UNIT 3

Predicting employee performance

Research indicates that a five per cent increase in employee engagement is
linked to a three percent growth in revenues in the subsequent year. Yet, most
HR departments struggle in the management of employee performance.

human capital forms the foundation of any organization, and employee

performance

Most organizations have realized that conventional performance review

systems are outdated, do not capture real-time performance, and fail to
provide timely feedback and improvement opportunities to employees
• Predictive analytics can be applied to the workforce to identify traits/patterns that
account for bad or good performance on an individual and team basis.
• An article published in The Times of India talks about a case study on how
analytics helped a manufacturing firm predict what was wrong with employee
performance. Using analytics, this company discovered that morale of ten
employees was down due to their issues with manager. The management quickly
stepped in to resolve the situation and take preventive measures before the
employee performance deteriorated further.
• Adani Group has hired an analytics startup firm Vahanalytics, which uses machine
learning for driver profiling, behavior and performance
• The startup will track the vehicles deployed at Adani Group’s Mundra Port and
capture information on whether drivers have been speeding, taking sharp turns or
not following driving norms. These reports will help Adani Group to predict the
performance factors of drivers and make timely innovations in regards to their
training.
• HR Analytics can also identify engagement activities which have the maximum
and minimum impact on employee performance.
• One, an organization can direct their investment towards initiatives that generate
the highest interest in the engagement levels
• Two, an organization can define measurable metrics that co-relate engagement and
performance
• performance analytics gives real-time information to take timely decisions. HR
can recognize red flags of performance and predict which employees fall in the
highest flight risk category.
• When HR can gauge employee performance from analytics, succession planning also
becomes easier. It can anticipate promotions, transfers, and firing in advance.
Accordingly, it can forecast workforce requirements and work towards filling the open
positions.
• Analytics can mine data on a candidate’s personality, behavioral traits, and skills to
throw useful insights into whether he or she would be the right fit for the organization.
• Recruiting Once you have enough recruiting data, you will be able to predict which
sources your best candidates come from, and invest your time, energy, and money into
those sources that yield the best return.
• Screening

• In today’s hiring environment, it can be difficult to tell from a resume, a cover letter, or
someone’s social media profile whether they’re a good match for the job
• A good screening system will not only help you remove unfit candidates from the
get-go, but it will provide data on the value of your various recruiting sources.

• Selection
• Use psychometric profiles to collect data and help with selection. When you have
enough data to become predictive, you will understand which types of people are
attracted, well-suited, and well-matched to your corporate culture and the roles
you’re looking to fill

• Talent Development: Need Analysis

• A Training Needs Analysis (TNA) is a process by which an
organization’s HRD needs are identified and articulated.  The
process can identify:
 An organisation’s goals and its effectiveness in reaching these goals

 gaps between an employee’s skills and the skills required for effective current job
performance
• gaps between an employee’s skills and the skills needed to perform the job
successfully in the future
• The two outcomes are a training need and a non-training need.

• Training Need reveals a performance gap, and the gap can be filled with training. 
It exists when the employee does not know how to do the job – it is a lack of
knowledge, skills, and attitudes.

• Non-Training Need reveals a gap, however this gap cannot be filled (or fixed)
with training.  It might encompass workflow, recruitment, or job design. 
Employees know how to do the job, but something else affects their performance.
• Types of Needs Analyses
• Organizational Analysis
 The important questions being answered by this analysis are who decided that
training should be conducted, why a training program is seen as the recommended
solution to a business problem, what the history of the organization has been with
regard to employee training and other management interventions.
• Person Analysis
 The important questions being answered by this analysis are who will receive the
training and their level of existing knowledge on the subject, what is their learning
style, and who will conduct the training. Do the employees have required
skills? Are there changes to policies, procedures, software, or equipment that
require or necessitate training?
• Work analysis / Task Analysis
 Also known as a task analysis or job analysis, this analysis seeks to specify the
main duties and skill level required. This helps ensure that the training which is
developed will include relevant links to the content of the job.
• Performance Analysis. 
 If performance is below expectations, can training help to improve this
performance? Is there a Performance Gap?
• Content Analysis
 It is important that the content of the training does not conflict or contradict job
requirements. An experienced worker can assist (as a subject matter expert) in
determining the appropriate content.
• Training Suitability Analysis
• . Training is one of several solutions to employment problems. However, it may
not always be the best solution. It is important to determine if training will be
effective in its usage
• Cost-Benefit Analysis
 Analysis of the return on investment (ROI) of training. Effective training results
in a return of value to the organization that is greater than the initial investment to
produce or administer the training.

• Training Methods and Evaluation

• The training evaluation helps them cut the costs and save a great deal of time,
which can then use for their business. This assessment is actually a measure to
check the cost effectiveness of the given training program and to ensure that the
training is capable of filling up the competency gaps within the organization.
• Basis of Training Evaluation
• Most of the evaluation methods and steps are the outcomes of Kirkpatrick’s
Model, which makes use of reaction, learning, behavior, and results as its basic
categories
• Training Evaluation Methods

• Satisfaction and Participant reaction

• For this purpose, the trainer, usually, hands out a survey at the end of the course to
test the reaction of the participants.

• it covers common questions like whether the participants enjoyed the training or
did they like the trainer. Moreover, would they want him or her back, in case any
other training program is initiated or do they feel as if it was a loss of their time?
2. Knowledge Acquisition

• It is a fact that most of the participants take training seriously only if they know
that they are required to demonstrate the concepts that they have learned during
the training.
• In this method, participants are supposed to take the exam, after the training. The
instructors or the trainers check and grade the responses, and share the results with
the students as well as the training managers. This is done so that any gaps in the
expected and acquired knowledge
3. Behavioral Application
• whenever the method of behavioral application is needed, it is used with the
combination of the first two
• For example, a company that initiates a course for increasing the telephone
conversion rates can conduct a particular number of mystery calls before starting
the training. This response can be recorded and graded in accordance with the
objectives of the course. After the training, the same company can again conduct
that particular number of mystery calls and can compare their results with those
before the training and measure the effectiveness of the training.

• Measuring the Business Improvement

• we can assess the success level of a training program by the improvement made in
that particular field, once the training is complete and the participants are ready to
apply their knowledge for the cause of development of the brand.
• For example, if we use the above example of the course of increasing the
telephone conversion rates, then it can be based on the goals like increasing the
number of sales, decreasing the number of appointment cancellations, expanding
the lead list, gaining higher conversion rates and decreasing the time lag.

5. Return on Investment (ROI)

• . It deals with the training regarding costs and returns. Costs like those of the
course fee, facility fee, staff management and their wages, time used for the
training the participants and returns like the business improvement, increased
number of conversions and financial gains, both short term and long term net
gains.
• Stages of Training Evaluation
• Training evaluation is normally done in five stages
1. Describing the outputs

• the output in the form of descriptive data is presented before the participants of the
current batch who are going to take the course. This includes previous
achievements recorded in the various forms like charts, graphs, etc. as well as
demographic data.

2. Pre-training Assessment
• In this step, the experiences with previous batches, along with the information
about what they achieved after they took the course, are revealed to the
participants of the current batch.
3. Post-Assessment (reactions)

• formats used by the instructor for instructional purposes, methods for teaching,
learning environment and satisfaction towards the instructors and the course,
itself.
• Post-Assessment (learning)
• deals with the self-assessment of the level of the gained knowledge and skills,
5. Following-up
• time to time assessment of the training program so that it generates the expected
results
• Optimizing Selection and Promotion decisions
• The ability to select the right person for the job, the team, the project. is
a fundamental capability of highly successful organizations and leaders
• Selecting the wrong person is a very expensive proposition but it’s
commonly done.
 Effective people decision-making is both an art and a science;
increasingly, with the tools available, can become more of a predictive
science.
• Strategies for conducting perfect interviews
• Don’t Focus on The Questions, Focus on The Interview.
• recruiters should focus on the interview process as a whole. Spend your time getting
to know the candidate better by exploring their skills and gaining an understanding
of their experience and personality.
• Test A Candidate’s Skills

• The job assessment test doesn’t have to be complex, but it should be difficult
enough for the candidate to show the level of their skill set.

• Include Other Relevant Employees

• Recruiters should involve other qualified employees throughout the interview

process to understand the skills the potential candidate can bring to the company and
how their personality will fit in with the rest of the team.
• Identifying Training and Development Need, Designing Training Programs

• The following are the two biggest factors that contribute to the increased need to
training and development in organizations:
• (i) Change
• There is in fact a direct relationship between the two. Change leads to the need for
training and development and training and development leads to individual and
organisational change
• ii) Development
• It is again one the strong reasons for training and development becoming all the
more important. Money is not the sole motivator at work and this is especially
very true for the 21st century. People who work with organizations seek more than
just employment out of their work; they look at holistic development of self.
• Designing Training Programs
• Designing a training programme is very important part of human resource
management
• Identification of training needs: the main cause of identification of training
needs is the technological changes
• For example computers are now days are used in all the offices which require
training the employees
• poor performance of workers which result in low production requires systematic
training.
• Training needs can be identified through following types of analysis.
• Organizational analysis: it is the systematic study of organizational objectives,
resources, its utilization, growth potential and climate.
• It involves following elements:
• Analysis of objectives
 It is the responsibility of the management to check which kind of training
programme is required to achieve the objectives.

 Climate analysis: Organizational climate shows the attitude of organizational

members

 Resource utilization analysis: It should be checked that whether the physical

and human resources have been utilized properly or not otherwise there is the
need of training to utilize them properly.
• Task analysis: it is analyzing the job systematically. To identify the job contents,
knowledge, skill, aptitude required to perform the job. In task analysis focus is on
the job
• ) Manpower analysis: the quality or type of manpower the firm required should
be checked properly. To achieve the proper quality standards specific training
needs should be determined on the basis of capability of present workers to learn
the new skills.

2. Setting the training objectives: after identification of training needs the next

step is setting the training objectives. The aim of any training programme is to
increase the organizational effectiveness. As each training programme must have
specific objective like increase productivity, improved quality, higher the morale
of employees, growth of employees, better human resource planning etc.
• Organization of training programme
• as every training programme include the trainees, trainers, training period, training
material so all these should be organized properly.
• ) Selection of the trainees: it is the first step of organization of training
programme. The trainee should be selected properly. They should be trained for
the kind of the job they like
• Preparation of instructor
• Qualified instructor may be obtained from inside the organization or from the
outside. He must have all the qualities of good trainer because he has to give
training to other people.

• Training methods: the on the job training and off the job training has been
already discussed. So the choice of training methods depends upon the objective
of the training programme.
4. Evaluation of training: at the end it is very important to evaluate the
effectiveness of training programme. As how much the employees have learnt
from the training programme. It will help in modifying the future training
programme.

• Training Evaluation & Methods of Training Evaluation

• For example, if a certain technical training was conducted, the organization would
be interested in knowing whether the new skills are being put to use at the
workplace or in other words whether the effectiveness of the worker is enhanced.
Similarly in case of behavioral training, the same would be evaluated on whether
there is change in the behavior, attitude and learning ability of the participants.
• Benefits of Training Evaluation
• Evaluation acts as a check to ensure that the training is able to fill the competency
gaps within the organization in a cost effective way.
• Evaluation ensures accountability
• Check the Cost
• Feedback to the Trainer / Training
• Organizations like IBM, Motorala only, it was found out, have a firm evaluation
mechanism in place.
• METHODS OF TRAINING EVALUATION
• CIRO MODEL
• The CIRO model was developed by Warr, Bird and Rackham and published in
1970 in their book “Evaluation of Management Training”. CIRO stands for
context, input, reaction and output
• The key difference in CIRO and Kirkpatrick’s models is that CIRO focuses on
measurements taken before and after the training has been carried out.
• One criticism of this model is that it does not take into account behaviour
• therefore, more suited to management focused training programs rather than those
designed for people working at lower levels in the organization.
1. Context
• This is about identifying and evaluating training needs based on collecting
information about performance deficiencies and based on these, setting training
objectives which may be at three levels
• The ultimate objective
• The intermediate objectives
• The immediate objectives
2. Input

• This is about analyzing the effectiveness of the training courses in terms of their
design, planning, management and delivery. It also involves analyzing the
organizational resources available and determining how these can be best used to
achieve the desired objectives.
3. Reaction
• This is about analyzing the reactions of the delegates to the training in order to
make improvements
4. Outcome

• Outcomes are evaluated in terms of what actually happened as a result of training.

Outcomes are measured at any or all of the following four levels, depending on the
purpose of the evaluation and on the resources that are available.

 The learner level

 The workplace level

 The team or department level

 The business level

• Training Effectiveness Models – Kirkpatrick Model of Training Effectiveness
• The most well-known and used model for measuring the effectiveness of training
programs was developed by Donald Kirkpatrick in the late 1950s.
• Level 1 – Reaction
• Level 2 – Learning
• Level 3 – Behavior
• Level 4 – Results
• How do you conduct a training evaluation? Here is a quick guide on some
appropriate information sources for each level.

• Level 1 (Reaction)

 Completed participant feedback questionnaire

• Level 2 (Learning)

 Pre- and post-test scores

 On-the-job assessments

 Supervisor reports

• Level 3 (Behavior)

 Completed self-assessment questionnaire

 On-the-job observation

 Reports from customers, peers and participant’s manager

• Level 4 (Results)

 Financial reports

 Quality inspections
• Level 1 evaluations (Reaction) for all programs
• Level 2 evaluations (Learning) for “hard-skills” programs only.

• Level 3 evaluations (Behavior) for strategic programs only.

• Level 4 evaluations (Results) for programs costing over $50,000. Above all else,
before starting an evaluation, be crystal clear about your purpose in conducting the
evaluation.

• Compensation: Definition, function, significance

• Payment or compensation to labour for its services is popularly known as personnel
remuneration. This payment is variously called either wages or salaries.
• Wages are usually associated with a payment made to workmen who are actually
engaged in physical production of goods and services; and payment of wages being
made on both bases-time rate and piece rate systems.
• Salaries, on the other hand, represent a payment made to office employees,
managerial personnel and technical personnel like engineers, cost accountants,
etc.; and salaries usually being paid only on a time-basis i.e. according to time-rate
system of payment.

• Financial compensation includes salary, bonus, and all the benefits and incentives,
whereas non-financial compensation includes awards, rewards, citation, praise,
recognition, which can motivate the employees towards highest productivity.

• Direct Compensation:

1. Basic pay, dearness allowance, cash allowance

2. Incentive pay, bonus, commission, profit sharing, stock option.

• Indirect Compensation

1. Legal requirement

 Provident fund

 Gratuity

 Pension

 Insurance

 Medical leave

 Accident benefits

Optional sick leave

Casual leave
• The main characteristics of the compensation system are as follows:

1. A hierarchy of pay levels

2. A hierarchy of jobs

3. A set of rules and procedures

4. Qualities required for movement from one level to other

• Objectives of Compensation:

1. The compensation should be paid to each employee on the basis of their abilities
and training.
• It should be flexible and clear
• Significance of Employee Compensation (Or Personnel Remuneration):

• Wages/ salaries constitute the primary source of income to employees. Their

adequacy or otherwise would very much determine their standard of living.
• ) Adequate remuneration is a source of motivation to employees
• Designing a Compensation System

• Employers receive compensation from a company in return for the work

performed. Most people think the pay and compensation to be the same, but the
fact is compensation is much more than just the monetary rewards provided by an
employer. According to Milkowitch and Newman, “compensation is all forms of
financial returns and tangible services and benefits employees receive as a part of
an employment relationship”.
• The Equal Pay Act, Fair Labour Standards Act, and The Employment Retirement
Income Security Act, regulate corporate compensation practices
• An organization must understand and fully follow these laws in order to avoid
costly lawsuits and design a competency based compensation structure.

1. Focusing on the Strategy Objectives:

• The most important goal in designing a compensation system is supporting the

strategic objectives of the organization and ensuring the system that fit in with the
organization structure and strategy.

• questions which should be focused before designing compensation strategy such

as:
 What is the organization’s strategy?

 Do employees work individually or in teams?

 Are employees seen as costs or investments?

 What is the cost to replace employees?

 What is the desired turnover rate?

2. Ensuring Commitment through Communication and Participation:

• . A compensation review committee could help identifying current issues with

compensation, job clarification or salary administration. It could contribute ideas
and feedback provides valuable advice.
• Analyzing Job Functions
• . It is important to undertake a job analysis before making changes to the
compensation plan as job analysis provides a collection of relevant information on
the type, scope and responsibility of each job.
• Writing Job Description
• Once the information is collected through the job analysis process, it can be used
for preparation of job description. A job description summarizes the important
component like the general nature of the work, specific tasks, responsibilities and
outcome competence required to perform the job.
5. Determining Internal Pay Equity:

• Fair pay is pay that employees generally view as equitable. Internal equity is
determined by job evaluation techniques such as whole job ranking method and
factor comparison technique.
6. Determining External Pay Equity:

• using market pricing is recommended to that of market competitive pay rates. Market
competitiveness is more flexible and adaptable than other methods.

• To gather competitors, pay rates, a survey method is developed which includes the
following steps:

 Establish a timeline

 Select bench-mark positions to survey

 Target survey participants

 Design questionnaire

 Use other available market data sources

 Follow up and verify answers with participants.

• Designing Salary Structure
• . Salary structure consists of jobs of equal value that are grouped into grades with
competitive salary ranges. Pay ranges are the rates from the minimum to
maximum of each grade.
• Each salary range includes minimum, midpoint and maximum salaries, with the
midpoint representing the market or going rate for the job.

• Typical compensation design problems include:

1. Failure to tie pay closely to achievement of objective and realistic performance

measures.
• Failure to regularly measure and provide feedback on performance
• Understanding compensation Analytics, Quantifiable data
• Compensation analytics is a practice to analyze whether or not the employer is
paying a reasonable amount of salary to its employees. It is a practice to bring
discipline
• Labour costs make up the majority of expenses for most organizations. It can
account for up to 70% of the business cost
• Components:

• External competitiveness: Employers compare their compensation data and

practices to external companies. For example, Salesforce found that their engineer
salaries were comparable to engineers at Microsoft. It was a fair comparison
because of the size and geographical spread of both organizations. On the other
hand, engineers at Slack were paid much less, but they are a much smaller
organization.
• Internal equity: Employers compare employees’ salary and indirect
compensation data to ensure fair compensation for the level and type of work
done.

• Region: Employers compare compensation data of people doing similar work

within a particular region.

• Level: Employers compare employees’ levels and the level at which they are
compensated.

• Benefits:
• Salary benchmarking gives an impartial idea of competitive salaries and allows
organizations to make informed decisions
• Evaluating pay equity allows organizations to compensate employees doing the
same level of work in a fair way.
• Transparent compensation decisions leave the decision-making of salaries in the
hands of accurate and impartial data. This leaves employees with a higher level of
trust in the organization and their managers.

• Factors affecting Employee Compensation

• The Compensation is the monetary and non-monetary rewards given to the
employees in return for their work done for the organization. Basically, the
compensation is in the form of salaries and wages
• Labor laws- There are several laws passed by the Government to safeguard
workers from the exploitation of employers. The payment of wages Act 1936, The
Minimum wages act 1948, The payment of Bonus Act 1965, Equal Remuneration
Act 1976, Payment of Gratuity Act 1972 are some of the acts passed in the welfare
of the labor, and all the employers must abide by these.
• Analytics for Compensation Planning
• Compensation strategies that entice(attract) employees to stay at the company are
more important than ever.

• Compensation has become much more complicated, as it’s no longer just about
exchanging money for time.

• A method of ensuring that your compensation budget is allocated as efficiently as

possible can have a considerable effect on your company’s success.

• Techniques:

• Market Data Comparison: Using your internal payroll data to compare market
averages from external salary surveys.
• Labour Cost Analysis: Merging payroll data such as base salaries, bonuses,
overtime pay, and benefits to determine overhead costs.

• People count Analysis: Providing an accurate picture of staffing levels and

compensation costs to assist with salary and workforce planning.

• Retention Analysis: Looks at employee’s risk of leaving by reviewing

compensation levels and performance data.

• High Performer Analysis: Profiles high performers by analyzing performance

levels and correlates with rewards, training, previous work experience and
education to assist with recruitment and retention efforts.
• Managing Compensation costs
• Performing internal audits like the pay equity example above can
lead to company-wide changes to pay and benefits.
• Uses:
• Eliminating guesswork from your decision-making
• Assessing pay equity
 Empower leaders to view current compensation costs and develop fair compensation
strategies for their teams.

 Identify trends in your organization’s succession plans to streamline your succession

strategy.
• Competency Mapping Analysis
• ) Identify key components of employee job descriptions – the critical points
only. Focus on what characteristics and skills are absolutely essential to get the job
done
• Clarify roles and eliminate superfluous information – narrow the scope again.
Look through your essential words and phrases. Ask yourself whether you have
more words than needed to describe the essential characteristics.
• Identify required aptitudes, attitudes, skills, and knowledge for roles – critical
components of the competencies are what is beneath the surface of employee
behavior. Like an iceberg, we see only what is above water, but realize the vast
majority is underneath
• 4) Synthesize ideas into central themes and define them – no more than 10
competencies
• ) Create a five-scale rubric system 
• What are the skills, aptitudes, and knowledge required at the minimum for each
level? Here’s where you will want to clearly describe the behaviors exhibited by
individuals who perform at each level on the novice-to-expert scale
• ) Build assessments 
• Look for open ended questions such as “describe how you would do…” or
“explain what you did when you were able to accomplish…” Ask your candidates
multiple layered questions. Never, ever, ask a question that can be answered with a
“yes or no.” You’re looking for depth of answer here so that you can evaluate how
well it fits to your rubric.

• Build logistics for roll-out and on-going measurement cycles – this is the fun
part! You build a list of competencies
• Steps in Competency Mapping Process
• A job analysis is conducted by requesting individuals to fill a position information
questionnaire. Questionnaire asks them to describe what they are doing, and what
skills, attitudes and abilities they need to have to perform it well.
1. The main objective is to gather data from employees about the key behaviors
essential to perform their respective work.
• Making use of the results of the job analysis, you are ready to create a competency
based job description. This competency based job description is presented to the
HR department for their agreement and additions if any
• Once we have competency based job description, we start the process of mapping
the competencies. The competencies of the particular job description become
factors for assessment on the performance evaluation.
1. Feedback can be given to the participant about the competencies that has been
assessed and where they stand.
• A detailed report is prepared of the competencies assessed and also the
development plan for the developmental areas
1. Additional development or training can be provided to employees. This will help
employees in achieving the objectives of the organization.

• People who use competency mapping feel that if an individual understands what
qualities are important to performing efficiently in a provided role or situation at
the office, he can work at building those qualities.
• HRM Competencies
• A competency is the combination of knowledge, skill, and/or ability one needs to
successfully perform a job function.
• There are general and technical competencies, and both are required for each
occupation.
• General competencies cut across occupations, while technical competencies are
specific to an occupation and/or technical area
• . Achieving organizational goal requires several HRM competencies within each of
the human resource disciplines – recruitment and selection, training and development,
workplace safety and risk management, employee relations, and compensation and
benefits
• HR Services
• Services such as benefits administration and payroll processing are major components
of this HRM competency because they support large-scale human resource programs
• HR Strategic Partnership
• The HRM competency most effective in developing a strategic partnership is the
ability to produce human resources metrics — or measurements — that
demonstrate a return on investment in HR department activities
• For example, lobbying (convincing) executive leadership to invest in a costly
applicant tracking system to create more efficient recruitment and selection would
require justifying the expense by demonstrating a return on investment. The usual
return on investment for an applicant tracking system is the reduction in the costs
to hire and process new employees. Applicant tracking systems automate
recruitment and selection processes that would have typically required staff time
and expense. Strategic alliances are worth the time they take to build, but they
require forward-thinking management principles.
• HR Processes
• Staying abreast(aware) of human resource best practices is an effective way to
maintain HRM competencies pertaining to processes, employment trends and
procedures for the delivery of services to employees and external HR customers.
External HR customers include applicants, former employees, vendors and
suppliers.
• HR Compliance
• Without human resource oversight, companies could be liable for exorbitant legal
fees, penalties and fines. In addition, noncompliance with labor and employment
laws can cause irreparable damage to the company’s business reputation
• HR Development
• Succession planning prepares the current workforce for increasingly responsible
roles using promotion-from-within policies.