Myths about Retention

Chapter 3 of the text has a section on Myths about Retention in the workplace.  I thought this was a good topic to discuss because people tend to have the wrong idea about what makes a good employee stay with a company.

The text lists 5 main myths that are commonly found:

1. Money is the main reason people leave- Although it's true that money is a powerful tool to recruit employees, if they feel they are being paid at a competitive level, they'll usually stay.

2.  Hiring has nothing to do with retention- According to the text, "This is not true.  Recruiting and selecting the people who fit the jobs and who are less likely to leave in the first place, and then orientating them to the company, can greatly increase retention."

3.  If you train people, you are only training them for another employer-  Although some people do this, it's not always true.  "The developing skills in employment may indeed make them more marketable, but it also tends to improve retention.  When an employer provides employees with training and development assistance, job satisfaction may increase and employers are more likely to stay."

4. Do not be concerned about retention during a merger- "That is exactly the time to worry about retention.  Although some people's jobs may have to be cut after a merger, the employees the company would like to keep may have the most opportunity to leave voluntarily.  During a merger, all the employees are concerned about job security, and if they do not feel a part of the new organization early on, many will leave."

5.  If solid performers want to leave, the company cannot hold them-  "Employees are best viewed as free agents.  They can indeed leave when they want.  The key to keeping solidly performing employees is to create an environment in which they want to stay and grow."

These are just some of the common myths about retention in the workplace.  There are several more that go without being noticed each day.

Workforce Retention (Cause and Effect)

A study was performed in Australia, to determine the factors that influence the length of practice.  The study wanted to find out which factors are most significant in a general practitioner’s decision to stay.  A national questionnaire was performed in 2001 in the rural, remote, and metropolitan areas.  They used a sample of 1400 rural practitioners obtained from the Health Insurance Commission. (Humphreys, Jones, 2002)

The study found that the top three reasons why GP’s would quit were:

1. On-call arrangement (Social factors relating to personal characteristics of the family)
2. Professional Support (Professional Issues)
3. Variety of Rural Practice (External factors relating to the community and its geographical location)

It seems as though the major issues that most people would assume a reason for a GP to quit, were correct.  This same type of study can be applied to other fields of study.  You can take another survey and distribute it to employees in the technology industry to find out the main reasons that people will quit.   For example, another study was conducted for nursing retention.  A big part of the reason for the shortage of nurses is due to recruitment issues, but also retention is a problem.  One of the main problems that were found in the nursing workforce was intimidation.  This came as a surprise to me because I never would have guessed that bullying occurred in the medical field.  Although, it was sort of naive of me to think that bullying isn’t possible in any type of job.  That being said, a study performed in the United Kingdom found that roughly 38% of nurses had reported being bullied in the previous year, as well as 42% reported witnessing the bullying of nurses by other staff members. (Stevens, 2002)

Ethical Behavior and Organizational Culture

Chapter 1 of the text stresses a lot on Ethics/Ethical Behavior.  According to the text, "Numerous writers on business ethics consistently stress that the primary determinant of ethical behavior is organizational culture, which is the shared values and beliefs in an organization."
The cultures of an organization are what effect employee decisions.  That being said, HR plays a vital role in ensuring ethical behavior in companies.

Introduction of Ethics (Past and Present)

Companies seem to all define ethics differently, but how many ethics have we actually adopted from the past?  A study was performed of the fortune 1000 companies to see which ethics have actually been adopted as the years go by.

The study examined the following:

• Ethics-oriented policy statements
• Freestanding ethics offices
• Ethics and compliance telephone reporting/advice systems
• Top management and departmental involvement in ethics activities
• Usage of ethics training and other ethics awareness activities
• Investigatory functions
• Evaluation of ethics program activities

The results showed a high degree of corporate adoption of ethics policies.  However there was a wide variability in the extent to which these policies are implemented.

Just as expected, the firms differed substantially in their efforts to see that those policies or codes actually are put into use.  The only correlation that all firms seemed to share was that firms committed to the lower cost, possibly more symbolic side of ethics activity. (Cochran, 1999)

Defining Ethics (What's the purpose?)

A lot of people don't understand the purpose of ethics.  Why do we study them, and why are they so important?  The truth is, ethical standards are seen as more important than making a profit (by most companies).  Reason being, ethics demonstrate your integrity as a company, and what your morals are.  If you don't have sound morals, you usually can't be trusted in the business world.  Just because a company turns a constant profit, does not mean they are doing it ethically.

An article I came across titled, "Defining 'business ethics': Like nailing jello to a wall" demonstrated the importance of ethics in our corporate culture today.  The article first starts off by pointing out that the concept of ethics was first developed through religious, cultural, and philosophical beliefs.  Corporate ethics are a much newer branch of traditional ethics, and have been developed in modern day.

The article made two main points about ethics that I thought were worth mentioning:

1. One's business ethics cannot be separated from his/her own personal ethics. (Lewis, 1985)
2. A business will never be anymore ethical than the people who are in the business. (Lewis, 1985)

I completely agree with both of these points.  There's really no way to separate your personal ethics when you come into the corporate environment.  Your personal beliefs begin to factor into what you do in any given situation at work.  I also agree with the fact that a business cannot be any more ethical than the employees that work for it.  A company can boast high ethical standards all it wants, but it means nothing if its employees don't follow through with it.

Violations of Ethics

Forbes had an interesting article on the 5 most publicized Ethics Violations by CEOs.  The violations were:

1. Enron (Kenneth Lay)- Enron’s downfall, and the imprisonment of several of its leadership group, was one of the most shocking and widely reported ethics violations of all time. It not only bankrupted the company but also destroyed Arthur Andersen, one of the largest audit firms in the world.The charges related to knowingly manipulating accounting rules and masking the enormous losses and liabilities of the company. Lay and Skilling were tried together on 46 counts, including money laundering, bank fraud, insider trading and conspiracy. Skilling was convicted on 19 counts and sentenced to over 24 years in prison. (Forbes, 2013)
2. WorldCom (Bernard Ebbers)- As the SEC was conducting its investigation of Enron, an even larger CEO ethics violation was brewing. WorldCom, which at the time was the United States‘ second-largest long-distance telecommunications company, entered into merger discussions with Sprint. The merger was ultimately dashed by the Department of Justice over concerns about it creating a virtual monopoly. The situation took its toll on the company’s stock price. CEO Bernard Ebbers owned hundreds of millions of dollars in WorldCom stock, which he margined to invest in other business ventures. As the stock price dropped, banks began demanding that Ebbers cover more than $400 million in margin calls. Ebbers convinced the board to lend him the money so that he would not have to sell substantial blocks of stock. He also began an aggressive campaign to prop up the stock price by creating outright fraudulent accounting entries. WorldCom’s internal audit department ultimately discovered the fraud, and the audit committee was informed. The resulting SEC investigation resulted in the company’s bankruptcy filing in 2002 and the conviction of Ebbers on fraud, conspiracy and filing false documents charges. Ebbers began a 25-year sentence in federal prison in 2006.(Forbes, 2013)
3. (Conrad Black)Hollinger International- Canadian Conrad Black created Hollinger Inc., the parent company of Hollinger International, in the mid-1980s with the purchase of the controlling interest in the Daily Telegraph. With a number of other purchases throughout the following 15 years, Hollinger became one of the largest media groups in the world. As CEO of Hollinger International, Black had substantial control over the company’s finances.  The board of directors confronted Black in 2003 over payments the company made to him and four other directors in the $200 million range. The board called in the SEC to investigate the validity of the payments and the accounting transactions created to account for them. Charges were laid against Black for fraud, tax evasion and racketeering, among others. In 2007, Black was convicted of four of the 13 charges against him and was sentenced to 78 months in prison, of which he served 42. He was released from prison in 2012. (Read More: The Uneven Consequences Of Corporate Misbehavior) (Forbes, 2013)
4. Tyco (Dennis Kozlowski)- Kozlowski, the CEO of Tyco, a massive security and electronics company, was also caught with his hand in the corporate coffers. In 2002, the board of directors discovered that Kozlowski and Mark Schwartz, the company’s CFO, had taken unauthorized bonuses and loans in the amount of $600 million. The men were brought up on charges of grand larceny and securities fraud, among others. Kozlowski had paid for lavish parties, a Manhattan address and expensive jewelry with corporate funds. His first trial in 2004 resulted in a mistrial, but in 2005 he was sentenced to between eight and 25 years. (Forbes, 2013)
5. Yahoo (Scott Thompson)- Compared with the other four infamous CEO bad boys on the list, Scott Thompson’s transgressions may not seem so egregious. What shocked shareholders and media alike was the brazenness of his deception and the lack of oversight that allowed it to happen. Thompson was brought in as Yahoo’s new CEO in early 2012, in an attempt to reverse the struggling company’s fortunes. By May, a shareholder activist group alleged that Thompson had embellished his resume by claiming he had a degree in computer science, along with an accounting degree. He has only an accounting degree.  There are two significant ramifications of the deception, which Thompson characterized as “inadvertent.” The first is that it means the board did not fully vet him before hiring. More importantly, because the false information appeared in SEC filings, the company and Thompson himself may face disciplinary or legal action. Thompson voluntarily stepped down as CEO in May. (Forbes, 2013)

These 5 examples are just a few of the many ethical scandals that have occurred in the past decade.  Accounts of racketeering, insider trading, bribery, and fraud all occur on a daily basis in corporate America.

Takeaways from this subject

What is the main point of learning about ethics?  That’s simple.  Ethics define who we are as people.  They are used not only in the work environment, but in our everyday lives as well.  Ethics also correlate with integrity.  Without integrity, it’s hard for other people to trust you.  By my own definition, integrity is doing the right thing when no one else is looking. 

How can students of ORG331 apply this information today?

Students need to know the consequences of unethical behavior.  As I have stated in my other posts, most students will be new to corporate America.  After graduation, they might not know the common practices of companies.  They need to know the risks of using unethical behavior, because there’s always people that try to get away with  one thing or another.  They also need to know why ethics are important to a company in general.

& Cochran, P. L. (1999). Corporate ethics practices in the mid-1990's: An empirical study of the Fortune 1000. Journal of Business Ethics, 18(3), 283-294.
References

Forbes (2013). 5 Most Publicized Ethics Violations by CEOs. [ONLINE] Available at: http://www.forbes.com/sites/investopedia/2013/02/05/5-most-publicized-ethics-violations-by-ceos/.

Lewis, P. V. (1985). Defining ‘business ethics’: Like nailing jello to a wall. Journal of Business Ethics, 4(5), 377-383.

New Employee Orientation

Introduction

New staff orientation is an activity performed by most companies as a means to acclimate their new hires, but can often be done poorly.  While the purpose of orientation is to introduce the worker to their new environment and bring them up to speed on company policies, procedures, and the general “how it’s done around here,” all too often the orientation results in either information overload or the glossing over of seemingly insignificant but crucial details.  Experts remark that an improperly conducted orientation or even a lack of orientation at all can lead to anxiety and high turnover in staff who are essentially left to sink or swim in their brand new environment.

Dr. Judith Brown writes in her article Employee Orientation: Keeping New Employees on Board that orientation shouldn’t be just something that a company does as a courtesy (Brown, 2007).  New hires cannot be reasonably expected to just pick up on the nuances of how an organization operates while on the job, despite being hired for their skillset, experience, knowledge, and abilities.  What is missing in that circumstance is the employee’s feeling of belonging, like they’re not just an accepted and crucial part of the culture but that they’re included and valued as a person and contributor to the organization’s goals…IF they know what those goals are, first of all!  Thus, merely handing the new employee a brochure or even a folder full of policies, procedures, descriptive documents, and forms isn’t enough.

When an employee is made to feel comfortable and part of the team, the employee is more apt to be able to learn his or her new job.  If the new hire is fretting about guessing what is considered acceptable or unacceptable behavior, that is less time and energy devoted to learning the job.  Research in organizational behavior shows that the higher the motivation and job satisfaction of an employee, the greater their productivity.  Job satisfaction can be an even greater motivator than just pay scale or title prestige  (Kimball & Nink, 2006).

Benefits of Orientation

Brown cites a number of reasons that a proper and appropriate orientation can be beneficial to both the employee and the company:

• Reduction of start-up cost.  When an employee is tossed into the wild to fend for him- or herself, armed with little more than the Employee Handbook, the employee has to learn both the job for which he or she was hired as well as learning how to get along with coworkers, expectations, and rules of the workplace.  Newcomers experience the highest amount of stress in acclimating to the new environment immediately, though that tends to decrease in the following days (Wanous and Reichers, 2000).
• Reduction of anxiety.  Related to the above, a newcomer to an organization feels like an outsider at first, obviously.  That feeling of isolation or exclusion can hamper the employee’s ability to focus and concentrate on the work at hand.  A proper orientation process can help reduce or eliminate some of the worries and concerns of the new employee.
• Reduction of employee turnover.  When a new employee feels like an outsider who doesn’t really belong, and that feeling persists weeks or months after hire, productivity suffers.  The concept of a psychological contract – a set of beliefs that an individual has regarding promises made or agreed upon between him- or herself and a coworker, supervisor, or the organization itself – is an important aspect in assimilating the employee into the organization’s culture, nurtured through a sense of belonging and inclusion.  A lack of orientation, or a poorly conducted one, can fail to convey that message to the employee, that they are a valued contributor and member of the organization.  That disconnect leads to the employee wondering “why am I even here?” (Wanous and Reichers, 2000)
• Reduction of remedial training.  Elementary concepts such as safety protocols, conditions of employment, history of the company, and even vacation and sick-day policies can all be addressed during orientation, rather than taking a supervisor’s and the employee’s time away from learning the job and how relevant business groups operate.  In Brown’s words, “the better the initial orientation, the less likely supervisors and coworkers will have to spend time teaching the employee.”
• Increasing realistic job expectations and motivation.  The more quickly an employee can assimilate to the working culture and job responsibilities, the more productive that employee can be.  Through proper orientation that includes realistic job previews, what is expected of them and others around them, and how they fit into the greater workings of the organization.

The benefits of a well-planned and executed employee orientation are clear.  Without it, new employees can find themselves floundering and struggling with a steep learning curve.  They struggle with not just learning and getting comfortable with their job tasks, but with learning the methods and procedures of the organization.  They struggle to figure out where and how they fit into the organization, and wonder whether they’re even valued as individuals and workers.

Conflicts such as these inevitably lead to decreased motivation and low engagement with the company.  Interestingly enough, such negativity has been shown to actually increase the overall cost of an employee, when considering the lost productivity as well as the tolls of physical, mental, and emotional declines that can result from a negative outlook. (Kimball and Nink, 2006)

What to Include in an Orientation Plan

Brown lists many suggestions to incorporate into an orientation program.  Significantly, her recommendation includes beginning before the employee even starts at the company.  By answering a few key questions, an effective plan can be devised.  Questions such as:

• What do new empoyees need to know about their work environment to make them more comfortable?
• What impression should the employee leave with on their first day?
• What important policies and procedures should the employee know right away on the first day?
• How can the company help the employee’s supervisor in acclimating the employee to their new environment?

Armed with the answers to these questions, an effective orientation program will include relevant information while understanding that not everything has to be conveyed to the employee in the span of a few hours.  Orientation can in fact begin before the new employee even arrives at the company on the first day of work, by providing some key information ahead of time so that the employee has a reasonable expectation when walking in the door for the first day.  Brown suggests that the company be open and communicative with the employee to assuage any fears or anxieties as quickly as possible.  It is also suggested to refrain from the less relevant portions of the dry and stuffy elements of company policies and employee handbooks, as such information can be gleaned at a later date, once the employee has been assimilated into the organization.

Summary

An effective orientation program focuses not just on the factual information about the company, but acknowledgment that the newcomer is indeed walking into a new and unfamiliar environment.  Steps should be taken to ease that transition from a higher overview level, outside of the specific ordered tasks of a job.  While the up-front costs of taking the time to communicate and prepare the new hire even before his or her official start date, as well as easing the new hire into the job, may not seem cost effective right away, but the long-term benefits of a more motivated and satisfied worker who ultimately needed less time and effort to acclimate to the new environment will vastly outweigh those short-term costs.

References

Brown, J. (2007, February). Employee Orientation: Keeping New Employees on Board. IPMA-HR.

Kimball, L. S., & Nink, C. E. (2006). How to Improve Employee Motivation, Commitment, Productivity, Well-Being and Safety.

Wanous, J. P., & Reichers, A. E. (2000). New Employee Orientation Programs. Human Resource Management Review, 435-451.

 

 

HR Best Practices

Best Practices as a Whole

What ARE HR best practices? 

A best practice is defined as, "A method or technique that has consistently shown results superior to those achieved with other means."  

In order for a company to be successful, it needs to instill value to its workforce.  Companies today have learned to deploy HR best practices to give them the best possible competitive advantage.  

In a comprehensive study on best practices in the lodging industry (conducted by professors affiliated with Cornell University) they found the following to be the five categories of best practices:

1. Leader Development
2.  Training and knowledge building
3. Employee empowerment
4.   Employee recognition
5.  Cost management

Cornell’s article lists several HR champions that applied these best practices to their workforce, along with the measure of success they received from it. 

For example, Accor North America used a combination of numerous integrated HR initiatives, including workforce design, feedback, rewards, and group process.  In return they have very low employee turnover, higher employee-satisfaction scores, and significantly better performance results.  (Siquaw, 2000)

This is just one of the several companies listed as “HR Champions” due to applying these successful HR methods. (Siguaw, 2000)

Connecting HR to Overall Success

Another study I found from Cornell was an article that tried to find the correlation between Human Resource Practices, Turnover, and Sales Growth in a company.

The study showed that there was a positive correlation between high involvement practices and the effect they have on organizational performance.  The study was based on a nationally representative sample (so the study could be applied generically to service and sales operations in the telecommunications industry)

That being said, it’s obvious that a company is much stronger with high involvement from its HR team.  In order for success to be the outcome, HR needs to be able to effectively communicate with its employees. (Batt, 2002)