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Human capital Management - Concept Session 1
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Human capital Management - Concept
Session 1
Definition
HC theory conceptualizes workers as embodying a set of skills which can be “rented out” to employers (Ehrenberg and Smith(1997)
Human Capital
Intangible assets (like copyright, customer relations, brands and company image).
Know-how, imagination and creativity of employees as important as hard assets.
HC theory describes the link between HR practices and business performance.
HC is
Non-standardised,
Tacit,
dynamic,
context dependent
and embodied in people
Intellectual Capital
Consists of intangible resources of the stocks and flow of knowledge other than financial and physical assets.
Elements:
Human Capital
Social Capital
Organizational Capital
Origin of Human capital
Adam Smith (1776) – return on investment in skills can be compared to ROI in physical capital.
Schultz(1961) – proved yield on HC investment > than investment in physical capital.
Elliot (1991) quality than quantity of HC
Features of HC
Represents the human factor, People bring HC to Organizations
Worker also invests in HC as employer
For a worker the investment in HC brings him higher level of earnings, greater job satisfaction, better career prospects and job security.
His cost of investment – psychological, social and monetary)
Employer invests in HC
As his ROI is improvement in performance, productivity, flexibility, capacity to innovate that will increase the skill base of the organization.
Workers as Assets?!
Workers are not passive assets.
Companies don’t own HC as other assets
No model of Human Asset accounting has captured the financial values of HR.
Workers choose how and where they invest their talents, time and energy.
But people add value.
Social capital
Features of social life – networks, norms and trust- that enable people to act together – horizontal associations – that help in transferring, sharing, transforming and disseminating knowledge.
Organizational Capital
Concerned with embedding and institutionalizing knowledge, to be retained and accessed through documentation and maintenance of databases.
OC is created by HC through SC.
Belongs to the firm.
Developed by KM processes that aim to obtain and record explicit and tacit knowledge.
HC theory and HR practices
Resourcing Strategies
Constraints – skill shortage, problems in recruiting and retaining people, low productivity, high absenteeism, employee relations climate.
Make or buy decisions
Talent management
HR Development strategies
Organizational and individual learning defined by knowledge, skills and competency requirements
Reward Strategies
Competency based/Skill based pay
SC theory and HR implications
Link between social capital and value creation.
Task forces and teams to facilitate info flow.
Organizational design
Organizational development
Culture Change programmes
Aims of HCM
To determine the impact of people on business.
To demonstrate that HR practices produce ROI.
To provide guidance on future HR and business strategies.
To provide predictive data to take informed decisions.
Introduction to Talent Management
Session 2Merlin Mythili S
“The dominant competitive weapon of the twenty first century will be the education and skills of the workforce”Lester Thurow
Talent
• Is an identifiable ability that is perceived to add immediate or future value to any prescribed activity, discipline or enterprise.
What is TM?
• Refers to identifying the employee talent and utilizing it effectively and retaining the same to compete with similar organizations.
• Talent is a competitive advantage.
Key Drivers of Talent Management
• Quest for Competitive Advantage• Workforce Diversity• Global Outlook (cross cultural
sensitivity)• Global Competition• Customer Focus• Mobile Workforce• Variety of Competencies• Knowledge driven Organisations
Framework for Talent Management
• McKinsey’s Framework(2000)– Embrace a talent mindset– Craft a winning employee value
proposition– Rebuild your recruitment strategy– Weave development into your
Organisation– Differentiate and affirm your people
Talent Mindset
• Establish standards for talent• Active involvement in people related
decisions• Probing review process• Invest real money in talent• Accountability for the talent pools
built
Value Proposition to potential talent
• Refer to Kuttan of Galle
Recruitment strategy
• Hunt for talent all the time• Tap many diverse pools of talent• Find ways of reaching the passive
people• Break the compensation rule• War for Talent
Three distinct threads of thought regarding TM
• Requires what HR has always done, but doing it faster– Sourcing talent– Growing talent through succession
planning/leader development and use of compensation and performance management processes
Three distinct threads of thought regarding TM
• Set of processes to ensure adequate flow of employees into jobs throughout the Organisations– The first in TM in this perspective is to
gain a solid understanding of the internal workforce
Three distinct threads of thought regarding TM
• Focus on talent without regard for organisational boundaries or specific positions– High performers are to be sought,
differentially rewarded– Performance pools rather than
succession pools of talent– Encourage rigorous performers
• TM is rooted in exhortation and Anecdotes rather than data and builds an argument based on selective self-reports of executives
• Aligning people with roles• Aligning roles with people
In summary• It is important to first emphasize the development
of all individuals• Talented people do not fit in easy classifications
( Extraordinary individuals certainly make life more interesting)
• Talent development only happens when a culture based on shared values and beliefs is created with leadership commitment
• Always fight against the push toward uniformity• Only 10% are going to be top, should
organisations chase the same talent or build an organisation for regular folks to perform as the top 10 %
Need and Importance of TM
Session 3Merlin Mythili S
When the winds of change blow, some people build walls and others build
windmills
- Chinese proverb
Talent Imperatives for a New Economic world
• 20th century economy focused on productivity and efficiency.• Enabled by technology they obtained high productivity from a
workforce whose costs were rising.• Narrow focus- developed economies-excluded more than of half
of the world.• New global economy – changed by politics and technology.• First stage of globalisation – movement of production from
developed to developing economies – cheaper costs• Now the era is –truly multi-polar world – working everywhere –
going where talent is- connecting people and processes – breaking traditional barriers
• “The war of talent is over and talent won” Ridderstale and Nordstrom (Funky Business, 2002)
The New context and TM
• Global abundance but local scarcity of talent.• Fewer young people and more older people.• Rising demand for new skills aggravated by
demographic pressures and educational shortcomings.
• New methods of working and new relationships between users and suppliers of talent.
• More diverse, remote and virtual workforces, with different attitudes to work across generations.
• Steady change in the nature of work.• Challenge of Engagement.
5 Talent Imperatives – Critical to Organisational Success
• Talent is a strategic issue.
• Diversity is the biggest asset.
• Learning and Skill Development – most important capability.
• Engagement is the mystery ingredient.
• Nurturing and developing talent is everyone’s concern in the Organisation.
Why Talent is a strategic Issue?
• Relentless pace of growth.• In 20 yrs- India and China –largest economies
followed by US and EU.• Only constant is Change- Organisation need to
respond – with Talent.• Changing nature of work and value – tangible and
intangible assets.• Shift from centralized production with repetitive
methods to a more devolved system – shared and scattered production –often independent of the producer.
• Unique knowledge of production, service and delivery methods, brand value, workforce capabilities.
The need to embrace diversity
• Global demographic shifts and dynamic labour markets has made talent acquisition more complex.– Shifting populations and ageing workforce– 4-2-1 problem.– Japan's answer –’dark factories’ – production
automation.– Government agencies, energy, heavy engineering,
non ‘eco-friendly’ industries does not attract youth.– Global abundance and local scarcity.– Knock-on effect –high salaries – skill shortage -
turnover is high.
The importance of Learning and Skill Development
• The world is becoming more educated – but is education creating the skills organisations need?– Deficiencies in applied skills, written
communication, leadership, professionalism/work ethics.
– Levels of investment in education (7 to 8% of GDP).– Migration of Skills and Jobs. (Obama’s recent
legislation on off shoring).
The Challenge of Engagement
• Change in attitude about work and life priorities.– Baby Boomers, Generation X (60s to 70s), Generation Y
(beginning 80s) or Net Generation– Above 70 geezers, below 35 geeks.– Managing mutigenerational teams is tough, reskilling,
retraining, motivating them tougher.• Rise of knowledge work and workers (P.Drucker).
– KW add value by processing existing info to create new information.
– HSPALTA policy Davenport’s acronym Hire Smart people and leave them alone. Old command and control would not work
• Changing patterns and nature of work (part time, flexi time, off shore time, virtual workers)
Change in “Psychological Contract”
Loyalty Effect• If you
– Are loyal– Work hard– Do as you are told
• We will provide– A secure job– Steady pay increase– Financial security
• You are– Ina dull environment– Safe– Ina static environment
Employability Effect• If you
– Develop skills we need– Apply them to help company
succeed– Behave consistently with our
new values• We will provide
– A challenging work environment
– Support to your development– Reward your contribution
• You are– In a Challenging work
environment– Rewarded
Changes in HR Practice
Loyalty based• Low differentiation
• Guaranteed increase in pay
• Weak performance appraisal
• Subjective decision on compensation
• Little consequence management
• Little investment in competence development
• Dominant motive n- Affiliation
• Paternalistic Management Style
Performance based• High Differentiation• Pay increase at risk• Strong Performance appraisal
system• Formal assessment of competency
and potential• Data based decision on
compensation• Job security linked to continuing
contribution• Significant increase in competence
development• Dominant motive: n-Achievement• Development Management Style
Talent Management and Human Resource
Management Session 4
Merlin Mythili S
• Demographic shift has changed the nature of psychological contract.
• “Volunteer” Employees as they can pick and choose between Employers based on work life balance, diversity policy and the extent to which they will have a voice.
• Time to spend more time with people than with finances.
Psychological Contract
'It is concerned with assumptions, expectations, promises and mutual obligations' Guest et al (1996)It encompasses the actions employees believe are expected of them and what response they expect from their employer.
Change in “Psychological Contract”
Loyalty Effect• If you
– Are loyal– Work hard– Do as you are told
• We will provide– A secure job– Steady pay increase– Financial security
• You are– In a dull environment– Safe– Ina static environment
Employability Effect• If you
– Develop skills we need– Apply them to help
company succeed– Behave consistently with
our new values• We will provide
– A challenging work environment
– Support to your development
– Reward your contribution• You are
– In a Challenging work environment
– Rewarded
Changes in HR Practice
Loyalty based• Low differentiation• Guaranteed increase in
pay• Weak performance
appraisal• Subjective decision on
compensation• Little consequence
management• Little investment in
competence development
• Dominant motive n- Affiliation
• Paternalistic Management Style
Performance based• High Differentiation• Pay increase at risk• Strong Performance
appraisal system• Formal assessment of
competency and potential• Data based decision on
compensation• Job security linked to
continuing contribution• Significant increase in
competence development• Dominant motive: n-
Achievement• Development Management
Style
Three distinct threads of thought regarding TM
• Requires what HR has always done, but doing it faster– Sourcing talent– Growing talent through succession
planning/leader development and use of compensation and performance management processes
Three distinct threads of thought regarding TM
• Set of processes to ensure adequate flow of employees into jobs throughout the Organisations– The first thing in TM in this perspective
is to gain a solid understanding of the internal workforce
Three distinct threads of thought regarding TM
• Focus on talent without regard for organisational boundaries or specific positions– High performers are to be sought,
differentially rewarded– Performance pools rather than
succession pools of talent– Encourage rigorous performers
• TM is rooted in exhortation and Anecdotes rather than data and builds an argument based on selective self-reports of executives
• Aligning people with roles• Aligning roles with people
Succession Planning & TM
• SM integrates TM with Organisational strategic planning and anticipates changes in management.
• Good succession planning is more a culture than an activity.
• Peter Principle (people promoted to their level of incompetence).
• Pick key people and Delegate. • Develop potential for promotion to be
successful.• Succession is a deliberate process.
Career Management & TM• If it is ‘volunteer’ employee then he decides for
himself.• TM approach – Organisation takes responsibility
for nurturing talent.• Fine balance – balance of power in the
employment relationship.• Dual responsibility, mutual investment.• Long term relationship is formed on offered
inducement of company and expected contributions of the individual than on commitment and loyalty.
• Mentoring provides both professional guidance and psychological support.
• Competence development.
Development and TM
• Assessment tools for measuring core competencies.
• Training and development solutions.• Coaching.• Job rotation.• Idea of corporate universities.
Recruiting, Retaining and Rewarding Talent
• Recruiting talent– Reactive, emergency driven recruitment?– To be an ‘employer of choice’.– New ways of recruitment.– Entice and keep them.
• Retaining talent– Meeting their long term objectives.– Good opportunities.– Way they are treated.– Inclusion, feedback, career planning.– Frontline leaders to develop retention skills.
• Rewarding talent– Rewards are based on business
performance pitting employees against each other.
– Mercenary culture (money before teamworking)
– Networked culture ( political backstabbing and hidden agendas)
– Performance driven culture (driven by numbers)
– Communal culture (too inward looking too slow to change)
– Communication culture (little feedback, action don’t mirror words)
Is TM another HRM fad?
• HR had already moved from command and control style to shared success.
• TM is part of HRM.• TM breaks HRM’s egalitarianism.• TM emphasizes differentiation.• TM works from people’s perspective
than managerial functions.• TM is from the perspective of
Organisational development.
TM TerritoryStrategy
Retention Recruitment
TMSuccession Planning Develop -ment
HRM
In summary
• It is important to first emphasize the development of all individuals
• Talented people do not fit in easy classifications ( Extraordinary individuals certainly make life more interesting)
• Talent development only happens when a culture based on shared values and beliefs is created with leadership commitment
• Always fight against the push toward uniformity
• Only 10% are going to be top, should organisations chase the same talent or build an organisation for regular folks to perform as the top 10 %
The Talent Myth
Session 5Merlin Mythili.S
Real Success of modern economy
• Talent mind-set at all levels.• System is also equivalent to talent.• These star Organisations don’t just
create, they execute, compete and co-ordinate the efforts of many different people and not just the talented few.
The case of Enron
• Best companies, McKinsey preached:– Leaders obsessed with the talent issue.
– Singled out and segregated stars.
– Rewarded them disproportionately.
– Pushed them to even more senior positions.
– Placed premium on first-tier business schools.
– Lavish compensation packages.
– System is only as strong as the stars.
Enron Timeline• 1985 Enron was created on merging Houston Natural
Gas and Interworth by Kenneth Lay.• Jeffery Skilling Joined as McKinsey’s consultant at Enron.• CFO Andrew Fastow.• McKinsey earned 10 billion dollars a year and has done
20 projects for Enron, was on the board.• Enron rated most innovative company in America in
2000 by Fortune magazine.• Skilling sold most of his shares after he retired citing
personal reasons in August 2001.• Stock price 90$ in mid 2000 plummeted to 1$ by Nov
2001.• Filed for bankruptcy by Dec 2, 2001.
The case of Enron contd...
• Skilling started his corporate division in 1990 Enron Capital and Trade brought MBAs from the best of colleges.
• 250 MBAs a year in the 90s.• Super Saturdays.• Kenneth Lay said Enron’s talent
differentiated them from their competitors.
Enron in
• Selling electricity and natural gas at market prices as markets were deregulated.
• Indulged in lobbying to keep price volatility.• Got into Online trading mode with Enrononline, i,e
complex weather derivatives.• Diversification strategy – broadband assets, pulp
and paper plants, electricity and water plants.• Fabricated financial reporting.• Arthur Anderson, its auditing partner.
Did Enron fail in spite of its Talent mind-set or because
of it?
What if smart people are over-rated?
McKinsey’s Differentiation and Affirmation
• A’s to be challenged and disproportionally rewarded.
• B’s to be encouraged and affirmed.• C’s to be told to shape up or be
shipped out.• ‘Rank and yank’ process• But how to rank?
• Link between I.Q and job performance is distinctly underwhelming.
• People with I.Q might not pick up effectively common-sense sort of things like working with people.
• That is tacit knowledge.• Employer should assess performance not
potential.• I.Q in not also equal to ethics/morals.
Exercise -What will you do?
1. Always delegate to the most junior person who can be trusted with the task.
2. Give your superiors frequent progress reports.
3. Announce a major reorganisation of the department that includes getting rid of whomever you believe to be ‘dead wood’.
4. Concentrate more on your people than on the tasks to be done.
5. Make people feel completely responsible for their work.
The Talent flipside at Enron• Freewheeling culture.• Annual turnover on promotions was 20%.• Performance evaluations were not based on
performance. • People deemed talented were pushed.• For E.g. Lynda Clemmons (weather derivative) in 7
years jumped from trader to heading a business unit.• Lou Pai (power trading business)lost 10s of millions of$
in selling electricity to residential customers in newly deregulated markets.
• Further he was given commercial electricity outsourcing business which ran up several more years of losses.
• Kitchin - Enrononline project 250 people working for it. Skilling gets to know after 6 months.
• Open market hiring 50 people would leave to the new business unit, leaving holes in the existing ones.
The dark side of charisma• Hogan, Raskin and Fazzini
• 3 types of flawed managers:– High Likability Floater.
– Homme de Ressentiment.– Narcissist
• Great confidence.
• Self nominate.
• Will take credit for success.
• Avoid responsibility and will not own up failure.
What happened to talent at Enron?
• Talent was given newer opportunities and tolerated for mistakes.
• War of talent was about indulging A employees and fawning over them.
• This inflated their ego.• When their self image was challenged
they cannot face consequences, they lied.
• Though lives are enriched by individual brilliance,– Only those organisations are successful where the
system is the star and not the other way around.
– Cases of Wal-Mart and Procter and Gamble.
• If everyone has to think outside the box, maybe it is the box that needs fixing.
The Talent Value Chain
Session 6Merlin Mythili S
• Talent driven ‘idea centric’ economy
• Talent breeds Innovation
• Imagination + Knowledge = Innovation• Imagination is more powerful than
Knowledge.
• Walt Disney, Henry Ford, Bill Gates, Michael Dell
Five Links in the Idea-Talent Chain
• Anticipation – anticipate, ride better create the wave.
• Articulation• Acceptance• Action ‘on time’• Leverage the idea, create wealth
– Idea dies anywhere on this chain if there is not commitment to the idea.
Five ways to create value
• Make sure your idea is unique, authentic, and genuine.
• Expose the idea to the right people and involve those people intensely.
• Ensure that all information is adequate, accurate and free flowing at all levels.
• Provide the right resources to people involved.
• Expect something unexpected: many failures, surprises and setbacks will come , so learn from these.
The idea value Chain
• Invest in yourself• Different Thinking• Emotional Commitment• Action
A core competency
• is a specific factor that a business sees as being central to the way it, or its employees, works. It fulfills three key criteria:– It provides consumer benefits– It is not easy for competitors to imitate– It can be leveraged widely to many
products and markets.
Indian Innovators
• Cavin Care– Sachet innovation
– CK Ranganathan
• Amul– Milk Revolution
– Verghese Kurien
• HoTMaiL– Sabeer Bhatia
– $400 million to Microsoft
Four Steps to Talent Management
Session 7, 8Merlin Mythili S
LBA Consulting Group’s study
• On identifying HR factors that contributed to the creation and sustenance of Organisational excellence.– A performance-oriented culture– Low turnover (particularly of premium
employees)– High levels of employee satisfaction– A cadre of qualified replacements– Effective investment in employee
compensation and development– Use of institutional competencies in
employee selection and evaluation processes
Three Outcomes of Organisational Excellence
• Identification, selection, development, retention of Superkeepers
• Identification and development of high-quality replacements for a small number of key positions
• Classification of and investment in each employee based on his actual/potential for adding value to the Organisation
Classification of Employees
• Superkeepers –GEE• Keepers –EE• Solid Citizens – ME• Misfits – BE/GBE
A core competency
• is a specific factor that a business sees as being central to the way it, or its employees, works. It fulfills three key criteria:– It provides consumer benefits– It is not easy for competitors to imitate– It can be leveraged widely to many
products and markets.
Step 1 of 4 Steps to TMS
• Develop assessment tools and scales– Develop competency definitions and
measurement scales.– Establish a performance appraisal
definition and measurement scale.– Establish a “talent potential forecast”
definition and measurement scale.– Apply the measurement scales to each
job
Core/Institutional Compentency
• Action Orientation• Communication• Creativity/Innovation• Critical Judgement• Customer Orientation• Interpersonal Skill• Leadership• Teamwork• Technical/Functional Expertise
Measurement Scale for a Competency
1 2 3 4 5 6
Clearly and appropriately expresses his desires/needs
Understands the importance of and clearly demonstrates good oral, listening and writing skills
Adapts communications to audience requirements to optimize understanding
Actively presents information to all levels and leads others to do the same
Promotes open expression of ideas and without retribution
Is recognised as one who effectively clarifies and communicates key/strategic information
Sample Competency GridCompetency EVP VP&CFO VP HR Dir R& D Opera
ManagerSalesman
Clerk
Action Orientation
6 5 5 5 4 3 1
Communications
6 6 6 5 4 3 1
Creativity 6 6 5 6 4 3 1
Critical judgement
6 6 6 5 4 2 1
Customer Orientation
6 5 5 5 4 2 1
Interpersonal Skill
6 5 6 5 4 3 1
Leadership 6 6 5 5 4 3 1
Teamwork 6 6 6 5 4 2 1
Technical Expertise
6 6 6 5 4 3 1
Performance & Potential Measurement Scale
Performance• 5 GEE• 4 EE• 3 ME• 2 BE• 1 GBE
Potential Forecast• 5 High potential• 4 promotable• 3 lateral• 2 Marginal• 1 None
Step 2 of 4 Steps to TMS• Develop Training and Development
Solutions that support your Organisation’s core competencies– Create a Coaching guide– Assemble a directory of best T & D
programmes organised by competency– Create a directory of top books
associated with each compentency
Some training programmes– On the job coaching/mentoring– Staff meeting on current problems– Job Rotation– Emergency fill-in Assignments– Special one person projects– Task force assignment– E-learning (company educational courses)– Courses outside Company– Guided Reading– Teaching Educational courses– Assistance from Counsellor– Extra curricular activity
Step 3 of 4 Steps to TMS
• Evaluate each employee using the Assessment Tools
Step 4 of 4 Steps to TMS
• Prepare action Reports– Create a “Bench Strength” summary– Create individual talent competency
development forms
Bench strength Summary report
Position PotentialPerformance
Next Position
Status Replacement
Status
CharlesEXE VP
P EE President & CEO
Now John. Linda
12 to 24 months
MikeEXE VP
HP GEE President & CEOVP & CFO
12 to 24 months Now
John, Linda
12 to 24 months
RogerVP & CFO
LR ME Blocking MikeSurplus
Now
MartinaVP R & D
NP GBE Void
Developing Talent through Competencies
Session 9Merlin Mythili
Competency models: History
• Competency models concern making transparent the skills an Organisation needs to be successful.
• Until 1970s most organisations thought that technical skills and intelligences mattered most for success.
• McClelland “Toward a theory of motive acquisition” “ Testing for Competence rather than for Intelligence”
• These characteristics can be measured and people can be trained.
• Skills such as ability to network, sense others’ feelings were important that best school for individual success.
Daniel Goleman’s Emotional Intelligence
• Self Awareness– Emotional Self-awareness– Accurate Self-assessment– Self-confidence
• Self Management– Emotional Self-control– Transparency– Adaptability– Achievement– Initiative– Optimism
• Social Awareness– Empathy– Organisational awareness– Service Orientation
• Relationship Management– Developing Others– Inspirational Leadership– Influence– Change Catalyst– Conflict Management– Teamwork and collaboration
Transparency: maintaining integrity
• 4. Acts on Values
• 3. Publicly admits to mistakes
• 2. Brings up ethical concerns
• 1. Keeps Promises
Teamwork and Collaboration
• 4. Builds Bonds
• 3. Encourages others
• 2. Solicits Input
• 1. Cooperates
Building a model
• For a critical role– Difference between a superior and
average performers• What they are good at• How they do it differently• Why they do it differently?
• For job families• Of leadership• Behavioural Benchmarking
Competency: Decisiveness
• 1. limited:– Ability to good judgement where there are clear answers– Frequently seeks guidance from others in adversity– Requires guidance in understanding when to take decisions independently
• 2. Basic:– Ability to good judgement where there are clear answers– Sometimes seeks guidance from others in adversity– Understands when to take decisions independently
• 3. Intermediate:– Frequently exercises sound judgement where there are unclear answers– Seeks guidance from others in case of unusually difficult decisions– Makes decisions in a timely manner
• 4. Advanced:– Exercises sound judgement where there are unclear answers– Demonstrates the ability to make firm decisions without guidance– Quickly makes decisions that are appropriate
• 5. Expert:– Exercises sound judgement in extremely difficult situations– Leads others by setting guidelines on how to weigh factors and make
decisions in adversity– Consistently takes appropriate decisions in keeping the best inserts of the
organisation
Description: The ability to make firm and resolute decisions as the situation demands, especially in the face of adversity or in cases where there is no clear solution
Competency models underpin HR systems
Talent Management through Performance
managementMerlin Mythili SSession 11 & 12
Nature of Performance Management
• Goal setting• Feedback• Reviewing performance in relation to
agreed objectives• Performance Management System
has two parts to it:– Performance Appraisal– Performance Review
Law of Effect
• Behaviour That leads to reward tends to be repeated.
• What gets measured gets done. If you want to change how an organisation behaves, change the measurement system.
Choice of Appraisal System
• Trait based• Behaviour based• Knowledge/Skill based• Results-based
Choice of AppraiserRater Strengths Weaknesses
Employee’s Immediate Supervisor
Personal bias Might not have the opportunity to observe the appraisee at work
Peers Excellent opportunity to observe Good knowledge of job requirements
Low rating may create resentmentPossibility of collusionMay weaken group trust
Subordinates Excellent opportunity to observe performanceGood knowledge of job requirements
May distort ratings to curry favour – or to get evenMay be afraid to be negative when it is deservedMay weaken the supervisory relationship
Clients/Customers/Suppliers May observe the most critical aspects of performance
May not see some important aspectsMay distort the proper business relationshipPossibility of collusion
Outside Experts May possess excellent appraisal SkillsHigh degree of objectivity
Limited opportunity to observe performanceMay not understand all aspects of the jobCan be expensive
Criteria for measures
• Relevant• Specific• Obtainable• Practical• Reliable• Timely
Performance Management Process
Plan
Monitor
ActReview
Criticisms
• Appraisal as we know it has outlived its usefulness. It is time to get rid of it (Hartle 1997).
• A great deal depends on the extent to which you have a good relationship with your boss…if you get off badly with your first two managers, you may just as well forget it (Barlow 1989).
• Muddle and confusion still surrounds the theory and practice of appraisal (Randell 1994).
• Institutionally elaborated systems of management appraisal and development are significant rhetorics in the apparatus of bureaucratic control (Barlow 1989).
Criticisms contd...
• Process viewed as burdensome and transactional in nature, a necessary evil to arrive at performance rating and pay increase.
• Key elements of PM set in vacuum, with no link to key business processes.
• Perceived low return on investment, seen as a cost rather than an investment.
Causes for Bias and Error in appraisal process
• Halo or horns effect• ‘Similar to me’ effect• Central Tendency, Leniency, Strictness• Primacy and Recency of Events• Contrast effect• Escalation of Commitment
Purpose of PM Defined
• Drive results• Building capability• Carving up consequences
TM strategies
• Develop different purposes and approaches for different employee groups.
• Integrate the enterprise with the individual.
• Create a culture of conversation and performance information.
• Invest more in process execution than program design.
Features of Performance Management
• Objective setting and review• Annual Appraisal• Personal Development Plans• Self- Appraisal• Performance-related Pay• Coaching/Mentoring• Career management• Competence assessment• Twice-yearly appraisal(180-degree)• Subordinate feedback• Continuous assessment• 360-degree feedback• Peer Appraisal• Balanced Score-card
360 Degree Feedback
• Systematically collecting and analysing information about someone's performance from the person’s manager,
• direct reports, • colleagues, • and sometimes, • customers and suppliers
Performance Management in its most developed form
• Involves all members as partners• Is performance in its broadest sense (inputs, outputs,
processes)• Agreed objectives• Team performance• Continuous process• Review is a joint affair• Focus on developing performance, skills, competence,
by providing feedback, recognition and opportunities to develop competencies.
• Self managed learning• Basis for PRP• Recognizes the need for training
Corporate Mission and Strategic Goals
Business Plans
Role Definition
Performance Agreement
Competence Requirements Performanc
e StandardsPersonal Development Plan
Action-Work Development and Support
Continuous Monitoring and feedback
Formal review, feedback and joint assessment
Performance-rating
Performance-related pay
Competence Evidence Performanc
e Measures
Talent management Strategies: Recruitment
and SelectionSession 13
Merlin Mythili.S
Finding and Hiring Fast-Track Talent
• Retaining In-house Superkeepers.
– Cost of their replacement is staggering.
• Why do they leave
– No longer feels good
– They won’t miss me
– No support
– Lack of opportunity for advancement
– Inadequate compensation
Five strategies for Retention of Talent
• Conducive Environmental factors– Clarify mission and value statement– Communicate positive feelings– Stay focused on customer– Be fair and honest– Promote integrity– Do not tolerate sub-par performance– Insist on workplace safety– Reduce meetings– Make work fun
• Relationship with employees• Support to Excel (resources, moral and mental)• Growth Options (learning culture)• Compensation
How to recruit Superkeepers from Competitors
• Identifying Superkeepers of other/competitor Organisations.– Networking– External recruiters– Synergistic organisations
• Use your own superkeepers to recruit them.• Personal Touch and an appealing job content.• Compensation package
– Stock options– Employment contracts– Change of control positions– Pension plans– Health care and flexi benefits
• Ensure Diversity• Build Bench strength of Superkeepers
– Communicate clear and exciting career path opportunities– Career development
Recruitment methods
• Employee Referrals– Reputation of the current employee– Realistic information to make informed
decisions– Current employees would help the new
hire
• Organisational websites• Social networks• College recruiting
What motivates/drives talented people?
• Money• Promotion• Recognition• Praise• Feedback• Not to be ignored• Not to be restricted• Ambiguity, paradox and uncertainty
Seven Intelligences
• Linguistic• Logical – Mathematical• Musical• Spatial• Kinaesthetic• Interpersonal• Intrapersonal
Making their contribution worthy
• Willingness to attend• Willingness to contribute• Willingness to work with others• Willingness to lead others• Willingness to make a discretionary
contribution
• Recognise that one size does not fit all– Different personal development needs– Different hopes and aspirations– Motivate people by tapping into their values and
passions– Work must be challenging and rewarding,
positive feedback– Delegate real authority to people , giving them
power to take decisions and the required support and information to do so
Coaching/Mentoring, Succession Planning and
TMMerlin Mythili SSession 14, 15
Coaching
• Challenge is to integrate a range of meaningful experiences in a systematic way that will appropriately build character and skill.
• Developmental efforts – Planning– Location– Timing– Context– Cost
Developing Star Talent• Structured Orientation to the Organisation and Role• Coaching/mentoring (sounding board, cheer leader for the young
star)– Peer Coaching– Group Coaching
• Issue Development Meetings• Job Rotation• Interim and Emergency Assignments
– How one’ own action caused mistake– Willingness to own and discuss openly– Understanding of how organisation reacts to mistakes
• Task Force assignments• Internal Education and Training• Executive programmes and External coursework• Guided Reading• Teaching as Learning• Extra curricular activity• E-Learning
Succession Planning• It is doing all you can to ensure you have the right people in
the right jobs at the right time.• Buy:
– Keep pace with changing market demands.– Acquire specialized skills.– Bring in new ideas and fresh perspectives.– Expensive.– The talent you buy is unproven in your organization.
• Build:– Develop people to your ‘‘spec’’.– Save money – lots of it!– Enhance career mobility & engagement within existing
workforce.– You know what you’re getting into.– Less opportunity for injecting new knowledge/energy.
Tips to Succession Planning• Flex with the future• The 3Cs of fit; competence, connection
and culture• The magic is in the mix of experience,
coaching and formal learning• Involve the talent in the planning
– interesting work;– meaningful work; and– work/life balance.
• Cast a wider net
Employee EngagementIntroduction
Merlin Mythili SSession 16
Definition
• Harnessing the Organisational members’ selves to their work roles.
• Engagement is the level of commitment and involvement an employee has towards their Organisation and values.
• Passion and energy.• Willingness and ability of employees to
give sustained discretionary effort to help their Organisation succeed.
• Is more a psychological contract.• Is how positively the employee
– Thinks about the organisation– Feels about the organisation– Is proactive in achieving Organisational goals
for customers, colleagues and other stakeholders
• Indifference• Cynicism and unhelpfulness• Positive and proactive approach• Not engaged• Actively disengaged are cave
dwellers• Actively engaged are builders
Benefits of employee engagement
• Will stay• Will perform better• Are more motivated• Significant link between employee engagement and
profitability• Emotional connect• Passion, commitment and alignment with company values• Increased trust in the Organisation• High energy working environment• Boost business growth• Employees effective brand ambassadors for the company
Factors leading to Employee Engagement
Feeling valued and involved
Career Development – opportunity for personal
development
Career Development – Effective Management of
talentLeadership- Clarity of Company valuesLeadership- Respectful
treatment of ethical behaviour
Leadership- company’s standards of ethical behaviour
Empowerment
Image
Equal opportunities & fair treatmentPerformance Appraisal
Pay & Benefits
Health & safety
Job satisfaction
Communication
Family Friendliness
Co-operation
Role of Culture in Employee Engagement
Merlin Mythili SSession 17 & 18
Organisational Culture
• Culture ‘The complex mixture of assumptions, behaviours, stories, myths, metaphors (symbols) and other ideas that fit together to define what it means to be a member of a particular society’
Stoner and Freeman, Management (1995 p181)
• Corporate Culture ’Official way we do things here’ (Mullins, 1999 p803)
• Organisational Culture ‘Way things are actually done’’ (Mullins, 1999 )
Organisational Culture
• The collection of relatively uniform and enduring values, beliefs, customs, traditions and practices that are shared by an Organisation’s members, learned by new recruits, and transmitted from one generation of employees to the next.
Hofstede’s cultural dimensions
• Power distance, • uncertainty avoidance,• individualism vs. collectivism, • masculinity vs. femininity, • Long term vs. short term orientation
Schien –model of 3 Levels of Culture
BASIC UNDERLYING ASSUMPTIONS
Visible organisational structures and processes
(hard to decipher)
Strategies, goals, philosophies, act without even thinking(espoused
justifications)-
Unconscious , taken-for granted beliefs, perceptions
thoughts and feelings (ultimate source of power
and action)
BASIC UNDERLYING ASSUMPTIONS
Visible organisational structures and processes
(hard to decipher)
Strategies, goals, philosophies, act without even thinking(espoused
justifications)-
Unconscious , taken-for granted beliefs, perceptions
thoughts and feelings (ultimate source of power
and action)
SURFACE MANIFESTATIONS
ESPOUSED VALUES
Factors that affect the Organisational Culture
• History and ownership• Size of organisation• Technology• Goals and objectives
FORMAL (OVERT) ASPECTSGoals
TechnologyStructure
Policies and ProceduresFinancial Resources
INFORMAL (COVERT ASPECTS)
Perceptions, Attitudes, Feelings (Anger, fear, liking, disappear) on formal/informal system.
Values, Informal interactions, group norms.
No problem-
we’ve avoided conflict
Organisational Culture-Formal or Informal? Herman’s (1984) Iceberg Metaphor
Drivers of Engagement
Merlin Mythili S Session 19
Components of High Engagement
• Vigour – Physical • Absorption‐ Intellectual • Dedication – Emotional Engagement is a combination of heart and mind and is a result of:
• Sense of identity, • Feeling valued • Emotional and intellectual connect with colleagues etc
• At the high‐end – Is the degree to which they are aligned, confident and committed to achieving discretionary effort to their work
• At the low end – It manifests itself in low levels of responsiveness and energy, and high absenteesism
Factors leading to Employee Engagement
Feeling valued and involved
Career Development – opportunity for personal development
Career Development – Effective Management of talent
Leadership‐ Clarity of Company values
Leadership‐ Respectful treatment of ethical behaviour
Leadership‐ company’s standards of ethical behaviour Empowerment
Image
Equal opportunities & fair treatment Performance Appraisal
Pay & Benefits
Health & safety
Job satisfaction Communication
Family Friendliness
Co‐operation
ENGAGEMENT
What do you do with the disengaged?
• Some people stick around adding no value • Others wreak havoc • Highly engaged people respond to
– Leadership and management effectiveness – Organisational values – Opportunities to grow and make meaningful contributions
• Complacent employees respond to – Supervisor effectiveness – Organisational focus on customer needs – Opportunities for long term employment
Drivers of Engagement – Six Cs
Career Where am I Going?
Community Is it socially rewarding?
Congruence Do Values Align?
Compensation Am I fairly rewarded?
Content Do I enjoy what I do?
Coping How am I supported?
• Content – Spicing up jobs and work –sensitivity to employees’ concerns
• Coping – energy n engagement are limited and renewable resources – exertion and recovery need to be balanced i issues at the physical, intellectual and emotional levels need to be tackled
• Compensation‐ valuing and rewarding people – ‘ underappreciated and unaccountable’ ‐ effective feedback
• Community – putting the fun back into work • Congruence – achieving alignment from top to bottom –
belief that intention will translate to action • Career – providing opportunities for achievement and
balance • Line managers very important for employee engagement
EVP of Google • Top ten reasons to work at Google
– Lend a helping hand – Life is beautiful – Appreciation is the best motivation – Work and play are not mutually exclusive – We love our employees – Innovation is our bloodline – Good company everywhere you look – Uniting the world, one user at a time – Boldly go where no one has gone before – There is such a thing as Free lunch – healthy, yummy, and made with love
Leading Employee Engagement
Session 21
The Ten C’s • Connect
– Not only profit sharing and work‐life balance are important, employees’ relationship with their managers is equally important. Leaders should walk the talk
• Career – Challenge employees and instill confidence in them that they can be achieved
– Provide with knowledge and tools • Clarity
– Communicate a clear vision
• Convey – Clarify expectations and provide feedback – Keep track of small improvements, create small wins and share his/her thoughts with the employees
• Congratulate – Exceptional leaders give recognition and they do a lot, they coach and convey
• Contribute – People want to know that their inputs matter – Good leaders help employees see and feel how they are contributing to the Organisation’s success
• Control – Employees value control over the flow and pace of work
– Leaders should create opportunities for employees to exercise control
– Leaders should consult with their employees – Flexibility – Involve employees in decision making – Allow smart people to drive initiative
• Collaborate – Great leaders are team builders – They create an environment that fosters trust and collaboration
– Need to be cared by colleagues get strengthened • Credibility
– Leaders to strive to maintain company’s reputation and demonstrate high ethical standards
– Employees want to be proud of their Organisations • Confidence
– Great leaders are individual exemplars of high ethical and performance standards
Engagement levels
Positive Attitude
Yes Men
Negative Attitude
Victims
Inaction Action
Stars
Cynics
Stars
• Are fully engaged • Give discretionary effort to serve the customer • See the silver lining hidden beneath dark clouds • View change as a challenge and opportunity • Treat life as a continuous learning experience • Expand willingly their personal comfort zone • Like to be challenged and stretched • Realists, not afraid of short tem mistakes and setbacks
• Optimistic about long term future
Cynics • Keen to disassociate and actively tell others why change won’t
work • Always see the negative • Criticize ideas and solutions • Express frustration • Argue against change • Focus on past • Oblivious to the consequences of their negativity • Bring other people round to their perspective • Angry at being ignored, not listened to, excluded, constrained • Overtly confident in their own ability • Rebellious • Unsympathetic to stress caused to others
Yes Men
• Avoid taking risks • Keep a low profile • Trying to tide things without drawing attention to themselves
• Acknowledging good ideas but being reluctant to change themselves
• Coasters, prepared to drift along
Victims
• Have negative attitude but lack drive • Avoid confronting issues • Retreating into ‘safety’ – burying their heads in the sand
• Avoid risks, doing the minimum • Avoid thinking about what might happen
Employee Engagement
• Is the primary enabler of successful execution of business strategy
• Is not a short term initiative • Must be driven from the top • Hire naturally engaged people • Is all about fit • No one impacts EE more than the immediate leader • Measuring EE and demonstrating its business impact is crucial
• It means reaching out to the heart
Engagement Drivers •Right employees in the right job •Exceptional Leadership •Organisational Systems and Drivers
Work Environment •Aligned effort and Strategy •Empowerment •Teamwork and collaboration •Growth and Development •Support and Recognition Engaged Employees
•Greater Loyalty •Enhanced Effort
Organisational Success •Satisfied and Loyal Customers •Increased Retention •Higher Profits and Profitability •Revenue Growth
Engagement value Preposition
Motivation, Reward and Engagement
Aims of this session
• Process and types of motivation • Main motivational theories • Relationship between money and motivation(pay & performance) and engagement
• Factors that affect satisfaction with pay • Practical implications of motivational theory • Need for fairness, equity and consistency in reward systems
What is motivation?
• Motive – reason to do something. • Motivation is about factors that influence people’s behaviour(goal directed behaviour).
• 3 components: – Direction – Effort – Persistence
2 types of motivation • Intrinsic
– Responsibility – Freedom to act – Scope to use and develop skills and abilities – Interesting and challenging work – Opportunities for advancement and growth
• Extrinsic – What is done to or for people to motivate them – Rewards such as increased pay, Praise & Promotion – Punishments such as disciplinary action, withholding pay or criticism
Content theories of motivation
• Content theories explain the behaviour of people in terms of motives that drive them.
• Answers the what of motivation.
– Maslow’s hierarchy of needs – Alderfer’s ERG theory – McClelland need theory (PAA) – Herzberg’s two factor model(S,DS)
Process theories of motivation
• process theories explain how people make choices with respect to desired goals and the means through which they pursue them. – Expectancy theory – Goal theory – Equity Theory
Vroom’s Expectancy theoy
• This theory holds that individual motivation depends on the valence of outcomes, their expectancy that effort will lead to performance and the instrumentality of performance in producing valued outcomes.
• F= V x I x E
Perceived value of rewards
Expectation that performance will lead to reward
Effort Job Performance
Individual abilities & traits
Role perceptions
Intrinsic rewards
Extrinsic rewards
Job satisfaction
Perceived equity of rewards
Porter and Lawler Model
Stacy Adams Equity theory
• This process theory argues that perception of unfairness leads to tension, which then motivates to resolve the unfairness in different ways.
My rewards Your rewards = My efforts Your efforts
Goal theory
• Motivation and performance are higher when individuals are set specific goals
• Difficult but accepted goals • Feedback on performance
Money and Motivation
• Money is a goal that people strive for; although to different degrees
• acts as an instrument which provides valued outcomes • Can be a symbol that indicates the recipient’s value to the
Organisation • Acts as a general reinforcer of desired behaviour • Satisfies the basic needs of survival and security and self‐
esteem • Lack of it causes dissatisfaction; but does not result in lasting
satisfaction • The euphoria can rapidly die away
Factors that affect satisfaction with pay
• Satisfactions with pay based on external market comparisons and internal comparisons
• Other aspects of organisational life • Satisfaction short‐lived • Dependant on the degree to which one feels their rate of pay has been determined fairly
• Commensurate with the self perception about ability, value and contribution
Practical implications of motivational theories
• Extrinsic & Intrinsic motivating factors • Significance of social and psychological needs as well as economic needs
• Influence of goals and feedback mechanism • Importance of expectations • Fairness, equity and consistency in reward systems and treatment of employees
