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Performance management

All new employees want to know how they will be assessed and rewarded. The more an employee can see a direct link between effort and reward, the greater the probability (although not the certainty) of satisfaction and retention. Setting goals using the SMART process can increase positive feelings for retention; if expectations are too high or different from the original realistic job preview, the employee will experience mismatch, stress and negative feelings towards the organization (Latham, 2004). The SMART goals, according to Doran (1981), are:

  • • Specific - target a specific area.
  • • Measurable - quantify, or at least suggest, an indicator of progress.
  • • Assignable - specify who will do it.
  • • Realistic - state what results can realistically be achieved, given available resources.
  • • Time-related - specify when the result(s) can be achieved.

Research on performance and turnover has been inconsistent in its findings. A significant body of data exists establishing that, as performance decreases, employees are most likely considering to leave (McEvoy & Cascio, 1987; Voight & Hirst, 2014; Williams & Livingstone, 1994). High performers, who are rewarded for their superior work, will remain with an organization that values their performance and thus will be less likely to leave voluntarily. Should low performers be allowed or encouraged to leave? While there is a valid argument for this, Google, for example, believes that all employees are talented and should be retained, and that poor performance is most likely due to a mismatch with the job or poor management (Davenport, Harris & Shapiro, 2010). On the other side of the spectrum, some research has shown that high performers also leave (Nyberg, 2010; Park & Shaw, 2013; Salamin & Hom, 2005; Trevor, Gerhart & Boudreau, 1997). The argument for this turnover is that higher-performing employees, who are more desirable to rival companies as a result of their superior work product, will have more external job opportunities and will, consequently, be more likely than their lower-performing colleagues to leave voluntarily. Longitudinal studies confirm that pay and the unemployment rate can affect the impact of the performance-turnover relationship (Nyberg, 2010; Trevor et al., 1997).

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