Employee Retention and Turnover Management

Importance of Customer Satisfaction and Loyalty

Organizations need satisfied and loyal customers.
For publicly held firms, there is also a critical need for satisfied investors.
Customers and investors provide financial resources essential for organizational survival.
Employee satisfaction and loyalty are often overlooked despite their strong link to organizational performance.

Research shows a direct link between employee retention and sales growth.
Companies listed as among the 100 best places to work often outperform competitors on financial performance indicators.
This relationship is particularly pronounced in service industries where direct employee/customer contact is vital.
Various chapters (eight and nine) provide insights into managing employee retention and talent attrition.

The chapter discusses methods for retaining high-performing employees and managing low performers during separation.
Retention strategies often revolve around compensation and benefits issues.

Turnover is categorized into:
- Involuntary Turnover: Initiated by the organization among employees who may wish to stay.
- Voluntary Turnover: Initiated by employees whom the organization may prefer to retain.

It is vital to recognize that both types of turnover (involuntary and voluntary) are different and require separate management strategies.
LO 10-1 aims to distinguish these two turnover types and their implications for competitive advantage.
Example:
- Amazon faced significant misconduct when employees accepted bribes, leaking sensitive data, leading to swift action from the firm to curb potential ramifications.
- The importance of decisive action against employee misconduct to avoid catastrophic organizational failure is emphasized.
Failing to address employee misconduct can lead to significant damages, as exemplified by the case of Derek Chauvin, whose previous complaints went unchecked.

Terminating employees poses legal complexities and risks due to potential lawsuits.
Historical context of the employment-at-will doctrine, which has evolved over time leading to wrongful discharge lawsuits.
Example case:
- A lawsuit involving Walmart shows wrongful discharge claims can arise when employees are separated for voicing valid concerns.
A wide range of protected groups exists, which complicates termination processes.

Maintaining poor performers due to fear of litigation can harm morale and productivity.
Example: Wells Fargo faced penalties and growth restrictions due to their failure to monitor employees’ ethical practices.
Long-term retention of poor performers leads to erosion of high standards within organizations.

Crucial to establish a perception of fairness (justice) in employee dismissals, focusing on:
- Outcome Justice: Fairness of the decisions based on input/output ratios.
- Procedural Justice: Fairness in the methods and processes leading to a decision.
- Interactional Justice: Sensitivity in interpersonal treatment during the termination process.
Example: Misconduct at JPMorgan leads to accusations of procedural injustice due to inconsistencies in termination reasoning.

Effective disciplinary measures should include documentation of employee performance and progressive disciplinary measures to address issues over time.
An effective system can mitigate issues surrounding wrongful discharges in the future.

Involves systematic stages with resolution attempts to resolve conflicts prior to litigation.
The use of ADR has increased but can lead to decreased transparency in workplace issues.

EAPs are critical in addressing substance abuses issues leading to terminations.
These programs aim to help employees seek assistance while balancing privacy rights against workplace safety.
Rising opioid addiction among workers highlights the ongoing relevance of EAPs for employer liability and safety concerns.

Wellness initiatives aim to promote health and prevent issues before they escalate.
Evidence indicates that merely offering wellness programs without engagement can be ineffective.

Provides resources for dismissed employees to transition from one job to another, reducing chance of retaliation and litigation against the organization.
Effective outplacement can help retain other employees and improve corporate reputation.

Retaining high performers is critical as turnover can cost organizations significantly (1.5-2.0 times the employee's salary).
Younger generations prioritize benefits and workplace culture over pay.

Different withdrawal behaviors include:
- Behavior Change: Attempts to change unsatisfactory job conditions.
- Physical Job Withdrawal: Leaving the job or being absent.
- Psychological Job Withdrawal: Emotional disengagement from job responsibilities.

Job satisfaction is heavily influenced by management quality, workplace relationships, and the perceived value of the work performed.
Safe working conditions and positive organizational culture are key to employee satisfaction.
Pay and benefits are critical but not the only determinants for employee retention.

Organizations must implement systematic measurement practices to track employees' job satisfaction effectively.
Survey feedback is an essential tool in retaining talent and improving satisfaction.