Retention Management

Voluntary turnover is the final stage of the employment relationship. When voluntary turnover occurs, employees who have been screened, selected, socialized, and trained in the organization depart despite the organization’s attempts to keep them. This clearly can be a considerable problem for an organization, since all the costs associated with staffing a new employee now must be incurred again for a new employee. However, voluntary turnover is not always a negative event. When an individual who has a poor productivity profile, negative attitudes towards the job and organization, and superior alternatives elsewhere leaves, it can be a positive outcome for the organization and the (former) employee.

In this case you will review information related to turnover in managerial positions for Tanglewood and determine whether managerial turnover is more likely to be a positive or negative event for this organization. You will also use the techniques described in Staffing Organizations, Chapter 14 to develop suggestions for Tanglewood so that they can ensure that they are retaining the employees that they want to keep to the greatest degree possible.

The Situation

As you may have noticed when analyzing the transition probability matrix in the planning exercise, there was a 34% annual turnover rate among store managers and assistant store managers in Washington during the past year. This is an unacceptably high number from Tanglewood’s point of view. Such high levels of turnover are likely to create a feeling of instability among lower level employees, and generally indicate that the organization will have difficulty creating effective long-term goals in these stores. Unfortunately, this high turnover among managerial employees is even more problematic because of the costs involved.

Managerial survey is a very sensitive issue for Tanglewood. The process of finding good managers obviously begins with recruiting. A very large number of individuals must be found during the recruiting phase, because, as you saw in case 4, only 11% of external applicants are selected to become assistant store managers and only 10% of external applicants are selected to become store managers. After hiring, every manager, regardless of their status as internal or external hires, is put through a two month training program that includes trips to the corporate offices, mentoring from other store managers and the regional manager, and culminating in a public welcoming ceremony at the store where the manager will work.

There is a downside to the process of training managers. Excellence in managerial performance is often observable from the outside as well because competitors can walk into the stores and see which ones are functioning well. It is common for particularly successful store managers to receive offers from other companies that are trying to capture some of the Tanglewood “essence.”

The Employee Satisfaction Survey

The Tanglewood employee relations department administered a survey every year to assess the attitudes of employees towards several aspects of their employment. Although the purpose of the survey is to collect baseline information on employee attitudes, Marilyn Gonzalez believes that these survey responses will be an ideal method to track the reasons why some managers are more likely to turnover.

The annual employee survey is conducted in June. Boxes of blank surveys are sent to regional managers, who then use central routing to send surveys to each store. The survey was initiated to give employees an opportunity to express their feelings about key topics that Tanglewood thinks will benefit employees. Given the overall organizational culture, it should be clear that employee satisfaction is an important issue. Emerson and Wood send bulk e-mails to all store managers to encourage them to get a 100% response rate from their employees. However, it is common for less than 50% of the employees to complete surveys.

An example of the survey is contained in Appendix E. The survey asks questions that can be broken down into four major topics, as follows:

Supervisor satisfaction
The supervisor satisfaction questions encourage employees to describe their relationship with their immediate supervisor and the extent to which they are satisfied with the direction they receive on a day to day basis. Tanglewood spends a great deal of money training supervisors on the “Tanglewood way” so they are especially concerned that these principles are carried out in practice.

Work satisfaction
Work satisfaction relates primarily to the degree to which employees believe that their tasks are interesting, fulfilling, and contribute to a meaningful life. The participatory system at Tanglewood puts a great deal of responsibility on employees to make their work enjoyable, but the corporate offices still want to make certain that every effort is made to ensure that employees have the freedom to do work they enjoy.

Pay satisfaction
Tanglewood realizes that because they place a great deal of responsibility in employees’ hands, they need to ensure that employees feel they are been adequately paid for this additional effort. At the same time, because Tanglewood spends a great deal of time and energy creating an enjoyable workplace, they believe that they should not make pay too much a focus of their human resources activities. The company typically is a market leader

in compensation relative to discount retailers like Target or WalMart, but pays slightly less than stores like Kohls, J.C. Penny, or Sears.

Benefits satisfaction
The benefits package offered by Tanglewood consists of basic medical coverage for most employees, a 401K program, and maternity leave benefits. Additional benefits for higher level employees include 50% tuition reimbursement for undergraduate education and. Within the corporate human resources function, Marilyn Gonzalez has been increasingly critical of the lack of innovative benefits offerings. Emerson and Wood recently proposed that there be an overhaul of the organization’s benefits because they do not create much of an impression on employees.

Regional data

Table 7.1 contains summary information from the employee surveys, the “competition index,” and turnover. Because the most pressing concern is managerial turnover, only data for store managers and assistant managers is displayed. The data is collected by the staffing services division and then summarized across stores for a five-year period. Having this long term aggregated data makes certain that the results are reasonably robust.

The competition index is a measure of the number of local businesses that might draw employees from Tanglewood. The scale ranges from 1 to 10, with higher values indicating more competition. Some of the factors that go into the development of the competition index include the number of other retail establishments in the area, the total square feet of retail available, and the number of other Tanglewood stores. This measure was not specifically developed for turnover analysis, but the corporate office believes that it probably is a good indication of the number of alternative organizations that might want to hire Tanglewood’s managers.

Case 8: Retention Management

Table 7.1 Turnover Data Across Locations

Region Work
satisfaction Supervisor
satisfaction Pay
satisfaction Benefits
satisfaction Competition
Index Turnover
Rate Total

Eastern Washington
Western Washington 2.9 4.4 3.9 4.5 5.2 0.27 135
Northern Oregon 2.1 3.6 1.5 3.8 6.8 0.41 148
Southern Oregon 3.1 4.8 2.7 4.5 5.4 0.24 77
Northern California 2.8 3.3 4.1 3.1 8.3 0.48 221
Idaho 3.9 4.2 3.0 4.1 4.1 0.29 99
Montana and Wyoming 4.4 3.3 4.1 3.5 3.8 0.36 130
Colorado 3.9 3.5 4.7 3.2 7.9 0.46 212
Utah 2.5 3.7 4.5 3.6 4.6 0.28 106
Nevada 2.3 2.8 2.9 2.4 3.7 0.33 125
New Mexico 3.6 3.2 4.8 2.9 4.2 0.28 101
Arizona 4.1 2.9 2.5 3.1 7.6 0.39 172

Correlations for individual surveys

Daryl Perrone has also developed a correlation matrix that describes the relationship between surveys and performance indicators. This is similar to the information described in the validation chapter. Perrone thinks the same methods can be used to assess turnover as can be used to assess selection methods, since turnover is “selection in reverse.” These data are available only for 153 managerial employees across the entire chain over time.
To ensure that the data are valid, only one year of information is used, so that the same managers are not being counted multiple times. The final row presents correlations between the performance indicators and turnover as well. Remember that turnover is a negative outcome. A negative relationship between satisfaction and turnover means that those with a positive attitude toward the job are less likely to turnover. This also means it generally is preferable to see negative correlations between performance indicators and satisfaction, because it means that those with higher levels of performance are less likely to leave the organization.

Table 3.2 Correlations between survey data and performance indicators
Citizenship Absence Performance Turnover
Work satisfaction Correlation 0.15 -0.17 0.28 -0.13
p-value 0.06 0.2 <0.01 0.11
Supervisor satisfaction Correlation 0.22 0.09 0.16 -0.19
p-value <0.01 0.27 0.05 0.02
Pay satisfaction Correlation 0.03 0.01 0.04 0.09
p-value 0.71 0.90 0.62 0.27
Benefits satisfaction Correlation 0.09 -0.07 0.12 -.24
p-value 0.27 0.39 0.14 <0.01
Turnover Correlation -0.19 0.32 0.34 n/a
p-value 0.02 <0.01 <0.01

Qualitative data: Exit interview results

Staffing services has strongly encouraged the regional managers to carefully interview their managerial employees when they turnover. Because it is assumed that the regional managers will have some familiarity with the employees they are going to interview, staffing services has traditionally encouraged a friendly, informal discussion that will take place soon after the employee has turned in a resignation. Regional managers are instructed to, “ask the employees about what factors influenced the manager’s decision to leave

Tanglewood.” The content, pacing, and direction of the interview questions are left to the manager’s discretion.

Because of these fairly loose guidelines, there is a great deal of variety in the form and content of these interviews. However, there are some broad areas of similarity among the responses. Daryl Perrone read through dozens of the interview reports provided by managers and developed the three most significant trends he noted.

Departure because of superior alternatives

One major reason managers say that they are leaving the organization is because they have found superior alternatives. Many of these managers express some regret about leaving, but at the same time, state that there are certain career outcomes that Tanglewood simply does not provide at the present time. Three representative statements from exit interviews are below:

“As much as I love it here, I just can’t pass up a job that pays 25% more per year to start in the high tech industry. I also think it’s just time for me to try out some different work”
Assistant Manager, Western Washington

“I would stay if Tanglewood would help to finance my MBA. But I know they won’t, and I know that my new employer will.”
Assistant Manager, Arizona

“My new job pays me $10,000 a year more, and I can get my whole family on my health plan for free. From my point of view, that’s a real no brainer.”
Store Manager, Northern California

Departure because of dissatisfaction with the organization’s direction

A second reason many employees say that they want to leave Tanglewood is because they are dissatisfied with the direction of the organization. Although Perrone is reluctant to make strong statements about trends in these comments, he did notice that there appeared to be more employees from the eastern and southern locations who made these comments:

“I came on board because I thought Tanglewood would be a different type of retail chain; you know, a place where people worked because they actually liked what they did. But for people like me who are working in a store that used to be run by Mirabelle [a former rival that Tanglewood bought out], that old culture of command and control is still there. It’s too much of an uphill battle to make employee participation work here.”
Store Manager, New Mexico

“It seems like a lot of people in upper management here don’t really know what they want, and that’s frustrating. If I really thought this company had a mission,

I’d follow it. But as it is, we seem to be constantly teetering between this ‘participation’ concept and standard retail.”
Assistant Manager, Utah

Departure because of major life events

The final common reason for employees to leave, according to exit interviews, is that some event outside of work has made it necessary for them to seek work elsewhere. The most common reasons are family events, such as the employee needing to take time off to care for a sick relative, the birth of a child, or relocation because of a significant others’ job offer. Two typical examples follow:

“It’s hard for me to leave, really. I’ve been working with Tanglewood ever since I graduated from college fifteen years ago. In many ways, it’s like a family to me. However, my wife just found a great opportunity in Chicago that we don’t want to pass up”
Store Manager, Eastern Washington

“My dad’s been really sick lately and I think that I need to be in Florida for him. You all have been great to me while I’ve been here, but family has to come first.”
Assistant Manager, Idaho

Specific assignment details:

Analyze the information from both the qualitative surveys and narrative reports, and from this information, develop an overall plan for improving retention outcomes for Tanglewood.

1) Review the information from the regional data and exit interviews, focusing on the major patterns that are associated with store-level turnover. What appear to be the most significant problems for Tanglewood based on this information?

2) Review the information contained in the description of the situation, individual data, and the exit interviews, focusing on the types of people who seem to be leaving as well as the costs and benefits of voluntary turnover described in Staffing Organizations, Chapter 14. Do you think the evidence suggests that Tanglewood has primarily functional or dysfunctional turnover? What evidence led you to that conclusion?

3) Compare the suggestions for developing exit interviews from Staffing Organizations, Chapter 14 to the methods used by Tanglewood. What specific concerns do you have about the quality of the data from exit interviews in their current form? What advice would you give Tanglewood to improve the quality of data they are receiving?

4) Evaluate the job satisfaction survey. Do you believe that this survey is comprehensive? Using the information in Staffing Organizations, Chapter 14, consider additional information Tanglewood might want to add to this survey to better understand turnover.

5) Based on these data, what interventions could Tanglewood, as a whole, initiate to improve their retention figures? Pay specific attention to the major sources of turnover identified in the data, as well as the factors listed in Staffing Organizations, Chapter 14 that are related to turnover but that might not currently be measured by Tanglewood. Your suggestions should be in the form of a memo from staffing services to the corporate offices.

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