STRATEGIC/ SYSTEMATIC APPROACH TO TRAINING FOR HUMAN

RESOURCE DEVELOPMENT:
In the transposing phase of the market, all organizations have a number of opportunities to
grab and number of challenges to meet. Due to such environment, the dynamic organizations
are smoothly surviving in the present competition. While facing these challenges, there is a
great pressure of work on the shoulders of management. It is a responsibility of the
management to make necessary changes at the workplace as per the requirement of the job.
To survive in the competition and to meet the requirements, the management needs to change
their policies, rules and regulations. For surviving the business and becoming a successful
pillar in the market; training is a tool that can help in gaining competitive advantages.
Patrick(1992), in one of the best books available on the psychology of training, starts his
discussion of the definition of training by referring to its aims- to develop new skills,
knowledge or expertise. He then cites two definitions of training:
“Training is the systematic development of the attitudes/knowledge/skill behaviour patterns
required by an individual in order to perform adequately a given task or job.”
“The acquisition of skills, concepts or attitudes that result in improved performance in an on
job situation”
Dale S. Beach defines training as ‘the organized procedure by which people learn knowledge
and/or skill for a definite purpose’. According to Edwin Flippo, ‘training is the act of
increasing the skills of an employee for doing a particular job’.
Role of Training:
Training and development is an essential element of every business if the value and potential
of its people is to be harnessed and grown. Many studies have highlighted the clear links
between well designed and strategic training and development initiatives and the bottom line
within the business. Most organisations look at training and development as an integral part
of the human resource development activity. The turn of the century has seen increased focus
on the same in organisations globally. Many organisations have mandated trainingbhours per
year for employees keeping in consideration the fact that technology is deskilling the
employees at very fast rate. Technically training involves change in attitude, skills
orvknowledge of a person with the resultant improvement in the behaviour. For training to be
effective it has to be a planned activity conducted after a thorough need analysis and target at
certain competencies, most important it is to be conducted in a learning ambiance. While
designing the training program it has to be kept in mind that both the individual goals and
organisational goals are kept in mind. Although it may not be entirely possible to ensure a
sync, but competencies are chosen in a way that a win-win is created for the employee and
the organisation.
Significance of training:
 Optimized utilization of Manpowe
 Increasing productivity
 Creates better corporate image
 Inculcating sense of team work, team spirit and inter-team collaborations
 Prevents obsolescence
Training and Development has its crucial role towards growth and success of any business, as
it ensures that organization’s employees are equipped with the right kind of skills, knowledge
and abilities to perform their assigned task. Right type of training can only ensure that
employees possess the right skills for betterment of business, and the same need to be
continuously updated in the follow up of the best and new HR practices. Training also helps
to increase productivity as training provides new techniques to complete given task in
possible shorter period of time which indirectly increases productivity. The image of an
industry and of individual employers is also influenced by the extent and quality of staff
training and development. Trainings will help to build oneness in the organization as number
of activities done during training programs as well as task allotted to the team which helps to
build team spirit among employees. To be a competitor organization has to be adaptable
enough with technology coming in the market that only can prevent from obsolescence.

Training and Development offer competitive advantage to a firm by removing performance

deficiencies; making employees stay long; minimising accidents, scraps and damage; and
meeting future employee’s needs. To ensure the organization is served in both the short and
longer term, a strategic approach to training is a key. Training itself, of course, varies in
delivery methods from e-learning segments taken online, to live classroom training, to offsite
programs, learning on-the-job, cohort-based webinars, and other formats. Given delivery
options as well as many other variables, what does it mean for an organization’s approach to
training and learning to be strategic?

Deming: “It’s not enough to do your best; you must know what to do and then do your best.
The below shown model has been modified a bit to add the 5th level of evaluation, ROI,
which considers if the business results obtained were worth the effort. This addition is
attributed to Dr. Jack Philips. Overall the model has 5 different levels of training evaluation
– where the top 2 are Results (usually business results) and ROI. This indicatesthat the most
effective training always results in an incremental increase in business results as a direct
result of the training program.

as developed by Don Kirkpatrick.

The ADDIE Model is an approach used by instructional designers and content developers to
create instructional course materials. The model has been adopted as the standard method by
many instructional designers because of its flexibility.
Training Need Analysis (TNA): A training needs analysis is a systematic approach for
determining what training needs to take place. A training needs analysis considers:
 Business needs
 Current competencies
 Training methods
 Cost
 Effectiveness

EMPLOYERS CAN CONDUCT A NEEDS ANALYSIS BY FOLLOWING THE

STEPS BELOW:
Step 1: Determine the Desired Business Outcomes
Before training needs analysis can begin, the employer needs to articulate the goal of the
training. That is, what are the expected business outcomes of the training? The training goal
should correspond to a business objective. This can be specific to an individual employee,
work unit, department or the entire organization. It is best for an employer to answer the
question: "How will we know that the training worked?"
Step 2: Link Desired Business Outcomes with Employee Behaviour
There are generally multiple behaviours that are associated with any desired business
outcome. These behaviours are a result of employees:
 Knowing what to do;
 Having the capability to do it; and
 Having the motivation to do it.
At this step in the process, employers should identify the desired critical competencies, i.e.,
behaviours and associated knowledge, skills, abilities and personal characteristics that are
linked to desired business outcomes. This is usually done through collecting information
from subject matter experts. Data collection may take the form of interviews, focus groups or
surveys.
Step 3: Identify Trainable Competencies
Not every competency can be improved through training. For example, a sales job may
require sales people to be outgoing and initiate conversations with total strangers. It is more
effective, then, for an employer to hire people that are already extroverts than to attempt to
train introverts to be more outgoing. Similarly, it may be more effective to hire people with
specialized knowledge than to educate and train them.
Step 4: Evaluate Competencies
With a targeted list of competencies in hand, employers should determine the extent to which
their employees possess these. The most often used methods are:
 Competency evaluations; and
 Tests or assessments.
However, multiple raters, including peers, subordinates and customers, are often used to
evaluate the performance of supervisors and executives. This approach is generally known as
360 degree surveys.
Step 5: Determine Performance Gaps
To do this, the employer first needs to establish what constitutes a performance gap. That
standard will vary from employer to employer. Some employers will set higher standards
than others. Setting that standard will provide the employer with an understanding of how
many employees fall above or below that standard. Those falling below would be considered
to be in need of training.
Step 6: Prioritize Training Needs
Employers should aggregate the data in Step 6 with information on the performance gap
pervasiveness. That is, employers should total how many, or what percentage, of the targeted
workforce needs the training. Employers should also consider the importance of the
competency. Taken together, pervasiveness and importance should result in a list of training
priorities.
Step 7: Determine How to Train
Using the training priority list from Step 6, employers should now consider how best to train
their workforce. Typical training methods include:
 On the job training (OJT);
 Mentoring and coaching;
 Classroom;
 Web-based;
 Books;
 Conferences; and
 University programs.
It is recommended that employers consult a professional who is well versed in adult learning
to help determine the best ways employees can acquire a particular competency. Some
learning methods will work better than others. Although no two people learn or retain
information in the same way, studies show that individuals retain information much better if
they actually perform the skill or task. This type of retention is about 75 percent.
Step 8: Conduct a Cost Benefit Analysis
At this point, employers need to consider the costs associated with a particular training
method and the extent to which performance gaps can be combined into the same training
experience. Cost factors include:
 Required training time;
 Training content development if designed in-house;
 Training evaluation and acquisition if purchased from vendor;
 Training content delivery;
 Lost productivity from time spent in training; and
 Travel and logistical expenses.
Step 9: Plan for Training Evaluation
The last step in this process is for employers to decide how they will know whether the
training worked. Training is only effective if the material is retained and used on the job.
Training Need Analysis will give following benefit:
 Effective training programs correctly identify and address the training needs.
 Need to determine what or who needs to be trained.
 Training needs analysis works to clarify training needs
A poorly designed training needs analyses can lead to training that:
 Addresses the wrong competencies
 Trains the wrong people
 Uses the wrong training methods

Your Training Needs Analysis (TNA) is the 1st step in the Quality Training Process. In this
Needs Analysis your primary goal is to determine if a training need exists, and if so, what
training is required to fill those gaps.

Sources & Methods for Capturing Training Needs

 Business Strategy & Organizational Changes – The TNA should include a
comparison of the organizations vision, goals, objectives & strategy against its current
capabilities to determine what additional skills or knowledge are needed to implement
the vision.
 Task Requirement Analysis – The TNA should include a review of all major job
activities to determine if any new or different skills & techniques are needed to
accomplish those tasks more effectively or efficiently.
 Employee Capability Assessment – The TNA can also include an assessment of the
capabilities of your organizations employees. This might capture both their current
technical skills and their soft skills like learning agility.

Purpose of the Training Needs Analysis

 It’s important to remember that training just for the sake of training is irrelevant. Your
training must be aligned with the organizational goals & objectives & directly linked to a
business NEED.
Aligning your Training Needs with the Goals, Objectives & strategy of the alignment
basically drives support from management. This will ensure Management support & greatly
impact your overall effectiveness.
Output of the Training Needs Analysis
At the end of your training needs analysis, you should have identified:
 WHO needs training
 WHAT concepts, tasks, activities or topics need training
 WHY the training is important (aligned with business results)

The strategic role of Learning & Development

One of L&D’s primary responsibilities is to manage the development of people—and to do so
in a way that supports other key business priorities. L&D’s strategic role spans five areas

1. Attract and retain talent. Traditionally, learning focused solely on improving

productivity. Today, learning also contributes to employability. Over the past several
decades, employment has shifted from staying with the same company for a lifetime to a
model where workers are being retained only as long as they can add value to an enterprise.
Workers are now in charge of their personal and professional growth and development—one
reason that people list “opportunities for learning and development” among the top criteria
for joining an organization. Conversely, a lack of L&D is one of the key reasons people cite
for leaving a company.

2. Develop people capabilities. Human capital requires ongoing investments in L&D to

retain its value. When knowledge becomes outdated or forgotten—a more rapid occurrence
today—the value of human capital declines and needs to be supplemented by new learning
and relevant work experiences.3 Companies that make investments in the next generation of
leaders are seeing an impressive return. Research indicates that companies in the top quartile
of leadership outperform other organizations by nearly two times on earnings before interest,
taxes, depreciation, and amortization (EBITDA). Moreover, companies that invest in
developing leaders during significant transformations are 2.4 times more likely to hit their
performance targets.4

3. Create a values-based culture. As the workforce in many companies becomes

increasingly virtual and globally dispersed, L&D can help to build a values-based culture and
a sense of community. In particular, millennials are particularly interested in working for
values-based, sustainable enterprises that contribute to the welfare of society.

4. Build an employer brand. An organization’s brand is one of its most important assets
and conveys a great deal about the company’s success in the market, financial strengths,
position in the industry, and products and services. Investments in L&D can help to enhance
 company’s brand and boost its reputation as an “employer of choice.” As large segments of
the workforce prepare to retire, employers must work harder to compete for a shrinking talent
pool. To do so, they must communicate their brand strength explicitly through an employer
value proposition.

5. Motivate and engage employees. The most important way to engage employees is to

provide them with opportunities to learn and develop new competencies. Research suggests
that lifelong learning contributes to happiness.5 When highly engaged employees are
challenged and given the skills to grow and develop within their chosen career path, they are
more likely to be energized by new opportunities at work and satisfied with their current
organization.

The L&D function in transition

Over the years, we have identified and field-tested nine dimensions that contribute to a strong
L&D function. We combined these dimensions to create the ACADEMIES framework,
which covers all aspects of L&D functions, from setting aspirations to measuring impact
(Exhibit 2). Although many companies regularly execute on several dimensions of this
framework, our recent research found that only a few companies are fully mature in all
dimensions.
1. Alignment with business strategy
One of an L&D executive’s primary tasks is to develop and shape a learning strategy based
on the company’s business and talent strategies. The learning strategy seeks to support
professional development and build capabilities across the company, on time, and in a cost-
effective manner. In addition, the learning strategy can enhance the company culture and
encourage employees to live the company’s values.
For many organizations, the L&D function supports the implementation of the business
strategy. For example, if one of the business strategies is a digital transformation, L&D will
focus on building the necessary people capabilities to make that possible.

To be effective, L&D must take a hard look at employee capabilities and determine which are
most essential to support the execution of the company’s business strategy. L&D leaders
should reevaluate this alignment on a yearly basis to ensure they are creating a people-
capability agenda that truly reflects business priorities and strategic objectives.
2. Co-ownership between business units and HR
With new tools and technologies constantly emerging, companies must become more agile,
ready to adapt their business processes and practices. L&D functions must likewise be
prepared to rapidly launch capability-building programs—for example, if new business needs
suddenly arise or staff members require immediate training on new technologies such as
cloud-based collaboration tools.
L&D functions can enhance their partnership with business leaders by establishing a
governance structure in which leadership from both groups share responsibility for defining,
prioritizing, designing, and securing funds for capability-building programs.
3. Assessment of capability gaps and estimated value
After companies identify their business priorities, they must verify that their employees can
deliver on them—a task that may be more difficult than it sounds. Some companies make no
effort to assess employee capabilities, while others do so only at a high level. Conversations
with L&D, HR, and senior executives suggest that many companies are ineffective or
indifferent at assessing capability gaps, especially when it comes to senior leaders and
midlevel managers.
The most effective companies take a deliberate, systematic approach to capability
assessment. At the heart of this process is a comprehensive competency or capability model
based on the organization’s strategic direction. For example, a key competency for a segment
of an e-commerce company’s workforce could be “deep expertise in big data and predictive
analytics.”
After identifying the most essential capabilities for various functions or job descriptions,
companies should then assess how employees rate in each of these areas. L&D interventions
should seek to close these capability gaps.
4. Design of learning journeys
Most corporate learning is delivered through a combination of digital-learning formats and
in-person sessions. While our research indicates that immersive L&D experiences in the
classroom still have immense value, leaders have told us that they are incredibly busy “from
eight to late,” which does not give them a lot of time to sit in a classroom. Furthermore, many
said that they prefer to develop and practice new skills and behaviors in a “safe
environment,” where they don’t have to worry about public failures that might affect their
career paths.
Traditional L&D programs consisted of several days of classroom learning with no follow-up
sessions, even though people tend to forget what they have learned without regular
reinforcement. As a result, many L&D functions are moving away from stand-alone
programs by designing learning journeys—continuous learning opportunities that take place
over a period of time and include L&D interventions such as fieldwork, pre- and post-
classroom digital learning, social learning, on-the-job coaching and mentoring, and short
workshops. The main objectives of a learning journey are to help people develop the required
new competencies in the most effective and efficient way and to support the transfer of
learning to the job.
5. Execution and scale-up
An established L&D agenda consists of a number of strategic initiatives that support
capability building and are aligned with business goals, such as helping leaders develop high-
performing teams or roll out safety training. The successful execution of L&D initiatives on
time and on budget is critical to build and sustain support from business leaders.
L&D functions often face an overload of initiatives and insufficient funding. L&D leadership
needs to maintain an ongoing discussion with business leaders about initiatives and priorities
to ensure the requisite resources and support.
Many new L&D initiatives are initially targeted to a limited audience. A successful execution
of a small pilot, such as an online orientation program for a specific audience, can lead to an
even bigger impact once the program is rolled out to the entire enterprise. The program’s cost
per person declines as companies benefit from economies of scale.
6. Measurement of impact on business performance
 A learning strategy’s execution and impact should be measured using key performance
indicators (KPIs). The first indicator looks at business excellence: how closely aligned all
L&D initiatives and investments are with business priorities. The second KPI looks at
learning excellence: whether learning interventions change people’s behavior and
performance. Last, an operational-excellence KPI measures how well investments and
resources in the corporate academy are used.
Accurate measurement is not simple, and many organizations still rely on traditional impact
metrics such as learning-program satisfaction and completion scores. But high-performing
organizations focus on outcomes-based metrics such as impact on individual performance,
employee engagement, team effectiveness, and business-process improvement.
We have identified several lenses for articulating and measuring learning impact:
 Strategic alignment: How effectively does the learning strategy support the
organization’s priorities?
 Capabilities: How well does the L&D function help colleagues build the mind-sets,
skills, and expertise they need most? This impact can be measured by assessing people’s
capability gaps against a comprehensive competency framework.
 Organizational health: To what extent does learning strengthen the overall health
and DNA of the organization? Relevant dimensions of the McKinsey Organizational Health
Index can provide a baseline.
 Individual peak performance: Beyond raw capabilities, how well does the L&D
function help colleagues achieve maximum impact in their role while maintaining a healthy
work-life balance?
Access to big data provides L&D functions with more opportunities to assess and predict the
business impact of their interventions.
7. Integration of L&D interventions into HR processes
Just as L&D corporate-learning activities need to be aligned with the business, they should
also be an integral part of the HR agenda. L&D has an important role to play in recruitment,
onboarding, performance management, promotion, workforce, and succession planning. Our
research shows that at best, many L&D functions have only loose connections to annual
performance reviews and lack a structured approach and follow-up to performance-
management practices.
Another example is onboarding. Companies that have developed high-impact onboarding
processes score better on employee engagement and satisfaction and lose fewer new
hires.8 The L&D function can play a critical role in onboarding—for example, by helping
people build the skills to be successful in their role, providing new hires with access to
digital-learning technologies, and connecting them with other new hires and mentors.
8. Enabling of the 70:20:10 learning framework
Many L&D functions embrace a framework known as “70:20:10,” in which 70 percent of
learning takes place on the job, 20 percent through interaction and collaboration, and 10
percent through formal-learning interventions such as classroom training and digital
curricula. These percentages are general guidelines and vary by industry and organization.
L&D functions have traditionally focused on the formal-learning component.
Today, L&D leaders must design and implement interventions that support informal learning,
including coaching and mentoring, on-the-job instruction, apprenticeships, leadership
shadowing, action-based learning, on-demand access to digital learning, and lunch-and-learn
sessions. Social technologies play a growing role in connecting experts and creating and
sharing knowledge.
9. Systems and learning technology applications
The most significant enablers for just-in-time learning are technology platforms and
applications. Examples include next-generation learning-management systems, virtual
classrooms, mobile-learning apps, embedded performance-support systems, polling software,
learning-video platforms, learning-assessment and -measurement platforms, massive open
online courses (MOOCs), and small private online courses (SPOCs), to name just a few.
The learning-technology industry has moved entirely to cloud-based platforms, which
provide L&D functions with unlimited opportunities to plug and unplug systems and access
the latest functionality without having to go through lengthy and expensive implementations
of an on-premises system. L&D leaders must make sure that learning technologies fit into an
overall system architecture that includes functionality to support the entire talent cycle,
including recruitment, on boarding, performance management, L&D, real-time feedback
tools, career management, succession planning, and rewards and recognition.

APPLYING THE RESOURCE-BASED VIEW OF SHRM

In adopting a focus on the internal context of the business, HR issues and practices are core to
providing sustainable competitive advantage, as they focus on how organizations can define
and build core competencies or capabilities which are superior to those of their competitors.
One key framework here is the work of Hamel and Prahalad (1993, 1994) and their notion of
‘core competencies’ in their ‘new strategy paradigm’. They argue that ‘for most companies,
the emphasis on competing in the present, means that too much management energy is
devoted to preserving the past and not enough to creating the future’.

Thus it is organisations that focus on identifying and developing their core competencies that
are more likely to be able to stay ahead of their competitors. The key point here is not to
anticipate the future, but create it, by not only focusing on organisational transformation and
competing for market share, but also regenerating strategies and competing for opportunity
share. Thus in creating the future, strategy is not only seen as learning, positioning and
planning but also forgetting, foresight and strategic architecture, where strategy goes beyond
achieving ‘fit’ and resource allocation to achieving ‘stretch’ and resource ‘leverage’.

The level of both tacit and explicit knowledge within the firm, coupled with the ability of
employees to learn, becomes crucial. Indeed, Boxall and Purcell (2003) argue that there is
little point in making a distinction between the resource-based view and the knowledge-based
view of the firm, as both approaches advocate that it is a firm’s ability to learn faster than its
competitors that leads to sustainable competitive advantage.Alternatively, Boxall and Purcell
present Leonard’s (1998) similar analysis based on ‘capabilities’.
These are ‘knowledge sets’ consisting of four dimensions: employee skills and knowledge,
technical systems, managerial systems, and values and norms. In this model, employee
development and incentive systems become a key driving force in achieving sustainable
competitive advantage through core capability. Interestingly, Leonard emphasises the
interlocking, systemic nature of these dimensions and warns organisations of the need to
build in opportunities for renewal, to avoid stagnation.

HAMEL AND PRAHALAD’S NOTION OF ‘CORE COMPETENCY’

When organisations grow through mergers or acquisitions, as they appear increasingly to do

(Hubbard, 1999), it has been argued that the resource-based view takes on further
significance. When mergers and acquisitions fail, it is often not at the planning stage but at
the implementation stage (Hunt et al., 1987) and people and employee issues have been noted
as the cause of one-third of such failures in one survey (Marks and Mirvis, 1982). Thus
‘human factors’ have been identified as crucial to successful mergers and acquisitions.

The work of Hamel and Prahalad (1994) indicated that CEOs and directors of multidivisional
firms should be encouraged to identify clusters of ‘know-how’ in their organisations which
‘transcend the artificial divisions of Strategic Business Units’ or at least have the potential to
do so. Thus the role of Human Resources shifts to a ‘strategic’ focus on ‘managing
capability’ and ‘know-how’, and ensuring that organisations retain both tacit and explicit
knowledge (Nonaka and Takeuchi, 1995) in order to become more innovative, as
organisations move to knowledge- based strategies as opposed to product-based ones.

The resource-based view of SHRM has recognised that both human capital and
organizational processes can add value to an organisation; however, they are likely to be
more powerful when they mutually reinforce and support one another. The role of Human
Resources in ensuring that exceptional value is achieved and in assisting organisations to
build competitive advantage lies in their ability to implement an integrated and mutually
reinforcing HR system which ensures that talent, once recruited, is developed, rewarded and
managed in order to reach their full potential.

This theme of horizontal integration or achieving congruence between HR policies and

practices is developed further in the next section, best-practice approach to SHRM.

Limitations of the Resource-Based view

The resource-based view is not without its critics, however, particularly in relation to its
strong focus on the internal context of the business. Some writers have suggested that the
effectiveness of the resource-based view approach is inextricably linked to the external
context of the firm (Miller and Shamsie, 1996; Porter, 1991). They have recognized that the
resource-based view approach provides more added value when the external environment is
less predictable.
Other writers have noted the tendency for advocates of the resource-based view to focus on
differences between firms in the same sector, as sources of sustainable competitive
advantage. This sometimes ignores the value and significance of common ‘base-line’ or
‘table stake’ (Hamel and Prahalad, 1994) characteristics across industries, which account for
their legitimacy in that particular industry. Thus in the retail sector, there are strong
similarities in how the industry employs a mix of core and peripheral labour, with the
periphery tending to be made up of relatively low-skilled employees, who traditionally
demonstrate higher rates of employee turnover.

Thus in reality, economic performance and efficiency tend to be delivered through

rightsizing, by gaining the same output from fewer and cheaper resources, rather than through
leverage, by achieving more output from given resources. The example of B&Q in the UK,
employing more mature people as both their core and particularly their peripheral workforce,
is a good example of how an organisation can partially differentiate themselves from their
competitors, by focusing on adding value through the knowledge and skills of their human
resources.

MEASURING SHRM OUTCOMES

This is all about determining whether HR is delivering the outcomes necessary for the
business’s success.
This may involve assessing:

 How happy and satisfied are our employees?

 How engaged are employees with their work and the organisation?

 What is our employee churn rate?

 What is our absenteeism rate?

 What is the impact of our training?

Common metrics for assessing outcomes include:

 Employee Net Promoter Score (eNPS)

 Employee satisfaction index

 Absenteeism rate

 Employee productivity rate

 Average length of service

 Attrition rate
Assessing HR service delivery
Essentially, this involves measuring whether the service HR delivers is effective – and
aligned with the company’s overall strategy, values and behaviours.
This may mean measuring factors like:

 Is the HR team itself delivering a good service?

 How effective is the induction programme?

 Are employees being developed sufficiently?

 How likely are employees to recommend the company

 How do employees rate the performance management process?

Common metrics for assessing HR service delivery include:

 Return on investment

 Benefit satisfaction

 Failure rate of new hires

 Training effectiveness

 Performance of new hires

 eNPS
Measuring HR internal efficiency and effectiveness
This means assessing whether HR services are being delivered as efficiently as they could be.
Key things to measure here may include:

 Are we recruiting through the most effective channels?

 How effective are we at recruiting the competencies the business needs?

 What are our costs-per-hire?

 What are our training costs?

 How effective are the different types of training?

Common metrics for assessing HR internal efficiency include:

 Return on investment

 Cost-per-hire

 Average time taken to fill vacancies

 eNPS

 Recruitment channel analysis

Auditing HR compliance
Concerning all the legal requirements surrounding HR, this is perhaps the least exciting area
to measure. Yet, interestingly, I find this is the area where HR teams focus too much of their
time and attention. Clearly, compliance is important and something that needs monitoring
regularly, but this must be done in conjunction with measuring those functions that are
related to the organisation’s strategic priorities.
Key things to measure here may include:

 Are our policies and practices up to date?

 Are employees properly trained on new policies and practices?

 Do employees understand key policies and practices?

 Is our employee handbook up to date?

 Are we meeting our equality and diversity obligations?

Common metrics for assessing HR compliance include:

 Percentage of employees trained in company policies

 Salary competitiveness

 Diversity rate/employee demographics

 Gender pay gap

 Number of diversity initiatives

Thinking outside the (KPI) box
Big data-related technology has brought many new and exciting ways to measure HR
effectiveness. For example, lengthy and expensive annual staff surveys are gradually being
replaced by short “pulse” surveys that ask employees a quick question on a much more
regular basis. This allows the HR team to build up a much more accurate picture of staff
sentiment and quickly respond to what the data tells them.
In another example, HappyOrNot terminals can be used to get daily, anonymous feedback
from employees. When placed in high-traffic areas like meeting rooms or the canteen, the
terminal asks an employee a simple question and the employee responds by choosing
between one of four smiley faces that best demonstrates how they feel.
The beauty of simple, continuous feedback systems like HappyOrNot terminals or pulse
surveys is not just the quick access to insights, but also the ability to monitor changes and
initiatives made in response to the feedback to see how effective those changes have been.

COMPENSATION 
 Compensation is a systematic approach to providing monetary value to employees in
exchange for work performed. Compensation may achieve several purposes assisting in
recruitment, job performance, and job satisfaction.

Compensation is a tool used by management for a variety of purposes to further the existance
of the company. Compensation may be adjusted according the the business needs, goals, and
available resources.

Compensation may be used to:

 Recruit and retain qualified employees.

 Increase or maintain morale/satisfaction.
 Reward and encourage peak performance.
 Achieve internal and external equity.
 Reduce turnover and encourage company loyalty.
 Modify (through negotiations) practices of unions.

Recruitment and retention of qualified employees is a common goal shared by many

employers. To some extent, the availability and cost of qualified applicants for open positions
is determined by market factors beyond the control of the employer. While an employer may
set compensation levels for new hires and advertize those salary ranges, it does so in the
context of other employers seeking to hire from the same applicant pool.

Morale and job satisfaction are affected by compensation. Often there is a balance (equity)
that must be reached between the monetary value the employer is willing to pay and the
sentiments of worth felt be the employee. In an attempt to save money, employers may opt to
freeze salaries or salary levels at the expence of satisfaction and morale. Conversely, an
employer wishing to reduce employee turnover may seek to increase salaries and salary
levels.

Compensation may also be used as a reward for exceptional job performance. Examples of
such plans include: bonuses, commissions, stock, profit sharing, gain sharing.

Components of a compensation system

Compensation will be perceived by employees as fair if based on systematic components.

Various compensation systems have developed to determine the value of positions. These
systems utilize many similar components including job descriptions, salary ranges/structures,
and written procedures.

The components of a compensation system include

 Job Descriptions A critical component of both compensation and selection systems,
job descriptions define in writing the responsibilities, requirements, functions, duties,
location, environment, conditions, and other aspects of jobs. Descriptions may be developed
for jobs individually or for entire job families.
 Job Analysis The process of analyzing jobs from which job descriptions are
developed. Job analysis techniques include the use of interviews, questionnaires, and
observation.
 Job Evaluation A system for comparing jobs for the purpose of determining
appropriate compensation levels for individual jobs or job elements. There are four main
techniques: Ranking, Classification, Factor Comparison, and Point Method.
 Pay Structures Useful for standardizing compensation practices. Most pay structures
include several grades with each grade containing a minimum salary/wage and either step
increments or grade range. Step increments are common with union positions where the pay
for each job is pre-determined through collective bargaining.
 Salary Surveys Collections of salary and market data. May include average salaries,
inflation indicators, cost of living indicators, salary budget averages. Companies may
purchase results of surveys conducted by survey vendors or may conduct their own salary
surveys. When purchasing the results of salary surveys conducted by other vendors, note that
surveys may be conducted within a specific industry or across industries as well as within one
geographical region or across different geographical regions. Know which industry or
geographic location the salary results pertain to before comparing the results to your
company.
 Policies and Regulations

Types of compensation

Different types of compensation include:

 Base Pay
 Commissions
 Overtime Pay
 Bonuses, Profit Sharing, Merit Pay
 Stock Options
 Travel/Meal/Housing Allowance
 Benefits including: dental, insurance, medical, vacation, leaves, retirement, taxes.

EMPLOYEE SEPARATION

The termination of employees from membership of the organization is referred as employee

separation. The rate at which employees leave the organization is measured by the rate of
employee separation.

The Costs of Employee Separation

 The employee separation is always resulted in some costs. The intensity of the incurring costs
varies on the basis of the decision of the management that either the empty position of
separated employee is replaced by a new employee or the position may be eliminated
permanently. Following are the costs that are linked with the employee separation.

 Recruitment Costs
 Selection Costs
 Training Costs
 Separation Costs

Benefits of Employee Separation

On one hand there are costs attached with the employee separation, but on the other hand
there are some resulting benefits too. Following are some of the Employee Benefits that are
associated with the employee separation.

 The labor cost is reduced

 The employees who perform poorly, are replaced
 The innovation is increased in the organization
 The diversity is enhanced in the organization

Types of Employee Separation

There are two main types of employee separations on the basis of the initiation of the
employment relationship termination. These two types of employee separations are as follow.

1. Voluntary Separation

When an employee terminates the employment relationship, then this form of employee
separation is known as voluntary separation. Voluntary separation is further divided into two
categories.

 Quits
 Retirements

2. Involuntary Separation

When employer of an organization ends the employment relationship with any employee,
then this employee separation is called involuntary separation. There may be a number of
reasons for involuntary separations like the employee does not fit with the requirements of a
particular job or due to economic necessity. Involuntary separation is further divided into the
following categories.
 Discharges
 Layoffs
 Rightsizing or downsizing