Module 3

TALENT MANAGEMENT: INCLUDING PERFORMANCE

MANAGEMENT AND HUMAN RESOURCE OUTSOURCING

Learning Objectives:
• Develop an understanding of the definition and concepts of Talent Management.
• To know how organizations attract, engage, develop, and retain talents across
cultural settings.
• To discuss how Talent Management Process Model works.
• To provide understanding on the Strategies can be used in Talent Management.
• To discuss the Performance Management Model.
• To provide knowledge about Human Resource Outsourcing.

Introduction

Talent management practices have evolved over the years to cater to people
specific trends much like all other aspects of work and have changed in fast strides over
the last few years. Strategic talent management is a necessity in today’s hyper-change
environment. Global trends in talent and human capital management have led to a
renaissance of the work-worker-workplace equation.

What is Talent Management?

Talent management is a constant process that involves attracting and retaining

high-quality employees, developing their skills, and continuously motivating them to
improve their performance.

Talent Management is the systematic process of identifying the vacant position,

hiring the suitable person, developing the skills, and expertise of the person to match
the position and retaining him to achieve long-term business.
 Talent management is defined as the methodically organized, strategic process
of getting the right talent onboard and helping them grow to their optimal capabilities
keeping organizational objectives in mind.

Talent Management in HR

Talent management naturally encompasses many of the responsibilities of HR.

All the same, it is not enough to expect that just because you have an HR department,
you are managing talent. You need to have a talent management strategy in place
designed just for your company to gain optimal results.

What Is the Talent Management Process?

The talent management process is how you organize the management of your
human resources. It is how you choose employees, how you hire them, and how (or if)
you train them, motivate them, fire them, and so on.

Talent Management Process Model

 While often cyclical rather than a generic linear progression of events, the
process of talent management could be considered, to begin with acknowledging the
need for talent and leads to filling that gap and ultimately growing and optimizing the
skills, traits, and expertise of employees, new and old.

The following image depicts the key points of the talent management process:

1. Planning: Like in any process with a set outcome, planning is the first step in the
process of talent management. It involves the following identifying where the gaps lie –
the human capital requirement, formulating job descriptions for the necessary key roles
to help guide sourcing and selection and developing a workforce plan for recruitment
initiatives.

2. Attracting: Based on the plan, the natural next step is to decide whether the
talent requirements should be filled in from within the organization or from external
sources. Either way, the process would involve attracting a healthy flow of applicants.
The usual external sources include job portals, social network, and referrals. The talent
pools that need to be tapped into must be identified in advance to keep the process as
smooth and efficient as possible. This is where the kind of employer brand that the
organization has built for itself, comes into play because that decides the quality of
applications that come in.

3. Selecting: This involves using a string of tests and checks to find the right match
for the job – the ideal person-organization fit. Written tests, interviews, group
discussions and psychometric testing along with an in-depth analysis of all available
information on the candidate on public access platforms help in gauging an all-rounded
picture of the person. Today there are software and AI-enabled solutions that recruiters
can use to skim through a vast population of CVs to focus on the most suitable options
and to find the ideal match.

4. Developing: Quite a few organizations today operate on the idea of hiring for
attitude and training for skills. This makes sense because while you would want a
predisposition to certain skill sets, it is the person that you are hiring and not the CV.
Developing employees to help them grow with the organization and training them for
the expertise needed to contribute to business success also builds loyalty and improves
employee engagement. This begins with an effective onboarding program to help the
employee settle into the new role, followed by providing ample opportunities for
enhancing the skills, aptitude and proficiency while also enabling growth through
counseling, coaching, mentoring and job-rotation schemes.

5. Retaining: For any organization to be truly successful, sustainably, talent needs

to be retained effectively. Most organizations try to retain their best talent through
promotions and increments, offering opportunities for growth, encouraging involvement
in special projects and decision-making, training for more evolved roles and rewards
and recognition programs.

6. Transitioning: Effective talent management focuses on a collective

transformation and evolution of the organization through the growth of individual
employees. This involves making each employee feel that they are a part of a bigger
whole. Providing retirement benefits, conducting exit interviews and effective
succession planning might seem like unrelated career points but they are all transition
tools that enable the shared journey.

The 7 Steps of a Great Talent Management Process (Talent Management Strategy)

The following steps cover what you need to do to develop a continuous talent
management process for your organization.

This can also serve as a strategy to find the most talented people available and
then help them stay in your company.

1. Specify What Skills You Need

What is the first step in the talent management process?

Before you can go any further, you must determine what kinds of hires you need
and what requirements they should fill.

 Consider if it would be possible to teach existing employees to avoid the need to

hire anyone new.
2. Attract the Right People

There are several stages to attracting talent:

 Create targeted advertisements and post them on top job sites — HR branding is
helpful here.
 Plan interviews and other means to identify the best person for the job. In
addition to regular questions, consider using personality assessments,
references, and tests that require candidates to perform in real-life situations.
 Hire your top choices.

3. Onboard and Organize Work

 Help new employees feel orientated by being ready for them as soon as they
enter the company.
 Know what tasks you will set them, have training sessions scheduled, and assign
current employees to support new workers settle in.

4. Organize Learning and Development

 Remember, it is often easier to develop the skills of your current employees than
to hire new talent.
 Plus, even if you do hire top talent, they will likely want to learn something in their
new role.
 Plan ways for your workers to learn and grow, such as through conferences,
courses, and a learning management system to create a learning environment.

5. Hold Performance Appraisals

 Checking employee performance regularly allows you to see if workers could

manage additional responsibilities.
 This could save you hiring new talent and it may help an employee prepare for a
promotion.
6. Strategize to Retain Your Best Talent

 Keep employees satisfied at work through promotions, benefits, motivating

tactics, ensuring job satisfaction, and improving company culture.

7. Plan for Successions

 Nurture employees for successions, such as for when a senior member of staff
retires. Enable employees to perform to their best through continuous learning
opportunities, including knowledge management.
 If an employee decides to leave the company, conduct an exit interview to find
out what went wrong — this will help you prevent the same issue occurring again
in the future.

Talent Management Strategy

A talent management strategy is based on the talent management model. It
should match your organization’s goals and clearly define what type of talent you need.
You organize the talent management process based on the talent management
strategy.

There are few different types of strategies you can choose from.

Strategy #1: Hire Only Top Employees. The advantages of this strategy are obvious:
• You immediately receive top talent.
• The employees will perform well and probably reach high performance faster.
• You can grow your company faster.
• You are more prepared for challenges and risks.

However, there are some disadvantages:

• It’s expensive and will cost you even more if you end up needing to hire
someone else.
• It could be more difficult to retain top talent.
• The hiring process may take longer, as you’ll probably want to select from a
wider pool of candidates.
• It can be challenging to manage team of top talent.
 • Having too many top performers on a team can lead to competition and result in
underperformance.

Strategy #2: Hire Promising Specialists and Develop Them. This second option has
a couple advantages:
• You can find talent faster. This may be necessary if you are in urgent need for
talent and have insufficient time to search for top employees.
• You will likely save money on salaries.
• The employee has the potential to become a skilled and loyal professional.
• You can hire two, or even three, promising specialists for the same amount as for
one top performer.

The main disadvantages are:

• Your company may grow slower.
• Compared to top talent, these hires lack of knowledge. This can lead to lower
performance.
• You may need to hire another specialist if the employee cannot handle the role.
• It requires a larger investment in development.
• The strategy may fail entirely, and you’ll need to revert to option 1.

Strategy #3: Combine Strategies 1 and 2. Finally, the pros of combining the two
above are:
• It gives you the best of both worlds.
• It also allows you to take advantage of a combination of new hires and existing
talent.
• Having top talent and potentially good specialists (e.g. young employees) will
help the specialists grow faster and motivate them.
• It leads to knowledge transfer — top talent can teach other employees. All the
same, there is one con:
• If you have specific requirements (such as you are in urgent need of growth or if
Conclusion

You need to stop assuming that you already have talent management covered
just because you have HR at your company. Talent management rarely happens
naturally.

You need a strategy that is tailored to your business alone. Only like this will you
obtain and retain top talent and gain a competitive advantage over other businesses in
your industry.

PERFORMANCE MANAGEMENT
What is Performance Management Process?
The performance management process is intended to create an ongoing
dialogue between the supervisor and employee. The Division of Human Resources and
Organizational Effectiveness recognizes the PCER (Plan, Coach, Evaluate, and
Reward) model for facilitating the performance management process. Through this
process, best practices are utilized to create a performance plan, coach for successful
completion of the plan, and complete the annual performance evaluation.

Performance Management Model

The performance management cycle is a model that allows management and
employees to better achieve organizational goals through a structured process of
employee development.
• Plan: Performance Management begins when the supervisor reviews the
employee's position restriction, communicates competencies, creates goals, and
discusses them with the employee. This helps establish mutual understanding of
the performance and behavioral expectations.

• Coach: The supervisor provides coaching and feedback throughout the year to
help their employees successfully reach their goals. The goals and any other
documentation created during the Plan phase become a working document to be
referenced, and revised, if necessary, throughout the performance review period.
The supervisor and employee can each create notes about employee
performance at any time which are tracked outside the Workday system.

• Evaluate: During the evaluation process, the supervisor may rely on multiple
resources, such as the employee self-evaluation, performance notes created
during the year, accolades, and customer feedback to assess the employee's
performance. The supervisor meets with the employee to discuss the
performance evaluation, explain the ratings, and provide feedback about
strengths and areas for improvement. The supervisor then completes the
evaluation in Workday and sends it to the employee to review and acknowledge
before formally closing the review in Workday.
 • Reward: The supervisor recognizes and rewards performance at year-end and
during the year as merited.

HUMAN RESOURCE OUTSOURCING

What is Human Resource Outsourcing?

HR outsourcing is a contractual agreement between an employer and an external

third party provider whereby the employer transfers the management of, and
responsibility for, certain HR functions to the external provider. Many types of HR
outsourcing options are available to employers.

Outsourcing is simply obtaining work previously done by employees inside the

company from sources outside the company. If someone has specialized in an activity
which is not strategically critical to our business – and is able to do that cost effectively,
it is better to get it from outside.

Human Resource Outsourcing is a process in which a company utilizes the

services of the third party to take care of its HR functions.

Outsourcing is a force behind the virtual organization movement. Outsourcing is

simply obtaining work previously done by employees inside the company from sources
outside the company. If someone has specialized in an activity which is not strategically
critical to our business – and is able to do that cost effectively, it is better to get it from
outside. The organization gets benefitted in the form of excellent quality, reliable supply,
and rock bottom price. It can also focus exclusively on doing what it is good at – thereby
enhancing its own competitive advantage.

People are the most important asset of an organization. Leading companies

around the world are taking more strategic approach to managing their human
resources. They are outsourcing day to day human resource functions so as to focus on
strategic HR issues that impact corporate performance and shareholder value.
HR Outsourcing – Need

Many factors will contribute to any organization’s decision to outsource its HR

functions. The following are some of the needs of HR Outsourcing:

i. Enabling businesses to focus on core operations

ii. Delivering cost savings – whether direct or indirect
iii. Helping to create a stable, cost-effective operating platform
iv. Transferring focus from internal processes to achievement of business goals
v. Realizing investment in HR transformation and IT systems
vi. Ensuring compliance with legal, regulatory and best practice requirements, and
vii. Transferring risk and liability for people issues.

HR Outsourcing – 3 Broad Types: Application Service Provider (ASP), Business

Process Outsourcing (BPO) and Total HR Outsourcing

HR – outsourcing can be broadly divided into three types:

1. Application Service Provider (ASP)

2. Business Process Outsourcing (BPO)
3. Total HR Outsourcing

Type # 1. Application Service Provider:

A host of companies specialize in providing hardware and software applications

to support large organizations, including application vendors like PeopleSoft, Oracle,
etc. which have developed application packages (PeopleSoft HRMS, Oracle HRMS), for
supporting human resource activities in an organization.

They install, customize and provide support for running these applications. The
major disadvantage with ASP is the costs associated with application software.
Secondly, the successful implementation of the application software is doubtful.
Type # 2. Business Process Outsourcing:

The major difference between BPO and ASP is that in BPO, the client is in direct
contact with the employees through call centers or support centers. MNCs generally opt
for BPO as they operate in many countries and employ a large number of people. While
certain firms wish to retain the power to control human resources, others hand over the
power to the service providers.

Type # 3. Total HR Outsourcing:

In this type of outsourcing, the entire HR function is run by the service provider.
There is no specific HR department in the organization. The client organization only has
senior HR professionals who are also HR- strategists. A host of non-strategic functions
and employee contact is done by the service provideCr.

Accordingly, the following processes can be adopted for outsourcing a few of the
HR services from outside:

1. Hiring Services:

Recruitment and selection are the human resource services through which
knowledge carriers from outside are brought into a company. External market gets its
supply of human resources or knowledge carriers mainly from three sources, viz., the
households, academic institutes, and industries. All those people who look for jobs are
available in different types of markets. Prospective employees search for jobs using
varieties of means and media.

As such there are varieties of markets where an employer can find its
employees. These potential employee markets differ not only in terms of number and
qualities of employees available but also in terms of willingness of a new hire to
continue the employment relations with the company for a good many years.

With varieties of people joining the labor markets at different stages of their
career, organizations find the task of reaching out to the right market for hiring a few
good quality employees who will stick with the company for some number of years a
very costly and risky affair. It requires good amount of investment to keep track of
changing employee profiles of different markets. Furthermore, an employer may use
such market specific knowledge assets only occasionally.

2. Developmental Services:

In the area of outsourcing of external developmental resources, companies buy

explicit market developed knowledge. Since there are many other organizations who
are experimenting with newer innovations in the area of management processes, an
organization can enhance the capability of its employees by giving them exposure to
those practices of other companies. Further, there are economy of scale in acquisition
and compilation of such information.

And, some organizations, e.g., academic institutes, professional manpower

training institutes specialize in such information acquisition, structuring, and
presentations to prospective learners.

However, if an organization straightaway uses the same external knowledge for

its internal employee development, then it will not get any competitive advantage over
the competitors. In order to gain competitive advantage out of an externally designed
and delivered explicit knowledge, an organization again should use a human learning
system to convert such explicit knowledge into internally useful tacit knowledge.

3. Performance Management:

Organizational performance evaluation involves measurement at three levels,

viz., at total organizational level, at group or at departmental level, and at individual
employee level. Performance information or data at total organization and at group or
department level are mostly explicit knowledge intensive and their measurements are
less controversial though there can be a few areas which are tacit and personalized
knowledge intensive.

As such a company can outsource evaluation of those parts of its organizational

and departmental performance that are explicit knowledge intensive keeping the
subjective and qualitative part of the assessments in-house.
 In the area of individual employee assessment, the scope of outsourcing is
extremely limited because much of these assessments are subjective and tacit
relational knowledge intensive. However, individual performance assessment uses tools
and techniques which are being continuously improved upon and are explicit knowledge
intensive.

These markets or industry specific knowledge, e.g., the format of performance

appraisal system or the weights given to different types of measurements, viz.,
economic results, observable behavior or personal traits, can be outsourced. An
organization can learn from the practices of other companies doing business in the
same industry. The benefit of such external sourcing of measurement format is that a
company can acquire the design of a successful company in the same industry without
spending much in its actual design.

4. Compensation and Benefit Management:

Compensation is an important part of the human resource services which

ensures supply of adequately skilled manpower to the company and to its various
positions. Unless the compensation for various positions are adequate to remunerate
the qualification and experience that is required for the job, it may fail to attract the right
people for those positions and it will be harder to retain such employees for long. Since
the main utility of a well-designed compensation is to attract and retain employees in
the organization, it is important that the compensation system and method are as per
the practices of its competitors. This means an external designer of a compensation
system can perform a better job than an internal expert. Since such external vendors
provide similar services in many other organizations, their design and practices reflect
the prevailing market practices well.

5. Reward and Incentive Management:

Rewards and incentives are used to encourage employees to go beyond their

call of duty. A good reward system not only attracts the right kind of employees into the
organization but also encourages them to work in such a way that organizational
capabilities are maintained. A reward that is well linked with the achievement of
objective outcome is a powerful motivating force for employees to work hard and show
the desired behavior.

However, for most managerial positions such objective outcome is available

mostly at the unit and group level. There are only a few positions for which an
employee’s actual contribution to organizational goals can be related directly with the
incumbent skill, competency, and motivation. This means an organization can
outsource reward management at group and unit levels but not at the individual level.

The advantage of such outsourced reward management is that a supplier can

bring in lot of expert knowledge from the market and provide a reward system that is
being used in the industry.

6. Specialized Consultancy Services:

Consultancy is a fast-growing service business in many countries including India.

There are several reasons why this business has been growing so fast. Firstly, many
big multifunctional, multi-product companies occasionally find a glaring mismatch
between manpower required and the manpower available both in terms of number and
quality in different departments. This happens because organizational processes have
inertia and are often hostages to their past successes.

Very few organizations can change their internal policies and fewer can change
their departmental manpower allocations in the same pace as that of the external
environment. The presence of different interests’ groups with their distinct powers and
pulls gives shape to any change in an organization’s policies.

Faced with the growing burden of operating cost and declining share of a
company’s products in the market, a management team often looks for an objective and
neutral assessment of internal functional departments. High inter-departmental rivalry
often makes it difficult for an internal expert to arrive at any valid assessment of these
internal functions.
 Secondly, survival and growth in a competitive environment requires fast learning
and adoption of good practices of others. Innovation is a risky and costly exercise. But a
company can reduce its risk and cost of adoption by learning from the experiences of
others. This has been making the benchmarking of organizational practices with
competitors quite a popular move.

There are specialized consultancy organizations which collect, process, and sell
such organizational process-oriented information. With growing importance of process
innovation and risk in such innovations, the market for consultancy services is certain to
expand very fast.

7. Management of Employment Relations for Low-Level Jobs:

Apart from outsourcing of selective parts of human resource management

services, another type of HR outsourcing is emerging as a new development where
Company A allows another Company B to manage its entire department or division.
Company B will bring its own employees in Company A premise and supervise them
while they are working there. The contract of Company A is only with the owner of
Company B. In any big manufacturing or service company, there are lots of jobs that
are required for its business but are not directly related to its main business. Let us take
a ship building company employing over 5000 employees. For providing tea, coffee,
and food, it needs a big canteen facility. This canteen has to engage as many as 50-60
employees to prepare and serve food and drinks to its various departments.
For running the company, these services are essential but their relations with its main
business are not direct and the effects of service failure from these departments on the
company market performance are not immediate. In the past, many of these services
were managed through internal departments and controlled through hierarchy. But the
problem of having such a remotely related activity as a part of a ship building activity is
that if a manager overseeing such activities may not gain any knowledge that can be
utilized in other departments of a ship builder that are directly related to ship making. As
a result, a manager who has worked for say ten years very efficiently in overseeing a
catering service in a ship building company will not find a befitting position in the
hierarchy. He/she will reach a career ceiling very quickly.
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