Performance Management

Module -1 Concept of Performance Management

Performance Management
Performance: the preview of performance management the term performance is
considered as the accomplishment of a given task measured against preset known standards
of accuracy, completeness, cost, and speed. In a contract, performance is deemed to be the
fulfillment of an obligation, in a manner that releases the performer from all liabilities under
the contract.
Performance management

 It is a continuous process of identifying, measuring and developing the

performance of individuals and teams and aligning performance with the strategic
goal of the organization
 Performance management further defined as a process which contributes to the
effective management of individuals and teams in order to achieve high level of
organizational performance.
 Performance management is a corporate management tool that helps managers
monitor and evaluate employees' work. Performance management's goal is to
create an environment where people can perform to the best of their abilities and
produce the highest-quality work most efficiently and effectively.
 It establishes shared understanding about what is to be achieved and an approach
to leading and developing people which will ensure that it is achieved (Armstrong
and Barron 2009)
 Performance management can focus on the performance of an organization, a
department, an employee, or the processes in place to manage particular tasks
 Performance management is defined as the process of continuous communication
and feedback between a manager and employee towards the achievement of
organizational objectives.
Performance-Management Programs

 Aligning employees' activities with the company's mission and goals- Employees
should understand how their goals contribute to the company's overall
achievements.
 Developing specific job-performance outcomes.
 Creating measurable performance-based expectations. Employees should give input
into how success is measured. Expectations include results, actions and behaviors
 Defining job-development plans. Supervisors and employees together should define
a job's duties. Employees should have a say in what types of new things they learn
and how they can use their knowledge to the company's benefit.
 Meeting regularly- Instead of waiting for an annual appraisal, managers and
employees should engage actively year-round to evaluate progress.
The main objective of performance management

 Achieving individual employee goals of employees along with organizational

objectives.
 Enhance the skills and personal development of employees through the managers'
help.
 Encourage work that helps in fulfilling business goals.
 Allows employees to focus on what's important.
 Optimizes employees' individual performance.
 Create healthy work environment
 Develop performance plans
 Selection of appropriate people
 Decision regarding performance standard
 Plans for development of employees
 Measurement of performance
 Performance feedback
 Design compensation, recognition and reward system
 Helps to identify the key result areas and work upon improving them.
 Setting the right expectations for managers and employees- An efficient
performance management system sets clear expectations from both managers and
employees.
 Effective communication between individuals and teams
 Set performance standards- Setting the right performance standards can help you
build a better performance plan. It, in turn, makes for a smoother evaluation of
employee performance.
 Determining individual training and performance plans- It promotes personal growth
and advancement in the employees' careers by helping them acquire the desired
knowledge and skills.
The advantages of the performance management system are as follows:
1. Documentation: With the help of a performance management system you can
generate a performance document for every employee for the particular financial
year. This paper can be maintained in the employee file to cover the performance
graph of the employee throughout the working years.
2. Structure: It creates a formal structure for communication between supervisor and
employee. It makes it necessary for supervisors and employees to take out time and
discuss the performance as well as bring out a solution to improve performance.
3. Feedback: Employees are often interested to know the feedback about their
performance in the organization. Here performance management system makes it
mandatory for the supervisor to provide timely performance feedback to the
employees.
4. Clarify Expectations: Using performance management system managers can clarify
the performance and behavior expectations that employees should understand.
 5. Annual Planning: It plays a vital role in the annual planning of hiring, training and
development practices, and goal settings.
6. Motivation: As a part of a comprehensive compensation strategy the performance
management system is very helpful to motivate the employees to improve their
performance.
The disadvantages of the performance management system are as follows:
1. Creates Negative Experience: The system can create a negative experience for the
employees, if the performance appraisal is not done in a fair way and feedback is
conveyed in a wrong way.
2. Time-Consuming: It is very overwhelming for managers to evaluate and manage the
performance of hundreds of employees working in the organization. The process
becomes time-consuming and not worth it.
3. Natural Biases: As managers are responsible for several steps in the performance
management system a natural bias from the manager's end is expected. The natural
biases can result in rater errors.
Importance of Performance Management System in Organizations

 Performance reviews help document salary actions.

 They provide feedback to employees on their performance.
 Performance reviews help identify “good” and “bad” performers.
 They help document personnel decisions, such as promotions and discipline.
 They assist management in deciding to retain or terminate.
 Performance reviews help identify training needs.
 They assist with personnel planning including staffing.
Performance management process steps
The steps in the performance management process can be broken down into four broad
categories: Planning, coaching, reviewing and rewarding. Each step is equally important,
and together form the backbone of a company’s performance management process.
1. Planning- The first step of the performance management process is Planning.
a. The defining stage- HR and management need to define the job itself, including a
comprehensive description, long and short-term goals, identify key objectives and
develop a clear metric for how those objectives and goals will be assessed.
Goals should be clear, done in the SMART format (specific, measurable, attainable,
relevant, time-based) and clear performance standards should be set.
b. The feedback stage- Once management has completed the defining stage,
employees should have the opportunity to give input on this material. They are the
one doing their job and will have a key insight into what skills, competencies and
goals will best assist the company to achieve organizational goals.
c. The approval stage- Management and employees both agree to the definition of the
role, goals and objectives.
2. Coaching
 Organize meetings on a timely, regular basis- The coaching process is extremely
important and must be done on a regular basis. Meetings should be at least
quarterly, although monthly meetings are the ideal.
 Provide necessary training, coaching and solutions- These meetings should focus on
solutions and coaching opportunities, rather than punitive measures for lackluster
performance.
 Solicit feedback on both sides- Management should be able to give - and receive -
honest feedback and work with employees rather than adopting a combative stance.
The ability to give actionable feedback is important here.
 Revisit objectives as necessary- As the performance management process
continues, management should revisit objectives to see if adjustments should be
made, as well as pay attention to career development opportunities for their
employees.
3. Reviewing
 Reviewing employee performance- At the end of the yearly performance
management cycle, there should be an employee review, which is sometimes also
called a performance appraisal. Typically, these are held once a year, to look at how
well the employee performed over that span of time. There should be a clear record
from previous check-ins to show the employee’s progress throughout the year.
 Reviewing the performance management process- At this stage, it is important for
both management and employees to look over the previous year and see how well
the performance management process worked.
 Reviewing overall goal completion- It is important to look at both smaller and larger
goals, as this can give an indication to problem areas where training or interventions
can be applied.
 Giving actionable feedback- A key part of the review is to give and receive feedback.
Management should give actionable feedback for the employee so that they know
areas where they can improve future performance.
4. Action
 Reward and recognition- employees will not stay motivated if they are given no
reason to. This does not necessarily have to be monetary, although it likely will
include monetary compensation. Other rewards could be new projects, company-
wide recognition, time off, or leadership opportunities.
 Setting the stage for next year’s performance management cycle
Some of the essential pre-requisites without which performance management system will
not function effectively in an organization are:

 Top management support and commitment is very essential for building a sound
performance culture in an organization.
 Organizational vision, mission and goals should be clearly defined and understood
by all levels so that the efforts are directed towards the realization of the
organizational ambitions.
 Clear definition of the roles for performing a given job within the organizational
framework which emanates from the departmental and the organizational
objectives. The system should also be able to explain the linkages of a role with
other roles.
 Open and transparent communication should prevail which will motivate the
employees for participating freely and delivering high performance. Communication
is an essential pre-requisite for a performance management process as it clarifies the
expectations and enables the parties in understanding the desired behaviors or
expected results.
 Identification of major performance parameters and definition of key performance
indicators.
 Consistency and fairness in application.
 A commitment towards recognition of high performance. Rewards and recognitions
should be built within the framework of performance management framework.
 Proper organizational training should be provided to the staff members based on
the identification of training needs from periodic evaluation and review of
performance. This will motivate the employees for a superior performance.
Key result areas (KRAs)
It broadly defines the job profile for the employee and enable them to have better clarity of
their role. KRAs should be well-defined, quantifiable, and easy to measure. It also helps
employees to align their role with that of the organization. For example, an employee who is
working at a managerial level in a manufacturing company would have a different KRA than
somebody who is in a technology firm.
Key Results Areas for an Organization- The Key Result Areas for an organization should
focus on the vital areas that fit best with an organization’s strategic goals and most directly
drive its success. Determining those success factors will require some analysis and
discussion among organization employees and leaders. An organization’s Key Result Areas
will vary depending on the organization. But, several broad areas are a part of KRAs for
many organizations. They include the following:

 Profit and economic gain

 Customer satisfaction
 Employee happiness
 Product quality
 Organizational management
If the KRAs are being developed for an individual, they should broadly define that job and
give the employee clarity in their role and mission within the organization. The KRAs likely
will include a list of functions and activities vital to success. On this ensure the KRAs Fit
the Position. KRAs can require certain objectives from an employee only when the
employee has the ability within the organization’s structure to accomplish that objective.
SMART KRAs: Many experts believe that KRAs (for an employee, department or
organization) should be SMART (specific, measurable, aligned, relevant, and time-bound).
Key Performance Indicators- it is the indicators which is used to look at key areas when
evaluating a business performance. KPI measure a person's, department's, or organization's
progress in specific areas (KRA).
1. Financial KPIs- might want to add more financial metrics to dashboard, like
expenses—how much money is going out? and stretch goals—these are major
drivers for innovation and long-term changes within a company. So, in order to build
a comprehensive financial reporting, here are the KPIs you’ll need to build:
 Profit margin
 Break down of expenses
 Stretch goals
 Profit per customer
 Growth rate
 Customer retention rate
2. Customer Satisfaction KPIs- Besides, keeping your customers engaged and happy
with your product will cost you five times less than acquiring new customers.
Focusing your marketing and sales strategies on customer retention –therefore on
customer satisfaction– will increase your chances to upsell and turn them into your
brand Ambassadors. Here are a few customer satisfaction KPIs you need to monitor
 Complaint rate
 Returning customers – for e-commerce websites for example. It can be Upsells for
SaaS companies
 CSAT – customer satisfaction score
 NPS – net promoter score
 Customer retention rate
 Customer support rating
 Recommendation rate
3. Market Perception KPIs- a top-of-mind brand in your marketplace is every
marketer’s dream. There are multiple ways to increase brand awareness: using social
media, collaborating with influencers and leaders in your industry, participating in
events or webinars/podcasts, doing PR campaigns to announce new funding
rounds/new products/new partnerships, etc.
4. Productivity KPIs- there is a need to measure the progress of your projects and make
sure that any critical tasks are being blocked for too long. Managing on-site and even
remote teams requires having a centralized report with everyone’s progress clearly
laid down.
 MODULE – 2 PERFORMANCE MANAGEMENT SYSTEM
Performance management is a continuous process that focuses on aspects like planning,
monitoring, and evaluating employee objectives in an attempt to enhance employee
performance. This helps employees to put in their best efforts to achieve company goals.
Performance Appraisal
Performance appraisal, also known as performance review/evaluation, is the identification,
documentation, and evaluation of an employee’s performance to comprehend whether an
employee is enhancing the productivity of a company or simply being a liability.
The main objective of the performance appraisal system was to exercise control over the
activities of the employees through disciplinary actions and management of rewards and
promotions.
Performance appraisals were mostly carried out annually for measuring the degree of
accomplishment of an individual
Objectives of Performance Appraisal

 Keeping records to decide stipend structure, bonuses, etc.

 Assigning the right tasks to the right employees after evaluating their strengths and
weaknesses.
 Identifying and evaluating the potential of an employee for further growth and
development.
 Providing feedback and positively impacting the working habits of employees.
Performance appraisal - Process
a. Establish Performance Standards
b. Communicate the Standards
c. Measure Actual Performance
d. Compare Actual Performance with Standards
e. Feedback to the Employee
f. Taking Corrective Action, if Necessary
Benefits of Performance Appraisal

 Deciding upon the promotion or dismissal of the employees.

 Deciding upon the salary/stipend structure of the employees.
 Boosting employee development.
 Establishing clear and effective communication between employers and employees.
 Motivating employees.
 Performance Appraisal
Focus is on top down assessment
Performed annually
Usage of ratings is very common
Focus is on traits
Monolithic system or rigid because it is only
confined to an employee’s past performance. It
has little to do with his growth.
Are very much linked with pay
Performance management looks at an
employee’s performance keeping in mind the
present and the future.
Performance management
It is very dynamic because it involves a lot of
dialog between the employee and the senior
managers. There is more room for discussion in
performance management.
Continuous reviews are performed by giving
real time instant performance reviews.
Usage of ratings is less common
Focus is on quantifiable objectives, values and
behaviours
Flexible system by in terms of keeping in mind
the growth of the organization. It come up with
developmental plans for more improvement
Is not directly linked with pay
Performance appraisal evaluates the
employee’s performance based on how he has
performed in the immediate past.

Performance management ensures that There is a lack of developmental strategies for

employees feel a better sense of belonging
compared to performance appraisals.
Performance Appraisal is generally conducted
by the human resource
performance appraisal is a system
employee performance in the appraisal
process. Employees may get cynical and leave
the organization if they don’t see any scope for
development.
whereas managers take care of performance
management.
performance management is a process

Potential Appraisal
It refers to the assessment of potential of a person refers to his abilities which are not being
utilized. It is the latent capability to discharge higher obligations and responsibilities in
future roles. Potential appraisal helps in career planning, succession planning etc.
A good potential appraisal system provides opportunities continuously for the employee to
know his strengths and weaknesses. These are done through periodic counseling and
guidance sessions by either the personnel department or the managers concerned. This
should enable the employee to develop realistic self- perceptions and plan his own career
and development
Potential appraisal helps to identify the hidden talents and potential of the individuals.
Identifying the potential talent facilitates in preparing the individuals for higher
responsibilities and positions in the future.
Difference between Potential Appraisal and Performance Appraisal
1. Potential Appraisal is forward looking process whether performance appraisal is
backward looking process.
2. Potential appraisal helps to identify the hidden talents and potential of the
individuals while Performance appraisal is a part of career development.
 Performance appraisal helps to rate the performance of the employees and evaluate
their contribution towards the organizational goals.
3. Good or worse assessment results of performance appraisal may not be a good
factor for potential appraisal.
4. Current performance of an employee could show evidence somewhere whether
he/she is flexible for new working conditions.
5. Potential appraisal helps to identify what can happen in future so that it can be
guided and directed towards the achievement of individual and organizational
growth and goals. Performance appraisal analysis past and apprised
Methods of conducting performance appraisal
A. Traditional methods
1. Ranking Method- This method requires the evaluator to list all salespeople in order
of their performance, beginning with the top performer. A number of ranking
methods are used for conducting the performance appraisal of employees.
2. Graphic Rating Scale Method- Graphic rating scale method identifies specific desired
traits, behavior factors or performance criteria, as, quality and quantity of work,
cooperativeness, analytical ability, decisiveness, initiative, emotional stability, etc.
Employees are rated on a scale based on the extent to which they exhibit the desired
behavior or the extent to which they meet the desired performance criteria.
3. Critical Incidents Method- Under this method the immediate supervisor tries to
make a continuous record of all the good or bad incidents of a person’s work-related
behavior. Whenever employees are found doing something good or positive which
contribute towards increasing the overall productivity of the organization or creating
a healthy work atmosphere it has been incurred to machinery or the overall
productivity of the organization gets adversely affected it adds to their negative
contributions. At the end of the rating period, these recorded critical incidents
whether positive or negative are used in the evaluation of the employee’s
performance.
4. Essay Method- Brief narratives by the manager describe the performance of an
employee. A manager may write a detailed write-up on the job knowledge and
potential of the employee and employees’ relation with their co-workers and
superiors; and so forth. Essay method provides detailed information about the
employee’s performance by the managers who have seen them closely on the job.
B. Modern Methods
1. Management by Objectives Method- MBO is a comprehensive management
approach which is used for conducting performance appraisal. The primary focus in
this method is on developing a set of objectives which are to be realized by the
employees. Therefore, the Management by Objectives approach involves
establishing performance goals jointly by the superior and subordinate. For this
program to be effective, both superior and subordinate must be actively involved in
objective formulation and agree on the methods to be used to assess performance.
2. 360° Feedback Appraisal- The term 360° feedback appraisal is also known as multi-
rater feedback, multisource feedback, full circle appraisal and group performance
 review. This concept involves a process of collecting information about a person’s
behavior from the people around him – his boss (es), colleagues, fellow members in
the team, suppliers, as well as customers.
3. Assessment Centers- it is for evaluating the supervisors. In this where managers
come together and being assessed by senior managers or specialist for 2-3 days.
4. Behaviorally Anchored Rating Scales (BARS)- it is an objective evaluation technique
was developed around 1960s. BARS are descriptions of various degrees of behavior
with regard to a specific performance dimension and incorporate the benefits of
narratives, critical incidents, and quantified ratings.
5. Psychological Appraisals- Psychological appraisals are conducted to assess the
future potential of the employees. In this method, the past and actual performance
is not assessed. The focus is on the future potential. Big organizations generally
employ full-time industrial psychologists for the purpose.
Appraisal form- An appraisal form is a document that managers and human resources staff
use to evaluate the performance of employees. The form often includes ratings and room
for comments on performance. On an appraisal form, managers keep track of employees’
achievements and contributions during a specific period. They also indicate the employees’
areas of strength and weakness.
Managers often use the performance appraisal form to guide them through an employee’s
performance review by highlighting specific items to discuss. When going through the
appraisal form, both the employee and manager can work together to create goals for the
employee.
Components of a performance management form

1. Identifying information
2. Instructions
3. Rating scales
4. Performance objectives and measures
5. Employee Comments
6. Competencies or requirements or knowledges (only if
your organization evaluates competencies)
7. Employee training and development plan
8. Sign-off section

1. Identifying information
 Employee's name
 Job title
 Review period
 Supervisor's name
 Date of review
2. Instruction section- Include some brief instructions on what is to be done, why, and
how to complete the performance management form
3. Performance objectives and measures - In this section of the form, document the
performance objectives identified in the work plan and the measures to be used to
assess achievement. Some formats include the objectives and the measures
together; other forms (like the one below) separate the objective and its measures.
4. Competencies - If your organization has a performance management process which
combines management by-objectives with an evaluation of competencies, include
them here. Examples of competencies are team work, effective communication, and
problem solving.
5. Clear rating scales - Performance management forms often (but not always) include
rating scales to help guide and simplify the assessment process. However, poorly
constructed rating scales can be a source of confusion, subjectivity, ambiguity and
conflict - all of which undermine the performance management process.
6. Employee training and development plan - As part of the performance planning
process, the manager and employee may have identified areas for further training
and/or development, as well as the types of activities that the employee could
engage in. Document the expectations for training and development in the
performance management form. At the end of the year, document the results of the
learning activities.
7. Sign-off section - End your form with an area for the manager's and employee’s
signatures. The signatures should come after a statement which indicates that 'by
signing, both parties are acknowledging that they have read and discussed the
contents of the performance review form.' This allows the performance
management cycle for one year to end and the cycle for the next year to begin.
Employee’s name: Lisa Nelson
Position: Marketing specialist
Department: Marketing
Supervisor’s name: Jorge Diaz
Review period: 7/1/19-1/1/20
Date of performance review: 1/12/20
Instructions: Employees are to complete a self-assessment and submit it to their manager no later
than 1/1/20. Managers are to complete their assessment and submit it to Human Resources by
December 1/12/20.
Rating scale:
 5 Excellent (consistently exceeds standards)
 4 Outstanding (frequently exceeds standards)
 3 Satisfactory (generally meets standards)
 2 Needs improvement (frequently fails to meet standards)
 Unacceptable (fails to meet standards)
1. OBJECTIVES: Overall Section Rating: 4
Objective Action Items Outcomes
increase number of Enhance social media Overall, followers on
followers strategies by sharing at least Twitter were increased by
on both Twitter and six high-quality content 22%, while LinkedIn
LinkedIn by 15%. pieces with each persona followers increased by 10%.
via social media
Section rating-4
Employee comments
(repeating with other objectives and comments if any)

2. GENERAL PERFORMANCE REQUIREMENTS: Overall Section Rating: 4

a) Communication Skills (Listens effectively and provides information and guidance to
individuals in an appropriate and timely manner.) section rating-2
b) Management Skills (Guides team to achieve desired results. Delegates responsibilities
appropriately and effectively, while developing direct reports.) section rating-2
Employee comments
(repeating with other requirements and comments if any)

SECTION 3: PROFESSIONAL DEVELOPMENT: overall Section Rating: 3

Pursue the AMA Professional Certified Marketer in Digital Marketing certification by completing
three to five LinkedIn Learning courses. Section rating-3
(repeating with other trainings and comments if any)

OVERALL RATING: 4

Section 1 (%): 4.0 Total Score:

Section 2 (%): 4.0
Section 3 (%): 3.0

By signing, both parties are acknowledging that we have read and discussed the contents of the
performance review form.
Employee Signature: Date:
Supervisor Signature: Date:
Performance measurement and evaluation
Performance measurement is the ongoing, regular collection of information for monitoring
how a program, policy or strategy is doing. It is a systematic way of mapping the evidence of
the progress you are making towards your expected results.
Performance measurement is concerned with compiling evidence to determine the progress
of an individual, a unit or an organization towards predetermined objectives
Through effective performance measurement, program staff can collect much valuable data
information that can help improve service delivery and client results. Performance
measurement data cannot, however, directly answer questions about program impact
whether the program alone produced any observed outcomes. Nor can performance
measurement data necessarily answer all questions about how a program is working or how
results were achieved. To answer these questions, evaluation methods are needed.
Performance measurement is ongoing, while evaluation is discrete. Performance
measurement is part of a continuous improvement process, in which data are collected,
analyzed, and reported as close to real time as possible, giving staff immediate and
actionable feedback on a program’s status. Evaluation, whether formative or summative, is
not done continuously but rather during particular periods of a program’s development or
implementation and over a specified timeframe.
Benefits of employee performance evaluation

 Improved communication
 Build a career path
 Check levels of engagement
 Get feedback for yourself
 Resources planning
Appraisal communication:
The results of the appraisal should be communicated to employees in an appropriate time.
It can be through:

 General Talk
 Review Meeting - It is a process where manager and employee work together to
assess the degree to which the employee attained agree-upon goals, and work
together to overcome any difficulties encountered. Also called performance
appraisal meeting, or performance evaluation meeting. Usually refers to an annual
meeting. Mutually agreed with conclusions about performance, areas for
improvement, and how to achieve improvement
Objectives

 To let subordinates, know where they stand

 To recognize their good work
 Point out how and where they can improve
  To develop them on their present job
 Develop and train them for higher jobs
 Serve as a record
 To warn underperforming employees
Performance Appraisal Feedback
PMS is effective when feedback is given on employee performance. It is an intellectual
activity requiring balanced and positive approach towards evaluation and communication. It
is ongoing exchange of information regarding standards and actuals between managers and
employees. Effective feedback should be:

 Honest
 Specific
 Should meet the needs of all parties
 Meaningful
 Accurate
 Could acted upon
 Instantly followed up in writing
Performance Coaching
Performance coaching can be described as a series of guided conversations that enable the
“coaches” to discover and implement personal solutions to challenging issues or areas of
performance. Interactive communication and relationship building process between leaders
to team members, peers to peers, or even team members to leaders. It Enhances
awareness, motivation, behavior change, performance and development of a person.
Coaching is given to reduce supervisor intervention and increase self-control and self-
direction
Objectives of coaching

 realize their potential as managers

 understand themselves (strengths and weaknesses)
 Understand behavior and its dynamics
 Better understanding of the environment
 Improve Interpersonal competence
 Set goals for further improvement
 Encourage them to develop alternative for dealing with problems
 Providing them apt atmosphere for sharing and discussing emotions
 Helping to develop action plan for improvement
Performance linked reward system.
Performance-related reward system involves rewarding employees according to their
performance, or results achieved or contribution to organizations performance as
individuals or as a part of a group. It involves a shift of focus from remuneration models
based on the worth of jobs and employee skills to their performance.
Performance-linked reward systems reduce labor cost, result in increases in real wages and
motivate performance. They provide a method of absorbing cost escalation on account of
pay increases and thus help in sustaining competitiveness of the organization.
Designing a performance-linked reward system is conditioned by a variety of factors such as
the nature of business, type of technology, the attitude of unions and human resource
management strategies of the organization. Therefore, no particular model can be
recommended; it has to be custom-tailored.
There are several types of performance-linked reward schemes. Generally, these are
designed to-share with or distribute to employees as individuals, groups or a collectivity
productivity gains, profit improvement or financial results of enterprise performance. Such
schemes fall into the following broad categories:
1. Merit Incentive Pay- A common method which has long been in existence is pay
increase or bonus payment on the basis of performance rating. The merit incentive
pay scheme provides another method of recognizing and rewarding differential
performance. This method could particularly be suitable for office staff. The actual
merit rating score will give the percentage of basic wage or basic wage plus D.A. as
incentive bonus. Given a result-oriented merit rating procedure and its objective
operation in an organization, it should not be difficult to install a merit incentive pay
system. This is not to minimize the difficulties that are usually encountered in
operating a -merit rating system
2. Piece rates system- There are several weaknesses in this system. It is not easy to
agree with workers on the standard output required. Frequent changes may be
needed in the standard output due to technology changes and this may lead to
conflict between unions and management.
3. Group Incentive and Productivity Gain Sharing- Under the productivity gain sharing
schemes, productivity gains are shared in accordance to an agreed pre-determined
formula. Profit sharing gives a share of profit. Sometimes, the quantum of bonus is
determined on the basis of profit as well as productivity improvements according to
a pre-determined benchmark value for each of them.
4. Productivity Bargaining- Productivity bargaining can provide yet another method of
improving productivity and linking wage increases- to such improvements.
Productivity bargaining, however, does not mean an incentive scheme or wage
increases in return for assurances and promises from unions for achieving
production targets.
5. Long-Term Incentive (ESOP)- Long-term incentive in the form of employee stock
options schemes are operated both to improve long-term incentive and to reduce
 fixed cost. ESOP envisages employee participation in and ownership of a company’s
equity. The plan usually involves allotment of equity shares according to a laid down
procedure and subject to governmental regulations, laws and rules. The employees
benefit in the form of enhanced market value of his shares and capital gains, which
in turn depend on company’s and employee performance. Several software and
high-tech organizations such as Infosys have conceived and designed such plans.
6. Competency-based Pay- The competency is a critical determinant of performance.
Therefore, there is an increasing interest in offering monetary incentive for acquiring
competencies required for higher performance on the present job or for the next
job. Such competency may for instance include values, attitude and behavioral
characteristics which influence performance.
 Module -3
Implementation & issues in performance management
Performance management is a strategic process and an integrated approach. The process
involves an ongoing dialogue between the supervisor and the employee for setting goals
which are achievable and contribute in the direction of fulfillment of the organizational goal.
The main objective of performance management approach is to proactively manage
employee’s performance for accomplishing organizational goals by attaining a desired level
of performance.
Developing performance management system
The entire process involves identification, evaluation and development of the work
performance of the employees through effective management practices like continuous
coaching, feedback and regular communication. The developing process includes the
following stages:
1. Work Planning and defining expectations
2. Identifying the organizational goals
3. Monitoring performance
4. Developing the weak performance areas
5. Performance rating
6. Rewarding good performance
Implementation of performance management system
Implementing a strong performance management system can help your organization to
achieve higher employee engagement, improved individual performance and better
performance. An effective performance management system allows the senior
management and employees to work together in achieving the ultimate corporate
objectives and strategies. It helps the organizations to manage the continuous process of
monitoring employee work performance, goal-setting, reviewing activities as well as provide
timely feedbacks.
Steps in implementing a successful performance management system:
1. Preparation- successful implementation of the PMS requires wide organizational
support and acceptance. There is a need to make a proper business case study and
also get budgetary approvals from the top management officials. If the organization
doesn’t have a clear performance management strategy, it will lead to disconnect
between the individual performance targets and the overall business goal.
2. Communication Plan- A communication plan should be designed by the companies
to ensure that information regarding the performance management strategy is
widely communicated within the organization. The communication plan
implemented by the organizations should be extremely detailed and should provide
answer to most.
 3. Gaining Employee Acceptance (Appeal process)- in order to gain employee
acceptance for the performance management software, it is important to include an
appeals process. An appeals process allows employees in an organization to
understand that if there is any disagreement regarding performance appraisal, they
can resolve such disagreements in an amicable and nonretaliatory way.
Thus, if such processes or policies are set in place, the employees feel assured that
any disagreements will be treated fairly and as objectively as possible. This indirectly
help gain support for the performance management system.
4. Training Programs for Acquisition of Required Skills- Training the employees is
another necessary step in preparing for implementing performance management
system. Providing the required training and development plan not only provides the
required skills and tools to do a good job implementing the performance
management process, but also helps increase the satisfaction with it.
5. Performing a Pilot Test- Before implement your PMS, an action plan is required to
test a version of the entire system so that adjustments and revisions can be made as
required to achieve the organizational objective. In the pilot testing phase, the
system is implemented in its entirety from beginning to end. It will include all the
steps that would be required if the system had actually been implemented. One of
the primary aspects of the pilot testing is that all participants should maintain
records considering any problems they encounter, ranging from issues with the
appraisal form to how the performance is measured in the timely feedback received
6. Implementation
7. Ongoing Monitoring and Evaluation- Once the testing period is over and the
performance management system is implemented throughout your organization,
the next important priority is to use clear measurements to monitor and evaluate
the system. In short, a decision needs to be made about how to evaluate the
system’s effectiveness, the extent to which the system is being implemented as
planned, as well as the extent to which the desired results are achieved.
Maintenance of PMS

 Proper evaluation, feedback and follow-up action is to be done by

 recording and analyzing performance assessments, which helps establish how the
managers are using performance management
 One-to-one interviews with the managers to know their experience and identifying
where support is further required
 Employee attitude surveys and focus group discussions
 Reviewing improvements in the performance of the organization
Issues in performance management
the need for having an effective performance management system becomes non-negotiable
to measure output levels, both in terms of quantity and quality. Each employee must be
able to deliver and improve efficiency to maximize the tight bandwidth. However, there are
certain performance issues that employees and employers face at work that make
performance management challenging and hinder quick yet sustainable growth.
1. Lack of clarity in vision and objectives- A vague vision and unclear objectives leads
to situations where employees do not know what is expected of them and the
leadership is unable to identify parameters to evaluate their performance. Without
specific objectives, there will always be an ambiguity in what constitutes effective
performance.
2. Lack of well-defined work processes- The next employee performance issue that
organizations come across is a lack of clarity on how the vision and objectives are to
be achieved. This obstacle is especially true for fast growing organizations which lack
clear processes and systems to achieve an identified goal.
3. No alignment between employee and leadership thinking- where a dynamism of
vision and best practices leads to conflicting views between employees and the
leadership. They may have different notions of what constitutes effective
performance, and, thus, achieving the same will have different pathways and metrics
for evaluation.
4. Lack of evaluation metrics and tools- Effective performance management and the
path to dealing with performance issues requires mapping and measuring
performance and productivity.
5. Shortage of the right talent, skills, and resources- This performance issue is faced by
almost all organizations as there is an overall shortage of skilled, qualified talent with
the right attitude and work ethic. However, it is more apparent for hyper growth
organizations which have financial constraints and limitations on how much they can
spend along with a relatively lesser known brand name. Shortage of competent
talent and resources leads to inefficiency in performance and other employee
performance issues.
6. Inadequate rewards and recognition- Performance issues arise when employees
feel their efforts are going unrecognized, fast growing organizations miss rewarding,
acknowledging, and appreciating everything their employees do, especially when
they go the extra mile. Many companies in the growth stage feel the financial
limitations prevent them from rewarding exceptional performance. However, this
leads to a lack of motivation, resulting in low levels of performance.
7. Overlooking employee voice and opinion- Employee performance issues are
intrinsically linked to overlooking what employees have to say. Most employees who
join fast growing companies are driven by their purpose and passion and seek to
make a difference. This requires organizations to hear what employees have to say,
and when this does not happen, there is a performance disconnect.
 8. Lack of leadership commitment- Unless the leadership is committed to addressing
performance issues and removing the obstacles to effective performance
management, it is very difficult to move the needle. Often, leaders in fast growing
companies are occupied with multiple things on their plate and find themselves
stretched for time. Invariably, they are unable to understand the causes of
performance problems and thus, unable to manage the same.
9. Inability to provide coaching and mentoring- Coaching and mentoring are integral
to effective performance management. Due to lack of mentoring and guidance,
employees find themselves lost in the way, leading to performance problems.
Leaders and managers find themselves pressed for time and are often unable to see
the return on investment with respect to coaching and mentoring.
10. Poor communication and siloed working- Employee performance issues often stem
from lack of transparent communication and a siloed approach to working. Adapting
to new models of working, especially in the new normal, employees in hybrid
organizations find it difficult to communicate with everyone on the team. This leads
to miscommunication and prevents everyone from being on the same page.
Consequently, these collaboration barriers result in declining performance.
11. Inability to offer feedback - many fast-growing companies lack the patience to allow
their employees to make mistakes and offer feedback to help them improve. This
often results in performance issues or rapid turnover. Either way, it is an obstacle to
effective performance management.
The role of HR in the PM
It is about making the process transparent, clear and consistent across the organization. The
results of employees have to be comparable as the outputs can be used in other HR
processes. The top management will not take HR proposals relevant if they do not trust the
fairness and transparency of the performance appraisal process.
1. Focus on collecting the most valuable information- HR has to make the process as
easy as possible. HR has to lead the development of the application for the
performance management system as the data collection is run automatically.
2. Participate in Planning and Development- In the modern marketplace, human
resource executives serve as strategic partners. They participate in the identification,
development and execution of corporate objectives. In this capacity, HR executives
align the work of their business unit to achieve company goals. The participation in
company planning allows human resource leaders to gain a profound understanding
of the organizational activities needed to aid in the sustainable growth of the
enterprise.
3. Provide Employees with Career Assistance- Periodically, human resource leaders
conduct staff member evaluations. Today, HR professionals take an active role in
helping employees advance their careers. Instead of simply grading employees on a
checklist of performance points, modern human resource specialists help workers
identify areas for improvement and develop specific action steps.
 4. Find and Recruit Employees That Advance Company Objectives- Today’s human
resource executives do more than post ads and interview job candidates to fill open
positions. Modern HR executives formulate employer brands designed to attract the
right job candidates.
5. Serve as Leaders of Change- Modern human resource leaders frequently lead
change initiatives for their organizations. As a result, current HR executives yield
strong project management skills in their corporate toolboxes. The professionals are
skilled at helping organizational stakeholders make the connection between change
initiatives and strategic needs, minimizing change resistance and employee unrest.
6. Advocate for Employees- While fulfilling their roles as employee advocates, HR
executives play an integral part in the success of organizations. In this regard, human
resource professionals contribute to building a work environment where employees
feel satisfied and motivated.
7. Provide Support for Domestic Violence Victims- The Centers for Disease Control
(CDC) forecasts that domestic violence can affect 1 in 4 women and 1 in 7 men in the
United States. The issue has grown so prevalent that employers can no longer afford
to think of domestic violence as a matter best left to the local authorities. As a result,
today’s HR professionals encourage those who’ve experienced domestic violence to
seek help in the workplace.
8. Ensure No Cyberbullying At Work- Traditionally, workplace intimidation took place
solely in the office. Today, however, the connectivity of the Internet extends the
influence of bullies to victims’ personal workstations and homes, an activity called
cyberbullying. Employees and supervisors know that this can happen in the
workplace, yet dealing with office cyberbullying may prove challenging. Despite this,
contemporary human resource executives strive to eliminate this kind of negative
activity in the workplace.
9. monitor and adjust organizational activities to ensure the success of various
initiatives
10. HR develops the performance management to increase productivity.
11. The performance management has a positive impact on motivation of employees
and identifies key talents and key gaps in the organization.
Performance Management as tool for Employee Empowerment
Employee empowerment
It refers to the manner in which companies provide their employees with anything and
everything they need to succeed.

 Give employees a voice by regularly soliciting and acting on their feedback.

 Provide opportunities for employees to grow through more autonomy, additional
responsibilities, or even an entirely new role.
 Recognize employees frequently to increase their engagement and confidence in
their own abilities.
 provide employees with the tools, training, and authority they need
it involves increasing both the authority levels and accountabilities for regular employees so
they can make more day-to-day decisions without consulting management. Apart from the
fact that employee empowerment can be effective in motivating employees, and creating
more satisfying and meaningful jobs, its other benefit is that it means decisions can be made
more quickly.
Performance management is linked to employee empowerment in

 First, through goal setting. The more an employee understands his or her job, and
how the job contributes to the overall organization, the better they will be able to
make decisions on their own -- informed and expert decisions. Employee
empowerment requires this clarity, or the decision that get made will often be the
wrong ones.
 Second, empowerment implies accountability, along with the freedom to make
decisions. The performance management process helps to create that accountability
for results and the outcomes of decisions the employee makes through ongoing
communication, and of course, the performance review process.
 Psychological empowerments like, job satisfaction, motivation dedication etc. Had a
positive correlation with performance management
 Key to improving participation and promoting innovation
 Motivate employees to take challenging decisions and overcome challenging
situations
 Continuous growth in the skills and performance
E-Performance Management
E-performance management is a part of e-HRM or HR information system (HRIS). Through IT
enabled PMS, it is possible to integrate strategies, policies, and practices of the organization
with the performance management process.
The digitization of performance management not only provides more precise data but also
positively influences management processes and strategic development. Technology-
enabled performance management tools simplify the manager's evaluation process and
turn employees into active participants in their review sessions.
Uses of an e-Performance Management System

 Better quality data: e.g. compiling training needs across the company can be done at
the touch of a button.
 Streamlining the process: Workflows and approvals get automated; hence process is
more effective.
 Encouraging year-round performance management: Regular reviews, & goal
updating can happen with ease.
 have a 24X7 presence
Benefits of an e-Performance Management System

 Appraisal satisfaction’ with the process is likely to be higher

  Specific feedback through CPM (computerized performance monitoring) enjoyed
trust and led to performance improvement
 Facilitates a ‘review’ process, e.g. by recording multiple ratings
 More data can be captured and measures for performance elements included, e.g.
increase in customer satisfaction
 A developmental plan can be devised, recorded and tracked by the CPM system
 Appraisal forms, instructions, feedback and plans can be generated by the system
 The PMS can be integrated with enterprise data of finance, operations, sales &
marketing etc. giving a macro view of performance
 Individual, team and organizational data can be analyzed to identify high performers,
identify competency gaps, fix compensation, make training plans
 Adherence to timelines and legal guidelines is easier
The key features of performance management software
1. Dynamic goal-setting: The employees’ goals should be aligned with the
organization’s goals. The solution should allow the option to change the goal as and
when needed.
2. Communication on the fly: A good performance management solution provides
interaction between team members and managers effortlessly at any time with an
in-built chat feature. A quick chat with team members or managers can keep
communication transparent and effortless.
3. Scheduling tools: It should allow scheduling for team members to complete tasks,
plan meetings, and collaborate with other team members. This works as an excellent
tool for employees who work out on the field or remotely.
4. Continuous performance evaluation: Managers should be able to set up automated
self-assessment and general evaluation questionnaires delivered in the flow of work
through the PMS. This gives managers a clear view of how employees perceive their
performance on the job and whether they are on track to achieve their and the
organization’s goals.
5. Recognition tool: The PMS should have a platform where managers can shout out to
their team members for doing well. Further integration with an email to give direct,
instant feedback is another great feature that can motivate employees and enable
positive employee engagement.
6. 360-degree feedback: Feedback from multiple sources or 360-degree feedback is
essential for effective performance management. It significantly reduces the bias
that can arise from the evaluation of an employee by just one person. The tool
should be able to offer the option of feedback collection from team members,
reporting managers, reports, and peers from other teams.
7. Project performance tracking tools: It should offer tools such as timesheets that
help track how employees use their time, and whether their input matches the
expected output and outcome.
8. Artificial intelligence-powered tools use features such as advanced natural language
processing, which track project-related keywords through email and other
 communication to gauge progress on a project. These tools can enable more
objective performance evaluations.
9. Performance comparison: Managers should be able to track the performance of all
employees in their team or those assigned to a specific project. The tool should go
further and be able to generate a performance report automatically, providing data
on the metrics you have customized it to evaluate.
10. Automated reminders and notifications: A gentle nudge to employees/managers to
remind them of deadlines, notifications that indicate progress on a particular
project, and general updates to changes in the process can improve an employee’s
experience with performance management.
11. Data security: This level of granular data about individual employees should be
safeguarded with a robust firewall in place. Always ensure that any tool you shortlist
offers a robust data security and protection feature.
 Module 4
Talent Management
Talent Management
Talent management is a constant process that involves attracting and retaining high-quality
employees, developing their skills, and continuously motivating them to improve their
performance.
The primary purpose of talent management is to create a motivated workforce who will stay
with your company in the long run. The exact way to achieve this will differ from company
to company. Talent Management essentially involves – Talent acquisition, Identification,
development and deployment.
Benefits of Talent Management

 Right Person in the right Job: Through a proper ascertainment of people skills and
strengths, people decisions gain a strategic agenda. The skill or competency mapping
allows you to take stock of skill inventories lying with the organization. This is
especially important both from the perspective of the organization as well as the
employee because the right person is deployed in the right position and employee
productivity is increased. Also, since there is a better alignment between an
individual’s interests and his job profile the job satisfaction is increased.
 Retaining the top talent: Despite changes in the global economy, attrition remains a
major concern of organizations. Retaining top talent is important to leadership and
growth in the marketplace. Organizations that fail to retain their top talent are at the
risk of losing out to competitors. The focus is now on charting employee retention
programs and strategies to recruit, develop, retain and engage quality people.
Employee growth in a career has to be taken care of, while succession planning is
being performed those who are on the radar need to be kept in loop so that they
know their performance is being rewarded.
 Better Hiring: The quality of an organization is the quality of workforce it possesses.
The best way to have talent at the top is have talent at the bottom. No wonder then
talent management programs and trainings, hiring assessments have become an
integral aspect of HR processes nowadays.
 Understanding Employees Better: Employee assessments give deep insights to the
management about their employees. Their development needs, career aspirations,
strengths and weaknesses, abilities, likes and dislikes. It is easier therefore to
determine what motivates whom and this helps a lot Job enrichment process.
 Better professional development decisions: When an organization gets to know
who its high potential is, it becomes easier to invest in their professional
development. Since development calls for investment decisions towards learning,
training and development of the individual either for growth, succession planning,
performance management etc., an organization remains bothered where to make
this investment and talent management just make this easier for them.
Talent Management Model-

1. Planning- Planning aligns your talent management model in line with the overall
goals of your organization. Only with the correct planning can you ensure that you
seek talent with the right skills and experience. In addition, it assesses current
employees to see what is working well for the company.
2. Attracting- The right strategy will attract just the kind of workers you want at your
business. Such hires will be driven, skilled, and seeking to advance within the
company.
3. Developing- The development part of the model involves taking steps to help talent
grow within the company. It should be aligned with the employee development plan
and includes identifying roles where particular employees could move to in the
future as well as considering how to expand workers’ skills and knowledge to fulfill
new challenges facing your organization.
4. Retaining- Another purpose of talent management is to keep people at your
company for longer. Employees need to continue feeling that the company is an
enjoyable, meaningful place to work. Through training and other types of
engagement, employees have the chance to create a career without leaving the
company. You may achieve this by focusing on compensation (monetary and
otherwise) as well as company culture.
5. Transitioning- After hiring and developing their skills, you need to plan for
employees’ transitions. Your aim at this stage is to keep their knowledge within the
company -this is called knowledge management. You need to have a plan in place to
promote employees or move them to another role, department, or office. If a
worker does decide to leave, you need to know why.
Talent Management approaches
1. Developing Job Descriptions- For each job opportunity that post for company,
whether it be internally posted or external, the descriptions that choose are very
important. Making sure to be as clear about what duties go into the performance of
a job will ensure that the people who apply know exactly what is expected of them.
Also, make sure that you list all of the necessary requirements for applying. This will
help minimize the number of applications you have to discard because people who
were not qualified applied anyway.
2. Provide Development Opportunities- For existing employees, make sure to offer
ongoing opportunities for people to develop in their profession. This can be
something as simple as a two-day training class on something new that would aid in
everyday duties, or it can be management training programs that allow entry level
professionals to gain valuable knowledge, experience, and opportunities.
3. Performance Assessments- A great way for employees to find out how they are
doing and how they can improve is to do regular assessments. These can be done
quarterly or twice per year in order to be effective. These assessments are usually
done by management and give a brief overview of what was done by an employee,
how their performance was, and how they can improve moving forward. This
eliminates any surprises come bonus time or time for raises and talent on staff is
always working towards new goals.
4. Selection Process- Sometimes a candidate will stand out as being the right person
for the job, however, there might be a big pool of people to choose from. A tried and
true selection process will make your decisions easier and faster. Also want to make
sure requirements are met, references check out, a resume is impressive and so on.
5. Effective Compensation- In order to hire good talent, compensation rates need to be
impressive. There should be a distinct reputation present for being a good company
with good compensation packages. Good health care benefits and additional perks
always help to obtain talent and keep them on board. Ongoing raises and bonuses
are a great incentive and a reward for a job well done.
The importance/objectives of Talent Management are as follows:

 Establishing a high-performance workforce.

 Attracting individuals with high potential and retaining them through proper
 training and refreshment.
 Increasing the productivity of the organization.
 Proper time management, as untrained and unskilled workforce lead to wastage of
 time and commitment of errors, which is not cost-effective.
 Retain talented and high-performing employees.
 Ensuring growth and innovation in the organization.
 Developing skills and competencies in employees.
Talent Mapping in Recruitment
Talent mapping is a proactive approach used to forecast long-term hiring needs and
subsequently cultivate organizational support for new roles over time. It bridges the gap
between a company’s goals and the personnel they must hire to reach them.
This exercise might seem simple, but as a company grows it can be difficult to predict future
hiring needs at scale. It requires HR professionals, recruiters, and executive leadership to all
have a seat at the table. Talent can be mapped by
1. Identification- Talent identification and management consist of the ways by which
an organization attracts, recruits, retains, identifies and develops talent. It is the
process of recruiting and selecting high potential and high performing individuals.
identification of talent can be accomplished using many different methods,
including:
 Competency model development
 Multi-rater (360) surveys
 Assessment Centers simulations
 Psychometric testing
 Interviews with key personnel
 Comprehensive evaluations
2. Integration- Integrated talent management (ITM) refers to the management of
traditional HR sub- functions (recruitment and selection, workforce planning,
performance management, learning and development, reward and recognition and
succession planning) in an integrated fashion to strategically leverage talent. An
integrated talent management strategy must be aligned with the business strategy
of the organization otherwise it will add no value to the business, regardless of how
good the strategy is. The cornerstone of an integrated Talent Management (ITM)
System is a robust competency model that guides talent management strategy and
tactics.
3. Retention- Talent Retention is considered as the practices implemented to keep
talented and skilled employees within the organization. Retention of an employee is
very important for the success of an organization or a company. Employees are
considered to be the most valuable asset of an organization and the value of a
resource increases with time. Employee retention is the most important strategy in
retaining valued employees and maintaining a positive employer-employee
relationship. Talent can be retained by,
 Encouraging flexibility at the workplace
 Build employee engagement.
 Get recognition and rewards right.
 Recruit the right employees
 Create an exceptional onboarding experience
 Provide avenues for professional development
 Offer winning incentives
 Manage to retain
  Providing frequent praise
 Investing in technology
 Eliminating unnecessary barriers in the workplace
 Offering opportunities for professional development
 Nurturing the employees
Causes for poor talent management: Talent management is one of the cursing factors
threatening organization. The causes of poor talent management are discussed as follows:
1. Long working hours: Long working hours and the intensity of work have consistently
emerged as two top most concerns of workers. Employees feel tired and bored
because of long working hours. The duration of work, number of working hours and
timings play a significant role in retaining of an employee.
2. Unsupportive Management: Work place support i.e., the support received from
supervisors and co-workers are the key elements in talent management.
Organizations have to understand the nature and problems of the employees and
create congenial work atmosphere, because support and co-ordination from top
level management and co-workers helps an employee to motivate and engage
himself in work.
3. Lack of co-ordination and communication: Co-ordination between different levels of
management is needed to set organizational objectives. Communication helps to
share the creative ideas and information among employees. But due to lack of
proper co-ordination and communication between employees quit the organization.
4. Higher personal aspirations: In the modern world, the life style of an individual is
one of the main reasons for poor talent management. Ever-increasing ambitions,
changing fashions, etc., can cause envy and a feeling of discontentment. Most of the
employees have higher aspirations towards their career and personal development.
An environment with poor facilities for growth and development may not create an
opportunity for development. An environment with poor facilities for growth and
development may not create an opportunity for employees to achieve personal
aspirations.
5. Unsatisfactory monetary and non-monetary rewards: Monetary and non-monetary
benefits play an important in retaining of an employee. An employee whose
monetary benefits are less than the cost of living may undergo may leave the
organization and try for some other source of work. Hence organizations have to
offer attractive benefits to retain employees.
Consequences of failure in managing talent
The consequences of talent attrition affect the organization effectiveness. The following are
some of the consequences of talent attrition.
1. Declined productivity: These days firms focus on getting more output from less
input. Productivity is very important for organizations from which they attain profits.
But due to poor working hours employees fail to produce maximum output leading
to decreased productivity.
 2. Increased employee turnover: Turnover means employees leaving the
organizations. Turnover of employees is a big qualitative and quantitative damage
for employers. Turnover affects organizational culture and productivity. Turnover
leads to windup of many entities. Work intensification has led to health problems
and attrition of professional and managerial employees. Unsupportive management
and co-workers lead to employee turnover.
3. Poor industrial relations: Employees who fail to co-ordinate with one another may
conflict with each other. Organizational conflicts affect the reputation, productivity
and industrial relations. Hence healthy industrial relations enable talent
management.
4. Inability to accept change: People resist change and ignore to learn the updated
things. Employees with poor monetary and non-monetary benefits may not accept
the changes in the organization structure, policies, goals and objectives. Even
employees may resist the projects and plans. Hence change management helps
employees to concentrate on their personal career and profession.
5. Corporate failure
6. Internal service downfall
7. Systematic inefficiency
8. Dislocation of business model
Tools for Managing Talent
In this process, the HR Manager has to execute 2 types of functions
1. To find leaders who will take the organization from where it is today to the next step
forward – In other words, to commanding heights of excellence.
2. To put in place the existing staff in such activities which helps in retaining and
developing them.
Keeping in view the budgetary constraints and the organization size where he had to
manage, few of the following tools can be used in retaining talent.

 Timely performance appraisals with suitable rewards and recognitions.

 Creating an environment for staff to pursue higher education.
 Mentoring of staff in some special and important cases in terms of attitudes,
outlook, mind-set etc.
 Providing On –the- job training for certain categories of employees, organize
development programs for executives in-house or sponsor and encourage staff to
attend workshops and seminars.
 Implement job rotation and job enrichment wherever possible, so that staff can
become experts in multi-tasking and assume higher responsibilities.
Effective Talent management
The process covers all key aspects of an employee’s “life cycle:” selection, development,
succession and performance management. Key components of a highly effective talent
management process include:
  A clear understanding of the organization’s current and future business strategies.
 Identification of the key gaps between the talent in place and the talent required to
drive business success.
 A sound talent management plan designed to close the talent gaps. It should also be
integrated with strategic and business plans.
 Accurate hiring and promotion decisions.
 Connection of individual and team goals to corporate goals, and providing clear
expectations and feedback to manage performance.
 Development of talent to enhance performance in current positions as well as
readiness for transition to the next level.
 A focus not just on the talent strategy itself, but the elements required for successful
execution.
 Business impact and workforce effectiveness measurement during and after
implementation.
Building Blocks of Effective Talent Management System in Public and Private
organizations- Those that aim at successfully bridging the gap will have to invest
significantly in their talent management and succession planning processes.

 (Re-)Define talent - Talent should be defined by analyzing competencies, key skills

and knowledge needed for the job. The skills gap is defined by a combination of
specific hard and soft skills. To overcome this gap, companies need to redefine their
ideas of talent.
 Identify and assess talent- Talent can sometimes be found within an organization
where one does not expect to find it. Once a talent has been identified, it is crucial
for a company to allow these employees to make lateral moves in a simple way.
Reskill or upskill talented employees and support internal mobility and job rotation
to cover the digital skills gaps.
 Develop a communication plan & provide feedback - Employees should be aware of
the companies’ talent strategy and the possibilities for personal and career growth.
Communicating clearly to employees about targets and about their status will raise
awareness and motivation.
 Provide strategic developmental experiences - Lifelong learning should be a mantra
in talent management, especially during times of disruptive change. Combining
formal training programs with challenging projects will enable high potential talent
(HIPOs) to develop new skills while taking on different responsibilities. Most
development occurs through on-the-job challenges, so having structured ‘high
potential program’ that facilitates such opportunities is important.
 Measure success - Setting up clear KPI’s and continuously measuring the success and
understanding the failures of the implemented processes is vital to build and
maintain a successful talent strategy.
 Module 5
Talent Management Practices
Factors affecting talent management
1. Age, Seniority and level of Education- Regarding the intention to stay in the
organization by the talented employees, the researcher has found that there is
positive relationship between age and the retention. The older an employee within
the organization the more he/she want to Stay. Employees with more than twenty
years seniority score were higher on intention to stay than employees with less
seniority. Moreover, it is more common for the young employees to change jobs at
the beginning of their career in any organization wherein it is not easy for an older
employee to find another job Stark.
2. Salary and Benefits- The relationship of salary and benefits with talent retention is
another aspect of making people stay in the organization. Fair remunerates and
rewards to the employees have been found to have a significant negative effect on
the intention to quit from the organization.
3. Working Environment- Employee Retention is another biggest challenge and
involves how to create and maintain daily working environments in which the
talented ones can productively pursue the joy of work and financial benefits from
their individual or collective contributions. New generation executives are looking
for challenging assignments with adequate compensation to get professional
satisfaction whereas an effective work-life balance strategy is not simply about
complying with the law.
4. Succession Planning- There are different perspectives about succession planning but
almost all of them hold a common root. Some consider it as a process of planning for
succession of choosing the next senior team. For other groups, it is an adequate pool
of proper talents for in-house recruitment.
5. Training and development
6. Organization Culture- Organizational culture has a substantial effect on whether
talent management activities will succeed and contribute to improving results. It is
the central to an organization’s ability to manage its knowledge more effectively.
The organization culture contributes to the individual’s level to commitment and
motivation in the organization.
7. Job Security- Increasing numbers of organizations mergers and acquisitions have left
employees feeling displeased from the companies that they work and haunted by
concerns of overall job security. As a result, employees are now making strategic
career moves to guarantee employment that satisfy their need for security.
8. Job Flexibility: Work practice that allows the employees a certain degree of freedom
in deciding how the work will be done and how they will coordinate their schedules
with those of other employees. Job flexibility is vital for retaining employees of any
age
9. Job Satisfaction- In the present hypercompetitive and increasingly complex global
economy, Job satisfaction represents one of the most challenging area faced by
 today’s service-based companies’ managers when it comes to managing their
employees. A positive and favorable attitude towards the job indicates the job
satisfaction.
10. Communication: Studies have indicated that effective communications improve
employee identification with their agency and build openness and trust culture.
Increasingly, organizations provide information on values, mission, strategies,
competitive performance, and changes that may affect the employee’s
11. Motivation: Nowadays motivational issues are more complex because of the wealth
and opportunity so many employees have enjoyed. Over the long haul, people need
intrinsic rewards to keep going and to perform at their peak. Talented workers have
more choices than ever before, and are likely to leave if not satisfied with their
employer or job content
12. Superior-Subordinate Relationship: Employee development programs cannot exist
without a culture that supports them. Any effective program must have strong
support from people in senior management positions, and these people must also
serve as positive role models to subordinates.
Talent management process

1. Identify Organization Goals- This is the cardinal stage and pivotal to the success of
the entire talent management process. The first step is to identify what the
organization aims to achieve and what characteristic qualifications and skills the
recruits should possess to realize the goals.
 2. Attracting and sourcing The Talent - The main aim of talent management process is
to hire the best talent for an organization. Organizations at this stage make effort to
attract the best talented people from the job market. On Sourcing the talent stage,
the talent management personnel look for appropriate sources in the job market or
industries where the targeted people can be hired or recruited.
3. Recruitment and Selection - This is the stage where you actually conduct interview
tests and recruit the top talent. Conduct relevant interview tests to identify the best
person and scoop them in. on this the stage where the objective of talent
management becomes a reality. It is when truly talented people are recruited or
hired in various roles.
4. Training and development − At this stage, the selected recruits are provided with
necessary training to make them productive and efficient to work towards the goals
of the organization.
5. Retention − The notable objective of talent management is not only hiring talent but
also ensuring their retention in the organization. Factors upon which the retention
rate depends are attractive pay package, job specification, safety and security of the
employees, personal development of an employee, recognition and culture of the
organization, and the fit between the job and talent.
6. Assessment − Periodical assessment of employees’ skills, abilities, improvements
and competencies enable the organization to know if they are fit for continuation
and promotion.
7. Performance appraisal − It is a measurement of the actual performance of the
employees in the job. It enables the organization to ascertain if the person can be
loaded with extra responsibilities.
8. Promotion − It refers to job enrichment. It keeps the energy level high of the
employees and they are inspired to continue to work for the organization. Promote
the people gradually to the new role. Nobody wants to work at the same designation
for a long period of time. This way you are helping your employees grow in their
professional career.
9. Succession Planning - This deal with the replacement of people within the
organization. Employees who have given their best to the organization and have
been serving for long deserve to hold higher positions.
Essentials of Talent Management
1. Culture of Learning- A job should not solely be filled based on past experience and
performance, but on the employee’s potential and aptitude to adapt to a new role.
That’s why ensuring continuous informal and formal learning and development is
key to help develop new skills and prepare for a new role. Personalized learning will
also create better engagement and will likely help retain talent
2. Competency Frameworks- A competency framework is essentially the lingua franca
of capability in the organization. Competency frameworks help drive consistency
within the business when recruiting employees, managing their performance and
developing them. It can perform a pivotal role in ensuring everyone understands
what is expected of them in a specific role and for a given context.
 3. Performance Management- The managing of talent in the organization reaches into
performance management. To implement a talent management strategy, it is
important to understand performance. Having a talent management system that
integrates with your learning platform offer further efficiencies as all training
records, learners progress reports, manager ratings and appraisals will naturally feed
in the TMS.
4. Career Development and Career Pathing- While learning and training will be
fundamental parts of your employees’ career development, structured coaching will
give them the necessary feedback they need to grow professionally. By facilitating
conversations with their manager on a regular basis, the employee will gain insight
into their performance and skills to work on.
5. Succession Planning- Succession planning is all about knowing the needs of your
organization and developing the capacity to address these needs when - and even
before - they arise. But how do you anticipate your future talent needs? The key to
effective succession planning is to be aligned with your overall talent management
strategy, which then includes your training initiatives, performance management,
career development and recruitment.
Stages in talent management

Talent management system

A talent management system, or TMS, is an integrated software platform that supports core
talent management processes, including recruitment, employee onboarding, performance
management, learning and professional development, compensation management, and
succession planning.
  These processes, and the technical capabilities that support them, are typically
delivered via software modules. So, businesses can start with what they need and
add additional functionality as they grow.
 Put simply, talent management systems focus on helping companies and HR achieve
their long-term (business) goals by putting the employees – or talent
 As such, talent management systems usually consist of various modules. Each
module represents a particular area of HR.
 The number one reason to use a talent management system is, of course, to
automate and optimize the entire package of talent management processes within
your organization.
The key elements of a talent management system.
1. Plan- Ensure talent strategies align with the needs of the business. Work with
leadership teams to understand business objectives, then ensure the talent strategy
supports these outcomes.
2. Recruit candidates- Source talent globally, nurture candidates throughout the
recruitment process, and leverage the efficiencies of a comprehensive applicant
management and tracking system.
3. Onboard employees- Optimize new hire engagement with a dedicated onboarding
portal. Ramp employees quickly with paperless new hire processes. Automate
workflows for on-, off-, and cross-boarding.
4. Manage employee performance- Help employees manage their goals. Use guided
action planning for continuous performance management.
5. Plan and design compensation models- Reward and recognize strong performers.
6. Develop and retain employees- Provide modern and engaging learner experiences.
Schedule and carry out compliance training. Develop proactive succession plans and
actively develop leaders.