HRM200 Lecture Notes - Lecture 7: Employee Engagement, Job Satisfaction, Indirect Costs
3 Nov 2016
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Chapter 15
The Importance of Managing Employee Separations
o Who leaves, how they are treated during exit, what the cause/nature of exit is and how
remaining employees perceive this exit – all impacts long-term sustainability of company
o HRM role: often overlooked in managing employee engagement and communication
during time of employee separation
Managing Turnover
o Turnover: termination of individual’s employment from company
o Voluntary turnover: employee-initiated, i.e. quit, retire
o Involuntary turnover: decision made by employer, i.e. dismiss, layoff
The Cost of Turnover
BONUS QUESTION ON TEST:
Bad hire cost – 1 to 2 times workers salary
Cost of turnover - 1.5 to 2.5 times
o Direct costs: more visible, easier estimated, advertising, interviewing, moving expenses
(offered for replacement)
o Indirect costs: often overlooked, lost productivity during employment gap, training curve
productivity losses ** KNOW 4 CATEGORIES OF COST OF TURNOVER –
SHORT ANSWER ** TEST
▪ Separation costs: exit interviews, administration, septn/severance pay
▪ Vacancy costs: temp workers, overtime, loss of sales due to vacancy
▪ Replacement costs: recruiting/hiring replacement (interview costs, testing, and
administration expense, travel/moving, etc.)
▪ Training Costs: formal/informal training of those hired for replacement, performance
differentiation between employee leaving and replacement
Voluntary turnover:
o Unanticipated challenges of replacing employee
▪ Biggest challenge: lack of managerial control
▪ Functional: good stay, bad leave
▪ Dysfunctional: bad stay, good leave
o Employee migrating to competition, i.e. knowledge, skills, abilities are new firm’s
strength old firms disadvantage
o Why? Low organization commitment, low role clarity, low tenure, high role conflict, and
low overall job satisfaction
o Reasons:
▪ Suboptimal hiring practices
▪ Diff. managerial style
▪ Lack of recognition
▪ Lack of competitive compensation systems
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▪ Toxic workplace environments – bad attitudes etc.
▪ “Hobo phenomena” (unexplained reasons for voluntary turnover)
o Retirees on call: program where retired ppl continue working on part-time/need-based
post retirement system
o Phased retirement: gradually reducing # of hours per week over time (not immediate
leave)
o Pre-retirement counselling: some months (or years) before, covering benefits advice,
second careers, etc.
Involuntary turnover:
o Should be fair/legal, after all reasonable steps taken to rehabilitate employment
relationship (employees end up feeling cheated esp. during employee
dismissal/downsizing) * IMPORTANT BULLET *
o Reasons:
▪ Unacceptable job performance
▪ Economic/financial pressure
▪ New strategic direction
WHY PEOPLE QUIT THEIR JOBS (Video): main reason: bosses/managers,
- Overall level of satisfaction factors:
o Reach career goals, intellectually challenged, work life balance, paid fairly
o Coworkers
- Keep employees engaged and intellectually challenged, encourage work life balance, pay
them fairly, set good examples
Fair and Just Disciplinary Process ** ON TEST 2 **
o Foundations:
1. Rules/regulations: clear expectations of acceptable behaviour, stated during
orientation in writing (good work performance, no liquor/drugs, follows safety rules)
2. Progressive discipline: warning (verbal/written), suspension, dismissal
3. Appeals process: allow employee to present case (they have the right, make it
equitable)
▪ Dismissal: terminating employee by company decision (invol.)
❖ Dismissal for just cause: termination based on poor behaviour No
severance/additional notice period required
o IF BREAKING LAW, BREACH OF CONTRACT,
INSUBORDINATION, WILLFUL NEGLECT OF DUTIES,
DISOBEDIENCE: justifiable reason to dismiss right on spot
❖ Crucial to investigate fairly b4 stating “just cause” dismissal bc no clear
definition (ask: is relationship harmed completely?)
❖ Cases: disobey, incompetent, dishonest, insubordinate, fights
▪ Insubordination: disregard/disobey authority, oftn grounds 4 just cause
Layoff
o Temporary withdrawal of employment to workers for econ/business reasons
o Conditions:
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Managing turnover: turnover: termination of individual"s employment from company, voluntary turnover: employee-initiated, i. e. quit, retire, involuntary turnover: decision made by employer, i. e. dismiss, layoff. Bad hire cost 1 to 2 times workers salary. Involuntary turnover: should be fair/legal, after all reasonable steps taken to rehabilitate employment relationship (employees end up feeling cheated esp. during employee dismissal/downsizing) * important bullet , reasons, unacceptable job performance, economic/financial pressure, new strategic direction. Why people quit their jobs (video): main reason: bosses/managers, Overall level of satisfaction factors: reach career goals, intellectually challenged, work life balance, paid fairly, coworkers. Keep employees engaged and intellectually challenged, encourage work life balance, pay them fairly, set good examples. Dismissal for just cause: termination based on poor behaviour no severance/additional notice period required: if breaking law, breach of contract, Disobedience: justifiable reason to dismiss right on spot. Crucial to investigate fairly b4 stating just cause dismissal bc no clear definition (ask: is relationship harmed completely?)
