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Chapter 15

Chapter 15 BU354.docx

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John Coffey

BU354 Chapter 15Managing Employee Separations Week 12 The Importance of Managing Employee Separations HRM is important based on who leaves how they are treated during the exit what the cause or nature of the exit is and how remaining employees perceive this all impacts he longterm sustainability of the organization Managing Turnover Employee exits can become a huge challenge for organizationsThe time money and resources invested in recruiting training and maintaining employees is lost when employees exit a firmTurnoverthe termination of an individuals employment with an organizationTurnover can be either permanent or temporary and can be a result of action taken by either the employee or employerVoluntary turnoveremployeeinitiated termination of employment such as quits retirement or resignationInvoluntary turnoveremployerinitiated termination of employment such as dismissal or layoffEmployee exits from a firm are usually a mix of voluntary and involuntary turnover Individuals who hold occupations in management and administrationrelated positions are less likely to be laid off than individuals in other occupationsEmployees in the goods industry are more likely to experience a layoff whereas employees in the service industry are more likely to voluntarily leave their job via quitting The Cost of Turnover Turnover rates vary by industry by the size of the company and by ageSome companies are in a constant search for talentEx Fast food workersThe combination of having a company incur the cost of turnover as well as the cost of daytoday operations can be economically damagingReducing turnover by even 10 could potentially result in direct savings of roughly 140 million per yearDirect costs associated with turnover are often easier to estimate given that they are more visible while indirect costs associated with turnover are often overlooked but are still considerableFour main components associated with the cost of turnoverSeparation coststhe cost of exit interviews admin functions and separation or severance payVacancy coststhe net savings or cost incurred of increased overtime the use of temporaryworkers and the loss of sales associated with the vacancy Replacement coststhe cost of recruiting and hiring a replacement to fill the vacant position Training costsformal and informal training Voluntary Turnover Includes quitting resignations and retirementsEmployee initiates the termination of employmentPresents unanticipated challenges of replacing and retraining employeesHas significant relationships withLow organizational commitment Low role clarity Low tenure High role conflict Low overall job satisfactionFive reasons for employee turnover within an organization1 Suboptimal hiring practices2 Difficult managerial style
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