Strategic Staffing Third Edition
Chapter 12
Managing
Workforce Flow
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Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved
Learning Objectives
After studying this chapter, you should be able to:
• Discuss ways to make socialization more effective.
• Describe the six different types of turnover.
• Discuss employee retention strategies.
• Discuss various ways of downsizing a company’s
workforce.
• Describe how to effectively terminate an employee.
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Time for Productivity
• Many organizations invest more money in hiring new employees
than in helping them acclimate and become productive.
• Most new hires want to get off to a good start, but need help
doing so.
• It takes mid-level managers an average of six months to get up
to speed in a new job.
• Even in restaurants and hotels it can take about 90 days for a
new employee to attain the productivity level of an existing
employee.
• On average, the time for new external hires to achieve full
productivity is eight weeks for clerical jobs, 20 weeks for
professionals, and more than 26 weeks for executives.
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Orientation and Socialization
Orientation (or onboarding): the process of completing new
hires’ employment-related paperwork, and familiarizing them with
their jobs, coworkers, work spaces, work tools, and the company’s
policies and benefits
Socialization: a long-term process of planned and unplanned,
formal and informal activities and experiences through which an
individual acquires the attitudes, behaviors, and knowledge
needed to successfully participate as an organizational member
• The primary goal of socialization is to get new employees up to speed
on their jobs and familiarize them with the organization’s culture, or
the norms, values, behavior patterns, rituals, language, and traditions
that provide a framework that helps employees interpret and
understand everyday experiences
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Socialization
• Can speed up the time it takes new hires to reach the point at
which they start generating a return on the company’s investment
in them.
• Can improve employee retention and employee engagement,
lessen the impact of reality shock, and facilitate new hire
adjustment and integration.
• People who are well socialized in their organizational roles tend
to have higher incomes, be more satisfied, more involved with
their careers and more adaptable, and have a better sense of
personal identity than those who are less socialized.
• Socialization prepares employees to perform their jobs effectively,
fit into the organization, and establish productive work
relationships.
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Socialization Program Choices
Table 12-1 Socialization Program Choices
One-time versus staggered programs: programs that put newcomers through one long session versus many
smaller ones
Collective versus individual programs: programs that put newcomers through a common set of experiences
as a group versus socializing them one-on-one
Formal versus informal programs: programs providing structured socialization using specifically designed
formal activities and materials away from the work setting versus informal socialization done by a new hire’s
coworkers on the job
Sequential versus random programs: programs that require recruits to pass through a series of distinct steps
to obtain full employee status versus using a random sequence of activities
Fixed versus variable programs: programs providing newcomers with a fixed timetable associated with
completing each stage in the transition from one role to another versus providing no consistent timetable and
few cues as to when to expect the next stage
Tournament versus contest programs: programs treating each socialization stage as an “elimination
tournament” where failure means that a new hire is out of the organization (fired) versus a “contest” in which
new hires build up a track record and “batting average” over time
Serial versus disjunctive programs: programs using experienced organizational members as role models or
mentors who groom newcomers to follow in their footsteps versus providing no role models or mentors
Investiture versus divestiture programs: programs that take advantage of a new hire’s unique skills versus
trying to deny or strip away personal characteristics through socialization
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Effective Socialization
Actively involve new employees
• Encourage them to ask questions
• Clarify new roles and their connection to business strategy
Manager must take the time to get the employee up to speed
Pairing coworkers with new hires for days or weeks can
facilitate their transition
Assess transition progress using metrics including
engagement, 30-, 60-, and 90-day retention rates, and
supervisor satisfaction
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Managing the Flow of the Workforce
Having the right people in the right jobs to execute
business strategy requires effectively managing turnover
and retention, succession management, redeployment,
and separations.
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Turnover
Table 12-2 Types of Turnover
Type of Turnover Description
Voluntary turnover The employee chooses to leave due to personal or
professional reasons
Involuntary turnover The employer initiates the separation due to the
employee’s poor performance, misconduct, a
reorganization of the firm, and so forth
Functional turnover The departure of a poor performer
Dysfunctional turnover The departure of an effective performer the company
would have liked to retain
Avoidable turnover Turnover that the employer could have prevented
Unavoidable turnover Turnover that the employer could not have prevented
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Why Top Performers Leave (1 of 2)
Table 12-3 Why Top-Performing Employees Leave Organizations
Reasons
Percentage of Top-Performing
Employees’ Responses
Percentage of Employers’
Responses
Pay 71 45
Promotion opportunity 33 68
Work-life balance 26 25
Stress 24 8
Career development 23 66
Health care benefits 22 0
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Why Top Performers Leave (2 of 2)
Table 12-3 Why Top-Performing Employees Leave Organizations
Note: The numbers do not total to 100 percent because each respondent chose three reasons.
Source: Reprinted with permission. All rights reserved, Towers Watson. For more information, visit
towerswatson.com. Agnvall, E., “Exit with the Click of a Mouse: Exit Interviews Go High-Tech,” Society
for Human Resource Management, October 2006,
www.shrm.org/hrtx/library_published/nonIC/CMS_018960.
Reasons
Percentage of Top-Performing
Employees’ Responses
Percentage of Employers’
Responses
Length of commute 18 4
Nature of work 18 8
Retirement benefits 17 2
Company culture 13 10
Relationship with
supervisor/manager
8 31
https://www.towerswatson.com/
https://www.shrm.org/hrtx/library_published/nonIC/CMS_018960
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Identifying Turnover Causes
• Exit interviews: asking departing employees why they are
leaving to acquire information that can be used to improve
conditions for current employees
• Employee satisfaction surveys can identify problems
that can be addressed to prevent additional turnover
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Retention Strategies (1 of 2)
Table 12-4 Retention Strategies
Clarifying promotion paths: A clear career path helps retain talented people
interested in moving up
Challenging employees: Developing skills and learning new things can keep
employees engaged
Developing better supervisors: Fair managers whose subordinates trust them
can improve employee retention
Giving employees work flexibility: Giving employees work flexibility can
improve their retention by enabling them to better balance their work and life
demands
Choosing a good location: Locating the company in a desirable area or in an
area with few competitors for the same talent can boost retention
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Retention Strategies (2 of 2)
Table 12-4 Retention Strategies
Providing competitive wages and benefits: Giving employees competitive pay
and benefits help improve retention
Holding managers accountable: Holding managers accountable for retaining
top performers and for challenging and developing their subordinates can
improve their retention
Providing Employees with Support: Staying in touch with new hires and
helping them overcome the obstacles they face to perform well can result in their
retention
Creating mobility barriers: Embedding employees in the company in such a
way that their value is greater inside than outside the firm due to their firm-
specific knowledge decreases the chance that they will leave
Creating a strong corporate culture: Creating a strong culture that employees
find attractive can enhance their commitment to the company
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Retention During Mergers and
Acquisitions
Create financial agreements with key talent that serve as golden
handcuffs and create mobility barriers.
Financial incentive packages such as retention bonuses or stock
options that mature over time can retain essential employees, and
increase their commitment to making the merger successful.
Companies can also increase the value of severance packages
offered to workers who stay until a merger or acquisition is
completed to keep important talent from leaving prematurely.
• These types of agreements are typically solidified in a written contract
that specifies the financial incentives that the employee will receive if
they stay with the company for a specified time.
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Managing Succession
Succession management should integrate talent management
with the organization’s strategic plan.
• Succession plans need to support the organization’s long-term direction,
growth, and planned change, and should enable an organization to
have the right people in the right place at the right time to execute the
business strategy.
• Career planning and succession management are often integrated to
ensure that employees are motivated to accept the higher-level jobs.
Mobility policies: specify the rules by which people move between
jobs within an organization and clearly document the rules for
opening notification, eligibility qualification, compensation and
advancement, and benefit changes related to advancement.
• Mobility policies should be well developed, clearly communicated, and
perceived as fair by employees.
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Workforce Redeployment
Workforce redeployment: the movement of employees to
other parts of the company or to other jobs the company
needs filled to match its workforce with its talent needs.
• Workforce redeployment software and services help organizations
match their talent to specific business needs in the most profitable way.
• Matching employees’ expertise and knowledge to customers’ needs and
deploying the right people is the same way a supply chain deploys
assets.
• For firms trying to maximize the efficiency of their workforce, which is
particularly important for companies pursuing a low-cost strategy,
workforce optimization is critical.
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Involuntary Employee Separations
Downsizing: the intentional reduction of employees intended
to improve the efficiency or effectiveness of the firm.
• Can improve the financial standing of a firm by reducing and changing the
workforce structure in a way that improves operational results.
• Downsizing is usually done in response to a merger or acquisition, revenue or
market share loss, technological and industrial change, new organizational
structures, and inaccurate labor demand forecasting.
• Downsizing is a popular intervention for organizations looking to improve
flexibility, reduce bureaucratic structure, increase decision-making efficiency,
and improve communication.
• Private sector employers often downsize to reduce costs to maximize
shareholder returns, and to remain competitive in an increasingly global
economy.
• Public sector downsizings are driven by budget reductions and technology
improvements that allow fewer workers to do the same amount of work.
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Downsizing (1 of 2)
Table 12-5 Downsizing Targeting Methods
Targeting Method Description
Across-the-board downsizing All units reduce their headcount by the same percentage
Geographic downsizing Specific locations are targeted for downsizing
Business-based downsizing Only some segments of the business are targeted (e.g.,
employees associated with one product line)
Position-based Downsizing Specific jobs are targeted (e.g., accountants or
salespeople)
Function-based Downsizing Specific functions are targeted (e.g., the firm’s human
resources department might be downsized), usually
during an organizational redesign
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Downsizing (2 of 2)
Table 12-5 Downsizing Targeting Methods
Targeting Method Description
Performance-based
Downsizing
Poor performers are targeted for separation
Seniority-based Downsizing The last people hired are the first downsized
Salary-based Downsizing The most highly paid employees are targeted
Competency-based Downsizing Employees with the competencies the company expects
to need in the future are retained, and employees without
those competencies are targeted
Self-selection Downsizing The firm encourages employees to self-select out of the
company by offering them inducements, such as buyouts
or early retirement packages
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Effective Downsizing Fully planning the downsizing is important to reduce the negative consequences the
downsizing has on employees and the company.
Unintended outcomes of a downsizing include:
• Increased costs from voluntary turnover, training, and consultants
• Reduced shareholder value
• Decreased efficiency due to the loss of expertise
• Reduced morale and motivation (waves of downsizing are the worst)
• Increased absenteeism and turnover of desirable employees due to stress and uncertainty
• Lower employee trust in the company
• A damaged reputation as an employer
• When a company’s employees take advantage of unemployment insurance, the company’s
future premiums rise
• Higher cost of attracting top talent after a downsizing
Given that downsizing is a traumatic event, no matter how well prepared the workforce is for
the impending change, the process should be carried out in the most expedient manner
possible.
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Survivor Syndrome
Survivor syndrome refers to the emotional effects of the
downsizing on surviving employees, during and after a downsizing.
• These effects include fear, anger, frustration, anxiety, and mistrust,
which can threaten the organization’s survival.
Survivors often are preoccupied with whether additional layoffs will
occur, and feel guilty about retaining their jobs while separated
coworkers are struggling.
• Can lead to a variety of adverse effects including higher turnover, lower
commitment and loyalty, and less flexibility among surviving employees.
Although some studies suggest that “survivor’s guilt” leads to
increased effort, other studies suggest that job insecurity reduces
productivity.
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Downsizing Assistance to Displaced
Employees
• Help in locating listings of vacant jobs and central pools of
displaced workers for whom the employer attempts to find
positions.
• Many large organizations help employees find employment
elsewhere in the organization through central processing
points that bring together displaced employees and vacant
positions.
• Employers frequently provide résumé coaching, job fairs,
and access to office equipment to facilitate employee
transitions out of the company.
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Seven Typical Downsizing Activities
1. A workforce demographics review including retirement and other loss projections and assessments of the age, diversity, and skills of the workforce;
2. Assessment of available options to avoid involuntary separations, such as a hiring freeze, buyouts, early retirement, retraining, and relocations;
3. Detailing full-time employee reductions by year, location, program, occupation, position, and person;
4. Conducting the downsizing or reduction in force;
5. Providing career transition/job placement assistance;
6. Providing assistance for survivors of downsizing; and
7. Ensuring that an adequate retraining program is in place.
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Layoffs
Layoff: temporary end to employment.
Employers tend to dislike layoffs compared to other downsizing methods, in part
because they are forced by law (in the case of most public sector employees) or by
bargaining agreements to employ seniority-based criteria in deciding which employees
to separate during layoffs.
• This does not guarantee that the right competencies will remain in the company to allow it to
execute its business strategy and emerge from the downsizing in a more competitive position,
and often means the retention of the most expensive employees.
• Layoffs also increase employee health problems and withdrawal behaviors.
• Layoffs often have a negative impact on employee diversity, since women and minorities tend to
be disproportionately affected by seniority-based layoff policies.
During a layoff, career transition assistance is usually provided to employees along with
job placement and training assistance, severance pay, and continuation of benefits
such as health insurance for a period of time.
Layoffs have a negative impact on a firm’s reputation that is significantly stronger for
newer than for older firms.
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Some Layoff Alternatives
• Attrition due to retirement, death, or resignation
• Hiring freeze: not hiring any new employees
• Early retirement incentives: allow retirement with full or reduced pension
benefits at an earlier age than normal
• Buyout incentives: a lump sum payment to encourage voluntarily quits
• Leave without pay
• Flexible work arrangements
• Workforce redeployment
• Cross training and retraining
• Reducing work hours and/or pay
• Sharing company ownership with workers in exchange for lower pay
• Increasing the use of temporary or contract employees who are let go
rather than laying off core workers
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Best Downsizing Practices
• Senior leadership should play a vital role
• Frequent two-way communication
• Involve the right people in downsizing planning
• Identify work processes that will not be needed in the future
• Incentives such as early retirement and buyouts work well and are popular with employees
• Using multiple strategies and techniques to accomplish goals for downsizing helps to leverage the outcome
• Provide transition assistance to separated and surviving employees
• Monitor progress
• Successful downsizing depends on the survivors’ trust, fairness perceptions, and belief in firm’s future
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Evaluating Downsizing Effectiveness
• Meeting authorized full-time employee headcount goals
• Increase in the ratio of supervisors to employees
• Employee loss due to attrition versus incentive programs
• Demographics of buyout recipients
• Impact on diversity goals
• Ability to meet budgetary limits
• Productivity changes
• Reduction in total cost of wages and salaries
• Number of grievances, appeals, or lawsuits filed
• Number of voluntary participants in incentive and career transition programs
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Discharging Employees (1 of 2)
May happen immediately after a policy violation or other job
misconduct (e.g., a safety violation, failure to renew a
professional license, etc.), or after a long pattern of poor
performance
Rather than separating multiple people from the company as
happens with downsizing, terminations focus on individual
employees
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Discharging Employees (2 of 2)
Even in an age of employment at will, it is important to document the
termination and keep thorough and accurate records regarding the cause
of the termination.
Having terminated (or laid off) employees sign a severance agreement
that includes a release stating that the departing employee gives up some
or all rights to sue you can reduce the risk of future litigation.
• Employee releases are most often used when a company does not have proper
documentation to fire an employee but wants to end the employment
relationship and reduce the possibility of a lawsuit.
• To be most effective, the release needs to involve some sort of consideration,
usually money beyond any standard severance agreement; the employee needs
to be given appropriate time to consider the offer and even change his or her
mind after signing it; and the employee should be able to negotiate some of its
contents to show that it was willingly signed.
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Common Termination Errors
• Doing it publicly
• Writing a positive letter of reference after a termination for cause (this opens the company to charges of negligent referral)
• Trying to document a termination for a just cause case that doesn’t exist
• Firing an employee after a merit raise or favorable performance review
• Stating that the person conducting the termination meeting disagrees with the termination
• Juries have also looked unfavorably at terminations that were done at end of a work day or work week, after the employee returns from a business trip, or at beginning of holiday
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Termination Tips (1 of 2)
• Remain impartial, calm, and in control of the conversation; be respectful
at all times
• Listen to employee requests for severance terms, but reserve final
decisions for a later time; being heard and considered will increase the
employee’s perceptions of fairness
• Be clear and don’t send mixed messages
• The shock of being fired can prevent the employee from listening to all
of what you are saying; repeat yourself if you feel your message is not
being heard
• Don’t give career advice to someone you’ve just fired
• If the person is being terminated, don’t say “laid off” because it implies
the possibility of return
• Hold the meeting in a private, neutral location
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Termination Tips (2 of 2)
• Deliver information without engaging in an argument; use prepared
notes if necessary. Do not ramble, make promises, or say a mistake is
being made
• Discuss the effective termination date, any severance package, etc.;
have the details of the termination and any severance package in writing
so the employee can take them with him or her along with the details of
the termination
• Be aware of legal compliance issues
• Write up an accurate record of the termination interview and provide a
copy to the employee
• Cover matters such as returning identification cards, keys, and how to
receive final paycheck
• Involve company security, if needed
• After discharge, notify all relevant parties of the termination
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Discussion Questions (1 of 2)
1. Think of the time you first joined an employer. In what
ways did the company and your coworkers socialize you?
What could have been done to enhance your socialization
experience?
2. How do you think technology can be best used to socialize
new employees and get them productive as quickly as
possible? When would using technology not be a good
way to socialize employees?
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Discussion Questions (2 of 2)
3. What are the factors that would make you most likely to
quit your current job (assuming you are currently
working)? What could your the most effective? Which are
the least effective, and why? organization do to keep you?
4. What downsizing targeting methods do you feel are
5. If you had to discharge an employee who you thought had
the potential for violence, what would you do?
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Opening Vignette Exercise
This chapter’s opening vignette illustrated how Hilton
socializes its new call center reservations and customer care
employees. Reread the vignette, and answer the following
questions:
• What are the strengths of Hilton’s socialization program and
why?
• Do you think that it is appropriate for Hilton to hold supervisors
accountable for employee retention during the first 90 days? Why
or why not?
• What additional ideas do you have to quickly socialize new
employees into a company focused on customer service?
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Chern’s Case Assignment
a) Write a report recommending appropriate onboarding and
socialization strategies, and explain why you are making
each recommendation.
b) Develop a retention plan for the company’s top performers.
c) Identify a downsizing strategy to reduce the number of
sales associates by 15%.
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Copyright
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permission of the publisher. Printed in the United States of America.