You Manage It! 3: Customer-Driven HR From Turnover to Retention: Managing to Keep Your Workers
Turnover is costly for organizations. In addition to the direct costs of recruiting, hiring, and training new talent, turnover can have negative effects that can be difficult to quantify. The loss of front-line employees, for example, can have a negative effect on customer service and can reduce the morale of remaining employees. In addition, employee turnover can result in a loss of expertise and knowledge that is critical to the operation.
One way to reduce turnover is to approach the issue from the perspective of what can be done to get employees to stay. The employee-equity model provides a framework for addressing strategies for increasing employee retention.
As shown in the “Employee Equity Model” graphic, the employee-equity model indicates that employee retention is a function of three equity levels: value, brand, and retention. Value equity is the employees’ perception of the employment exchange. It is the fairly objective assessment of the costs and benefits of the job. For example, how does the pay measure up against the effort and difficulty of performing the job? Although working conditions are a central value-equity concern, convenience can also be a factor. For example, the worker’s value-equity assessment might be affected negatively if the job is located in an area that is difficult to reach or the hours of the job are difficult to accommodate. Brand equity is a more subjective emotional assessment of an organization’s desirability. In making a brand-equity assessment, a worker might consider how the employer treats workers, the organization’s culture, and how it approaches ethics. Brand equity reflects the extent to which a worker is happy, or even proud, to be working for the organization. Retention equity is the worker’s perceived benefit of staying with the organization. Key factors in retention-equity assessments are seniority and pension plans. Other factors that can influence retention equity are the opportunities in the organization for development and for career advancement. In addition, the extent to which organizational members have a sense of community can influence retention equity levels.
Critical Thinking Questions
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6-26. The employee-equity model provides value, brand, and retention equity perceptions as important determinants of whether an employee stays with an organization. Do you think that the three components are independent, or do they influence each other? Is this a problem for managing retention with the employee equity model? Why or why not?
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6-27. How would you measure value, brand, and retention equity in an organization? How often do you think the three characteristics should be measured?
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6-28. Given your response to item 2, how would these measures be useful? What could they be used for?
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6-29. Value, brand, and retention characteristics could be used as criteria, or standards, for assessing management programs and actions. For example, consider recruitment and/or performance appraisal. If you were trying to maximize employee retention, how might you go about recruitment or performance appraisal so that value, brand, or retention equity is influenced positively?
Team Exercise
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6-30. The things that might lead a person to quit might not be the same things that lead a person to stay with an organization. For example, another job offer or the tendency to always be looking for new opportunities elsewhere can lead a person to quit.
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a. Using the employee equity framework, identify the types of things that the organization could do to improve retention. Organize these actions or programs according to whether the primary focus is on improving value, brand, or retention equity.
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b. What is the management advantage of focusing on these retention efforts? That is, instead of focusing on why someone quits, why focus on retention?
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Experiential Exercise: Team
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6-31. Divide the team into three groups. Each group will choose value, brand, or retention equity. Or, if team sizes are smaller, each team will select an equity component. For each equity component, generate survey items or interview questions that would measure that form of equity. For each item or question, identify organizational characteristics or management actions that would maximize the measure. Share your measures and proposed management actions with the rest of the class.
Experiential Exercise: Individual
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6-32. Generate survey or interview items that would capture value-, brand-, or retention-equity levels in workers. If possible, ask a sample of your friends and neighbors to take a survey based on your items. Are value, brand, and retention equities high or low? For low levels, ask your survey respondents what they think their employers could do to improve these levels.
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b. Are there differences among groups of employees in terms of the importance placed on value, brand, or retention equity? For example, might production, sales, and staff workers weigh the three equity components differently? If so, identify the component that you think would be most important for each group. How might differentiating among groups of employees in terms of the importance placed on the three equity components be useful to management? Share your findings and conclusions with the rest of the class.
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