1.

Introduction It is undeniable that human resource is the most important asset in an organization. Numerous

researches have been done and strategies have been implemented to promote retention and development of employees, however, turnover still at all-time high and employees still often feel themselves irrelevant to the development program carried out by their organization. Simply ask around are you satisfied with your job? the answer could often be very negative. In these report, we will critically discuss retention of employees from a different dimensions; recruitment and psychological contract. Follow by that, we will examine the development of employees. We will also discuss and suggest the relevant human resource strategies for each of the subjects. 2.0 Retention through recruitment Hire the right talent Kleynhams, et al. (2006) defines recruitment as a process that involved systematic steps that enable an organization to attract the right person who ends up with the right company and doing the right job, and with so the organization goals can be achieved. Resick, et al. (2007) noted that employees, who experience a good degree of job fit, will be more likely to engage with their work and are often more productive. Research has shown that poor job fit could lead to poor job satisfaction (Kristof-Brown, 2005), low productivity (Hoffman and Woehr, 2006), and eventually increase in turnover (Resick, et al., 2007). Chern (2004) comments that hire the right person take time and effort but it is rather cost effective. Employee turnover not only costly, but it also cost employee morale and dissatisfactions from those who have to pick up the slack until replacement are found. Thus, hire the right talent at the first place could decrease the turnover rate. Phillips (1998) suggests that recruitment can be made more efficient through the use of realistic job previews (RJPs). A very basic of RJPs is to provide the candidates with pertinent job information without any distortion and exaggeration (Popovich and Wanous 1982). Ivancevich (2010) also further agree that it is important for recruiters to provide realistic expectations about the job, as it will significantly reduce turnover of new employees. Finding also suggests that RJPs can be used as an inoculation against disappointment with the realities of the job. The opposite of RJPs is traditional job preview which tend to present the job as attractive, interesting and stimulating. Popovich and Wanous (1982) found that employee who was hired after RJPs indicates a higher job satisfaction and job survival if compare with those who was hired using traditional previews. Besides that, using psychometric assessment system during interview could also help recruiters to have a picture of candidates personalities and thus help to decide whether the person is fit for the jobs.

The psychometric assessment serves three purposes as it evaluates competence, predict job performance and to analyst personality. The Seven point plan (Rawling and Rodger 1985) is a useful method to build a total picture of the candidates. Seven area of questions are asked, which include physical make-up (bearing and speech), attainments (education, training, and experience), general intelligence, special aptitudes, interests, disposition (dependable, influential, self-reliant, etc.), and circumstances (domestic life, external variables).Strong-Campbell Interest Inventory could also be used to measure the candidates interests to the job as one of the most common reason why people quit is due to lack of interest and motivation for the work. Honesty and integrity tests, like the Personnel Selection Inventory test by James Craig could also be used to examine individuals attitudes on certain topics such as theft, drug-abuse, and violence. Therefore interviewer can predict if that candidate is likely to engage in such behaviors. Barrick and Zimmerman (2005) suggest that past behavior could be an indicator of future behavior. Two data used are numbers of job over the past five years and tenure in the last job to reflect the commitment to prior employer. Barrick and Zimmerman (2005) further suggest that individual who has habit of seeking new jobs, as can be represented by the tenure and numbers of jobs held over the past five years, could be expected to do so again. A combination of above theories and strategies should be embedded into the recruitment process by human resource officer (HRO). A more comprehensive recruitment process can then be developed as it will enable the interviewer to analyze candidates from all aspects which include personality, interest towards the job, past behavior and at the same time, provide the most realistic job expectation. With these, the recruitment process could take a much longer time, but it will significantly increase the retention level of new employees. 3.0 Psychological contracts Rousseau (2001), Turnley and Feldman (1998) defined psychological contract as employees subjective interpretations and evaluations of their employment deal. Rousseau (1996) found that psychological contracts is the employees belief regarding the terms and conditions of the exchange agreement between themselves and the organizations. Turnley and Feldman (1988) further suggest that psychological contract emerged when employees believe that their organization has promised them certain incentives in return for their services.

3.1

Relationship between psychological contracts and employee retention Robinson (1996) pointed out that employees tend to reciprocate to their employer with intention

to leave once they feel that the psychological contract is breached. This is also supported by later research by Coyle-Shapiro (2002) that reduced level of commitment and loyalty and eventually leads to intention to leave as the reactions once those promises are violated. De Vos, et al. (2003) further listed out the common violation of promises are compensation, promotion and career perspective. Thus, it is very important for human resource officer and supervisor to be able to understand employees subjective interpretations of their employment deal. 3.2 Retention factors and human resource management (HRM) strategies through the dimension of

psychological contracts De Vos and Meganck (2007) have pointed out five major retention factors which are career development opportunities, social atmosphere, job content, financial rewards, and work-life balance. Employees would have positive expectation on these areas. HRO and supervisor must be able to make aware of these psychological contracts and relevant HRM strategies must be developed to promote retention. We will be examining each of these factors and the correspondent HRM strategies. 3.2.1 Career development opportunities Zheng and Kleiner (2001) rightfully noted that career development is a joint effort between employee and organization. It is an outcome of individual career planning and institutional career management process. The career development consists of opportunities of promotion, personal development and increasing responsibilities (Guerrero and Herrbach, 2007). 3.2.1.1 HRM strategies Internal job posting HRO should develop an information system that allowed employees to know about job opportunities that available within the organization. It should also come with proper guideline on the eligibility criteria and transfer guidelines. Internal job transfer should be encouraged by HRO and supervisor as it can save cost incurred in recruitment and training for new hire. Furthermore, it can also save time used for integration of culture, environment and knowledge on the job. Besides that, the utmost important reason is to prevent the trained talents to go to competitors that could threaten company position. Individual development plan HR manager should develop an individual development system that enables employees to draft, update and review their career development plan which includes career 3

goal, objective, competency, achievement, qualification and etc. HRO and supervisor should be held accountable for the review and discussion of employees development plan. Performance management A clear performance review system should be held in place. Definition on how performance is being evaluate and how it can be achieve must be written and agreed by employee, supervisor and HRO. With this careful management of performance, not only the performance of the employee can be developed, but also the ultimate goal and success of the organization can be assured. 3.2.2 Workplace atmosphere Workplace atmosphere refers to the relationship among co-workers and supervisors. Kahn (1990) noted that cooperation, support, trust and partnership are the elements that encourage and sustain relational environment. Employees, who do not have these relationships, often felt themselves to be lonely, disconnected, isolated and disengaged from their work place. Eventually, employees could feel unsafe and unable to be themselves (Khan, 1990). Hackman and Morris (1975) noted that conflicts in work place could reduce productivity and lower job satisfaction. Lu, et al. (2009) further classify conflicts into relationship and task conflict. Further research suggests relationship conflicts could suppress team spirits (Jehn, 1995). 3.2.2.1 HRM strategies Conflicts counseling Counseling should be made available to employees. HRO and supervisor could establish a team with the objective to resolve work place conflicts by providing counseling to employees involved. Supervisor should be trained with basic counseling knowledge and technic that enable him or her to be the first point of support whenever conflicts happen. Harter, et al. (2002) noted that employees who feel they are supported by their employer, often manifested through their supervisor, would work harder and be more committed to organizational success. Management practices that promote good work place atmosphere HRO and supervisor should work together to develop a working culture, perhaps practices of management that encourage and prioritized on good workplace atmosphere. Brown and Leigh (1996) shown that poor management practices such as creating unfriendly or hostile workplace atmosphere or having poor communication skills will lead to job dissatisfaction. Harter, et al. (2002) supported these by adding it will increase turnover.

3.2.3

Job contents The job contents must match the employees competencies. Hersch (1991) found that workers

who are overqualified for their job would have lower job satisfaction. Based on the job characteristics model (Hackman and Oldham, 1976), there are five core job dimensions (Skill variety, task identity, task significance, autonomy and feedback) that will stimulate three critical psychological states (Experienced meaningfulness of work, experienced responsibility for outcomes of work, and knowledge of actual results of work activities), which eventually promote work motivation, performance, satisfaction and reduce absenteeism and turnover. 3.2.3.1 HRM strategies Job description and specification HRO must ensure the accuracy of the job description and specification during recruitment. This could avoid mismatch of job and talent as per discussed earlier. Normally, job descriptions are provided by supervisors of the particular teams as they will have the overall and in depth knowledge on the task. However, it is very often that supervisors are not providing accurate descriptions of the job as they are afraid that it will reduce the numbers of candidates if the job description is too realistic and not attractive. Thus, HRO play an important role to ensure its accuracy. Job design HRO should participate in job design by applying HRM theories and concepts to ensure the job are able to stimulate employee self-satisfaction and increase their competencies in a long run. Job enrichment HRO together with supervisor could vertically expand the job to allow the employees to do a more complete activity that would increases the employees freedom, independence, responsibility, and provides feedback, so the employees will be able to assess and correct his or her own performance. 3.2.4 Financial rewards Adams (1963) and Lawler (1990) both suggest that pay satisfaction is based on perceptual and comparative process through equity theory. Adams (1963) argues that employees tend to seek equilibrium between the effort put into the job and what they get in return. Lawler (1990) further comment that satisfaction or dissatisfaction with pays is influenced by the differences between what employee think they should receive for their effort and what they have contributed to the organization.

3.2.4.1 HRM strategies Efficient and equitable pay system HRO must constantly conduct pay survey to ensure up to market compensation and to ensure the compensation decision supported organizational goals. Performance based rewards system HRO could implement a reward system that based on employees performance. The performance criteria are depends on employees functional group. The performance is being review periodically to ensure employees is aware of the progress of performance, thus, eliminate the discrepancy on perception of what should be receive and what has been contributed. 3.2.5 Work-life balance Wok-life balance definition could be complex as it can be view from the meaning of work, life and balance (Deery 2008). MacInnes (2006) suggest viewing from the angle of long working hour, increased work demand, and exhausted from work. Mauno and Kinnunen (1999) comment it is exhaustion from work and too tied to enjoy family life. Deery (2008) found that lack of work-life balance could lead to turnover. 3.2.5.1 HRM strategies Family friendly policies It is defined as benefits or working condition that assist employees to balance their work and life. It could include family leave, marriage leave, flexible working hour and compressed work week. Grover and crooker (1995) cited that employees with access to family friendly policies showed greater organizational commitment and lower intention to quit their job. Find and reduce stressor HRO could work with supervisor to constantly review and monitor if there is any stressor in work place. This could include work overloaded and high level of work stress. Maslach and Jackson (1982) found that work stressor could lead to burnout, which define as a state of physical, emotional, mental exhaustion, and cynicism towards ones work. 4.0 Human resource development (HRD) Swanson (2001) defined HRD as the process of developing expertise through organizational development and training for the purpose of improving performance. Bratton and Gold (1999) defined HRD as the procedures and processes that seek to provide learning activities to enhance skills, knowledge and capabilities of employees, teams and the organization itself in order to make changes in action to achieve the desired outcomes. Elena (2000) suggests that it HRD means development of the abilities of the individual employee and organization as a whole. 6

Rapid development in technologies has accelerated the changes of both environmental and market forces that an organization is facing. Thus, the development of human resource has become one of the key determinations of organization success. Losey (1999) has noted that there are increasingly number of organization seeks to implement sophisticated HRD strategies to develop employee competencies and flexibility in order to quickly response to business needs. Maurer, et al. (2003) suggest that HRD impact competitive advantages of the organization, not only through developing employees, but also through cost savings by reducing absenteeism and turn over. These were supported by earlier research of Robertson et al. (1991) that HRD enhances employee retention. 4.1 4.1.1 HRD strategies Coaching Philips (1996) noted that coaching plays an important part in improving individual performance. It is an informal learning through daily interaction and shared relationship among the supervisor and co workers. Coaching requires sharing information and ideas in ways that change behavior and accomplish strategies (Ulrich 2008). Coaching is concerned with creating conditions so that people can perform to the best of their ability (Philips 1996). Human resource officer should work closely with team supervisor to implement a coaching system and culture that promotes development in terms of working skill and knowledge. The coach can be selected from senior and the one to be coach is normally the new hire. The coach set a good example of what is to be done, answer questions and offer a counsel and assistance when it is needed. 4.1.2 Feedback DeNisi and Kluger (2000) noted that feedback is an important component in effective performance improvement strategies. Hackman and Oldham (1980) argue that performance feedback could increase job satisfaction and motivation. McCarthy and Garavan (2001) also further comment that performance feedback plays an important role in numerous organizational activities such as career development, motivation, job satisfaction, and performance management. In lines with this, human resource officer could implement 360 feedbacks. 360-feedback is a HRD strategy that integrated feedback into performance appraisal. It relies on the input of an employees superiors, colleagues, subordinates and sometimes, customers and suppliers (Yukl and Lepsinger, 1995). 360-feedback helps employees to understand and know their strength and area of improvement. It also helps human resource officer and supervisor to identify what is the suitable training or development course for that particular employee. 4.1.3 Goal setting 7

Goal is defined as the object of an action (Ivancevich 2010). Locke and Latham (1990) noted that specific goals will lead to higher performance, if compare to vague goal such as do your best. Thus, a specific goal should be set for each employee. It can be put as one of the objective in individual development plan. Human resource officer and supervisor should help the employee to set his or her specific goal by providing counseling and feedback. This is to make sure that the particular goal is achievable, realistic and more importantly, in line with company goal. Greenhaus, et al. (1995) argue that employees with career goal setting are likely to be more skillful and contribute more to the company. 4.1.4 Training Longnecker and Fink (2005) define training as a systematic process that alters behavior of employee in order to achieve organization goals. It is related to present specific job skills and abilities needed to be successful. There is a significant difference between training and development where; training focus on short term skills and development emphasize on long term learning. However, training is a crucial part to prepare the employee with specific skill and ability in order to advance and further development. There are a lot of training methods. For instance, on-the-job training, role-playing, class room training and out-door oriented programs. Human resource officer and supervisor play an important role in identifying the right program for the right employees. Latham (1988) identify four attributes to identify the needs of training which are organization, task, person and demographic analysis. Training programs should be publish and make available to all employees. Employees are encouraged to apply and participate in training programs that is in line with his or her development plan. For example, Dell publishes its training calendar to each employee via HR learning and organization development team. Some of the training course include are like effective negotiation skills, creativity and innovation, project management and effective grammar for business writing skills. 4.1.5 Empowerment Thomas and Velthouse (1990) defined empowerment as an increasing of intrinsic task motivations that result from four cognitions (meaningfulness, competence, choice and impact), that reflect an individuals perceptions of his or her role. In a more simple definition it means encouraging an individual to make decisions with least intervention from management. Kaplan and Norton (1992) argued that empowering employees will increase their motivation, learning and growth. Further study by Koberg (1999) shows employees who feel empowered has higher motivation, which leads to greater organization effectiveness and performance. Human resource officer and supervisor should promote empowerment culture by encouraging employees to make decision in their daily task. The empowerment should be in

line with organization goal, customer oriented and more importantly, it must be ethical and comply with organization rule and regulation. 5.0 Conclusion In this report, we discussed through retention strategies starting from recruitment, which is hired the right talent. Subsequently we reviewed retention from the dimension of psychological contracts an employee might have towards organization. Five retention factors have been identified; Career development opportunities, workplace atmosphere, job content, financial rewards and work-life balance. We also briefly discuss through HRM strategies for each retention factors. We then looked at HRD and its strategies. In conclusion, it is clear that employee retention and development is crucial in the success of an organization. An organization is only as good as the employee who comprise of it. It is important for HRO and supervisor to look at the psychological contract perspective of employees, often these expectations could make a huge impact on employees commitment towards the organization. On the other hand, the development of employees is crucial as it has become very obvious that changes seem to be the only constant in todays business environment. 6.0 Recommendation Retention and development of employees is important but to retain and develop talents or performers are far more crucial. Talents and performers have to be identified and recognized through programs such like rising stars. It is these group of people who could make significant contribution and impacts to the organization, be it good or bad time.

7.0

References 1) Adams, J.S., 1963. Toward an Understanding of Inequity. Journal of Abnormal and Social Psychology, 67, pp. 422436. 2) Barrick, M.R. and Zimmerman, R.D., 2005. Reducing voluntary, avoidable turnover through selection. Journal of Applied Psychology, 90(1), pp. 159-66. 3) Bratton, J. and Gold, J., 1999. Human resource management. London; Macmillan press ltd. 4) Brown, S. and Leigh, T., 1996. A new look at psychological climate and its relationship to job involvement, effort, and performance. Journal of Applied Psychology, 81(4), pp. 358-68. 5) Coyle-Shapiro, J.A.-M., 2002. A psychological contract perspective on organizational citizenship behavior. Journal of Organizational Behavior, 23, pp. 927-46. 6) De Vos, A. and Meganck, A., 2007. What HR managers do versus what employees value. Personnel Review, 38 (1), pp. 45-60. 7) De Vos, A., Buyens, D. and Schalk, R., 2003. Psychological contract development during organizational socialization: adaptation to reality and the role of reciprocity. Journal of Organizational Behavior, 24, pp. 537-99. 8) Deery, M., 2008. Talent management, work life balance and retention strategies. International Journal of Contemporary Hospitality Management, 20 (7), pp. 23 28. 9) DeNisi, A. and Kluger, A., 2000. Feedback effectiveness: can 360-degree appraisals be improved? Academy of Management Executive, 14(1), pp. 129-39. 10) Elena P. Antonacopoulou, 2000. Employee development through self-development in three retail banks. Journal of personnel review, 29(4), pp. 491-508. 11) Ferne, C., 2004. Hiring So You Won't Be Firing. Supervision, 65(3), pp. 10-12. 12) Grover, S. L. and Crooker, K. J., 1995. Who appreciate family-responsive human resources policies: the impact of family friendly policies on the organizational attachment of parents and non- parents. Personal Psychology, 48(2), pp. 271. 13) Guerrero, S. and Herrbach, O., 2007. The affective underpinnings of psychological contract fulfillment. Journal of Managerial Psychology, 23(5), pp. 47. 14) Hackman, J. R., and Oldham, G. R., 1976. Motivation through the Design of Work: Test of a Theory. Organizational Behaviour and Human Performance, 16, pp. 250-279. 15) Hackman, J.R. and Morris, C.G., 1975. Group tasks, group interaction process, and group performance effectiveness: a review and proposed integration, in Berkowitz, L. (Ed.). Advances in Experimental Social Psychology, 8. 16) Hackman, J.R. and Oldham, G.R., 1980. Work Redesign. Massachusetts; Addison-Wesley. 10

17) Harter, J.K., Schmidt, F.L. and Hayes, T.L., 2002. Business-unit-level relationship between employee satisfaction, employee engagement, and business outcomes: a meta-analysis. Journal of Applied Psychology, 87(2), pp. 268-79. 18) Hersch J., 1991. Education Match and Job Match. Review of Economics and Statistics, 73, pp. 140144. 19) Hoffman, B.J. and Woehr, D.J., 2006. A quantitative review of the relationship between personorganization fit and behavioral outcomes. Journal of vocational Behavior, Vol. 68, pp. 389-99. 20) Ivancevich, J. M. (2010), Human resource management. McGraw Hill : NY 21) Jehn, K.A., 1995. A multimethod examination of the benefits and detriments of intragroup conflict. Administrative Science Quarterly, 40, pp. 256-82. 22) Kahn, W., 1990. Psychological conditions of personal engagement and disengagement at work. Academy of Management Journal, 33(4), pp. 692-724. 23) Kaplan, R. S. and Norton, D. P., 1992. The balanced scorecard: Measures that drive performance. Harvard Business Review, 70 pp. 92100. 24) Kleynhams, R., Markham, L. K., Meyer, W. and Van, S., 2006. Human resource Management. 2nd ed. Pearson Prentice Hall, South Africa. 25) Koberg, C. S., Boss, R. W., Senjem, J. C. and Goodman, E. A., 1999. Antecedents and outcomes of empowerment. Group and Organization Management, 24(1) pp. 7191. 26) Kristof-Brown, A.L., Zimmerman, R.D. and Johnson, E.C., 2005. Consequences of individual's fit at work: a meta-analysis of person-job, person-organization, person-group, and personsupervisor fit. Personnel Psychology, 58, pp. 281-342. 27) Latham, G. P, 1988. Annual review of psychology, 39(1), pp. 545. 28) Lawler, E., 1990. Strategic Pay: Aligning Organizational Strategies and Pay Systems. San Francisco: Jossey-Bass. 29) Locke, E.A. and Latham, G.P., 1990. A theory of goal-setting and task performance. NJ; Prentice Hall. 30) Longnecker, C.O. and Fink, L.S., 2005. Management training: benefits and lost opportunities. Industrial and commercial training, pp. 25-30. 31) Losey, M.R., 1999. Mastering the competencies of HR management. Human Resource Management, 38(2), pp. 99-111. 32) Lu, L., Zhou, F. and Leung, K., 2009. Effects of task and relationship conflicts on individual work conflicts on individual work. International Journal of Conflict Management, 22(2), pp. 131150.

11

33) MacInnes, J., 2006. Work life balance in Europe: A response to the baby bust or reward to the baby boomers? European Societies, 8(2), pp. 223 249. 34) Maslach, C. and Jackson, S.E., 1982. The Measurement of Experienced Burnout. Journal of Occupational Behaviour, 2, pp. 99113. 35) Mauno, S. and Kinnunen, U., 1999. The effects of job stressors on marital satisfaction in Finnish dual-earner couples. Journal of Organizational Behavior, 20, pp. 879 895. 36) Maurer, T., Weiss, E. and Barbeite, F., 2003. A model of involvement in work-related learning and development activity: the effects of individual, situational motivational, and age variables. Journal of Applied Psychology, 88, pp. 707-24. 37) McCarthy, A. M. and Gavaran, T. N., 2011. 360 feedback processes: performance improvement and employee career development. Journal of European Industrial Training, 25(1). 38) Phillips, J. M., 1998. Effects of realistic job previews on multiple organizational outcome: A meta - analysis. Academy of Management Journal, pp. 673 - 90. 39) Phillips, R., 1996. Coaching for higher performance. Employee Counseling Today, 8(4), pp. 29 32 40) Popovich, P. and Wanous, J. P., 1982. Realistic job preview as a persuasive communication. Academy of Management Review, pp. 570 -78. 41) Rawling, K. and Rodger, A., 1985. The seven point plan and new perspectives fifty years on. Nfer-Nelson: Philadelphia. a. , C.J., Baltes, B.B. and Shantz, C.W., 2007. Person-organization fit and work-related attitudes and decisions: examining interactive effects with job fit and conscientiousness. Journal of Applied Psychology, 92, pp. 1446-55. 42) Robertson, I.T., Iles, P.A., Gratton, L. and Sharpley, D., 1991. The psychological impact of selection procedures on candidates. Human Relations, 44, pp. 1963-82. 43) Robinson, S.L., 1996. Trust and breach of the psychological contract. Administrative Science Quarterly, 41, pp. 574-99. 44) Rousseau, D.M., 2001. The idiosyncratic deal: flexibility versus fairness? Organizational Dynamics, 29, pp. 260-73. 45) Swanson, R.A., 2001. Human resource development and its underlying theory. Human resource development international, 4(3), pp. 299-312. 46) Thomas, K. W. and Velthouse, B. A. 1990. Cognitive elements of empowerment: An "interpretive" model of intrinsic task motivation. Academy of management review, 15, pp. 66681. 47) Turnley, W.H. and Feldman, D.C., 1998. Psychological contract violation during corporate restructuring. Human Resource Management, 37, pp. 71-83. 12

48) Ulrich, C., 2008. Coaching for results, Business Strategy Series, 9(3), pp. 104-114. 49) Yukl, G. and Lepsinger, R., 1995. How to get the most out of 360 feedback. Training, 32(12), pp. 45-50. 50) Zheng, Y. and Kleiner, B. H., 2001. Developments concerning career development and transition. Management research news, 4.

13