Bauer, Human Resource Management
SAGE Publishing, 2020
Lecture Notes
Chapter 10: Managing Employee Separations and Retention
Learning Objectives
10.2. Explain the costs of voluntary turnover to an organization.
10.3. Identify the steps organizations should take to manage employee retention.
Chapter Summary
This chapter aims to describe how to manage employee separations, whether by employee or employer
choice, and retention in order to ensure the organization has the right talent to get work done. The
chapter begins with an overview on the kinds of employee separations. Then, voluntary turnover is
Annotated Chapter Outline
I. Understanding and Managing Employee Separations: There are different forms of employee
separation.
A. Voluntary turnover: departure initiated by an employee
i. Typically because of the availability of better alternatives or unhappiness with
B. Involuntary turnover: discharge initiated by the organization
i. Dismissal: employment termination
ii. Layoffs: separation due to economic or strategic reasons
II. Voluntary Turnover
i. Occurs when employees quit their jobs
ii. Can be considered the final stage of employee withdrawal at work
iii. Turnover rate
a. Formula and calculation
iv. Retention rate
Bauer, Human Resource Management
SAGE Publishing, 2020
B. Costs of Voluntary Turnover
i. One estimate: replacing an employee may cost between 90% to 200% of their
annual salary
ii. Voluntary turnover is negatively related to workforce productivity
iii. Three key reasons that this is problematic
a. Direct costs involved in replacements
iv. More impactful in certain industries and contexts
C. Causes of Voluntary Turnover
i. Function of desire to leave and ease of movement
a. Reasons to desire to leave
b. Factors impacting ease of movement
III. Managing Employee Retention: factors for organizations to retain their employees and
strategies to cope with turnover
A. Gain Upper-Management Support
i. Example: Hydratech Industries and calculating the cost of turnover
B. Leverage Engagement and Attitude Surveys
i. Impact of predictive analytics
a. Reported intentions to leave
C. Utilize Exit Interviews
i. Must be conducted regularly and the data analyzed and disseminated to effect
change
a. Stay interviews: interviews of employees who are not leaving
D. Hire for Fit
i. Maximizes happiness and engagement at work
E. Structure Onboarding Experiences
Bauer, Human Resource Management
SAGE Publishing, 2020
i. Korn Ferry survey: 10% to 25% newly hired employees leave within their first 6
months
F. Invest in High-Commitment HR Practices
i. Investment in long-term and high-quality management–employee relationships
reduces employee turnover.
G. Focus on Turnover Predictors
i. Job satisfaction: employee’s contentment with different facets of their work
ii. Work engagement: feelings of emotional connection to work and a state of
H. Learn How to Cope With Turnover
i. Chronically high turnover rate in some industries
a. Necessitates a combination of a turnover reduction strategy with a
turnover management strategy
J. Retirements
i. A type of work withdrawal where working activities are replaced with other life
activities or a different career
ii. Costs and benefits to the organization
a. Incentive for organizations to manage retirements
iii. Personal and work-related reasons for retirement
iv. “Age–friendly workplace”
Bauer, Human Resource Management
SAGE Publishing, 2020
IV. Involuntary Turnover: Dismissals: when the employee is a poor fit for the job and the
organization decides to terminate the employment relationship
A. Costs of Dismissals
i. Risks to the organization
B. When to Dismiss an Employee
i. Did you investigate the root cause of performance deficiencies?
a. Progressive discipline system: aim to ensure that employees have a
chance to correct their behavior and are given multiple chances
iv. Did you consider the timing of your decision?
C. The Legal Side of Dismissals
i. Employment at will: The organization has the right to terminate the employment
of anyone at any time, and employees have the right to quit at any time.
a. A two-week notice is not a legal requirement.
ii. Wrongful dismissal: a dismissal that violates the law
a. Collective bargaining agreement
f. Covenant of good faith
iii. Potential for a costly lawsuit
D. The Dismissal Interview
i. Be there.
a. Responsibility of the dismissed employee’s manager
ii. Be straightforward.
i. Reasons to explain
V. Involuntary Turnover: Layoffs: reducing the number of employees is a method for
organization dealing with the pressures of containing and reducing costs
A. Costs of Layoffs
Bauer, Human Resource Management
SAGE Publishing, 2020
a. Unemployment insurance: payment made to unemployed individuals
B. Benefits of Job Security
i. Job insecurity: the feeling and worry that individuals may suddenly lose their jobs
a. Important stressor
C. Deciding Layoff Criteria
i. Depends on organizational needs
iv. Importance of good records of criteria and systematic implementation
v. Importance of conducting an adverse impact analysis
D. The Legal Side of Layoffs
i. Worker Adjustment and Retraining Notification Act (WARN)
a. Covers employers with at least 100 full-time employees, or with at least
E. Delivering the Message
i. Professional and compassionate manner
F. Severance Pay: payments made to departing employees during organizationally
initiated turnover
i. Often include 1 or 2 weeks of pay for each year the employee has been
employed by the organization
Bauer, Human Resource Management
SAGE Publishing, 2020
ii. May include additional benefits
iii. Reasons to provide a severance package
G. Outplacement Assistance