RETENTION AND

MOTIVATION
MBA 103
Jomary C. Brequillo
Learning Objectives:

7.1 The Costs of Turnover 7.2 Retention Plans

1.Be able identify the difference between direct and 1.Be able to discuss some of the theories on job
indirect turnover costs. satisfaction and dissatisfaction.
2. Describe some of the reasons why employees leave. 2. Explain the components of a retention plan
3. Explain the components of a retention plan.
7.3 Implementing Retention Strategies
1. Explain the strategies and considerations in the
development of a retention plan

TREY 2
research
What is Turnover?
• Turnover is the Loss of an employee.

Two Types of Turnover:

• Voluntary Turnover - the type of turnover that is
initiated by the employee for many different reasons.
• Involuntary Turnover- the type of turnover where the
employee has no choice in their termination—for
The Cost of
example, employer-initiated due to nonperformance
Turnover
TREY 3
research
TURNOVER RATE FORMULA
Formula to compute the percentage of employee turnover

X 100

**

TREY 4
research
TURNOVER RATE FORMULA
For Example: we have 118 employees, during the month For example: Let’s say of the three separations, two
3 already left the company and we are left with 115 were in the accounting department. We have ten people
employees midmonth left in the accounting department.

X 100 X 100

Turnover % in the company:

Turnover % in the acctng dept:
TR= x 100 TR= x 100
TR= x 100 TR=0.2 x 100
TR=0.026 x 100 Turnover Rate= 2%
Turnover Rate= 2.6%

TREY 5
research
What is the industry standard for turnover rate?

As a general rule, employee retention rates of 90 percent or higher

are considered good and a company should aim for a turnover rate of 10%
or less. Inadequate staffing levels to cover the workload.

TREY 6
research
TWO TYPES OF TURNOVER COSTS
Costs associated when an employee leave.

Direct Cost Indirect Cost

• Recruitment costs • Lost knowledge
• Advertising costs for new position • Loss of productivity while new employee is brought
• Orientation and training of new employee up to speed
• Severance costs • Cost associated with lack of motivation prior to
leaving
• Testing costs
• Cost associated with loss of trade secrets
• Time to interview new replacements
• Time to recruit and train new hires

TREY 7
research
 Common reasons of Voluntary Turnover

Job
Mismatch

family
Lack of
situation
growth
changes

Employee
Turnover

Internal pay
Workload
equity

Management

Add a footer TREY 8

research
What is HPWS?
High-performance work systems (HPWS).

 Effective high-performance work systems (HPWS) is the name given to a set of

systematic HR practices that create an environment where the employee has greater
involvement and responsibility for the success of the organization.

 A high-performance work system is a strategic approach to many of the things we

do in HR, including retention.

TREY 9
research
COMPONENTS OF HPWS

TREY 10
research
Theory of
Dissatisfaction
Let’s define first what job satisfaction and job
dissatisfaction is.

TREY 11
research
RETENTION PLAN
Steps of developing a retention plan:

1. Understanding some of the theories on job

satisfaction and dissatisfaction.
2. Gather data as to the satisfaction level of our
current employees
3. Implement specific strategies for employee
retention

Add a footer TREY 12

research
Theory of Job Satisfaction and Job Dissatisfaction

Progression of Job Withdrawal

Hawthorne Studies

Maslow’s Hierarchy of Needs

Herzberg Two-Factor Theory

McGregor

Carrot and Stick

TREY 13
research
Progress of Job Withdrawal
This is one of the basic theories, this theory was developed by Dan Farrell and James Petersen.

Emplo
yee • For any number of reasons discussed earlier in this chapter.
beco
mes
dissati
sfied

• If unionized, increased grievances

Behav • Whistle-blowing
ior • Change of conditions,such as applying for other jobs
Chang
e

• Leave the job

• Internal transfer
Physic
al
• Absenteeism
withd • Tardiness
rawal

• Disengagement in job and/or with team members

Psychol
• Less organizational commitment
ogical • Becomes less productive
withdr
awal

TREY 14
research
Hawthorne Studies:

 Developed by Elton Mayo in Western Electric Hawthorne Works

company in Illinois, he conducted a series of experiments
between 1927 and 1932.

 The experiment focuses on the physical and environmental

factors of the workplace such as lighting and break times, would
affect employee motivation.

TREY 15
research
Maslow’s Hierarchy of Needs:
 This was developed by Abraham Maslow in 1943.

When we usually see a pyramid, we start at the bottom and

gradually work our way up.

• Physiological Needs are the most basic needs.

• Safety needs at work might include feeling safe in the actual
physical environment or job security.
• Social needs or love and belonging
• Esteem needs refer to the need we have to feel good about
ourselves.
• Self-actualization needs are the needs we have to better
ourselves.

TREY 16
research
Maslow’s Hierarchy of Needs:

For example, if a person is lost in the woods, they are likely

looking to fulfill their physiological needs. They may be hungry,
thirsty, lacking shelter, or cold. This individual would probably
not be concerned with their financial security or their need to
belong in a group. They are looking to fulfill the conditions for
their immediate survival.

TREY 17
research
Herzberg Two-Factor Theory:
 This was conducted by Frederick Herzberg in 1959.

 Herzberg's two-factor theory is a motivation theory

that suggests that satisfaction and dissatisfaction at
work are influenced by two sets of factors: hygiene
factors and motivators.

 Hygiene factors are basic job necessities, such as

working conditions and salary, that, if not met, can
cause dissatisfaction.

 He further said the hygiene factors were not

necessarily motivators, but if not present in the work
environment, they would actually cause demotivation

TREY 18
research
Herzberg Two-Factor Theory:

MOTIVATION FACTORS
1. Achievement 1. Company policies
2. Recognition 2. Supervision
3. The work itself 3. Relationship with

HYGIENE FACTORS
4. Responsibility manager
5. Advancement 4. Work conditions
6. Growth 5. Salary
6.Relationship with
peers

TREY 19
research
Herzberg Two-Factor Theory:

TREY 20
research
McGregor:

 Douglas McGregor proposed the X-Y

theory in his 1960 book called The Human
Side of Enterprise.

 This theory gives us a starting point to

understanding how management style can
impact the retention of employees.

 Two fundamental approaches to managing

people.
 Theory X managers
 Theory Y managers

TREY 21
research
McGregor:
Theory X Theory Y
• The average person dislikes work • Most people want to make an
and will avoid it. effort at work.
• Most people need to be • People will apply self-control and
threatened with punishment to self-direction in pursuit of
work toward company goals. company objectives.
• The average person needs to be • Commitment to objectives is a
directed. function of expected rewards
• Most workers will avoid received.
responsibility. • People usually accept and actually
welcome responsibility.
• Most workers will use imagination
and ingenuity in solving company
problems.

TREY 22
research
McGregor:
THEORY X THEORY Y
Their employees get their
Their employees enjoy
motivation to work from a
SOURCES OF MOTIVATION working for the sake of
desire to achieve personal
assuming responsibility
goals
More likely to implement a
Less likely to implement a
USE OF REWARD reward system to motivate
reward system
employees.
Level of involvement from Supervise their employees Usually place a lot of trust
management personnel: directly in each member

Often assume that

employees need formal
Tend to assume that
Assumptions about direction, resist change,
employees can work
employees value job security above all
independently
else and dislike additional
responsibilities.

Effective on overseeing
More creative industry
Ideal environment for employees who are
that requires critical and
application performing manual labor or
analytical thinking
using an assembly line

TREY 23
research
Carrot and Stick:
 The term was coined in the 1700s during the Seven
Years’ War

 Carrot and stick motivation is a motivational

approach that involves offering a “carrot” (a
reward—for good behavior) and a “stick” (a
negative consequence for poor behavior).

Examples of the carrot approach will be:

• If you increase sales by 10 percent, you will receive a
bonus.
• If production increases by 15 percent, the entire
team will receive an extra day off next month.
While the stick approach will be:
• If you don’t increase your sales by 10 percent, you
will be fired.
• Everyone will have to take a pay cut if we don’t
produce 15 percent more than we are currently
producing.
TREY 24
research
Carrot and Stick:

How to implement a carrot and stick policy

Use these steps to begin a carrot and stick motivational
policy for your team:

 Set a goal.
 Create an incentive.
 Compensation
 Benefits
 Recognition
 Appreciation
 Decide who should receive the carrot.
 Outline a consequence.
 Decide who should receive the stick.
 Choose your carrot and stick policy carefully.

TREY 25
research
 Sources of
Employee
Satisfaction Data
How can we gather data about employee satisfaction?

TREY 26
research
Sources of Employee Satisfaction Data:
 RESEARCH
 EXIT INTERVIEW  Exit interviews can be a valuable way to
> an interview performed by HR or a manager who gather information about employee
seeks satisfaction and can serve as a starting
information as to what the employee liked at the organization point for determining any retention issues
and what they see should be improved. that may exist in the organization.
SAMPLE EXIT INTERVIEW QUESTIONS
1. What is your primary reason for leaving?
2. What did you like most about your job?
3. What did you like least about your job?
4. Did you feel there was room for growth in
your job?
5. What incentives did you utilize while at our
company?
6. Which incentives would you change and why?
7. Did you have enough training to do your job
effectively?

TREY 27
research
Sources of Employee Satisfaction Data:

TREY 28
research
Sources of Employee Satisfaction Data:
 Employee satisfaction surveys.
 (JDI) survey  Things to consider in developing JDI Survey:
> A standardized and widely used measure of job 1. Communicate the purpose and goal of
satisfaction is the job descriptive index (JDI) survey. the survey.
>Initially developed in 1969 at Bowling Green State 2. Once the survey is complete,
University by Smith, Kendall, and Hulin communicate what changes have been made as a
result of the survey.
3. Assure employees their responses will
 FIVE ASPECTS OF JDI: be anonymous and private.
1. Present job 4. Involve management and leadership in
2. Present pay the survey development.
3. Opportunities for promotion 5. Ask clear, concise questions that get at
4. Supervision the root of morale issues.
5. Coworkers

TREY 29
research
Sources of Employee Satisfaction Data:
 Employee satisfaction surveys.
 (JDI) survey  Things to consider in developing JDI Survey:
> A standardized and widely used measure of job 1. Communicate the purpose and goal of
satisfaction is the job descriptive index (JDI) survey. the survey.
>Initially developed in 1969 at Bowling Green State 2. Once the survey is complete,
University by Smith, Kendall, and Hulin communicate what changes have been made as a
result of the survey.
3. Assure employees their responses will
 FIVE ASPECTS OF JDI: be anonymous and private.
1. Present job 4. Involve management and leadership in
2. Present pay the survey development.
3. Opportunities for promotion 5. Ask clear, concise questions that get at
4. Supervision the root of morale issues.
5. Coworkers

TREY 30
research
Sources of Employee Satisfaction Data:

TREY 31
research
IMPLEMENTING
RETENTION
STRATEGIES

TREY 32
research
RETENTION PLAN
 Here are the components of a retention plan:
1. JDI survey results, other survey results, and exit
interview findings
2. Current retention plans, strengths, and
weaknesses.
3. Goals of a retention plan (e.g., reduce turnover
by 10 percent)
4. Individual strategies to meet retention and
turnover reduction goals.
5. Budgeting. An understanding of how your
retention plans will impact the payroll budget is
important.

TREY 33
research
Implementing Retention Strategies
 Salaries and Benefits
 Training and Development
 Performance Appraisals
 Succession Planning
 Flextime, Telecommuting, and Sabbaticals
 Management Training
 Conflict Management and Fairness
 Job Design, Job Enlargement, and Empowerment
 Pay-for-Performance Strategies
 Work-Life Balance
 Other Retention Strategies

TREY 34
research
Salaries and Benefits
 A comprehensive compensation plan that includes
not only pay
 health benefits and
 paid time off (PTO)

> Considerations surrounding pay as a way to retain

employees.
1. Instituting a standard process.
2. A pay communication strategy
3. Paid time off

TREY 35
research
 *Seattle Genetics
Training and Development What the company does: Seattle Genetics is a
biotechnology company focused on developing antibody-
based therapies to treat cancer.
 HR professionals and managers can help
Locations hiring: Bothell, Washington
employees attain self-growth by:
Number of employees: 800
1. Offering training programs within
Programs offered: Tuition reimbursement, onsite training
the organization
courses to enhance job-related skills and access to job-
2. Paying for employees to attend
related conferences and seminars. “We encourage and
career skill seminars and programs.
support continuing education, offer onsite training to
3. Companies offer tuition
enhance job- and management-related skills and provide
reimbursement programs to help the
opportunities for our employees to attend job-related
employee earn a degree.
conferences and seminars,” says Taylor Cline, staffing
associate.
Why the company offers this perk: “Developing our
employees’ careers is an investment for both our employees
and the future of Seattle Genetics,” says Cline.
What kind of employee the company is looking for: “Team
members who bring enthusiasm to everything they do,”
says Cline. “We look for employees who are constantly
striving to attain individual goals while recognizing the
power of working collaboratively.”
TREY 36
research
Performance Appraisals
 The performance appraisal is a formalized process
to assess how well an employee does his or her job.

Succession Planning:
• Succession planning is a process of identifying and
developing internal people who have the potential
for filling positions

The goals of a succession planning would usually include:

 Identify high-potential employees capable of advancing to positions
of higher responsibility.
 Ensure the development of these individuals to help them be
“ready” to earn a promotion into a new position.
 Ensure diversity in the talent bench by creating a formal succession
planning process.

TREY 37
research
Flextime, Telecommuting, and Sabbaticals
 According to a Salary.com survey, the ability to work
from home and flexible work schedules are benefits that
would entice an employee to stay in their job.
 A sabbatical is a rest or break from work; “an extended
period of time intentionally spent on something that’s
not your routine job.”

Management Training:
• Training of managers to be better communicators
and motivators is a way to handle this retention
issue.

TREY 38
research
Conflict Management and Fairness
 There are six main areas employees will use to determine the
outcome fairness of a conflict:
1. Consistency
2. Bias Suppression
3. Information Accuracy
4. Correctability
5. Representatives
6. Ethically

 Some of the procedures questioned could include the

following:
1. How time off is requested
2. How assignments of the “best” projects are given
3. Division of work
4. Promotion processes
5. Pay processes

TREY 39
research
Job Design, Job Enlargement, and Empowerment
 Job design refers to the way that a set of tasks, or an  Employee empowerment involves
entire job, is organized. employees in their work by allowing them
 The definition of job enlargement is adding additional to make decisions and act upon those
activities within the same level to an existing role. decisions, with the support of the
organization
In fact, research in this area by Richard Hackman and Greg Oldham found that
employees need the following to achieve job satisfaction:
• Skill variety, or many different activities as part of the job
• Task identity, or being able to complete one task from beginning to end
• Task significance, or the degree to which the job has impact on others,
internally or externally
• Autonomy, or freedom to make decisions within the job
• Feedback, or clear information about performance

TREY 40
research
Pay-for-Performance Strategies
 A pay-for-performance strategy means that
employees are rewarded for meeting preset
objectives within the organization.

To make sure a pay-for-performance system works, the

organization needs to ensure the following:
• Standards are specific and measureable.
• The system is applied fairly to all employees.
• The system is communicated clearly to employees.
• The best work from everyone in the organization is
encouraged.
• Rewards are given to performers versus nonperformers.
• The system is updated as the business climate changes.
• There are substantial rewards for high performers

TREY 41
research
Pay-for-Performance Strategies

TREY 42
research
Work-Life Balance
 Work-life balance discussions originated during the 1960s
“Work-life balance comes down, not to an
and 1970s and pertained mostly to working mothers’
organizational strategy, but to an individual
meeting the demands of family and work.
strategy.”
 work-life balance is the state of equilibrium where a
person equally prioritizes the demands of one's career
and the demands of one's personal life.

Work-life balance tips for employees:

1. Offer Flexibility
2. Encourage Breaks
3. Encourage Altruism
4. Allow Time Off
5. Encourage Hobbies

TREY 43
research
Other Retention Strategies
 According to Fortune’s “100 Best Companies to Work
For,” retention strategies that are more unusual might be
part of your retention plan.
1. Some strategies from the list might include the following:
On-site daycare or daycare assistance
2. Gym memberships or on-site gyms
3. Concierge service to assist in party planning or dog
grooming, for example
4. On-site dry cleaning drop-off and pickup
5. Car care, such as oil changes, on-site once a week
6. On-site doggie daycare
7. On-site yoga or other fitness classes
8. “Summer Fridays,” when all employees work half days on
Fridays during the summer
9. Various support groups for cancer survivors, weight loss,
or support in caring for aging parents
10. Allowance for fertility treatment benefits
11. On-site life coaches
TREY 44
research
Large image

“Everyone wants to be appreciated, so if

you appreciate someone, don’t keep it a
secret.” – Mary Kay Ash, businesswoman
& founder of Mary Kay Comestics

TREY 45
research
ThankYou

TREY 46
research