Mgmt 383

1. Mgmt 383 Chapter 3 Organizational and Individual Relations Fall 2008

2. Psychological Contracts • The unwritten expectations that employees and employers have about the nature of their work relationships • Quid pro quo • Loosely defines what actions are “fair” in the workplace. • Both tangible items and intangible items can affect the psychological contract.

3. Psychological Contracts • Generally, employers expect employees to provide: • Make continuous improvement • Increase productivity • Tenure (stay a reasonable time with the organization) • Provide extra effort when needed. • If the psychological contract is not altered, the employer may expect greater employee commitment (loyalty).

4. Psychological Contracts • Generally, employees expect employers to provide: • Competitive wages • Competitive benefits • Career development opportunities • Flexibility to balance family and work

5. Factors Adversely Affecting Individual & Organizational Relations • Mergers and acquisitions • Self-employment and contingent work • Less management job tenure • Job insecurity (economic anxiety) • Downsizing • Global competition • Job obsolescence

6. Factors Adversely Affecting Individual & Organizational Relations • Executive pay v. the plight of the workers. • Some executives appear to be rewarded for downsizing. • As wages stagnate or decline, executive pay appears to be increasing. • Lack of reciprocity.

7. Factors Affecting Satisfaction and Commitment Individual Characteristics Ability Motivation Support The Job • Design • Job elements Job Satisfaction Organizational Commitment Absenteeism/ Turnover

8. Individual Motivation • Motivation - the inner strivings that initiate a person’s action. • Motivation - stimulating goal-directed behavior. • We can either motivate our employees to stay or to leave.

9. Organizational Commitment • Organizational Commitment– the degree to which an individual believes in and accepts organizational goals, and the degree of desire to remain a member of the organization.

10. Types ofOrganizational Commitment 1.Normative Commitment - the responsibility that the individual feels toward the organization and its goals. 2.Affective Commitment - how strongly an individual identifies with the organization. 3.Continuance Commitment - how strongly the individual judges the consequences of leaving the organization.

11. Low Organizational Commitment Consequences Loworganizational commitment has two consequences • Higher absenteeism (costs about $505 per employee per annum) • Higher turnover and related costs • Recruiting costs • Orientation costs • Lost productivity • Separation costs

12. Individual Performance Factors Effort Motivation Attendance/turnover Job design Work ethic Individual Performance Ability KSA Interests Personality traits Support Training & Development Equipment Performance Standards

13. Retention • Again, one of the factors contributing to organizational effectiveness. • HR must to focus on keeping the people with the critical KSA the organization needs to accomplish its objectives. • Sometimes referred to as tenure.

14. Retention • Myths about tenure: • Money is the main reason people leave. [WR story] • Hiring has nothing to do with retention. • If you train people, you are training them for another employer. • Don not be concerned about retention during a merger. [You may loses your most mobile employees] • If solid performers want to leave, the organization cannot hold them.

15. Drivers of Retention • Character of the employer • Job design and work • Career opportunities • Rewards • Employee relationships

16. Character of the Employer • Cultural and values • Organization culture – the shared values and beliefs of the organization. • Working for a first rate institution, as opposed to a diploma mill. • Management– good leadership and vision as opposed to self-serving and incompetent. • Job Security

17. Job Design/Work • Job Design – organizing TDR into a productive unit of work. Reasons for systematic job design: • Maximize performance • Enhance job satisfaction • Reduce adverse affects to physical and mental health. • Person/Job Fit – matching the characteristics of applicants with the characteristic of the job. • Introvert with a sales job?

18. Job Design/Work • Some factors in Design that have a positive impact on retention: • Good equipment • Up-to-date technology • Good working conditions • Good physical workplace environment (space, lighting, temperature, and noise) • A safe working environment

19. Time Flexibility Considerations • Global Work Scheduling Differences • Shift Work • Shift differentials for evening and graveyard shifts. • Compressed Work Weeks • Flextime • Core time • Many jobs are not conducive to flextime.

20. Work Flexibility Considerations • Compressed Work Weeks • Leave for children’s school functions • Job Sharing • Telecommuting • On-site child care • On-site elder care • EAPs • Wellness programs • Fitness facilties

21. Career Opportunities • Training/Development and mentoring. • Confidence that you can perform your job enhances job satisfaction. • Lack of self-confidence leads to turnover. • Career Planning/Advancement Opportunities • Promotion show that you are valued by your employer.

22. Rewards • Compensation and benefits must be competitive. External inequity causes dissatisfaction. • Performance-based compensation rewards exceptional performance and indicates it is recognized and valued. • Why work hard if everyone is paid the same. • If everyone is special, then no one is special. • Recognition • Tangible rewards ($) • Intangible rewards (plaques)

23. Employee Relationships • Are policies and practices fair. • Nondiscriminatory in an EEO sense. • Not given to favoritism or nepotism. • Are actions consistent? • Do you receive sufficient mangment and organizational support? • Do you get along with your co-workers?

24. Types of Employee Absenteeism • Voluntary – avoidable • Involuntary – unavoidable • Sick leave • Death in the family

25. Reasons for Absenteeism • Family Issues - 22% • Personal Illness - 36% • Stress - 11% • Personal Needs - 18% • Entitlement Mentality - 13% Source: CCH 2003 study.

26. Controlling Absenteeism • Discipline • Positive reinforcement – rewards for good attendance. • Combination • “No fault” policies - reason for absence does not matter after “x” absences, disciplinary action is automatic. • Paid-time-off (PTO) - once they run out, they are no longer paid for absences.

27. Types of Employee Turnover • Involuntary – employer terminates employment. • Voluntary - employee terminates employment. • Functional – low performers or disruptive employees leave. • Dysfunctional – key employees or high performers leave. • Uncontrollable – employee moves out of area, employee stays home to raise kids, spouse is transferred, returns to school, etc. • Controllable – employee leaves due to factors influenced by employer (pay, level of supervision, etc.)

28. Retention • Measuring the turnover rate Number of employee separations per mo. Total number of employees x 100

29. Turnover Costs • Separation Costs • Processing costs • Legal fees if separation is challenged • Continued benefits (COBRA) • Accrued vacation and paid time off. • Replacement Costs • Recruiting and selection costs • Employment referral fees • Lost supervisor’s time • Employment testing expenses • Overtime for replacements • Fees for temporary employees (if used)

30. Turnover Costs • Training Costs • Orientation for replacement (this is paid time with no production) • Lost supervisor’s time • Training staff wages • Training materials costs • Hidden Costs • Lost supervisor’s time • Lost productivity • Missed deadlines • Decreased customer service • Decreased morale and turnover of other employees

31. Retention Interventions • Better Selection • Good Orientation/Training • Equitable Compensation & Benefits • Good Talent Management (Career Planning & Development) • Good Employee Relations (Fair Policies and Discipline) • Realistic Job Previews

32. Realistic Job Previews • A Realistic Job Preview (RJP) is any part of the selection process that gives the applicant a clear idea of what it will be like to work at the job if they are hired. • Special characteristics of the job • Hours • Specific requirements • “Typical" day on the job • Allows the candidate an opportunity to quit before he or she is hired.