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Dysfunctional turnover is the loss of high-performing employees due to unplanned downsizing.

19/12/2020 Client: saad24vbs Deadline: 2 Day

Strategic Staffing Third Edition

Chapter 12

Managing

Workforce Flow

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.

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.

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

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.

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

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

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.

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

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

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.

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

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

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

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

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.

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.

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.

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.

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

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

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.

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.

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.

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.

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.

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

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

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

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

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.

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

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

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

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?

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?

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?

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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mechanical, photocopying, recording, or otherwise, without the prior written

permission of the publisher. Printed in the United States of America.

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