cause (e.g., feigning illness)Avoidable without justifiable cause (e.g., feigning illness)

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Figure 2-5 Employee Absenteeism Figure 2-5 Employee Absenteeism ControlsControls

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Employee TurnoverEmployee Turnover

• TurnoverTurnover The process in which employees leave the organization and have to be The process in which employees leave the organization and have to be

replaced.replaced.

• Types of TurnoverTypes of Turnover• Involuntary turnoverInvoluntary turnover—terminations for poor performance or work —terminations for poor performance or work

rule violations.rule violations.

• Voluntary turnoverVoluntary turnover—employees leave by choice.—employees leave by choice.

• Functional turnoverFunctional turnover—lower-performing or disruptive employees —lower-performing or disruptive employees leave the organization.leave the organization.

• Dysfunctional turnoverDysfunctional turnover—key individuals and high performers —key individuals and high performers leave at critical times.leave at critical times.

• Uncontrollable turnoverUncontrollable turnover—employees leave for reasons outside —employees leave for reasons outside the control of the organization.the control of the organization.

• Controllable turnoverControllable turnover—occurs due to factors that could be —occurs due to factors that could be influenced by the employer.influenced by the employer.

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Employee TurnoverEmployee Turnover

• Reasons for TurnoverReasons for Turnover

1.1. The employee moves out of the geographic area.The employee moves out of the geographic area.

2.2. The employee decides to stay home with young The employee decides to stay home with young children or elder relatives.children or elder relatives.

3.3. The employee’s spouse is transferred.The employee’s spouse is transferred.

4.4. The employee is a student worker who graduates The employee is a student worker who graduates from college.from college.

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HR MetricsHR Metrics

• HR Metrics: Measuring AbsenteeismHR Metrics: Measuring Absenteeism Incidence rateIncidence rate Inactivity rateInactivity rate Severity rateSeverity rate

100days) work of(Number employees) ofnumber (Average

period during absence jobgh lost throu days-person ofNumber

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HR MetricsHR Metrics

• Ways to Measure Turnover:Ways to Measure Turnover: Job and job levelsJob and job levels Department, unit, and locationDepartment, unit, and location Reason for leavingReason for leaving Length of serviceLength of service Demographic characteristicsDemographic characteristics Education and trainingEducation and training Knowledge, skills, and abilitiesKnowledge, skills, and abilities Performance ratings/levelsPerformance ratings/levels

• Computing the Turnover rate:Computing the Turnover rate:

100 midmonthat employees ofnumber Total

month theduring sseparation employee ofNumber

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HR MetricsHR Metrics

• Costs of TurnoverCosts of TurnoverSeparation costsSeparation costsReplacement costsReplacement costsTraining costsTraining costsHidden costsHidden costs

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Figure 2-6 Simplified Turnover Costing Figure 2-6 Simplified Turnover Costing ModelModel