Tag: Human capital Management B.com Notes

A measure of dispersion indicates the scattering of data. It explains the disparity of data from one another, delivering a precise view of their distribution. The measure of dispersion displays and gives us an idea about the variation and the central value of an individual item.

In other words, dispersion is the extent to which values in a distribution differ from the average of the distribution. It gives us an idea about the extent to which individual items vary from one another, and from the central value.

• It should be rigidly defined.
• It should not be unduly affected by extreme items
• It should be based on all the observations.
• It should be amicable to further algebraic treatment.
• It should be lest affected by fluctuations of sampling.
• It should be simple to understand and easy to calculate.

The management is concerned with these problems as they are interested in the well-being and development of employees and they would like to deal with their abnormal behaviour which might disrupt work and demotivate other employees.

Counselling has been defined as a process which takes place in one-to-one relationship between an individual beset by problems with he cannot cope alone and a professional worker whose training and experience have qualified him to help other reach solutions to various types of personal difficulties.

Counselling is concerned with bringing out a voluntary change in the client. The counsellor provides help to achieve the desired change or make suitable changes. The client alone is responsible for the decisions, though the councilor may assist the client by his warmth and understanding relationship.

Counselling is the process of helping other persons to find solutions to their problems and anxieties. The person carrying out Counselling is known as counsellor and the person being counselled is called counselee or client.

Keith Davis defines the term Counselling as “discussion of emotional problems with an employee with the general objective of decreasing it”.

The aim of counselling is to provide help and support to the employee during the difficult times of their lives to enable them to face problems and challenges successfully. It is generally conducted as a private face-to-face meeting between the employee and the counsellor where the counsellor attempts to understand the employee’s problems and give him suggestions.

Employees may face problems in their personal or professional life which may start affecting their performance and work place behaviour. When a person faces some difficulties, his stress level would increase and start having a negative influence on his work performance.

Objectives

• Provide an opportunity for the employee to discuss his frustration, tension, conflicts, concerns and problems.
• Understand his behaviour and reasons for such behaviour.
• Help the employee to realise his potential.
• Help him to understand his strengths and areas for development.
• Understanding the work environment.
• Improve his personal and interpersonal effectiveness.

Characteristics:

• Service offered to employees.
• Service is conducted in organisation.
• Focus is on problems faced by employees.
• Objective of counselling is problem solution.
• Employee counselling serves all concerned.
• Employee counselling is a continuous process.
• Role of counsellor is important in counselling.
• Half knowledge is a dangerous thing, is completed through counselling.

Function

Reorientation:

It involves a change in the employee’s psychic self through a change in basic goals and values. Mostly, it needs a revision of the employee’s level of aspiration to bring it more in line with actual attainment. It is largely a job of the professional counsellor.

Advice:

One of the important functions of counselling is offering advice “to the counselee.” The counsellor has to understand the problem of the counselee completely, before offering advice and suggesting a course of action.

Clarified Thinking:

Another function of counselling is that of clarified thinking. As emotional blocks to straight thinking are relieved while narrating the problems to the counsellor, one begins to think more rationally. Clarified thinking tends to be a normal result of emotional release, but a skilled counsellor can act as a catalyst to bring about clear thinking more quickly. The client begins to accept responsibility for his own problems and strives to be more realistic in solving them.

Release of Emotional Tension:

Releasing emotional tension is an important function of counselling. People feel emotional release from their frustration after counselling. Release of tension may not solve the entire problem, but it removes mental blocks to the solution.

Reassurance:

In order to give courage to face a problem confidently, counselling provides employees with reassurance. Normally reassurance is not acceptable to the counselee. However, it is useful in some situations.

Communication:

Counselling helps improve both upward and downward communications. In an upward direction, it is a key for employees-to make the management know their feeling. Counselling initiates an upward signal. Another part of the counsellor’s job is to discover emotional problems relating to company’s policies and to interpret those problems to top management.

Skills

• Counsellor should be a morale booster for the employee
• Counsellor should be unbiased and must never compare one employee with other employees
• Counsellor should have warm manners and social etiquettes
• He/she must be well versed in excellent communication skills
• The counsellor should possess professional qualifications, experienced, maturity
• Effective listening skill
• Pleasing personality
• Immense Patience
• Compassionate approach
• Non-judgmental towards a problem or an employee
• Research-Oriented as counselling is an ever evolving profession
• Empathetic and sympathetic towards the employees
• Discrete outlook
• Ever encouraging to employees to come forward for redressal.
• Employee counselling has a positive impact on the employee’s life as their problems are solved and they lead a stress free life.

Techniques

Directive Counselling:

As the name implies, directive counselling is a process of directing the employees to solve their emotional problems through advice, reassurance, communication, release of tension. The counsellor deals with the emotional problem of the employee patiently, and then decides with the employee what to do and then motivating the employee to do it.

The counsellor takes an active part in discussing every aspect of the problem and helps in devising the solution and suggests the ways to get it. It is assumed that the counsellor is superior to counselee and knows what to do.

Non-Directive Counselling:

Non-directive or client-centred counselling is the process of skillfully listening and encouraging a counselee to explain bothersome emotional problems, understand them and determine the course of action. The central point in such type of counselling is the counselee and not the counsellor. This technique is mostly used by professional counsellors but managers can also practise it in their organisation.

The role of a counsellor is simply to listen to the person and try to understand his feelings and encourage to discover and follow improved course of action. He should not suggest or reassure any course of action rather he should accept his feelings without any judgment.

He should also avoid blame or praise or doubts during the course of counselling otherwise the role of counsellor will change because it may be possible that the person may not come out with his true feelings and the very purpose of such counselling may be defeated.

The counsellor throughout the interview should attempt to ask discerning questions, restate ideas, clarify feelings and understand why these feelings exist. There exists a fluid and sensitive relationship between the counsellor and counselee that requires minute attention to every detail in the overall situation.

Co-Operative Counselling:

Employers make limited use of non-directive counselling because it requires professional counsellors and is costly. On the other hand, directive counselling is often not accepted by modern, independent and democratic employees. This is why that organisations in general use counselling which falls between the two extremes of directive and non-directive counselling.

This moderate, or middle-of-the-road approach, is called ‘co-operative counselling’. It is called ‘co-operative’ because it uses the co-operative efforts of both the counsellor and the counselee. It is neither entirely counsellor-centred nor counselee- centred. In fact, it requires that both of them come forward with their varied knowledge, perspectives and insights to resolve the counsel’s problems in a work-together” setting.

Keith Davis has defined co-operative counselling as “a mutual discussion of an employee’s emotional problem and a co-operative effort to set up conditions that will remedy it.” Co-operative counselling starts with the listening technique of non-directive counselling but as the interview progresses, the counsellor plays a much more important and positive role than he plays in non-directive technique.

The counsellor initiates the discussion and discusses the problem with the employee from his broader perspective of the organisation, thus, throwing various perspectives before the employees for comparison.

Co-operative counselling applies four functions of counselling, i.e., reassurance, communication, release of tension and clarified thinking. It has no room for advice. If reorientation is needed, the counsellor refers the employee to a professional counsellor. If direct action is required, the manager takes the action but he does so in his capacity as a direct superior and not as a counsellor.

One of the approaches for structuring payroll and employment for assignments overseas is through running a dual payroll. This method offers the greatest flexibility for preserving and enhancing employee benefits and tax advantages between the home and host country. Dual payroll can be more complex to manage for human resources, but for longer assignments or high-value employees it may be worth the effort of implementation.

Dual employment works by using split payroll methods for both taxation and pension contribution reasons. In dual employment, two contracts are used, where the employee has a contract in both the home and host country. The home country agreement will preserve the existing employment relationship, effectively ‘suspending’ employment for the duration of the foreign assignment.

Two-Tier Wage System Essentials

In a two-tier wage system, the business owner negotiates with the union to install two separate wage structures for existing and new workers. Existing members of the union continue to receive pay, wage increases and benefits as defined by the previous agreement. New workers who join the union receive a lower starting wage, lower peak wage and often a less-substantive benefits package.

Employee Division

Two-tiered wage systems also provide the business with the advantage of a more divided work force. While workers receiving wages and benefits under the old agreement probably remain more or less satisfied, new workers receiving reduced pay and benefits for equivalent work often resent their better paid coworkers. This internal conflict among union members makes it more difficult for the union to bargain collectively, as new and senior workers view the situation in different terms. For example, when new workers want to push for wage renegotiation, senior union members maintain a vested interest in protecting their existing wages and benefits. The business, on the other hand, gets to avoid the issue while the union tries to sort out its internal strife.

Long-Term Cost Reductions

The business also stands to see long-term labor cost reductions. As older, higher-paid union members retire, the business can replace them with less-expensive workers.

Short-Term Cost Reduction

One of the advantages of a two-tier wage system is that the business enjoys a short-term cost reduction for all new workers that join the union. The total budget for wages and benefits the business must allocate goes down, while production remains consistent. The reduction in labor costs also lowers unit costs for each product. Lower unit costs allow the business to enjoy a larger profit margin on products by maintaining current pricing or to reduce prices to improve their competitiveness.

Benefits of Dual Payroll

• Ensures that local employee contract and labor laws are adhered to, and are made part of the host country employment agreement.
• The original employment agreement in the home country, (or an amendment drafted for the purpose of the assignment) will preserve home country employment benefits for the employee.
• Offers continuity and stability to the employee while on assignment, adding attraction to the overseas position.
• Maintains specific time related employee benefits at home such as accrued leave, seniority, salary rates and pension contributions.

How to Set Up a Dual Payroll

• Draft a home country employment agreement (or amendment) that preserves the employment relationship for the length of the assignment.
• Draft a host country employment agreement that reflects that jurisdiction’s employment laws, as well as compensation and benefits in kind.
• Establish a local payroll through a service provider to administer the host country payroll, tax withholding and statutory contributions.
• Continue to make necessary withholdings and contributions through the home country payroll.
• Review applicable tax treaties that would grant relief from making tax and statutory contributions in both countries.
• Termination upon conclusion of the assignment should adhere to host country laws to avoid unlawful termination claims.

Merit-based pay

Merit pays, merit increase or pay for performance, is performance-related pay, most frequently in the context of educational reform or government civil service reform (government jobs). It provides bonuses for workers who perform their jobs effectively, according to easily measurable criteria.

Merit pay is the type of compensation a company uses to reward higher-performing employees with ongoing additional pay. Merit pay is sometimes called incentive pay or pay-for-performance, and it involves giving employees base pay increases or bonuses based on their performance. Merit pay may take the place of simple pay raises, compensation increases based on employee seniority or general cost-of-living adjustments.

Advantages

Companies may choose merit pay as their compensation model based on its potential benefits. These advantages include:

• Attracting top talent: Offering merit-based pay can help a company attract confident talent. Top employees who know their worth and believe in their skills are generally eager to have their pay tied to their performance.
• Clarifying expectations: When compensation is related to their performance, employees have clear guidance regarding what their employer considers exceptional work. In that way, merit pay can help differentiate critical tasks and low priority undertakings.
• Identifying employee rankings: Employers can use merit evaluations to create a ranked list of employees by strength. Top performers receive the highest merit pay and underperforming employees receive less or no merit pay.
• Making company objectives clear: When companies tie compensation increases to accomplishing goals, they make their business objectives real to their employees. Presenting an actionable to-do list that leads to more pay takes vision and mission statements from concepts to reality.
• Increasing productivity and efficiency: When employees know there are financial rewards for quality work, they are more likely to self-motivate. Merit pay can help combat workplace complacency.
• Generating healthy competition: In a positive corporate culture, merit pay can inspire employees to compete to produce the best results. When pay increases are directly related to accomplishing company goals, both top performers and the business itself are winners.

Disadvantages

• Subjectivity of application: Even when merit pay is based on objective goals, managers may still award it subjectively.
• Perceived favoritism: Employees who are not satisfied with their merit pay may feel like there is manager favoritism toward other employees, regardless of their performance reviews.
• Use of resources better spent elsewhere: Merit pay systems require a business to develop competencies, determine measurements and create performance baselines in addition to scheduling and holding actual evaluations, so they require a lot of resources. Not all businesses can implement merit pay because they need to use those resources for the profit-driving aspects of the business.
• Managerial burden: Thoughtful completion of the merit pay process takes a lot of work from managers. Since no two managers are the same, some may be more up to the challenge than others. Managers who have better communication skills, for example, may find it easier to express what employees need to do to qualify for merit increases.
• Morale implications: Merit pay can have negative implications on company morale. Some employees may be discouraged by what they see as unequal rewards for the same work, while others may feel like they are being compensated similarly to other employees whose work they view as subpar.
• Unfounded expectations: Merit pay can lead employees to expect the same increase year after year, regardless of budgetary restraints and changes in employee behavior.
• Unhealthy competition: In less positive company cultures, the promise of merit pay may encourage employees to act selfishly instead of in the company’s best interest.

Skill-based pay

Skill-based pay is a salary system that determines an employee’s pay based on his or her knowledge, experience, education or specialized training. Depending on the company, the employee might also receive a higher salary for earning formal certification in his or her industry.

Skill-Based Compensation Program

• Identify the skill profiles you have in your company. We differentiate between three different skill profiles as outlined below:
• Breadth: Being able to perform in different work settings and environments and have transferable skills that can be used in an agile work environment. In the past, this was oftentimes associated with a unionized environment where skills to work across different machinery were rewarded. In today’s digital world, this may be comparable to a full stack developer someone with broad technical skills that can work across multiple platforms. This could also be a software architect who understands how different aspects of an application interconnect.
• Depth: Becoming a deep expert in a subject matter. An example today would be a software engineer who develops deep understanding of one programming language but also is able to write a code that is non-repetitive, efficient, maintainable and dependable.
• Self-management and Management of others: Optimizing self-management or management of others; for example, software development teams that organize themselves effectively and efficiently. In an agile software development environment, the developers’ teams not only ensure information flow between themselves but also to the outside world (e.g., the client or the business sponsor). This can also mean the team is able to absorb new business requirements that may impact various aspects of the development process.

Identify the specific skills your company needs. As a first step, the business needs to assess their skill requirements and measure their current skill base against their internal benchmark. This can be done internally or with outside help.

Assess your current workforce. Once you take time to evaluate the current skills among your workforce, you’ll be able to identify and map out skills gaps. When considering a skill-based compensation model, it may make sense to look outside your organization to determine how readily available talent with the skills you need are and what it will cost to bring them into the organization vs. upskilling and retraining your current workforce. If there’s a need for hiring new talent, there a few things to be considered:

• How much will the talent cost to the company?
• Will there be compression issues to hire new talent with the skills you need?
• What is the risk of losing new talent in the next two years?
• How much will it cost the company to train employees with adjacent skills to get up to speed instead of hiring new talent?

Establish a skill-based bonus system with internal and external certification. Training and certifying employees are key to a skill-based compensation model. This can be done through your own training departments or with the help of external online certification centers or universities. Traditional manufacturing companies that used skill-based compensation models had an easier time identifying the training employees needed as they were often geared around a process and machinery. In the digital world, determining the necessary training requires an in depth understanding of your business goals in the future and what skills are needed to meet these demands.

Advantages

• It enhances productivity and quality through better use of human resources.
• It facilitates technological change, which may meet with resistance in a purely job-based system.
• The higher pay levels, continuous training, and job enlargement through the broadening of skills, tend to reduce staff turnover.
• Elimination of unnecessary jobs can result from a workplace having broad, rather than narrow, skills. It also reduces the need for supervision.
• Job satisfaction is engendered through employees having greater control over the planning and implementation of their work.
• Broadening of skills leads employees to develop a better perspective of operations as a whole.
• It is an incentive for self-development.
• It provides employment security through skills enhancement.
• It reduces the need to look to promotion to higher levels (which are always limited) as the only way to enhance earnings, and it facilitates the planning of an employee’s career development path.
• Since the reward flows from the application of a skill and it does not reduce opportunities for others to similarly increase their skills and earnings, there is likely to be less competition among individuals.
• Since the pay increases on account of skills are linked to a measurable standard, the criticism of subjectivity often associated with performance appraisals and individual-based performance-related pay, is avoided

Competency-based pay

Competency-based pay has the advantage of being simple to structure and utilizes readily accessible salary tables. One unique disadvantage of the salary structure is it can be difficult to alter during times of economic hardship. Competency-based pay might also be known as skills-based and knowledge-based pay.

Advantages

• Individual self-motivation: Instead of basing pay on seniority and job level, the employee achieves as much as they’re willing to and is rewarded for it.
• Company-wide motivation: Competency-based pay encourages a culture of self-motivation and self-improvement within the company. It can create a company of employees who are actively seeking to improve their skills and finding new ways to contribute to the company. Competency-based pay helps to tie your company’s culture directly to the success of the company.
• Increased transparency: Employees will better understand what they have the potential to earn with a competency-based pay system and what skills they need to acquire to reach the pay they desire.
• Reduced turnover: Employee turnover is costly for a company, and a competency-based pay plan curbs that by helping employees feel that their skills and knowledge are important to the company, which improves retention.

Disadvantages of competency-based pay

• Sometimes competition within the organization can lead to a disjoint in a team, which affects overall output
• In some cases, competency-based pay can lead to favouritism towards a particular employee

Importance

When businesses become flatter eliminating non-value adding activities, competency-based pay may complement the move by assigning value to an employee’s work in terms of the competencies that enable the staff member to perform effectively in his role. It rewards employees by better compensation and benefits for the skills, knowledge and behaviors important for personal performance and organizational success and not just for the activities they perform.

Competency based pay encourages better performance and facilitates lateral career development. It is suitable in organizations where there is an over-emphasis on outputs, fit with a performance appraisal is required, cultural change towards greater flexibility is sought. A compensation based on an employee’s performance is also appreciated by an employee.

Team based pay

Team-based-pay provides rewards to teams or groups of employees carrying out similar and related work linked to the performance of the team. As described by Armstrong and Ryden (1996), team pay is usually paid in the form of a bonus shared among team members in proportion to their base rate of pay. Individual team members may be eligible for competence related or skill based pay, but not for performance related Pay.

In team based pay systems the payments reflect the measurable goals of the team. The aim of team based pay is to strengthen the team through incentives building a coherent, mutually supportive group of people with a right level of involvement. Team based pay promotes team working and cooperation among team members. It promotes multi-skilling.

A team based pay acts as an incentive for the team to improve the performance of the complete team. It also encourages the laggards of the team to improve and meet the team standards.

Sometimes, team members show resistance as they feel recognition of individual effort is more important. The team members do not want to adhere to the group norms and feel pressurized while working. The peer group pressure can also be helpful in raising the performance of the whole team.

Contribution related pay

Contribution Related pay is a relatively new concept that has been developed principally by the pay experts Duncan, Brown & Michael Armstrong. It is complex to manage contribution pay system. As it raises the expectation amongst individuals that if they achieve a set of targets & improve their skills & competencies each year they shall get a continual payout.

Contribution is what people do to bring about a result. As an individual contribute to the achievement of the purpose of their role. In relation to performance management and pay, the contribution is a more general concept, which describes the overall part people play generating results.

Contribution-related-pay can be defined as a process for making pay decisions that are based on assessments of both the outcomes of the work undertaken by individuals and the level of skill and competence required for that level.

Contribution -related-pay can work effectively with a pay structure, which has pay slabs. Here the delivery of the pay should be based on performance. Competence and career progression considerations.

As per (Brown 1998) contribution-related pay means paying for results including competence for the last year’s performance and the expected performance in future. This pay works by applying the mixed model of performance management. It involves assessing the inputs, the outputs and coming to a conclusion by deciding the pay.

The first approach to contribution-related-pay is to collect information regarding the competence of an individual and what he/ she has delivered. Similarly an overview of performance in achieving objectives or meeting the performance standards can be done. The information is then combined and clubbed to be compared with others in similar roles to decide for change in pay.

Methods of Promotion

Vertical Promotion:

When an employee is shifted from a lower category to higher category with increase in pay, status and responsibility it is called vertical promotion. For example a sales Manager is promoted as General Manager in the company.

Horizontal Promotion:

When an employee is shifted in the same category with increase in pay, responsibilities and change in designation, it is called horizontal promotion. For example Second Division Assistant is promoted as First Division Assistant. This type of promotion may take place within the same department or from one department to another or from one plant to another plant.

Dry Promotion:

When promotion is made without increase in salary or remuneration, it is called “dry promotion”. For example, a college professor promoted as Head of the Department without increase in salary. In dry promotion there will be a change in designation and responsibility without corresponding change in remuneration.

Seniority vs Meritocracy

Promotion by Seniority:

Promotion by seniority is one of the popular methods followed for giving promotion to the employee. Seniority is based on the total length of service and is counted from the date of his appointment in the organisation. This method is followed in Government service. However, merits such as qualifications, knowledge, skills, performance, etc., are not given weightage as promotion is based on seniority.

Advantages of Promotion by Seniority:

• In business and industrial undertakings, this method is followed for patronising employees and has wide acceptance by trade unions and among employees.
• It is very simple and objective method of identifying employees for promotion.
• Creates a sense of security among employees since they can predict in advance when they will get promoted.
• Leads to congenial industrial relations as decisions on promotions are based on seniority alone.
• Avoids bias, favouritism and nepotism in identifying employees for promotion.
• Employees will remain loyal to the organisation even when there are better opportunities elsewhere.

Disadvantages:

• Seniority very often ignores merit and good performance in the job. The person with long service need not be competent in the job.
• Overemphasis on seniority and no incentive for high/improved performance the job.
• Ambitious people who are highly career oriented, may not stick to the job and leave the organisation.
• It is difficult to attract talented people unless they are placed in special category for promotion.
• No differentiation between efficient and inefficient employees and promotes mediocrity in the organisation.
• Management is not generally favourable to promote employees based on seniority. They prefer to combine merits and seniority.

Promotion by Merit:

Promotion by merit is generally followed in private organisations. Promotions are based on merits of the employees, i.e., qualifications, knowledge, skills, honesty, initiative, interpersonal relationship, effective communication and of course performance in the job. Seniority is not given weightage. However, unions demand promotions based on seniority, i.e., length of service of the employee.

The HR department has to keep updated records about each employee and such records should include details, performance in the job, increments, performance awards etc. Performance appraisal records would also provide information on the past performance and strengths and weaknesses of the employee.

Advantages of Promotion by Merit:

• It appreciates and recognises the knowledge, skills and performance of the employee. Even employees with less experience can expect promotions.
• It motivates the employees to perform better as promotions are based on merits.
• The management is able to retain competent employees as they are eligible for promotions based on merits.
• Leads to increased productivity in the organisation.
• Management support promotions based on merit.
• It is a scientific and objective method of promoting employees.

Limitations of Promotion by Merit:

• Scope for favouritism and bias.
• The method is not accepted by trade unions.
• Defining merit is difficult and complicated in the absence of updated and accurate records.
• No guaranteed promotion even if the person has put in several years’ service in the organisation.

Performance Management System is the systematic approach to measure the performance of employees. It is a process through which the organization aligns their mission, goals and objectives with available resources (e.g. Manpower, material etc), systems and set the priorities.

The execution administration framework is a constant procedure of characterizing and conveying the activity parts and duties, execution desires, goals and set their needs between boss (administrator) and subordinates (workers). It incorporates association, office and representative shared objective and targets which are lined up with frameworks and assets. It is the channel of providing clarity about goals and also to improve the business processes through various methods and mechanism.

Performance management can be defined as the development of individuals with competence and commitment, working towards the achievement of shared meaningful objectives within an organization which supports and encourages their achievement.

Michael Armstrong have defined performance management is a strategic and integrated approach to delivering sustained success to organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors.

Performance assessment has a long history based on comparative judgements of human worth. In the early part of the 19th century, for example, Robert Owen used colored wooden cubes, hung above work stations, to indicate the performance of individual employees at his New Lanark cotton mills in Scotland. Various merit ratings were represented by different colored cubes which were changed to indicate improvement or decline in employee performance.

According to Michael Armstrong and Angela Baron: ‘Performance management is a process which contributes to the effective management of individual and teams in order to achieve high levels of organisational performance.’

According to Dr. T. V. Rao: ‘Performance management involves thinking through various facets of performance, identifying critical dimensions of performance, planning, reviewing and developing and enhancing performance and related competencies.’

According to Manuel Mendonca and R. N. Kanungo: ‘Performance management refers to the process of setting and communicating performance targets, defining evaluative criteria to be employed at different levels of performance, monitoring performance, reviewing performance, providing feedback and taking corrective measures to remove performance snags.’

According to Ronnie Malcom: ‘Performance management may be defined as a planned and systematic approach to managing the performance of individuals ensuring their personal development and contributing towards organisational goals.’

According to John Storey: ‘Performance management includes the whole cycle of agreeing goals and objectives (which may vary in their degree of specificity), providing feedback, offering coaching and advice and motivating staff to perform at a high level.’

Objectives

• To identify systematically the need and requirements of some learning and training aspects;
• To promote better and high work culture in the organisation;
• To focus more on systems approach to perform appraisals rather than to make any formalities;
• To foster a positive relationship between managers and employees through a two-way communication process;
• To appreciate, recognise and to give reward and compensate employees for achievement of performance objectives successfully in a more objective, transparent and justified way.
• To emphasise on career planning and future growth opportunities for employees;
• It is ensuring to raise the efficiency and productivity of employees;
• To encourage belongingness, team spirit and devotions among employees with the job;
• To provide feedback about HR planning and potentialities to implement the planning facts.

Types

Performance Management in Self-Managed Teams:

Performance management in self-managed work team is managed by the team itself. This empowerment varies from organization to organization, or even from department to department, and also depends upon the readiness of the team members to assume those responsibilities.

A fully empowered mature self-managed team would decide their own jobs, set performance standards, give feedback to members about work progress, performance and team skills, appraise their own performance, and identify and support the training and development needs of the members. The organization, particularly the HR department, in this set up will provide guidelines and a framework for that performance management in terms of organizational policies and compliance regulations.

Traditional Performance Management:

Performance management in natural work groups usually operates according to the traditional performance management model in which the focus is on the work performance of an individual and his or her contributions to the mission of the organization, as observed and assessed by the evaluating manager.

While the evaluating manager may solicit the input and involvement of the employee in each step in the process, authority and ultimate responsibility remains with the HR manager or the HR head of the organization.

Performance Management in Cross Functional Teams:

A cross-functional team typically operates without formal supervision, though it may have a team leader. Members usually report to evaluating managers in their concerned departments.

These managers are often not present or be aware of what and when the team members are participating in the work of the team and may only know about the results of the team’s work and the team member’s performance through the reports of others, evidence of the team’s products, or via customer feedback. Hence performance evaluation in this case definitely is a complexes process.

Factors

Business Culture:

At the national level, culture affects performance management through sociopolitical traditions and attitudes which determine whether performance assessment is acceptable, and to what degree. Cultural norms dictate ‘acceptable’ standards of performance and the management methods by which they are assured.

Legislation:

In today’s globalized economy, the employment relationship between workers and employing organizations is seen as a contractual matter. This relationship is expressed in formal or legalistic statements of obligation between the two, such as written employment contracts, job descriptions and performance objectives.

Employers taking HR and administrative decisions on the basis of performance assessment have to be mindful of possible legal action on the following grounds:

1. Validity or accuracy of assessment ratings as predictors of future performance and promotion potential.
2. Validity or accuracy of ratings as measures of past behaviour.
3. Statutory norms laid down by the Government and Government authorities.

General Economic Conditions:

Prevailing attitudes towards employees and, in turn, their response to performance assessment are considerably affected by issues such as unemployment and economic conditions of the nation. Growth and shrinkage in the job market which are influenced by changes in the economic scenario of a nation is conventionally believed to be followed by changes in the behaviour of workers and employers.

At times of high unemployment, workers are thought to be concerned about losing their jobs and hence more conscientious and tolerant of strict management. When suitable employees are scarce, managers must be cautious  unflattering assessments can trigger an employee’s move to another organization leading to high attrition.

Industry Sector:

Methods of performance management vary considerably between different industrial sectors, partly as a matter of the nature of the work involved, tradition and fashion. Sales and service dominated industries, such as retail business and financial services, tend to have clear individual or team objectives which can be translated readily into performance targets.

Performance-related pay (PRP) is common in this sector. In other sectors like manufacturing sector performance objectives are more diffuse and difficult to measure so that PRP is not easily justified.

Technological Change:

Technological change, particularly changes in information technology has a dramatic effect on the nature of supervision, and hence performance assessment. Work can be done at a distance by traveling executives, overseas affiliates or telecommuters working from home. This raises intriguing issues for performance management.

Further, technology has the capability to provide extensive information and statistics regarding an individual’s performance that is being recorded on a real time basis into the information system. This information not only provides a meaningful measure of job performance but also provides a clear cut picture on the areas of performance improvement and skill development.

Flexibility and Diversification:

In the new business environment, the traditional nature of the employment relationship has considerably changed, moving the balance of power firmly in favour of employers. Organizations in today’s highly competitive era have seen job descriptions have disappeared or, at least, have been diluted, so that employees can be asked to do virtually anything required by the organization.

Conversely, performance criteria have been more tightly defined, typically expressed in the form of demanding objectives; forever-moving goalposts. Performance assessment has become the crucial means of monitoring this relationship.

Employee Relations:

Performance management is a means of enhancing managerial control, particularly through individual performance-related pay schemes. Individualization of pay (performance based pay systems) diminishes or neutralizes the role of collective bargaining. The purpose and influence of trade unions is thereby getting day by day diluted, reducing both their effectiveness and attractiveness as an alternative focus for employee involvement.

Workforce Composition:

One important function of performance assessment is the identification of individual strengths and weaknesses of the employees. Strengths may indicate a potential star performer, worthy of a management career route and promotion. Assessment employed to determine development needs ultimately serves to increase a nation’s human capital. This helps the organization to identify and streamline the composition of their workforce with people who are the most competent in terms of their talents and abilities.

Recruitment is a two-sided coin, one side of opportunity and the other of risk. Hiring a new member of your team or finding a trusted freelancer can be like flipping the coin. They may be a perfect fit or they may carry risks. Risks including damage, costs, and loss of time can be hard to recover from.

For a startup, the risks can be fatal, while larger companies face increased expectations to find the best talent. You are searching for a perfect fit, someone to inspire the team, to provide new ideas, to stimulate morale and productivity. But if you hire someone that does not connect with your company, you may need to jump some hurdles along the way. Companies that strategise their recruitment process to predict job performance experience better hiring results.

Cognitive Ability Tests

A cognitive ability test measures different aspect of cognition. This is because the job of a Python Developer requires a different cognitive ability to that of a Sales Manager. Dependant on your company, you will assess new employees using methods that best suit your ethos. The different aspects of cognition are as follows;

Numerical Reasoning: Ranging from mental mathematics to complicated critical reasoning

Verbal Reasoning: Evaluates the understanding of English language (grammar, vocabulary, comprehension)

Abstract Reasoning: Involves incomplete symbols or diagrams with missing items to assess the ability to draw conclusions based on specific information

Logical Reasoning: Aimed to assess critical thinking skills through the understanding of complicated texts.

General Aptitude Test: Most commonly covers verbal reasoning, numerical reasoning, and cognitive ability, this test aims to determine innate ability at a number of levels.

Raven’s Progressive Matrices (RPM) Also used in educational settings, this test aims to measure abstract reasoning through non-verbal means. The test involves multiple choice questions consisting of visual geometric designs with a missing piece.

Criteria Cognitive Aptitude Test (CCAT): Measures problem-solving, skill learning, and critical thinking abilities. This test consists of 50 questions and has a 15-minute time limit.

The Five-Factor Model of Personality

Researchers originally developed this model to understand and explain a person’s personality through five separate traits. Psychological research of this kind has since been used to benefit the criminal justice system, the education system, and more recently the recruitment system. The following model can help to show what traits of a person’s personality are relevant for job performance. Your recruiter will look for certain behaviours or traits that can benefit your team. The Five-Factor Model of Personality includes;

Emotional Stability

(self-esteem, self-efficacy, life satisfaction etc.)

Extraversion

(incentive reward sensitivity, positive emotion, happiness etc.)

Openness

(intelligence, creativity, broad-mindedness etc.)

Agreeableness

(cooperativeness empathy, sympathy etc.)

Conscientiousness

(dutifulness, orderliness, discipline etc.)

When recruiting you can test for each personality measure in different ways. One method involves specific behavioural questions during an interview, while an alternative method is to use a personality assessment. You ideally want to measure all aspects of the personality to create a candidate profile.

Past Behaviour

One of the most common types of interview questions are those related to how a candidate behaved in the past. This is because past performance is one of the most accurate factors to predict job performance. Past behaviour is also important within a variety of public and private sectors, ranging from education to the legal system. You can best predict job performance by focusing on records of past behaviour rather than relying on first impressions and gut feelings (e.g. volunteering for responsibilities, involved in challenging tasks, past rewards/promotions).