MBA 4th SEM

HR ANALYTICS

UNIT 3 NOTES

PERFORMANCE ANALYSIS:

PREDICTING EMPLOYEE PERFORMANCE:

Human capital forms the foundation of any organization, and employee

performance has a significant impact on the bottom line. In fact, research indicates
that a five per cent increase in employee engagement is linked to a three percent
growth in revenues in the subsequent year. Yet, most HR departments struggle in
the management of employee performance.

Predictive analytics can be applied to the workforce to identify traits/patterns that

account for bad or good performance on an individual and team basis. Since
analytics is an amalgamation of powerful mathematical algorithms, it also gives
objective insight into their work preferences and the factors that drive their
performance. An article published in The Times of India talks about a case study
on how analytics helped a manufacturing firm predict what was wrong with
employee performance. Using analytics, this company discovered that morale of
ten employees was down due to their issues with manager. The management
quickly stepped in to resolve the situation and take preventive measures before the
employee performance deteriorated further.

Recruiting

Gathering data about your recruiting sources is the first step to honing your
strategies in on what works. Once you have enough recruiting data, you will be
able to predict which sources your best candidates come from, and invest your
time, energy, and money into those sources that yield the best return.

Screening

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

Selection

Now that you have recruited from the best pools and screened out the least qualified
candidates based on predictive analytics, you must choose a specific candidate to
hire.

Use psychometric profiles to collect data and help with selection. When you have
enough data to become predictive, you will understand which types of people are
attracted, well-suited, and well-matched to your corporate culture and the roles
you’re looking to fill. You will find a certain type of person, with certain
characteristics, who thrives in your organization.

TRAINING REQUIREMENTS:

A Training Needs Analysis (TNA) is a process by which an organisation’s HRD

needs are identified and articulated. The process can identify:

• An organisation’s goals and its effectiveness in reaching these goals

• Discrepancies or gaps between an employee’s skills and the skills required

for effective current job performance

• Discrepancies or gaps between an employee’s skills and the skills needed to

perform the job successfully in the future

• The conditions under which the HRD activity will occur.

Ultimately, the TNA will identify needs which require addressing in some way. It
not only provides clear direction for identifying training needs, but also helps to
evaluate how effective previous training programmes have been. The two
outcomes are a training need and a non-training need.

A Training Need reveals a performance gap, and the gap can be filled with
training. It exists when the employee does not know how to do the job – it is a lack
of knowledge, skills, and attitudes.
A Non-Training Need reveals a gap, however this gap cannot be filled (or fixed)
with training. It might encompass workflow, recruitment, or job
design. Employees know how to do the job, but something else affects their
performance.

Types of Needs Analyses

Many needs assessments are available for use in different employment contexts.
Sources that can help you determine which needs analysis is appropriate for your
situation are described below

• Organizational Analysis. An analysis of the business needs or other

reasons the training is desired. An analysis of the organization’s strategies,
goals, and objectives. What is the organization overall trying to
accomplish? The important questions being answered by this analysis are
who decided that training should be conducted, why a training program is
seen as the recommended solution to a business problem, what the history
of the organization has been with regard to employee training and other
management interventions.

• Person Analysis. Analysis dealing with potential participants and

instructors involved in the process. The important questions being answered
by this analysis are who will receive the training and their level of existing
knowledge on the subject, what is their learning style, and who will conduct
the training. Do the employees have required skills? Are there changes to
policies, procedures, software, or equipment that require or necessitate
training?

• Work analysis / Task Analysis. Analysis of the tasks being performed. This
is an analysis of the job and the requirements for performing the work. Also
known as a task analysis or job analysis, this analysis seeks to specify the
main duties and skill level required. This helps ensure that the training which
is developed will include relevant links to the content of the job.

• Performance Analysis. Are the employees performing up to the established

standard? If performance is below expectations, can training help to improve
this performance? Is there a Performance Gap?
 • Content Analysis. Analysis of documents, laws, procedures used on the job.
This analysis answers questions about what knowledge or information is
used on this job. This information comes from manuals, documents, or
regulations. It is important that the content of the training does not conflict
or contradict job requirements. An experienced worker can assist (as a
subject matter expert) in determining the appropriate content.

• Training Suitability Analysis. Analysis of whether training is the desired

solution. Training is one of several solutions to employment problems.
However, it may not always be the best solution. It is important to determine
if training will be effective in its usage.

• Cost-Benefit Analysis. Analysis of the return on investment (ROI) of

training. Effective training results in a return of value to the organization that
is greater than the initial investment to produce or administer the training.

REQUISITES OF EFFECTIVE TRAINING:

Effective Training is a targeted educational process that equips individuals with

the knowledge, skills, and competencies necessary to perform their jobs
proficiently and contribute positively to the broader goals of an organization. It is
characterized by clear objectives, tailored content that meets the specific needs of
the participants, and engaging delivery methods that facilitate active learning.
Effective training should also be measurable, allowing organizations to assess its
impact through changes in employee performance and productivity. Crucially, it
should promote continuous development and be adaptable to evolving
organizational demands and technological advancements. Ultimately, effective
training not only enhances individual performance but also drives organizational
success and competitiveness in the marketplace.

Requisites of effective Training:

• Alignment with Organizational Goals

Training should be strategically aligned with the organization’s goals and

objectives. This alignment ensures that the training directly contributes to the
company’s broader strategic aims, such as improving productivity, enhancing
quality, fostering innovation, or expanding market reach.
 • Needs Assessment

A thorough needs assessment is essential to identify the specific skills and

knowledge gaps among employees. This assessment helps in designing training
programs that are relevant and focused, targeting areas where they are most needed,
thus maximizing the impact and relevance of the training.

• Well-Defined Objectives

Each training program should have clear, specific, and measurable objectives.
These objectives guide the design of the curriculum and help in evaluating the
success of the training. Trainees should understand what they are expected to learn
and how it applies to their jobs.

• Engaging and Practical Content

The training content must be engaging and practical, using real-world applications
to illustrate concepts and theories. This approach helps in retaining interest and
improving the applicability of learned skills in the workplace. Methods such as
hands-on activities, simulations, and role-playing can enhance engagement and
retention.

• Qualified Trainers

Effective training requires knowledgeable and skilled trainers who can

communicate ideas clearly and motivate participants. Trainers should not only be
experts in their subject matter but also skilled in instructional methods and adept
at managing diverse learning styles and dynamics within the training group.

• Evaluation and Feedback

Post-training evaluation is crucial to determine the effectiveness of the training

program. This should include immediate feedback to assess trainee satisfaction and
learning outcomes, as well as longer-term evaluations that measure the application
of skills on the job. Continuous feedback allows for ongoing improvements to
training strategies and content, ensuring they remain relevant and impactful.

• Adaptability and Flexibility

Effective training programs are adaptable to changes within the organization and
the external environment. They should be flexible enough to accommodate
differing learner needs, preferences, and varying paces of learning. Adapting
content and delivery methods to suit remote learning environments or to integrate
emerging technologies are also crucial aspects of maintaining training relevance
and effectiveness.

• Integration with Technology

Leveraging technology can significantly enhance the effectiveness of training.

Tools such as Learning Management Systems (LMS), virtual reality (VR), and
artificial intelligence (AI) can provide immersive and interactive learning
experiences, facilitate distance learning, and personalize the learning experience
for individual needs.

• Supportive Learning Environment

Supportive Learning environment that encourages interaction, questions, and

collaboration among participants fosters a more effective training experience. This
environment should be free from distractions, conducive to learning, and equipped
with the necessary resources to aid in the training process. Psychological safety,
where trainees feel safe to express themselves and make mistakes, is also vital.

• Continuous Improvement

Effective training is not a one-time event but a continuous process of development.

Organizations should commit to the continuous improvement of training programs
based on the feedback and outcomes of past sessions. This involves regularly
updating training materials to keep up with industry developments and changing
job requirements.

• Strategic Reinforcement

Post-training reinforcement is key to ensuring that new skills and knowledge are
retained and applied effectively in the workplace. This can involve follow-up
sessions, coaching, mentoring, and support groups. Additionally, integrating
learned skills with day-to-day tasks and providing practical applications in the
workplace can significantly boost the long-term impact of training.
Designing and Developing effective Training Modules:

1. Needs Analysis

Start by conducting a thorough needs analysis to determine the skills, knowledge,

and competencies required by the workforce to meet current and future job
demands. This analysis should consider the organizational goals, individual
performance gaps, and feedback from stakeholders. This foundational step ensures
that the training modules are targeted and relevant.

2. Define Learning Objectives

Based on the needs analysis, clearly define the learning objectives for each training
module. These objectives should be Specific, Measurable, Achievable, Relevant,
and Time-bound (SMART). Learning objectives guide the content creation and
help in evaluating the effectiveness of the training.

3. Curriculum Development

Develop a curriculum that methodically covers all necessary topics to meet the
learning objectives. Organize the content logically, ensuring a progressive build-
up of knowledge. Include various learning activities such as lectures, discussions,
case studies, and hands-on exercises that cater to different learning styles.

4. Select Appropriate Training Methods

Choose training methods that best suit the content and the audience. Consider a
blend of traditional classroom learning, e-learning, on-the-job training, and
interactive simulations to enhance engagement and retention. The choice of
method should also consider logistical aspects like the number of trainees,
geographical dispersion, and available resources.

5. Develop Training Materials

Create high-quality training materials that are clear and concise. These can include
slide presentations, workbooks, handouts, and multimedia materials such as videos
and interactive software. Ensure that these materials are accessible to all
participants, considering any disabilities or technological limitations they might
have.
 6. Integrate Technology

Utilize technology to make training more effective and flexible. Tools like learning
management systems (LMS), virtual reality (VR), augmented reality (AR), and
mobile learning applications can provide immersive and personalized learning
experiences.

7. Pilot Testing

Before full-scale implementation, conduct a pilot test of the training module with
a select group of employees. This testing helps identify any issues or areas for
improvement in the training content, delivery methods, and materials. Use
feedback from the pilot to refine the module.

8. Implementation

Execute the training program according to the planned schedule and format. Ensure
facilitators and trainers are well-prepared and that all logistical aspects are
managed efficiently. Consider the environment and timing of the training to
minimize disruptions and maximize learning.

9. Evaluation and Feedback

Evaluate the effectiveness of the training module using both formative (during the
program) and summative (after completion) assessments. Collect feedback from
participants and other stakeholders to assess whether the learning objectives have
been met and how the training has impacted job performance.

10. Continuous Improvement

Use the insights gained from evaluations and feedback to continuously improve
the training modules. Update the content and methods regularly to keep pace with
changes in the industry, technology, and your organization’s internal strategies.

EVALUATING TRAINING AND DEVELOPMENT:

Training Evaluation Method Types, Stages and Programs: Companies spend a lot
of money for the training purposes of their employees and that’s why it is necessary
for them to understand the effectiveness of the Employees Training and
Development Programs. The training evaluation helps them cut the costs and save
a great deal of time, which can then use for their business. This assessment is
actually a measure to check the cost effectiveness of the given training program
and to ensure that the training is capable of filling up the competency gaps within
the organization.

There are various methods and stages to perform this assessment, but most of the
time, it is done with the collection of data, which mostly comprises of their
feedback about the deliverable of the training and whether or not, they are satisfied.
Moreover, it is also discussed that whether they got to learn something from the
training and do they feel as if they are able to apply those newly acquired skills in
their workplace.

Basis of Training Evaluation

Most of the evaluation methods and steps are the outcomes of Kirkpatrick’s
Model, which makes use of reaction, learning, behavior, and results as its basic
categories on which the eye is needed to be kept.

Reaction deals with the response of the participant regarding whether they liked
the training course or not and if they did, then which part of it was the most
interesting one and if not, then what’s the reason. Learning deals with the degree
to which the participants gained the knowledge and the rate of gain. Behavior
involves the checking of the level of the application of the skills, whereas, results
deal the effect of the skills and knowledge on the success of the organization.

Training Evaluation Methods

1. Satisfaction and Participant reaction

Satisfaction evaluation is the most basic measure for assessing the success rate of
any training. For the purpose, the trainer, usually, hands out a survey at the end of
the course to test the reaction of the participants.

2. Knowledge Acquisition

Knowledge acquisition is the second level of the training evaluation and involves
the examination as the attachment of the training course to check that how much
the participants have learned from the training course. It is a fact that most of the
participants take training seriously only if they know that they are required to
demonstrate the concepts that they have learned during the training.

In this method, participants are supposed to take the exam, after the training. The
instructors or the trainers check and grade the responses, and share the results with
the students as well as the training managers. This is done so that any gaps in the
expected and acquired knowledge can be quickly sewn up.

A reliable and valid examination, as the training ends, can help in determining if
the participant has understood and learned the concept or not. It can point out the
participants that did not gain anything from training, leaving even further room for
the support those who did. Furthermore, it can highlight areas that might need
additional coaching or further training.

3. Behavioral Application

The third method of evaluation deals with the behavioral application of their newly
acquired skills. It also involves monitoring the changing behaviors as the skills and
knowledge are applied to the tasks. Even though the first method of training
evaluation, satisfaction assessment, is sufficient in most of the cases, but whenever
the method of behavioral application is needed, it is used with the combination of
the first two.

This method demonstrates the level to which the participants apply their newly
acquired knowledge in their real life and real world problems. This provides crystal
clear evidence of who is applying the knowledge, where the knowledge is being
applied and for what purposes. This can assist the management to avoid any
misapplications.

For example, a company that initiates a course for increasing the telephone
conversion rates can conduct a particular number of mystery calls before starting
the training. This response can be recorded and graded in accordance with the
objectives of the course. After the training, the same company can again conduct
that particular number of mystery calls and can compare their results with those
before the training and measure the effectiveness of the training.

4. Measuring the Business Improvement

The primary objective of nearly all the organizations arranging the training courses
is to generate a particular business improvement. So, it means that we can assess
the success level of a training program by the improvement made in that particular
field, once the training is complete and the participants are ready to apply their
knowledge for the cause of development of the brand.

For example, if we use the above example of the course of increasing the telephone
conversion rates, then it can be based on the goals like increasing the number of
sales, decreasing the number of appointment cancellations, expanding the lead list,
gaining higher conversion rates and decreasing the time lag.

5. Return on Investment (ROI)

The final member of our list of training evaluation methods, is related to the
measurement of return on investment. It deals with the training regarding costs
and returns. Costs like those of the course fee, facility fee, staff management and
their wages, time used for the training the participants and returns like the business
improvement, increased number of conversions and financial gains, both short term
and long term net gains.

Stages of Training Evaluation

Training evaluation is normally done in five stages while keeping an eye on all of
the internal and external factors that could alter the expectations and results.

1. Describing the outputs

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

2. Pre-training Assessment

In this step, the experiences with previous batches, along with the information
about what they achieved after they took the course, are revealed to the participants
of the current batch. This, then leads the descriptive data like expected outputs for
the current batch, syllabus, learning needs and anything else that can come handy,
later on.
 3. Post-Assessment (reactions)

This deals with the reaction of the participants to the training experience and
involves a lot of factors like the formats used by the instructor for instructional
purposes, methods for teaching, learning environment and satisfaction towards the
instructors and the course, itself.

4. Post-Assessment (learning)

The fourth step towards training evaluation deals with the self-assessment of the
level of the gained knowledge and skills, along with their points of applications
and the effects caused by the application of these skills.

5. Following-up

The final step involves the time to time assessment of the training program so that
it generates the expected results without dwindling or interruptions. This is done
so that the participants of the course could get the feel as they are getting trained
by the best in the whole market.

BENEFITS OF EVALUATION TRAINING:

• Evaluation ensures accountability: Training evaluation ensures that

training programs comply with the competency gaps and that the
deliverables are not compromised upon.

• Check the Cost: Evaluation ensures that the training programs are effective
in improving the work quality, employee behavior, attitude and development
of new skills within the employee within a certain budget. Since globally
companies are trying to cut their costs without compromising upon the
quality, evaluation just aims at achieving the same with training.

• Feedback to the Trainer / Training: Evaluation also acts as a feedback to

the trainer or the facilitator and the entire training process. Since evaluation
accesses individuals at the level of their work, it gets easier to understand
the loopholes of the training and the changes required in the training
methodology.
Not many organizations believe in the process of evaluation or at least do not have
an evaluation system in place. Many organizations conduct training programs year
after year only as a matter of faith and not many have a firm evaluation mechanism
in place. Organizations like IBM, Motorala only, it was found out, have a firm
evaluation mechanism in place.

Methods of Training Evaluation

1. Satisfaction and Participant reaction

Satisfaction evaluation is the most basic measure for assessing the success rate of
any training. For the purpose, the trainer, usually, hands out a survey at the end of
the course to test the reaction of the participants.

2. Knowledge Acquisition

Knowledge acquisition is the second level of the training evaluation and involves
the examination as the attachment of the training course to check that how much
the participants have learned from the training course. It is a fact that most of the
participants take training seriously only if they know that they are required to
demonstrate the concepts that they have learned during the training.

In this method, participants are supposed to take the exam, after the training. The
instructors or the trainers check and grade the responses, and share the results with
the students as well as the training managers. This is done so that any gaps in the
expected and acquired knowledge can be quickly sewn up.

A reliable and valid examination, as the training ends, can help in determining if
the participant has understood and learned the concept or not. It can point out the
participants that did not gain anything from training, leaving even further room for
the support those who did. Furthermore, it can highlight areas that might need
additional coaching or further training.

3. Behavioral Application

The third method of evaluation deals with the behavioral application of their newly
acquired skills. It also involves monitoring the changing behaviors as the skills and
knowledge are applied to the tasks. Even though the first method of training
evaluation, satisfaction assessment, is sufficient in most of the cases, but whenever
the method of behavioral application is needed, it is used with the combination of
the first two.

This method demonstrates the level to which the participants apply their newly
acquired knowledge in their real life and real world problems. This provides crystal
clear evidence of who is applying the knowledge, where the knowledge is being
applied and for what purposes. This can assist the management to avoid any
misapplications.

For example, a company that initiates a course for increasing the telephone
conversion rates can conduct a particular number of mystery calls before starting
the training. This response can be recorded and graded in accordance with the
objectives of the course. After the training, the same company can again conduct
that particular number of mystery calls and can compare their results with those
before the training and measure the effectiveness of the training.

4. Measuring the Business Improvement

The primary objective of nearly all the organizations arranging the training courses
is to generate a particular business improvement. So, it means that we can assess
the success level of a training program by the improvement made in that particular
field, once the training is complete and the participants are ready to apply their
knowledge for the cause of development of the brand.

For example, if we use the above example of the course of increasing the telephone
conversion rates, then it can be based on the goals like increasing the number of
sales, decreasing the number of appointment cancellations, expanding the lead list,
gaining higher conversion rates and decreasing the time lag.

5. Return on Investment (ROI)

The final member of our list of training evaluation methods, is related to the
measurement of return on investment. It deals with the training regarding costs and
returns. Costs like those of the course fee, facility fee, staff management and their
wages, time used for the training the participants and returns like the business
improvement, increased number of conversions and financial gains, both short term
and long term net gains.
OPTIMIZING SELECTION AND PROMOTION DECISIONS:

The ability to select the right person for the job, the team, the project. is a
fundamental capability of highly successful organizations and leaders.
Unfortunately, it is also an area that, in most organizations, is done rather poorly.
This would be more clearly understood if they looked at their level of engagement,
performance, and positive retention.

Considerations:

• The people decisions are normally what determine the level of success a
leader will have.

• Effective people decision-making is both and art and a science and

increasingly, with the tools available, can become more of a predictive
science.

• Making the wrong people decision is remarkably expensive as it may be easy

to get rid of truly bad performers- but that mediocre performer can pose
greater risks as they can cost your organizations month after month and they
also lead to the loss of high performers…

• In a rapidly changing world and market environment, picking the right

investments to make in your people is key to creating and maintaining a high
performing organization.

• Technology is having a huge impact on the cost-effectiveness of available

alternatives both for selection and development of people.

• For many competition for competencies and skills can come from those half
way around the world who are more educated and cost 1/3 as much (or less).
How does this impact people decisions locally?

• Selecting the wrong person is a very expensive proposition but it’s

commonly done.

• Interviews, even structured behavioral interviews, are often poor ways to

accurately assess the future performance of an individual (but effectivve in
validating key performance factors).
Strategies:

1. Don’t Focus on The Questions, Focus on The Interview.

Too many times interviewers focus on buzzworthy questions they believe will help
them understand everything they need to know about the candidate. However, there
aren’t specific questions that will instantly give them insight into the candidate.

Instead, recruiters should focus on the interview process as a whole. Spend your
time getting to know the candidate better by exploring their skills and gaining an
understanding of their experience and personality. Asking questions related to your
industry and the candidate’s skillsets will be far more effective than a couple of
oddball questions

Test A Candidate’s Skills

Unfortunately, some candidates lie on their resume which is why it’s important that
hiring staff check references and follow up with previous employers to evaluate a
candidate’s stated skills and background.

For some hiring managers, viewing a candidate’s portfolio is enough to prove their
skills. However, many companies test a candidate’s skills in the form of a test,
written, verbal or otherwise. The job assessment test doesn’t have to be complex,
but it should be difficult enough for the candidate to show the level of their skill
set.

Include Other Relevant Employees

One person shouldn’t conduct the entire talent acquisition process on their own.
Recruiters should involve other qualified employees throughout the interview
process to get an accurate understanding of the skills the potential candidate can
bring to the company and how their personality will fit in with the rest of the team.

This should include the candidate’s future manager, the department’s head or even
a team member who will be working closely with them on a daily basis. It can also
be effective to include a recruitment and staffing expert in the hiring process. These
consultants can manage almost all of the entire recruitment and selection process
from candidate sourcing to interviews, streamlining the hiring process for internal
HR teams.
ANALYSING AND CLASSIFIYING TRAINING NEEDS:

The need for Training and Development

Before we say that technology is responsible for increased need of training inputs
to employees, it is important to understand that there are other factors too that
contribute to the latter. Training is also necessary for the individual development
and progress of the employee, which motivates him to work for a certain
organization apart from just money. We also require training update employees of
the market trends, the change in the employment policies and other things.

The following are the two biggest factors that contribute to the increased need to
training and development in organizations:

(i) Change: The word change encapsulates almost everything. It is one of the
biggest factors that contribute to the need of training and development. There is in
fact a direct relationship between the two. Change leads to the need for training
and development and training and development leads to individual and
organisational change, and the cycle goes on and on. More specifically it is the
technology that is driving the need; changing the way how businesses function,
compete and deliver.

(ii) Development: It is again one the strong reasons for training and development
becoming all the more important. Money is not the sole motivator at work and this
is especially very true for the 21st century. People who work with organizations
seek more than just employment out of their work; they look at holistic
development of self. Spirituality and self awareness for example are gaining
momentum world over. People seek happiness at jobs which may not be possible
unless an individual is aware of the self. At ford, for example, an individual can
enroll himself / herself in a course on ‘self awareness’, which apparently seems
inconsequential to ones performance at work but contributes to the spiritual well
being of an individual which is all the more important.

Designing Training Programs

When developing your training plan, there are a number of considerations.

Training is something that should be planned and developed in advance.
Designing a training programme is very important part of human resource
management. Let us discuss in this article how to design a training programme:

1. Identification of training needs: the main cause of identification of

training needs is the technological changes that are taking place. For
example computers are now days are used in all the offices which require
training the employees. Except technological changes poor performance of
workers which result in low production requires systematic training.
Training needs can be identified through following types of analysis.

(a) Organizational analysis: it is the systematic study of organizational

objectives, resources, its utilization, growth potential and climate. It involves
following elements:

• Analysis of objectives: All the objectives of the organization whether long-

term or short-term should be analyzed properly. It is the responsibility of the
management to check which kind of training programme is required to
achieve these objectives.

• Climate analysis: Organizational climate shows the attitude of

organizational members. It helps in checking whether the environment in
different departments is conducive or not and where there is the need of
training programme to improve the climate of the organization.

• Resource utilization analysis: It should be checked that whether the

physical and human resources have been utilized properly or not otherwise
there is the need of training to utilize them properly.

(b) Task analysis: it is analyzing the job systematically. To identify the job
contents, knowledge, skill, aptitude required to perform the job. In task analysis
focus is on the job. It basically studies the various types of skills and training
required to perform the job.

(c) Manpower analysis: the quality or type of manpower the firm required should
be checked properly. To achieve the proper quality standards specific training
needs should be determined on the basis of capability of present workers to learn
the new skills.
 2. Setting the training objectives: after identification of training needs the
next step is setting the training objectives. The aim of any training
programme is to increase the organizational effectiveness. As each training
programme must have specific objective like increase productivity,
improved quality, higher the morale of employees, growth of employees,
better human resource planning etc.

3. Organization of training programme: as every training programme include

the trainees, trainers, training period, training material so all these should be
organized properly.

(i) Selection of the trainees: it is the first step of organization of training

programme. The trainee should be selected properly. They should be trained for
the kind of the job they like. Careful selection of the trainees helps in effectiveness
of training programme.

(ii) Preparation of instructor: instructor I the important person in the training

programme. Qualified instructor may be obtained from inside the organization or
from the outside. He must have all the qualities of good trainer because he has to
give training to other people.

(iii) Determination of training period: the time duration of training depends upon
the type of skill required. For the training of clerk training of a week is enough
while for any other position it may require more or less training time.
(iv) Training methods: the on the job training and off the job training has been
already discussed. So the choice of training methods depends upon the objective
of the training programme.

4. Evaluation of training: at the end it is very important to evaluate the

effectiveness of training programme. As how much the employees have
learnt from the training programme. It will help in modifying the future
training programme.

MEASURING TRAINING EFFECTIVENESS:

Evaluation involves the assessment of the effectiveness of the training programs.

This assessment is done by collecting data on whether the participants were
satisfied with the deliverables of the training program, whether they learned
something from the training and are able to apply those skills at their workplace.
There are different tools for assessment of a training program depending upon the
kind of training conducted.

Since organizations spend a large amount of money, it is therefore important for

them to understand the usefulness of the same. For example, if a certain technical
training was conducted, the organization would be interested in knowing whether
the new skills are being put to use at the workplace or in other words whether the
effectiveness of the worker is enhanced. Similarly in case of behavioral training,
the same would be evaluated on whether there is change in the behavior, attitude
and learning ability of the participants.

Benefits of Training Evaluation

Evaluation acts as a check to ensure that the training is able to fill the competency
gaps within the organization in a cost effective way. This is especially very
important in wake of the fact the organizations are trying to cut costs and increase
globally. Some of the benefits of the training evaluation are as under:

• Evaluation ensures accountability: Training evaluation ensures that

training programs comply with the competency gaps and that the
deliverables are not compromised upon.
 • Check the Cost: Evaluation ensures that the training programs are effective
in improving the work quality, employee behavior, attitude and development
of new skills within the employee within a certain budget. Since globally
companies are trying to cut their costs without compromising upon the
quality, evaluation just aims at achieving the same with training.

• Feedback to the Trainer / Training: Evaluation also acts as a feedback to

the trainer or the facilitator and the entire training process. Since evaluation
accesses individuals at the level of their work, it gets easier to understand
the loopholes of the training and the changes required in the training
methodology.

Not many organizations believe in the process of evaluation or at least do not have
an evaluation system in place. Many organizations conduct training programs year
after year only as a matter of faith and not many have a firm evaluation mechanism
in place. Organizations like IBM, Motorala only, it was found out, have a firm
evaluation mechanism in place.

Methods of Training Evaluation

1. Satisfaction and Participant reaction

Satisfaction evaluation is the most basic measure for assessing the success rate of
any training. For the purpose, the trainer, usually, hands out a survey at the end of
the course to test the reaction of the participants.

Training Evaluation & Methods of Training Evaluation

Evaluation involves the assessment of the effectiveness of the training programs.

This assessment is done by collecting data on whether the participants were
satisfied with the deliverables of the training program, whether they learned
something from the training and are able to apply those skills at their workplace.
There are different tools for assessment of a training program depending upon the
kind of training conducted.

Since organizations spend a large amount of money, it is therefore important for

them to understand the usefulness of the same. For example, if a certain technical
training was conducted, the organization would be interested in knowing whether
the new skills are being put to use at the workplace or in other words whether the
effectiveness of the worker is enhanced. Similarly in case of behavioral training,
the same would be evaluated on whether there is change in the behavior, attitude
and learning ability of the participants.

Benefits of Training Evaluation

Evaluation acts as a check to ensure that the training is able to fill the competency
gaps within the organization in a cost effective way. This is especially very
important in wake of the fact the organizations are trying to cut costs and increase
globally. Some of the benefits of the training evaluation are as under:

• Evaluation ensures accountability: Training evaluation ensures that

training programs comply with the competency gaps and that the
deliverables are not compromised upon.

• Check the Cost: Evaluation ensures that the training programs are effective
in improving the work quality, employee behavior, attitude and development
of new skills within the employee within a certain budget. Since globally
companies are trying to cut their costs without compromising upon the
quality, evaluation just aims at achieving the same with training.

• Feedback to the Trainer / Training: Evaluation also acts as a feedback to

the trainer or the facilitator and the entire training process. Since evaluation
accesses individuals at the level of their work, it gets easier to understand
the loopholes of the training and the changes required in the training
methodology.

Not many organizations believe in the process of evaluation or at least do not have
an evaluation system in place. Many organizations conduct training programs year
after year only as a matter of faith and not many have a firm evaluation mechanism
in place. Organizations like IBM, Motorala only, it was found out, have a firm
evaluation mechanism in place.

Methods of Training Evaluation

1. Satisfaction and Participant reaction

Satisfaction evaluation is the most basic measure for assessing the success rate of
any training. For the purpose, the trainer, usually, hands out a survey at the end of
the course to test the reaction of the participants.

2. Knowledge Acquisition

Knowledge acquisition is the second level of the training evaluation and involves
the examination as the attachment of the training course to check that how much
the participants have learned from the training course. It is a fact that most of the
participants take training seriously only if they know that they are required to
demonstrate the concepts that they have learned during the training.

In this method, participants are supposed to take the exam, after the training. The
instructors or the trainers check and grade the responses, and share the results with
the students as well as the training managers. This is done so that any gaps in the
expected and acquired knowledge can be quickly sewn up.

A reliable and valid examination, as the training ends, can help in determining if
the participant has understood and learned the concept or not. It can point out the
participants that did not gain anything from training, leaving even further room for
the support those who did. Furthermore, it can highlight areas that might need
additional coaching or further training.

3. Behavioral Application

The third method of evaluation deals with the behavioral application of their newly
acquired skills. It also involves monitoring the changing behaviors as the skills and
knowledge are applied to the tasks. Even though the first method of training
evaluation, satisfaction assessment, is sufficient in most of the cases, but whenever
the method of behavioral application is needed, it is used with the combination of
the first two.

This method demonstrates the level to which the participants apply their newly
acquired knowledge in their real life and real world problems. This provides crystal
clear evidence of who is applying the knowledge, where the knowledge is being
applied and for what purposes. This can assist the management to avoid any
misapplications.
For example, a company that initiates a course for increasing the telephone
conversion rates can conduct a particular number of mystery calls before starting
the training. This response can be recorded and graded in accordance with the
objectives of the course. After the training, the same company can again conduct
that particular number of mystery calls and can compare their results with those
before the training and measure the effectiveness of the training.

4. Measuring the Business Improvement

The primary objective of nearly all the organizations arranging the training courses
is to generate a particular business improvement. So, it means that we can assess
the success level of a training program by the improvement made in that particular
field, once the training is complete and the participants are ready to apply their
knowledge for the cause of development of the brand.

For example, if we use the above example of the course of increasing the telephone
conversion rates, then it can be based on the goals like increasing the number of
sales, decreasing the number of appointment cancellations, expanding the lead list,
gaining higher conversion rates and decreasing the time lag.

5. Return on Investment (ROI)

The final member of our list of training evaluation methods, is related to the
measurement of return on investment. It deals with the training regarding costs and
returns. Costs like those of the course fee, facility fee, staff management and their
wages, time used for the training the participants and returns like the business
improvement, increased number of conversions and financial gains, both short term
and long term net gains.

PREDICTING TRAINING AND EFFECTIVENESS PERFORMANCE:

CIRO Model

The CIRO model was developed by Warr, Bird and Rackham and published in
1970 in their book “Evaluation of Management Training”. CIRO stands for
context, input, reaction and output. The key difference in CIRO and Kirkpatrick’s
models is that CIRO focuses on measurements taken before and after the training
has been carried out.
One criticism of this model is that it does not take into account behaviour. Some
practitioners feel that it is, therefore, more suited to management focused training
programs rather than those designed for people working at lower levels in the
organization.

1. Context

This is about identifying and evaluating training needs based on collecting

information about performance deficiencies and based on these, setting training
objectives which may be at three levels:

• The ultimate objective: The particular organizational deficiency that the

training program will eliminate.

• The intermediate objectives: The changes to the employees work

behaviours necessary if the ultimate objective is to be achieved.
 • The immediate objectives: The new knowledge, skills or attitudes that
employees need to acquire in order to change their behaviour and so achieve
the intermediate objectives.

2. Input

This is about analyzing the effectiveness of the training courses in terms of their
design, planning, management and delivery. It also involves analyzing the
organizational resources available and determining how these can be best used to
achieve the desired objectives.

3. Reaction

This is about analyzing the reactions of the delegates to the training in order to
make improvements. This evaluation is obviously subjective so needs to be
collected in as systematic and objective way as possible.

4. Outcome

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

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

• The learner level

• The workplace level

• The team or department level

• The business level

TRAINING EFFECTIVENESS MODEL: KIRKPATRICK MODEL OF

TRAINING EFFECTIVENESS:

The Kirkpatrick Model

The most well-known and used model for measuring the effectiveness of training
programs was developed by Donald Kirkpatrick in the late 1950s. It has since been
adapted and modified by a number of writers, however, the basic structure has well
stood the test of time. The basic structure of Kirkpatrick’s four-level model is
shown here.
Level 1 – Reaction: To what extent did the participants find the training useful,
challenging, well-structured, organized, and so on.

Level 2 – Learning: To what extent did participants improve knowledge and skills
and change attitudes as a result of the training.

Level 3 – Behavior: To what extent did participants change their behavior back in
the workplace as a result of the training.

Level 4 – Results: What measurable organizational benefits resulted from the

training in terms such as productivity, efficiency and sales revenue.

An evaluation at each level answers whether a fundamental requirement of the

training program was met. It’s not that conducting an evaluation at one level is
more important that another. All levels of evaluation are important. In fact, the
Kirkpatrick model explains the usefulness of performing training evaluations at
each level. Each level provides a diagnostic checkpoint for problems at the
succeeding level. So, if participants did not learn (Level 2), participant reactions
gathered at Level 1 (Reaction) will reveal the barriers to learning. Now moving up
to the next level, if participants did not use the skills once back in the workplace
(Level 3), perhaps they did not learn the required skills in the first place (Level 2).

The difficulty and cost of conducting an evaluation increases as you move up the
levels. So, you will need to consider carefully what levels of evaluation you will
conduct for which programs. You may decide to conduct
Level 1 evaluations (Reaction) for all programs.

Level 2 evaluations (Learning) for “hard-skills” programs only.

Level 3 evaluations (Behavior) for strategic programs only.

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

Using the Kirkpatrick Model

How do you conduct a training evaluation? Here is a quick guide on some

appropriate information sources for each level.

Level 1 (Reaction)

• Completed participant feedback questionnaire

• Informal comments from participants

• Focus group sessions with participants

Level 2 (Learning)

• Pre- and post-test scores

• On-the-job assessments

• Supervisor reports

Level 3 (Behavior)

• Completed self-assessment questionnaire

• On-the-job observation

• Reports from customers, peers and participant’s manager

Level 4 (Results)

• Financial reports

• Quality inspections
 • Interview with sales manager

When considering what sources of data you will use for your evaluation, think
about the cost and time involved in collecting the data. Balance this against the
accuracy of the source and the accuracy you actually need. Will existing sources
suffice or will you need to collect new information?

Think broadly about where you can get information. Sources include:

• Hardcopy and online quantitative reports

• Production and job records

• Interviews with participants, managers, peers, customers, suppliers and

regulators

• Checklists and tests

• Direct observation

• Questionnaires, self-rating and multi-rating

• Focus Group sessions

DESIGNING A COMPENSATION SYSTEM:

Compensation refers to the total financial and non-financial rewards provided to

employees by an organization in exchange for their work and contributions. It
includes base salary or wages, bonuses, commissions, incentives, benefits such as
health insurance, retirement plans, paid time off, and other perks. Compensation
aims to attract, retain, and motivate employees while ensuring fair and competitive
pay aligned with industry standards. It plays a key role in employee satisfaction,
productivity, and organizational success. A well-structured compensation system
balances the needs of the business and the employees, promoting loyalty and
performance.

Function of Compensation:

1. Attraction of Talent
One of the primary functions of compensation is to attract qualified and skilled
candidates to an organization. A competitive compensation package, including
salary, benefits, and incentives, helps organizations stand out in the job market and
draw in top talent. The promise of fair compensation encourages potential
employees to consider the organization as a desirable place to work.

2. Retention of Employees

Effective compensation strategies help retain valuable employees. Competitive pay

and benefits reduce turnover by providing employees with incentives to stay in the
organization. When employees feel fairly compensated for their efforts, they are
less likely to seek opportunities elsewhere. Compensation plays a critical role in
employee loyalty and long-term commitment to the company.

3. Motivation and Performance

Compensation is a significant motivator for employees to perform well. By tying

rewards such as bonuses, incentives, and promotions to performance, organizations
encourage employees to achieve their goals and exceed expectations. A well-
designed compensation system aligns employee efforts with organizational
objectives, driving productivity and high performance.

4. Job Satisfaction

Fair and equitable compensation contributes to employee satisfaction. When

employees feel that their compensation reflects their skills, experience, and
contributions, they are more likely to be satisfied with their job. This satisfaction
reduces the likelihood of disengagement, absenteeism, or job dissatisfaction,
leading to a more positive work environment.

5. Cost Management

Compensation is a major component of an organization’s expenses. Managing

compensation efficiently helps control labor costs while ensuring employees are
adequately rewarded. A well-planned compensation structure ensures the
organization remains financially sustainable while providing competitive salaries
and benefits.

6. Compliance with Laws

Organizations must ensure their compensation practices comply with labor laws,
including minimum wage regulations, overtime rules, and equal pay mandates.
Proper compensation structures ensure adherence to legal requirements,
minimizing the risk of penalties or legal disputes.

7. Equity and Fairness

Compensation promotes fairness and equity within the organization. By offering

consistent pay structures and avoiding bias, companies ensure employees are
treated equally for similar roles and responsibilities, promoting a culture of fairness
and transparency.

Significance Compensation:

1. Employee Attraction

A competitive compensation package is essential for attracting top talent in a

competitive job market. Companies offering appealing salaries, bonuses, and
benefits stand out to skilled professionals, making it easier to recruit individuals
with the qualifications necessary to meet organizational goals. Compensation acts
as a key motivator for candidates choosing between potential employers.

2. Employee Retention

Compensation is a vital tool for retaining valuable employees. When workers feel
they are fairly compensated for their efforts and skills, they are less likely to seek
opportunities elsewhere. Retention rates improve with appropriate compensation
strategies, which reduces turnover and the costs associated with hiring and training
new employees.

3. Boosting Motivation and Productivity

Well-designed compensation structures, including bonuses, commissions, and

performance-based incentives, directly motivate employees to perform at their
best. By linking compensation to performance metrics, organizations create a goal-
driven environment that encourages productivity and enhances employee focus on
achieving both personal and organizational objectives.

4. Enhancing Job Satisfaction

Fair compensation contributes to job satisfaction, leading to higher morale and
lower absenteeism. Employees who believe they are adequately rewarded for their
efforts are more likely to be satisfied with their work, contributing positively to the
overall organizational culture. Satisfied employees also tend to show higher
engagement and commitment.

5. Promoting Equity and Fairness

A transparent and well-structured compensation system promotes fairness and

equity within the organization. By offering consistent pay based on qualifications,
experience, and performance, companies ensure all employees are treated fairly.
This helps create a more inclusive and positive work environment, reducing
instances of dissatisfaction and conflict.

6. Improving Organizational Reputation

Organizations that offer competitive compensation packages gain a reputation for

valuing their employees. This not only attracts talent but also enhances the
company’s image in the industry, making it a desirable place to work. A positive
reputation helps in recruiting efforts and fosters long-term organizational success.

7. Supporting Legal Compliance

Compliance with labor laws, including minimum wage requirements, overtime

pay, and equal pay regulations, is critical. A sound compensation system ensures
the organization adheres to these legal standards, minimizing the risk of penalties
or legal disputes. Compliance also enhances the organization’s reputation for
ethical practices.

8. Facilitating Career Development

Compensation can be tied to career growth, encouraging employees to develop new

skills and pursue further education. Promotions, raises, and bonuses provide
incentives for professional development, benefiting both the employee and the
organization by creating a more skilled and capable workforce.

Rules and Policies of Compensation:

Compensation rules and policies are essential for ensuring that an organization’s
pay practices are fair, transparent, and compliant with legal standards. These
policies guide how salaries, bonuses, benefits, and other forms of compensation
are determined, administered, and communicated.

1. Equal Pay Policy

Equal Pay Policy ensures that all employees are paid fairly for equal work,
regardless of gender, race, age, or other non-job-related factors. This policy is
crucial for complying with anti-discrimination laws and fostering a fair and
inclusive workplace. It mandates that employees performing similar tasks and
duties should receive the same pay, preventing wage disparities based on
unjustified factors.

2. Compensation Structure

Compensation Structure defines the framework for how salaries and wages are
set within an organization. This includes establishing salary ranges, pay grades,
and the criteria for moving between these levels. A clear structure helps ensure
consistency and fairness in how employees are compensated for their roles and
responsibilities, making it easier to manage pay decisions.

3. Performance-Based Pay

Performance-Based Pay policies link compensation to individual or team

performance. This includes bonuses, commissions, and incentive programs tied to
achieving specific goals or metrics. Performance-based pay motivates employees
to enhance their productivity and align their efforts with organizational objectives,
fostering a performance-driven culture.

4. Overtime Pay Policy

Overtime Pay Policy outlines the rules for compensating employees who work
beyond their standard working hours. This policy typically adheres to labor laws
that require overtime pay at a higher rate (e.g., time and a half) for hours worked
beyond a specified threshold. Clear guidelines help manage expectations and
ensure compliance with legal requirements.

5. Benefits Policy
Benefits Policy details the non-salary compensation provided to employees,
including health insurance, retirement plans, paid time off, and other perks. This
policy outlines eligibility, coverage levels, and the process for enrolling in and
utilizing these benefits. A comprehensive benefits policy helps attract and retain
employees by offering valuable supplementary compensation.

6. Salary Review and Adjustment

Salary Review and Adjustment policies specify how and when salaries are
reviewed and adjusted. This includes annual reviews, cost-of-living adjustments,
and merit-based increases. Transparent guidelines ensure that employees
understand the criteria for salary increases and the timing of reviews, promoting
fairness and clarity in pay adjustments.

7. Compensation for Exempt and Non-Exempt Employees

Compensation for Exempt and Non-Exempt Employees differentiates between

employees who are exempt from overtime pay and those who are non-exempt.
Exempt employees typically hold managerial or professional positions and are not
entitled to overtime pay, while non-exempt employees receive additional pay for
overtime work. Policies must clearly define these classifications to ensure
compliance with labor laws and fair compensation practices.

8. Travel and Expense Reimbursement

Travel and Expense Reimbursement policies outline how employees are

compensated for work-related travel and expenses. This includes guidelines for
submitting expense reports, the types of expenses covered (e.g., lodging, meals,
transportation), and the reimbursement process. Clear policies ensure that
employees are fairly reimbursed for out-of-pocket expenses incurred while
performing their job duties.

9. Pay Transparency

Pay Transparency policies govern how compensation information is shared

within the organization. This includes whether salary ranges or individual pay
levels are disclosed to employees or the public. Transparency can build trust and
ensure fairness but must be balanced with privacy considerations and competitive
concerns.

10. Compensation Compliance

Compensation Compliance policies ensure that the organization’s compensation

practices adhere to relevant laws and regulations, such as minimum wage
requirements, tax regulations, and labor laws. Regular audits and updates to
compensation practices help maintain compliance and avoid legal issues.

11. Compensation Appeals

Compensation Appeals policies provide a process for employees to appeal

compensation decisions they believe are unfair or incorrect. This policy outlines
the steps for submitting an appeal, the review process, and how decisions are
communicated. It ensures that employees have a formal mechanism to address
concerns about their compensation.

UNDERSTANDABLE COMPENSATION ANALYTICS, QUANTIFIABLE

DATA:

Compensation analytics is a practice to analyze whether or not the employer is

paying a reasonable amount of salary to its employees. It is a practice to bring
discipline. Professionals work on employment data to understand factors from all
sides both in the employee as well as employer benefits. The biggest objective is
to make informed compensation decisions on the basis of accurate analytics and
data. During the process, salaries are compared by region, industry level of
experience, and job titles.

Labour costs make up the majority of expenses for most organizations. It can
account for up to 70% of the business cost. It is, therefore, critical to understand
what this cost consists of. Although compensation analysis can be a complex
process, it is a necessary tool to ensure fair workplace practices and contribute to
your employee engagement strategy.

The purpose of this guide is to provide a basic understanding of compensation

analysis and its associated benefits. It also offers practical steps on conducting a
compensation analysis, which you should tailor to your organization’s needs.
Components:

External competitiveness: Employers compare their compensation data and

practices to external companies. For example, Salesforce found that their engineer
salaries were comparable to engineers at Microsoft. It was a fair comparison
because of the size and geographical spread of both organizations. On the other
hand, engineers at Slack were paid much less, but they are a much smaller
organization.

Internal equity: Employers compare employees’ salary and indirect compensation

data to ensure fair compensation for the level and type of work done.

Region: Employers compare compensation data of people doing similar work

within a particular region.

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

Benefits:

Salary benchmarking gives an impartial idea of competitive salaries and allows

organizations to make informed decisions. Salary benchmarks provide data points,
whether it is worth it or not to pay an employee above the average salary. It also
helps understand the holistic remuneration packages offered by employers.

Evaluating pay equity allows organizations to compensate employees doing the

same level of work in a fair way. Conducting a comprehensive compensation
analysis also enables you to correct historic pay gaps.

Transparent compensation decisions leave the decision-making of salaries in the

hands of accurate and impartial data. This leaves employees with a higher level of
trust in the organization and their managers.

Compensation analysis is dynamic, as mentioned before, and thus, you’re able to

make projections based on future needs or employees and how this may affect your
compensation strategy.

Identifying opportunities: Through a comprehensive compensation analysis, you

can identify where you can improve your compensation strategy.
FACTORS AFFECTING COMPENSATION & BENEFITS:

Employee Compensation is a multifaceted concept that influences workforce

motivation, satisfaction, and retention. The structure and level of compensation are
not arbitrary; they are shaped by a variety of factors, both internal and external.

Market Conditions:

• Supply and Demand:

One of the most significant factors impacting employee compensation is the

balance of supply and demand in the labor market. When demand for specific skills
exceeds supply, employers may offer higher salaries to attract talent. Conversely,
if there are many qualified candidates for a few positions, wages may stagnate or
decrease.

• Economic Conditions:

The overall economic environment plays a critical role in compensation levels. In

a booming economy, companies are more likely to offer competitive salaries and
generous benefits to attract talent. In contrast, during economic downturns,
organizations may implement salary freezes, reduce bonuses, or cut benefits.

Industry Standards:

• Benchmarking:

Different industries have distinct compensation norms. For instance, tech

companies might offer higher salaries than those in manufacturing. Organizations
often conduct market surveys to benchmark their compensation packages against
industry standards, ensuring they remain competitive.

• Regulatory Factors:

Certain industries are subject to specific regulations that can influence

compensation. For example, financial services and healthcare industries often face
stringent compliance requirements that can affect how compensation is structured.

Job Characteristics:

• Skill Level and Experience:

The complexity of a job and the skill level required significantly impact
compensation. Positions that require specialized skills, extensive experience, or
advanced education typically command higher salaries. Organizations often assess
the qualifications needed for a role and adjust compensation accordingly.

• Job Responsibilities:

The scope and responsibilities of a position are also crucial. Employees with
greater responsibilities or those who manage teams often receive higher
compensation than those in entry-level roles. This differentiation reflects the level
of impact an employee has on the organization.

Company Size and Financial Performance:

• Organizational Resources:

Larger organizations often have more resources and may offer higher
compensation compared to smaller companies. They can also provide more
comprehensive benefits packages due to economies of scale.

• Profitability:

Company’s financial health directly affects its ability to offer competitive

compensation. Organizations that are profitable may reward their employees with
higher salaries, bonuses, and other incentives, while struggling companies may
need to cut back on compensation.

Geographic Location:

• Cost of Living:

The cost of living varies significantly from one location to another. For instance,
salaries in urban areas with high living costs (like New York or San Francisco) are
generally higher than those in rural areas. Employers often adjust salaries based on
the cost of living to ensure their employees can maintain a reasonable standard of
living.

• Regional Economic Conditions:

Local economic conditions also play a role in compensation. In areas with high
unemployment rates, salaries may be lower due to the larger pool of available labor.
Conversely, in regions with low unemployment and high demand for skilled
workers, employers may need to increase compensation to attract talent.

Organizational Culture and Compensation Philosophy:

• Company Values:

The values and culture of an organization can influence its compensation strategy.
Companies that prioritize employee well-being and engagement may offer more
competitive salaries and comprehensive benefits to attract and retain talent.

• Compensation Philosophy:

Organizations typically adopt a specific compensation philosophy, such as market-

based, performance-based, or equity-based compensation. This philosophy will
dictate how salaries and benefits are structured and can significantly affect the
overall compensation offered.

Employee Performance and Potential:

• Performance Reviews:

Many organizations utilize performance appraisals to assess employee

performance. High performers may receive merit-based increases, bonuses, or
promotions that reflect their contributions to the company. This performance-
oriented approach incentivizes employees to excel in their roles.

• Future Potential:

Some organizations consider an employee’s potential for growth when determining

compensation. Employees seen as having high potential may receive higher
starting salaries or more rapid increases as part of a long-term investment strategy.

Legal and Regulatory Factors:

• Minimum Wage Laws:

Government-mandated minimum wage laws set a baseline for employee
compensation. Organizations must comply with these laws, which can vary
significantly by region and industry.

• Labor Relations and Union Agreements:

In industries where labor unions are present, collective bargaining agreements can
play a critical role in determining compensation. Unions negotiate salaries and
benefits on behalf of their members, which can lead to higher compensation
packages than those offered by non-unionized organizations.

Benefits and Non-Monetary Compensation

• Comprehensive Benefits Packages:

Employee benefits such as health insurance, retirement plans, paid time off, and
flexible working arrangements are increasingly important components of total
compensation. Organizations that offer robust benefits can attract talent even if
their base salaries are lower than competitors.

• Work-Life Balance:

The emphasis on work-life balance has led many companies to adopt policies that
enhance employee well-being. Flexible work hours, remote work options, and
wellness programs can be seen as valuable components of compensation,
enhancing overall employee satisfaction.

Technological Advancements:

• Automation and AI:

The rise of technology has transformed job roles and the skills required to perform
them. As automation and artificial intelligence become more prevalent, employers
may adjust compensation to reflect the demand for new skills or the reduced need
for certain roles.

• Remote Work:
The shift to remote work has also changed compensation dynamics. Organizations
are exploring new compensation models to address the geographic flexibility that
remote work allows, potentially leading to disparities in pay based on location.

ANALYTICS FOR COMPENSATION PLANNING:

Compensation strategies that entice employees to stay at the company are more
important than ever.

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

Today’s compensation plan must maximize the effectiveness of the budget for each
employee and department. At the same time, it needs to provide satisfaction and
security to your employees, ensuring that they’re compensated fairly.

What’s more, a good compensation plan incorporates ways of motivating

employees to perform at their best. You can do so by providing a range of
performance incentives that are appealing, relevant and quantifiable.

That’s why investing in the development of a solid compensation planning strategy

is worth it. A method of ensuring that your compensation budget is allocated as
efficiently as possible can have a considerable effect on your company’s success.

Techniques:

Market Data Comparison: Using your internal payroll data to compare market
averages from external salary surveys.

Labour Cost Analysis: Merging payroll data such as base salaries, bonuses,
overtime pay, and benefits to determine overhead costs.

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

compensation costs to assist with salary and workforce planning.

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

compensation levels and performance data.
High Performer Analysis: Profiles high performers by analyzing performance
levels and correlates with rewards, training, previous work experience and
education to assist with recruitment and retention efforts.

Sales Compensation Analysis: Calculates commissions, bonuses, quotas and

hours worked to determine sales per hour.

Geographic Pay Analysis: Review payroll costs by location to assist with

geographic investment and expansion strategy decisions.

Managing Compensation Costs

Performing internal audits like the pay equity example above can lead to company-
wide changes to pay and benefits. Movements can lead to more hires and reduced
turnover, as well as increased wage and benefits pressures at competing
organizations. If you find your organization behind the pack, it can be tempting to
simply follow the lead of others. However, this can lead to wasted spending.

Uses:

Eliminating guesswork from your decision-making

The second benefit lies in using data to make a decision where Human Resources
and management previously used “gut instinct” for decision-making. When a good
employee tenders their resignation, the natural instinct of their manager is to get
approval to make a counter-offer.

Assessing pay equity

The topic of pay fairness has received a great deal of press across multiple
countries, particularly given the mandated reporting of the “gender pay gap” in the
United Kingdom and elsewhere. Since the defined pay gap that needs to be reported
doesn’t measure pay equity, companies need much more detailed data to conduct
an accurate pay fairness assessment. Much of the data required for an accurate
assessment of pay equity such as base salary, bonus structures, job classes, and
performance values reside inside compensation applications. Statistical procedures
in combination with compensation analytics reveal the true compensation picture
that can be communicated both internally and externally, and satisfy compliance
requirements.
 • Visualize all of your compensation data in one place and discover trends that
result in key business outcomes.

• Streamline compensation planning with actionable insights.

• Empower leaders to view current compensation costs and develop fair

compensation strategies for their teams.

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

succession strategy.

• Break down time-since-promotion by succession job and discover

actionable insights

COMPETENCY SCORECARD:

1) Identify key components of employee job descriptions – the critical points

only. Focus on what characteristics and skills are absolutely essential to get the job
done. Remember that job descriptions often serve different purposes when posting
a position than is needed to explain the role’s responsibilities.

2) Clarify roles and eliminate superfluous information – narrow the scope

again. Look through your essential words and phrases. Ask yourself whether you
have more words than needed to describe the essential characteristics. Then ask
yourself whether the role’s responsibilities are clear. How do they align to the task?
the team’s mission? the overall organizational strategy? If they don’t, back to the
drawing board.

3) Identify required aptitudes, attitudes, skills, and knowledge for roles –

critical components of the competencies are what is beneath the surface of
employee behavior. Like an iceberg, we see only what is above water, but realize
the vast majority is underneath. These values, underlying skills, and approach to
work is what you’re after. Identify what you need for a successful employee.

4) Synthesize ideas into central themes and define them – no more than 10
competencies. You will get mired in the assessment and analysis portion if you
don’t narrow it down to the critical few. Start researching other similar
organizations and the competencies they require of employees. Look to the K-12
educational sector. There’s quite a bit of knowledge about teacher competencies
that will likely align very well with your team.

5) Create a five-scale rubric system – describe what a novice looks like for each
competency. What about your expert? What does performance at each level in
between look like? What are the skills, aptitudes, and knowledge required at the
minimum for each level? Here’s where you will want to clearly describe the
behaviors exhibited by individuals who perform at each level on the novice-to-
expert scale. Ask others to review your list. Would they know what is expected to
perform at each level? If not, it’s back to the drawing board.

6) Build assessments – organize your set of questions aimed at identifying level

of alignment for each of the five scales you’ve designed. Don’t just ask questions
that measure whether someone is an expert. Look for open ended questions such
as “describe how you would do…” or “explain what you did when you were able
to accomplish…” Ask your candidates multiple layered questions. Never, ever, ask
a question that can be answered with a “yes or no.” You’re looking for depth of
answer here so that you can evaluate how well it fits to your rubric.

7) Build logistics for roll-out and on-going measurement cycles – this is the fun
part! You build a list of competencies, defined them, built rubrics to assess level
of competency on a novice-to-expert scale. Now you need to launch your program.
Pay attention to your audience. Are they a group of people with test anxiety? Do
they prefer written or oral assessment? Would they be excited to show where they
are at as far as their performance? The program will lose its luster if you only do it
once. Build a plan for continuous assessment – but don’t go crazy with it. Twice a
year is probably more than enough. Use the time in between to build on the gap
areas of your team. Make sure they’re moving toward the skillset of your defined
expert. However, don’t assume everyone will get there. A good rule of thumb is
that you’ll have the majority of your team in the middle 60%, with 20% of them
on either side of the novice-to-expert scale.
Steps in Competency Mapping Process

1. A job analysis is conducted by requesting individuals to fill a position

information questionnaire. Questionnaire asks them to describe what they
are doing, and what skills, attitudes and abilities they need to have to perform
it well. one on one interview can also be used to gather data. The main
objective is to gather data from employees about the key behaviors essential
to perform their respective work.

2. Making use of the results of the job analysis, you are ready to create a
competency based job description. This competency based job description
is presented to the HR department for their agreement and additions if any. It
is developed after thoroughly examining the input from the represented
group of employees and transforming it to standard competencies.

3. Once we have competency based job description, we start the process of

mapping the competencies. The competencies of the particular job
description become factors for assessment on the performance evaluation.
 Making use of competencies, you can perform more objective evaluations
determined by displayed or not displayed behaviors. Feedback can be given
to the participant about the competencies that has been assessed and where
they stand.

4. A detailed report is prepared of the competencies assessed and also the

development plan for the developmental areas. The outcomes of assessment
can be employed to identify what competencies employees require.
Additional development or training can be provided to employees. This will
help employees in achieving the objectives of the organization.

The underlying principle of competency mapping is that behavioral and

knowledge characteristics could be perfected, and that the behaviors and
knowledge sets people outwardly show are just a little part of the behaviors and
knowledge sets which individuals are competent at showing. People who use
competency mapping feel that if an individual understands what qualities are
important to performing efficiently in a provided role or situation at the office, he
can work at building those qualities.

Competency mapping provides HR manager a reasonably clear idea of the

employee. When the employee `tops’ every indicator at his level, he progresses to
a higher level and begins there at the base – in a nutshell, he is promoted. It also
helps in figuring out the training and development needs and importantly it helps
to motivate the best talent and develop the rest. It is a win-win situation for
employees and the organization.