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Senior Professional in Human Resources – International (SPHRi) Workbook Module Two: Talent Development and Management 2021 Edition (2nd) Copyright © 2021 by International Human Resource Certification Institute All rights reserved. No part of this book shall be reproduced, stored in a retrieval syste...

Senior Professional in Human Resources – International (SPHRi) Workbook Module Two: Talent Development and Management 2021 Edition (2nd) Copyright © 2021 by International Human Resource Certification Institute All rights reserved. No part of this book shall be reproduced, stored in a retrieval system, or transmitted by any means – electronic, mechanical, photocopying, recording, or otherwise – without written permission from the International Human Resource Certification Institute (IHRCI). No patent liability is assumed with respect to the use of the information contained herein. Although every precaution has been taken in the preparation of this book, the publisher and author assume no responsibility for errors or omissions. Neither is any liability assumed for damages resulting from the use of the information contained herein. International Human Resource Certification Institute (IHRCI) Flat/Rm, B, 5/F, Gaylord Commercial Building, 114-118, Lockhart Road. Hong Kong www.ihrci.org 1 Introduction As a purchaser of the SPHRi certification workbook serials, you have access to the www.ihrci.org learning system. The system contains Glossary that provides a search box and a description of the key terms in HR. Also, the system consists of over 800 practice exam questions and answers with explanations in our database including pre-test, review-test, and post-test: Pre-test: It contains the same percentage of questions from each content area. Participants can take a pre-test of that module to access their conceptual understanding of that specific area of the SPHRi Body of Knowledge. When the pre-test is completed, an overall correct percentage is provided along with the number and percentage of questions answered correctly. The answers with explanations to individual questions are also provided. Our system allows users to save the results of the pre-test so that they can improve upon that later. Review-test: Every review test contains questions s with explanations which help to understand the concepts of that particular knowledge area for each section of the study workbook. Once you successfully finish reviewing for one section text in the workbook; you naturally get access to the next section. Every new section helps construct on the earlier concepts learnt in the previous knowledge areas. Please do step-wise study for all the knowledge areas. Post-test: Once you complete with all the knowledge areas, have a post-test through the full length simulated practice tests under the same testing conditions as the actual exams. With 130 questions covered during the 2.5 hours test. These tests are designed to help you get the feel of the final SPHRi Exam, with similar format and question types. Practice till you are near to 80% correct answers in the post-test. This helped you in understanding areas where you have improved since the last test as well as list down topics for which you needed more revision. Access to the learning system is valid for twelve (12) months from the date of purchase to cover two test windows. Each practice for the pre-test, review-test, and post-test may be taken as many times as you would like within the 12 months. Access to these practice exams is for your individual use; your account is not to be shared with others. Your use of the online practice exams signifies your acknowledgment of an agreement to these terms. This workbook is not a textbook. These materials include workbooks and practice exams are intended for use as an aid to preparation for the SPHRi Certification Exam conducted by the HR Certification Institute. By using all of the preparation materials, you will be well-versed in the four key functional areas that make up the HR Certification Institute SPHRi body of knowledge. Studying these materials does not guarantee, however, that you will pass the exam. These workbooks are not to be considered legal or professional advice. 2 Table of Content Introduction........................................................................................................................1 Table of Content..................................................................................................................2 Part One: Organizational Development.................................................................................6 Human Resource Development (HRD).......................................................................6 Organizational Development (OD).............................................................................7 Entering and Contracting................................................................................8 Diagnosing Organizations, Groups, and Jobs....................................................8 Collecting, Analyzing, and Feeding Back Diagnostic Information.......................8 Designing Interventions..................................................................................9 Leading and Managing Change.......................................................................9 Leading Change...................................................................................................... 11 Creating a Climate for Change (Step1-Step3)................................................. 12 Engaging and Enabling the Whole Organization (Step4-Step6)....................... 13 Implementing and Sustaining Change (Step7-Step8)...................................... 15 Unfreeze, Change and Refreeze.................................................................... 16 Learning Organization............................................................................................. 17 Key features in Learning Organization........................................................... 17 The Five Disciplines...................................................................................... 17 Organizational Learning vs. Learning Organization......................................... 18 Knowledge Management........................................................................................ 19 Socialization................................................................................................. 20 Externalization............................................................................................. 20 Combination................................................................................................ 20 Internalization.............................................................................................. 21 HR Roles in Organizational Development................................................................. 21 Why HR Matters Now More Than Ever.......................................................... 23 HR’s New Role.............................................................................................. 24 Part Two: Performance Management................................................................................. 30 Performance Management System.......................................................................... 30 Managing Business Performance.................................................................. 30 Managing Job Performance.......................................................................... 31 Integrating the management of Business and Job performance..................... 33 Performance Planning............................................................................................. 34 Performance Standard.................................................................................. 34 Management by objectives (MBO)................................................................ 34 Goal Setting................................................................................................. 36 Objectives and Key Results (OKR).................................................................. 37 Performance Monitoring......................................................................................... 38 3 Eliminating Obstacle or Updating Objectives................................................. 38 Reinforcing Effective Behaviors..................................................................... 38 Conversations, Feedback and Recognition (CFR)............................................ 39 Maintaining performance records................................................................. 41 Performance Appraisal............................................................................................ 41 Objectives of Performance Appraisal............................................................. 41 Process of Performance Appraisals............................................................... 43 Acceptability of Performance Appraisals....................................................... 44 Performance Development..................................................................................... 47 Performance Improvement Plans (PIPs)........................................................ 48 Individual Development Plans (IDPs)............................................................. 50 Managing Performance in Cross Culture Context..................................................... 51 Cross Cultural Communication...................................................................... 51 Cross Cultural Training.................................................................................. 51 Managing a Virtual Team.............................................................................. 51 Employee Disciplinary Procedure............................................................................ 52 Stage 1: Verbal warning................................................................................ 53 Stage 2: Written Warning.............................................................................. 54 Stage 3: Final Warning.................................................................................. 54 Stage 4: Dismissal or action short of dismissal............................................... 55 Gross or Serious Misconduct........................................................................ 55 Part Three: Talent Development......................................................................................... 57 Adult Learning........................................................................................................ 57 Trainability................................................................................................... 58 Learning Styles............................................................................................. 58 Learning Curves............................................................................................ 58 Levels of Learning......................................................................................... 59 Employee Training.................................................................................................. 59 Analysis........................................................................................................ 60 Design.......................................................................................................... 61 Development............................................................................................... 61 Implementation........................................................................................... 63 Evaluation.................................................................................................... 64 2.6. Training Transfer........................................................................................... 66 Employee Development.......................................................................................... 67 Assessment.................................................................................................. 68 Education..................................................................................................... 69 Job Experiences............................................................................................ 70 4 Mentoring.................................................................................................... 71 Coaching...................................................................................................... 72 Management Development.................................................................................... 74 Leadership Style........................................................................................... 74 Situational Leadership.................................................................................. 76 Leadership Competencies............................................................................. 78 Leadership Development Methods............................................................... 81 Career Development............................................................................................... 83 Career Management Matters........................................................................ 83 HR Roles in Career Management................................................................... 84 Stages in career development....................................................................... 85 Career Paths and Ladders............................................................................. 86 Talent Management................................................................................................ 88 Alignment With Strategy............................................................................... 89 Internal Consistency..................................................................................... 90 Cultural Embeddedness................................................................................ 90 Management Involvement............................................................................ 91 Balance of Global and Local Needs................................................................ 92 Employer Branding Through Differentiation.................................................. 93 Replacement Planning vs. Succession Planning vs. Talent Management.................... 94 Replacement planning.................................................................................. 94 Succession planning..................................................................................... 94 Talent management...................................................................................... 97 A Positions and A Players........................................................................................ 98 Identifying Your A Positions.......................................................................... 99 Managing Your A Positions......................................................................... 102 Managing Your Portfolio of Positions........................................................... 104 Making Tough Choices................................................................................ 105 Managing High Performers and High Potentials..................................................... 105 Identifying High Performers and High Potentials.......................................... 106 Assessing Performance vs. Potential........................................................... 107 Development Strategies for High Performers and High Potentials................ 107 Diversity and Inclusion........................................................................................ 108 10.1. Educate Managers.................................................................................... 109 Recognize Individuality............................................................................. 109 Engage Others.......................................................................................... 109 Prohibit Bias............................................................................................. 110 Be the Real Deal....................................................................................... 110 5 Part Four: Employee Relations.......................................................................................... 111 Psychological Contract.......................................................................................... 111 Nature of Employee Relations..................................................................... 112 Recruitment and Selection.......................................................................... 114 Training and Development.......................................................................... 114 Performance Management......................................................................... 114 Compensation and Benefits........................................................................ 114 Employee Engagement......................................................................................... 115 Make Work Meaningful.............................................................................. 116 Foster Great Management.......................................................................... 116 Establish a Flexible, Humane, Inclusive Workforce....................................... 116 Create ample opportunities for growth....................................................... 116 Establish vision, purpose, and transparency in leadership............................ 117 Employee Survey.................................................................................................. 117 Objectives.................................................................................................. 118 Communication........................................................................................... 118 Collection................................................................................................... 118 Action........................................................................................................ 119 Review....................................................................................................... 119 Success Factors.......................................................................................... 119 Employee Retention............................................................................................. 120 Voluntary Turnover..................................................................................... 121 Causes of Turnover..................................................................................... 121 Functional or Dysfunctional Turnover.......................................................... 121 Cost of Turnover......................................................................................... 122 Retention Initiatives................................................................................... 123 Employee Surveys...................................................................................... 125 Exit Interviews............................................................................................ 125 Employee Communication.................................................................................... 127 Formal vs. Informal Communication............................................................ 127 Communication Process............................................................................. 128 Communication Channel............................................................................ 130 Direction in Formal Communication............................................................ 133 Reference........................................................................................................................ 137 8 Entering and Contracting The entering and contracting processes constitute the initial activities of the OD process. They set the parameters for the phases of planned change that follow: diagnosing, planning and implementing change, and evaluating and institutionalizing it. Organizational entry involves clarifying the organizational issue or presenting problem, determining the relevant client, and selecting and OD practitioner. Developing an OD contract focuses on making a good decision about whether to proceed and allows both the client and the OD practitioner to clarify expectations about how the change process will unfold. Diagnosing Organizations, Groups, and Jobs An organization-level diagnostic model consists of environmental inputs; a set of design components called a strategic orientation; and a variety of outputs, such as performance, productivity, and stakeholder satisfaction. Diagnosis involves understanding each of the parts in the model and then assessing howl the elements of the strategic orientation align with each other and with the input. Organization effectiveness is likely to be high when there is good alignment. Group diagnostic models take the organization’s design as the primary input; examine goal clarity, task structure, group composition, performance norm, and group functioning as the key design components; and list group performance and member quality of work life as the outputs. As with any open-systems model, the alignment of the parts is the key to understanding effectiveness. At the individual job level organization design, group design, and personal characteristics of individuals occupying jobs are the salient input. Individual jobs have five key dimensions: skill variety, task significance, task identity, autonomy, and feedback that work together to produce outputs of work satisfaction and work quality. Collecting, Analyzing, and Feeding Back Diagnostic Information The four major techniques for gathering diagnostic data are questionnaires, interviews, observations, and unobtrusive measure (from secondary sources, such as company records and archives). Benchmarking is a useful data collecting method to examine the best practices of other organizations and make changes in operations based on what is learned. Data analysis techniques fall into two broad classes: qualitative and quantitative. Qualitative techniques generally are easier to use because they do not rely on numerical data. That fact also makes them easier to understand and interpret. Quantitative techniques, on the other hand, can provide more accurate reading of the organizational problem. Data feedback is concerned with identifying the content of the data to be feedback and designing a feedback process that ensures ownership of the data. Feeding back data is a central activity in almost any OD program. If members own the data, they will be motivated to solve organizational problems. 9 A special application of the data-collection and feedback process is called survey feedback. It is one of the most accepted processes in OD. Survey feedback highlights the importance of contracting appropriately with the client system, establishing relevant categories for data collection, and feeding back the data as necessary steps for diagnosing organizational problems and developing interventions for resolving them. 2.4. Designing Interventions An intervention is a set of planned activities intended to help an organization improve its performance and effectiveness. Effective interventions are designed to fit the needs of the organization, are based on causal knowledge of intended outcomes, and transfer competence to manage change to organization members. Intervention design involves understanding situational contingencies such as individual differences among organization members and dimensions of the change process itself. Four key organizational factor-readiness for change, capability to change, culture context, and the capabilities of the change agent-affect the design and implementation of almost any intervention. 2.5. Leading and Managing Change 2.5.1. Change Process Theory -Unfreezing stage: Getting people to accept that the change will occur. Ending things that resist change is vital at this stage. -Moving stage: Getting people to accept the new, desired state. -Refreezing stage: When the new ideal becomes a regular part of the organization. 2.5.2. Implementation Theory -Interpersonal strategies Interpersonal intervention strategies deal with work relationships between employees. These interventions are directed at improving interpersonal, intrapersonal, intergroup, and intra group relations. In organizations with multiple layers, interpersonal approaches are often difficult because the layers are usually accompanied by "proper" channels for communication. - Technological strategies Technological intervention strategies focus on processes. The processes must provide adequate resources to achieve the company's goals. Technological development often includes such activities as job design, job simplification and specialization, grouping jobs into departments by function or product, and analyzing work flow and human factors to achieve coordination and communication among departments. -Structural strategies Structural intervention strategies look at how the structure of the organization is 10 helping or hindering the organization. They examine issues such as span of control and reporting relationships. For example, a company may decide that it has too many mid-level managers and may restructure to cut waste, reduce redundancy, and improve profits. 2.5.3. Effective Change Management Companies that are able to manage change effectively can gain distinct advantages over their competition that can lead to even greater success. When done right, change management can alleviate uncertainty among employees about how the change might impact them, reduce the potential for a negative impact on productivity, and engage or re-engage the company’s workforce. Companies who want to successfully lead employees through adoption of an organizational change must follow a systematic, proactive approach that incorporates four primary steps: overcoming resistance, engaging employees, implementing change in phases and communicating the change. ⚫ Overcoming resistance Although employee resistance is a natural reaction to widespread organizational changes, you can overcome that resistance by focusing on several key strategies: Clearly and consistently communicate about the change well in advance of its implementation. Help employees better understand the need for the change and the rationale behind the decisions, as well as the ways the change may affect them. Ensure that your change management team includes change champions who can help spread positive messages about the change, as well as take the temperature of employee reactions to the change. Provide strong support for the changing environment, such as ensuring that managers are provided with the training and information they need to answer employee questions. ⚫ Engaging employees Employees who are engaged in the change are more likely to put in the effort necessary to help implement the change and ensure a positive outcome for the organization. Help create high levels of employee engagement during your change process by: Developing a team approach that includes employees’ perspectives from a variety of departments and levels. Assigning and clarifying roles and responsibilities. Increasing your focus on the workers who are affected most by the change. Including resistance leaders in the change process to help overcome pushback from other employees. 11 Understanding and taking into account the different motivational factors for each employee. Implementing change in phases For companies planning a major change initiative, taking a phased approach can help ensure that the transition to a new system or process is as smooth and seamless as possible. Here are recommendations with three phases: Prepare for change – By taking steps such as defining your change management strategy, developing your change management team, and outlining key roles. Manage the change – By creating and executing change management plans that include communications, operations and resistance management. Reinforce the change – By collecting and analyzing feedback and then implementing corrective actions where needed. Communicating change Failing to tell employees in advance about organizational changes can increase employee misconduct by 42 percent. An integral part of every stage of the change management process, communication must be a two-way street in order to ensure the success of the organizational change. Think quality over quantity when it comes to communicating with employees, and consider these communication strategies for successful implementation: Pre-and post-surveys allow for feedback both before and after the change has been implemented, which can enhance the overall process. Engage resistors in one-on-one sessions prior to the solution’s implementation to allow them to provide their input. Be clear, consistent and explicit, especially when it comes to timeline and responsibilities. Use both formal and informal communication approaches, including email, intranet, in-person meetings, and signage and voice mails. Offer opportunities for employees to provide feedback into the process, and then be sure to use the input to inform the plan. Gather employees to explore worst-case scenarios and then develop strategies to address them. 3. Leading Change Change management is about people, performance and leadership, ergo, one would think HR should be leading the charge (or at least playing a major role). Leading the leadership in providing the organizational guidance is where HR can bring tremendous value because HR has, or should have, a top-level view of people, programs and process. They have a unique vantage point to breach silos and facilitate organizational change. If HR is going to 13 3.1.2. Step2: Create a Coalition Convince people that change is necessary. This often takes strong leadership and visible support from key people within your organization. Managing change isn't enough – you have to lead it. You can find effective change leaders throughout your organization – they don't necessarily follow the traditional company hierarchy. To lead change, you need to bring together a coalition, or team, of influential people whose power comes from a variety of sources, including job title, status, expertise, and political importance. Once formed, your "change coalition" needs to work as a team, continuing to build urgency and momentum around the need for change. For this step, the actions you should take are as follows: Identify the true leaders in your organization. Ask for an emotional commitment from these key people. Work on team building within your change coalition. Check your team for weak areas, and ensure that you have a good mix of people from different departments and different levels within your company. 3.1.3. Step3: Develop a Vision and Strategy When you first start thinking about change, there will probably be many great ideas and solutions floating around. Link these concepts to an overall vision that people can grasp easily and remember. A clear vision can help everyone understand why you're asking them to do something. When people see for themselves what you're trying to achieve, then the directives they're given tend to make more sense. For this step, the actions you should take are as follows: Determine the values that are central to the change. Develop a short summary (one or two sentences) that captures what you "see" as the future of your organization. Create a strategy to execute that vision. Ensure that your change coalition can describe the vision in five minutes. Practice your "vision speech" often. 3.2. Engaging and Enabling the Whole Organization (Step4-Step6) 3.2.1. Step4: Communicate the Vision What you do with your vision after you create it will determine your success. Your message will probably have strong competition from other day-to-day communications within the company, so you need to communicate it frequently and powerfully, and embed it within everything that you do. Don't just call special meetings to communicate your vision. Instead, talk about it every chance you get. Use the vision 14 daily to make decisions and solve problems. When you keep it fresh on everyone's minds, they'll remember it and respond to it. It's also important to "walk the talk." What you do is far more important – and believable – than what you say. Demonstrate the kind of behavior that you want from others. For this step, the actions you should take are as follows: Talk often about your change vision. Openly and honestly address peoples' concerns and anxieties. Apply your vision to all aspects of operations from training to performance reviews. Tie everything back to the vision. 3.2.2. Step5: Empower Action If you follow these steps and reach this point in the change process, you've been talking about your vision and building buy-in from all levels of the organization. Hopefully, your staff wants to get busy and achieve the benefits that you've been promoting. But is anyone resisting the change? And are there processes or structures that are getting in its way? Put in place the structure for change, and continually check for barriers to it. Removing obstacles can empower the people you need to execute your vision, and it can help the change move forward. For this step, the actions you should take are as follows: Identify, or hire, change leaders whose main roles are to deliver the change. Look at your organizational structure, job descriptions, and performance and compensation systems to ensure they're in line with your vision. Recognize and reward people for making change happen. Identify people who are resisting the change, and help them see what's needed. Take action to quickly remove barriers (human or otherwise). 3.2.3. Step6: Get Quick Wins Nothing motivates more than success. Give your company a taste of victory early in the change process. Within a short time frame (this could be a month or a year, depending on the type of change), you'll want to have some "quick wins" that your staff can see. Without this, critics and negative thinkers might hurt your progress. Create short-term targets – not just one long-term goal. You want each smaller target to be achievable, with little room for failure. Your change team may have to work very hard to come up with these targets, but each "win" that you produce can further motivate the entire staff. For this step, the actions you should take are as follows: 15 Look for sure-fire projects that you can implement without help from any strong critics of the change. Don't choose early targets that are expensive. You want to be able to justify the investment in each project. Thoroughly analyze the potential pros and cons of your targets. If you don't succeed with an early goal, it can hurt your entire change initiative. Reward the people who help you meet the targets. 3.3. Implementing and Sustaining Change (Step7-Step8) 3.3.1. Step7: Leverage wins to drive change Many change projects fail because victory is declared too early. Real change runs deep. Quick wins are only the beginning of what needs to be done to achieve long-term change. Launching one new product using a new system is great. But if you can launch 10 products, that means the new system is working. To reach that 10th success, you need to keep looking for improvements. Each success provides an opportunity to build on what went right and identify what you can improve. For this step, the actions you should take are as follows: After every win, analyze what went right and what needs improving. Set goals to continue building on the momentum you've achieved. Learn about kaizen, the idea of continuous improvement. Keep ideas fresh by bringing in new change agents and leaders for your change coalition. 3.3.2. Step8: Embed in culture Finally, to make any change stick, it should become part of the core of your organization. Your corporate culture often determines what gets done, so the values behind your vision must show in day-to-day work. Make continuous efforts to ensure that the change is seen in every aspect of your organization. This will help give that change a solid place in your organization's culture. It's also important that your company's leaders continue to support the change. This includes existing staff and new leaders who are brought in. If you lose the support of these people, you might end up back where you started. For this step, the actions you should take are as follows: Talk about progress every chance you get. Tell success stories about the change process, and repeat other stories that you hear. Include the change ideals and values when hiring and training new staff. Publicly recognize key members of your original change coalition, and make sure the rest of the staff – new and old – remembers their contributions. 19 need to work on or change in order to be more competitive or create a monopoly, what they are doing right, who the people are that work there and with their competitors, and what they are like as individuals. Both the learning organization and organizational learning are similar in that they both involve learning. Whether being the process of learning or the actual institutionalizing of learning, it has become popular in organizations today. The reason is because of the idea that one needs to be better than one’s competitors. Learning has also become more popular because of the ever changing environment that we all live in today. Organizations are becoming more and more competitive with each other and without some strategy of becoming better, organizations fall and go out of business, or even worse, go bankrupt. The strategy of learning in an organization has become the answer to businesses all around the world. The learning organization and organizational learning are slightly different in that the learning organization is the process to change and organizational learning is having the process and strategies and implementing change throughout an organization. Simply put, one is the plan, the other is the action. It would be very smart to implement these strategies in order to remain competitive in today’s society. Especially in the global economy today with the economy dropping, it is important that an organization be very wise, innovative, and has some sort of strategy in order to stay in business. 5. Knowledge Management Knowledge Management (KM) is a discipline that promotes an integrated approach to identifying, capturing, evaluating, retrieving, and sharing all of an enterprise's information assets. These assets may include databases, documents, policies, procedures, and previously un-captured expertise and experience of individual works. An author suggested that the main ingredient behind successful innovation was not a clever way of thinking or brainstorming. Instead, it was a place where people could share ideas, let them bump into each other, and in so doing, evolve into new, more powerful forms. The coffee-shops of Paris served this purpose during the Enlightenment, allowing for fantastic new scientific and philosophical concepts to be born. Philosopher Ikujiro Nanaka and others developed a model of knowledge creation that captures all the ways knowledge moves and morphs within a network, and the one main technique that managers can use to encourage its development. The model suggested by Nanaka’s team details the ways that knowledge changes hands and transforms. To begin, he divides knowledge into two types: Explicit Knowledge, which can be described with numbers, science, or manuals, and Tacit Knowledge, the emotional, difficult-to-describe variety. Both kinds of knowledge are necessary, both for everyday living and for business ventures. These two kinds of knowledge interact with four processes: Socialization, Externalization, Combination, and Internalization (SECI) as the below figure. 21 explicit knowledge, allowing the more refined forms to be distributed throughout the organization. An example would be a team in a tech firm whose job is to publish reports of successful products made throughout the company. 5.4. Internalization Internalization is where the model comes full circle: as we started with an individual sharing tacit knowledge, it ends with the same individual converting the explicit knowledge supplied either by the firm or outside sources into personally applicable tacit knowledge. An HR official runs through this process when he reads the company’s training manual for conflict resolution, then puts it into practice. Internalization doesn’t just refer to an individual; the collective tacit knowledge of the organization is morphed from its explicit knowledge through internalization. Now that we understand the main mechanisms whereby knowledge moves throughout an organization, the only piece missing is this: What are we, as managers, supposed to do about it? How can we apply this information? Here, we return with Nanako to the introduction of this article: a space that encourage the flow of ideas, which can allow all the SECI processes to occur. Nanako introduces a concept from Japanese, called “Ba”, which generally translates as “Place of _______.” Ba, when applied to business, refers to the concept of having a place for knowledge processes to occur. This place can be physical, virtual, or mental (such as a shared perspective or set of values). Managers’ main purpose in knowledge management is to provide this Ba, and to tailor the characteristics of each Ba to the processes it’s meant to encourage. For example, if one is trying to encourage Socialization, it would be counterproductive to encourage virtual interaction. Why? Socialization requires face-toface interaction, as the very act of an individual expressing his/her tacit knowledge transmutes it to explicit knowledge, making it Externalization instead of Socialization. Considerations such as these should become vital to a manager’s strategy. Ba is a powerful tool, and regulated or not, it’s an integral component in a company’s culture. When underutilized, Ba will develop independent of a manager’s direction, and will likely be counterproductive to the company’s goals. However, when used properly, Ba can encourage the flow of ideas throughout an organization, and as such, allow for greater innovation and creativity. Enjoy, and good luck, Change makers! 6. HR Roles in Organizational Development Should we do away with HR? In recent years, a number of people who study and write about business—along with many who run businesses—have been debating that question. The debate arises out of serious and widespread doubts about HR’s contribution to organizational performance. As David Ulrich, a very famous researcher and professor in HR filed said, He must agree that there is good reason for HR’s beleaguered reputation. It is often ineffective, incompetent, and costly; in a phrase, it is value sapping. Indeed, if HR were to remain configured as it is today in many companies, I would have to answer the question above with a resounding “Yes—abolish the thing!” But the truth is, HR has never been more necessary. The competitive forces that managers face today and will continue to confront in the future demand organizational excellence. 22 The efforts to achieve such excellence—through a focus on learning, quality, teamwork, and reengineering—are driven by the way organizations get things done and how they treat their people. Those are fundamental HR issues. To state it plainly: achieving organizational excellence must be the work of HR. The question for senior managers, then, is not Should we do away with HR? but What should we do with HR? The answer is: create an entirely new role and agenda for the field that focuses it not on traditional HR activities, such as staffing and compensation, but on outcomes. HR should not be defined by what it does but by what it delivers—results that enrich the organization’s value to customers, investors, and employees. More specifically, HR can help deliver organizational excellence in the following four ways: First, HR should become a partner with senior and line managers in strategy execution, helping to move planning from the conference room to the marketplace. Second, it should become an expert in the way work is organized and executed, delivering administrative efficiency to ensure that costs are reduced while quality is maintained. Third, it should become a champion for employees, vigorously representing their concerns to senior management and at the same time working to increase employee contribution; that is, employees’ commitment to the organization and their ability to deliver results. And finally, HR should become an agent of continuous transformation; shaping processes and a culture that together improve an organization’s capacity for change. Make no mistake: this new agenda for HR is a radical departure from the status quo. In most companies today, HR is sanctioned mainly to play policy police and regulatory watchdog. It handles the paperwork involved in hiring and firing, manages the bureaucratic aspects of benefits, and administers compensation decisions made by others. When it is more empowered by senior management, it might oversee recruiting, manage training and development programs, or design initiatives to increase workplace diversity. But the fact remains: the activities of HR appear to be—and often are—disconnected from the real work of the organization. The new agenda, however, would mean that every one of HR’s activities would in some concrete way help the company better serve its customers or otherwise increase shareholder value. Can HR transform itself alone? Absolutely not. In fact, the primary responsibility for transforming the role of HR belongs to the CEO and to every line manager who must achieve business goals. The reason? Line managers have ultimate responsibility for both the processes and the outcomes of the company. They are answerable to shareholders for creating economic value, to customers for creating product or service value, and to employees for creating workplace value. It follows that they should lead the way in fully integrating HR into the company’s real work. Indeed, to do so, they must become HR champions themselves. They must acknowledge that competitive success is a function of organizational excellence. More important, they must hold HR accountable for delivering it. Of course, the line should not impose the new agenda on the HR staff. Rather, operating managers and HR managers must form a partnership to quickly and completely reconceive and reconfigure the function—to overhaul it from one devoted to activities to one 23 committed to outcomes. The process will be different in every organization, but the result will be the same: a business era in which the question Should we do away with HR? will be considered utterly ridiculous. 6.1. Why HR Matters Now More Than Ever Regardless of their industry, size, or location, companies today face five critical business challenges. Collectively, these challenges require organizations to build new capabilities. Who is currently responsible for developing those capabilities? Everyone— and no one. That vacuum is HR’s opportunity to play a leadership role in enabling organizations to meet the following competitive challenges: 6.1.1. Globalization. Gone are the days when companies created products at home and shipped them abroad “as is.” With the rapid expansion of global markets, managers are struggling to balance the paradoxical demand to think globally and act locally. That imperative requires them to move people, ideas, products, and information around the world to meet local needs. They must add new and important ingredients to the mix when making strategy: volatile political situations, contentious global trade issues, fluctuating exchange rates, and unfamiliar cultures. They must be more literate in the ways of international customers, commerce, and competition than ever before. In short, globalization requires that organizations increase their ability to learn and collaborate and to manage diversity, complexity, and ambiguity. 6.1.2. Profitability Through Growth. During the past decade, most Western companies have been clearing debris, using downsizing, reengineering, de-layering, and consolidation to increase efficiency and cut costs. The gains of such yard work, however, have largely been realized, and executives will now have to pay attention to the other part of the profitability equation: revenue growth. The drive for revenue growth, needless to say, puts unique demands on an organization. Companies seeking to acquire new customers and develop new products must be creative and innovative, and must encourage the free flow of information and shared learning among employees. They must also become more market focused— more in touch with the fast changing and disparate needs of their customers. And companies seeking growth through mergers, acquisitions, or joint ventures require other capabilities, such as the finely honed skills needed to integrate different organizations’ work processes and cultures. 6.1.3. Technology. From videoconferencing to the Internet, technology has made our world smaller and faster. Ideas and massive amounts of information are in constant movement. The challenge for managers is to make sense and good use of what technology offers. Not all technology adds value. But technology can and will affect how and where work gets done. In the coming years, managers will need to figure out how to make technology a viable, productive part of the work setting. They will need to stay ahead of the information curve and learn to leverage information for business results. Otherwise, 24 they risk being swallowed by a tidal wave of data—not ideas. 6.1.4. Intellectual Capital. Knowledge has become a direct competitive advantage for companies selling ideas and relationships (think of professional service, software, and technology-driven companies) and an indirect competitive advantage for all companies attempting to differentiate themselves by how they serve customers. From now on, successful companies will be the ones that are the most adept at attracting, developing, and retaining individuals who can drive a global organization that is responsive to both its customers and the burgeoning opportunities of technology. Thus the challenge for organizations is making sure they have the capability to find, assimilate, develop, compensate, and retain such talented individuals. 6.1.5. Change, Change, and More Change. Perhaps the greatest competitive challenge companies face is adjusting to—indeed, embracing—nonstop change. They must be able to learn rapidly and continuously, innovate ceaselessly, and take on new strategic imperatives faster and more comfortably. Constant change means organizations must create a healthy discomfort with the status quo, an ability to detect emerging trends quicker than the competition, an ability to make rapid decisions, and the agility to seek new ways of doing business. To thrive, in other words, companies will need to be in a never-ending state of transformation, perpetually creating fundamental, enduring change. 6.2. HR’s New Role The five challenges described above have one overarching implication for business: the only competitive weapon left is organization. Sooner or later, traditional forms of competitiveness—cost, technology, distribution, manufacturing, and product features—can be copied. They have become table stakes. You must have them to be a player, but they do not guarantee you will be a winner. In the new economy, winning will spring from organizational capabilities such as speed, responsiveness, agility, learning capacity, and employee competence. Successful organizations will be those that are able to quickly turn strategy into action; to manage processes intelligently and efficiently; to maximize employee contribution and commitment; and to create the conditions for seamless change. The need to develop those capabilities brings us back to the mandate for HR set forth at the beginning of this article. Let’s take a closer look at each HR imperative in turn. We’re not going to argue that HR should make strategy. Strategy is the responsibility of a company’s executive team—of which HR is a member. To be full-fledged strategic partners with senior management, however, HR executives should impel and guide serious discussion of how the company should be organized to carry out its strategy. Creating the conditions for this discussion involves four steps. 25 Future / Strategic Focus Strategic Partner Change Agent Management of Strategic Management of Transformation Human Resources and Change Administrative Partner Employee Champion Management of Firm Management of Employee Infrastructure Contribution Day-to-Day / Operational Focus Source: Ulrich, D. (1998). A new mandate for human resources. Harvard Business Review, Jan-Feb, 76(1):124-134. 6.2.1. Becoming a Partner in Strategy Execution. First, HR should be held responsible for defining an organizational architecture. In other words, it should identify the underlying model of the company’s way of doing business. Several well-established frameworks can be used in this process. Jay Galbraith’s star model, for example, identifies five essential organizational components: strategy, structure, rewards, processes, and people. The well-known 7-S framework created by McKinsey & Company distinguishes seven components in a company’s architecture: strategy, structure, systems, staff, style, skills, and shared values. It’s relatively unimportant which framework the HR staff uses to define the company’s architecture, as long as it’s robust. What matters more is that an architecture be articulated explicitly. Without such clarity, managers can become myopic about how the company runs—and thus about what drives strategy implementation and what stands in its way. They might think only of structure as the driving force behind actions and decisions, and neglect systems or skills. Or they might understand the company primarily in terms of its values and pay inadequate attention to the influence of systems on how work—that is, strategy execution—actually gets accomplished. Senior management should ask HR to play the role of an architect called into an already-constructed building to draw up its plans. The architect makes measurements; calculates dimensions; notes windows, doors, and staircases; and examines the plumbing and heating infrastructures. The result is a comprehensive set of blueprints that contains all the building’s parts and shows how they work together. Next, HR must be accountable for conducting an organizational audit. Blueprints can illuminate the places in a house that require immediate improvement; organizationalarchitecture plans can be similarly useful. They are critical in helping managers identify 26 which components of the company must change in order to facilitate strategy execution. Again, HR’s role is to shepherd the dialogue about the company’s blueprints. Consider a company in which HR defined the organization’s architecture in terms of its culture, competencies, rewards, governance, work processes, and leadership. The HR staff was able to use that model to guide management through a rigorous discussion of “fit”—did the company’s culture fit its strategic goals, did its competencies, and so forth. When the answer was no, HR was able to guide a discussion of how to obtain or develop what was missing. The third role for HR as a strategic partner is to identify methods for renovating the parts of the organizational architecture that need it. In other words, HR managers should be assigned to take the lead in proposing, creating, and debating best practices in culture change programs, for example, or in appraisal and reward systems. Similarly, if strategy implementation requires, say, a team-based organizational structure, HR would be responsible for bringing state-of-the-art approaches for creating this structure to senior management’s attention. Fourth and finally, HR must take stock of its own work and set clear priorities. At any given moment, the HR staff might have a dozen initiatives in its sights, such as pay-forperformance, global team-work, and action-learning development experiences. But to be truly tied to business outcomes, HR needs to join forces with operating managers to systematically assess the impact and importance of each one of these initiatives. Which ones are really aligned with strategy implementation? Which ones should receive attention immediately, and which can wait? Which ones, in short, are truly linked to business results? Because becoming a strategic partner means an entirely new role for HR, it may have to acquire new skills and capabilities. Its staff may need more education in order to perform the kind of in-depth analysis an organizational audit involves, for example. Ultimately, such new knowledge will allow HR to add value to the executive team with confidence. In time, the concept of HR as a strategic partner will make business sense. 6.2.2. Becoming an Administrative Expert. For decades, HR professionals have been tagged as administrators. In their new role as administrative experts, however, they will need to shed their traditional image of rulemaking policy police, while still making sure that all the required routine work in companies is done well. In order to move from their old role as administrators into their new role, HR staff will have to improve the efficiency of both their own function and the entire organization. Within the HR function are dozens of processes that can be done better, faster, and cheaper. Finding and fixing those processes is part of the work of the new HR. Some companies have already embraced these tasks, and the results are impressive. One company has created a fully automated and flexible benefits program that employees can manage without paperwork; another has used technology to screen résumés and reduce the cycle time for hiring new candidates; and a third has created an electronic bulletin board that allows employees to communicate with senior executives. In all 27 three cases, the quality of HR work improved and costs were lowered, generally by removing steps or leveraging technology. But decreased costs aren’t the only benefit of HR’s becoming the organization’s administrative expert. Improving efficiency will build HR’s credibility, which, in turn, will open the door for it to become a partner in executing strategy. Consider the case of a CEO who held a very low opinion of the company’s HR staff after they sent a letter to a job candidate offering a salary figure with the decimal point in the wrong place. (The candidate called the CEO and joked that she didn’t realize the job would make her a millionaire.) It was only after the HR staff proved they could streamline the organization’s systems and procedures and deliver flawless administrative service that the CEO finally felt comfortable giving HR a seat at the strategy table. HR executives can also prove their value as administrative experts by rethinking how work is done throughout the organization. For example, they can design and implement a system that allows departments to share administrative services. At Amoco, for instance, HR helped create a shared-service organization that encompassed 14 business units. HR can also create centers of expertise that gather, coordinate, and disseminate vital information about market trends, for instance, or organizational processes. Such groups can act as internal consultants, not only saving the company money but also improving its competitive situation. 6.2.3. Becoming an Employee Champion (Employee Advocate). Work today is more demanding than ever—employees are continually being asked to do more with less. And as companies withdraw the old employment contract, which was based on security and predictable promotions, and replace it with faint promises of trust, employees respond in kind. Their relationship with the organization becomes transactional. They give their time but not much more. That kind of curtailed contribution is a recipe for organizational failure. Companies cannot thrive unless their employees are engaged fully. Engaged employees—that is, employees who believe they are valued—share ideas, work harder than the necessary minimum, and relate better to customers, to name just three benefits. In their new role, HR professionals must be held accountable for ensuring that employees are engaged—that they feel committed to the organization and contribute fully. In the past, HR sought that commitment by attending to the social needs of employees—picnics, parties, United Way campaigns, and so on. While those activities must still be organized, HR’s new agenda supersedes them. HR must now take responsibility for orienting and training line management about the importance of high employee morale and how to achieve it. In addition, the new HR should be the employees’ voice in management discussions; offer employees opportunities for personal and professional growth; and provide resources that help employees meet the demands put on them. Orienting and training line management about how to achieve high employee morale can be accomplished using several tools, such as workshops, written reports, and employee surveys. Such tools can help managers understand the sources of low morale within the organization—not just specifically, but conceptually. For instance, HR might 28 inform the line that 82% of employees feel demoralized because of a recent downsizing. That’s useful. But more than that, HR should be responsible for educating the line about the causes of low employee morale. For instance, it is generally agreed by organizational behavior experts that employee morale decreases when people believe the demands put upon them exceed the resources available to meet those demands. Morale also drops when goals are unclear, priorities are unfocused, or performance measurement is ambiguous. HR serves an important role in holding a mirror in front of senior executives. HR can play a critical role in recommending ways to ameliorate morale problems. Recommendations can be as simple as urging the hiring of additional support staff or as complex as suggesting that reengineering be considered for certain tasks. The new role for HR might also involve suggesting that more teams be used on some projects or that employees be given more control over their own work schedules. It may mean suggesting that line managers pay attention to the possibility that some employees are being asked to do boring or repetitive work. HR at Baxter Healthcare, for example, identified boring work as a problem and then helped to solve it by redesigning work processes to connect employees more directly with customers. Along with educating operating managers about morale, HR staff must also be an advocate for employees—they must represent the employees to management and be their voice in management discussions. Employees should have confidence that when decisions are made that affect them (such as a plant closing), HR’s involvement in the decision-making process clearly represents employees’ views and supports their rights. Such advocacy cannot be invisible. Employees must know that HR is their voice before they will communicate their opinions to HR managers. 6.2.4. Becoming a Change Agent. To adapt a phrase, Change happens. And the pace of change today, because of globalization, technological innovation, and information access, is both dizzying and dazzling. That said, the primary difference between winners and losers in business will be the ability to respond to the pace of change. Winners will be able to adapt, learn, and act quickly. Losers will spend time trying to control and master change. The new HR has as its fourth responsibility the job of building the organization’s capacity to embrace and capitalize on change. It will make sure that change initiatives that are focused on creating high-performing teams, reducing cycle time for innovation, or implementing new technology are defined, developed, and delivered in a timely way. The new HR can also make sure that broad vision statements (such as, We will be the global leader in our markets) get transformed into specific behaviors by helping employees figure out what work they can stop, start, and keep doing to make the vision real. At Hewlett-Packard, HR has helped make sure that the company’s value of treating employees with trust, dignity, and respect translates into practices that, for example, give employees more control over when and where they work. Change has a way of scaring people—scaring them into inaction. HR’s role as a change agent is to replace resistance with resolve, planning with results, and fear of change with excitement about its possibilities. How? The answer lies in the creation and use of 31 executives, that describe the long-term drivers of success. 1.1.2. Communicating and linking Communicating and linking lets managers communicate their strategy up and down the organization and link it to departmental and individual objectives. Traditionally, departments are evaluated by their financial performance, and individual incentives are tied to short-term financial goals. The scorecard gives managers a way of ensuring that all levels of the organization understand the long-term strategy and that both departmental and individual objectives are aligned with it. 1.1.3. Budgeting Budgeting is the process by which a company or individuals evaluate their earnings and expenses and project their cash flow for the future. Budgeting enables companies to integrate their business and financial plans. Goal setting is a key element to making a budget. Almost all organizations today are implementing a variety of change programs, each with its own champions, gurus, and consultants, and each competing for senior executives’ time, energy, and resources. Managers find it difficult to integrate those diverse initiatives to achieve their strategic goals—a situation that leads to frequent disappointments with the programs’ results. But when managers use the ambitious goals set for performance measures as the basis for allocating resources and setting priorities, they can undertake and coordinate only those initiatives that move them toward their long-term strategic objectives. After that, cascading the strategic objectives and translate the corporate-wide objectives down to first business units, support units or departments and then teams or individuals. 1.1.4. Performance Measurement Performance measurement, also called performance metric, refers to numerical information that quantifies input, output, and performance dimensions of processes, products, services, and the overall organization outcomes. Performance measurement can provide feedback and learning that gives companies the capacity for what we call strategic learning. Existing feedback and review processes focus on whether the company, its departments, or its individual employees have met their budgeted financial goals. If the balanced scorecard (BSC) is implemented at the center of its management systems, a company can monitor short-term results from the three additional perspectives—customers, internal business processes, and learning and growth—and evaluate strategy in the light of recent performance. The scorecard thus enables companies to modify strategies to reflect real-time learning. 1.2. Managing Job Performance Job performance is defined as the set of behaviors that are relevant to the goals of the organization or the organizational unit in which a person work. Job performance is what the organization hires one to do, and do well. Job performance is not the consequence or result of action, it is the action itself. However, if the action does not produce a result that is useful to shareholder, the action does not count. The criterion domain of job performance: 1.2.1. Task Performance 32 Task performance refers the proficiency with which job incumbents perform activities that are formally recognized as part of their job or activities that contribute to the organization’s technical core. It often belongs to “can do behavior”. The components of task performance are: Declarative Knowledge: fact, principles, goals, self-knowledge. Procedural Knowledge and Skill: cognitive skill, psychomotor skill, physical skill, Selfmanagement skill, interpersonal skill. Motivation: choice to perform, level of effort, persistence of effort. 1.2.2. Contextual Performance Other activities do not fall under the category of task performance but are still important for organizational effectiveness. It often belongs to “will do behavior” and called Organizational Citizenship Behavior (OCB). The components of task performance are: Interpersonal citizenship behaviors: helping & cooperating with others. Organizational citizenship behaviors: endorsing, supporting & defending organizational objectives; following organizational rules & procedures. Job/Task citizenship behaviors: Persisting with enthusiasm & extra effort as to complete own task activities successfully. 1.2.3. Job Performance Management Process Job Performance management, often called “Performance Management” in an individual level, is the process of identifying, executing, evaluating, and developing the performance of the human resources in an organization. The performance management process from two perspectives: a). the upstream component encompasses planning, objective setting, and measurement, which lends itself to standardization of performance management practices; b).The downstream component includes the performance appraisal itself. This component often reflects localization of performance management practices. An effective Performance Management process establishes the groundwork for excellence by: Performance planning is a discussion for developing a common understands of the objectives or performance standard that need to be achieved. Performance monitoring is a day-to-day management behavior to assure the objectives could be accomplished. Performance appraisal is the process that measures the degree to which employee accomplishes work requirements. Performance development is an ongoing cyclical process aims to develop, maintain and improve your skills, knowledge and job performance through performance 33 planning, monitoring, and appraisal. 1.3. Integrating the management of Business and Job performance One of the biggest challenges for any company lies in achieving organizational alignment: that desired state in which the entire enterprise is working together to achieve business goals. Key to alignment is ensuring that employees understand the relevance of their contributions and taking the appropriate measures to ensure they remain engaged. Alignment between organizational strategy, group and individual goals is necessary to ensure that individuals can see how their individual effort and performance contribute to the attainment of strategic goals. When alignment is successfully achieved, clear goals are evident at the top of the organization / group and are clearly communicated at all hierarchical levels. Executives have to ensure alignment throughout the organization to establish a strong link between different levels of performance management. Traditionally, performance management in an organizational context has been divided into three levels: strategic, operational and individual performance management. Strategic Level At strategic level, performance management deals with the achievement of the overall organizational objectives. Practitioners refer to it as corporate, business, organizational or enterprise performance management, this being the highest and most complete level of usage of performance management principles in organizations. Strategic management is a key driver of performance management at this level, as the key processes related to performance management systems are strategy formulation and implementation. Operational Level Performance management at operational level is linked to operational management, as its focus is on the achievement of operational objectives. Although aligned with corporate strategy, the focus here is more functional / tactical. The evolution of operational performance management is linked to the evolution of accounting and management in history. This is due to the fact that operational performance was evaluated in terms of efficiency and effectiveness. And the easiest way to do this is by using financial indicators, provided by the accounting function in organizations. Over time, as internal and external operating environments became more complex, organizations started to look at nonfinancial indicators of performance. This made the connection with operations management and other aspects of the general management discipline. Individual Level The traditional level at which performance management is used in organizations is the individual level, looking at the performance of individuals in an organizational context. 34 At individual level, performance management is represented by an integrated and planned system for continuously improving the performance of all employees. It involves defining work goals and standards, reviewing performance against these standards, actively managing all levels of performance, and maximizing learning and development. 2. Performance Planning Performance planning is a formal structured process for identifying and communicating the organizational and individual goals expected of the employee. The performance plan consists of performance expected of an employee and an Individual Development Plan. Performance plans are decided collaboratively between the supervisor and employee working together. They together determine the performance expectations and development objectives to be accomplished during the review period. They discuss goals, objectives and expectations for the review period. The process helps to improve the communication and discuss the career development plan of the employee. Here are some important issues regarding performance planning: 2.1. Performance Standard Objectives or goals(the term are interchangeable) define what organizations, functions, departments, teams and job holders are expected to perform and accomplish. Some cultural factors that may influence performance management standards: Some cultures value performance of the group over the individual as follow. In some cases, an open and honest exchange of issues can occur. In other cultural contexts, a more formal, reserved relationship is the norm. The appropriateness of forms and the meaning of rating scales vary significantly from culture to culture and location to location. In some cultures, only positive feedback is provided so employees can save face. The act of ranking employees within a group can be difficult in collective cultures. Compensation practices vary widely across borders, cultures, and legal systems. The perceived value of the rewards can also vary from culture to culture. This practice may not be accepted in collective cultures and those with high ascribed value dimensions. Appraisals can be highly culturally specific. Even the meaning of the term "performance" can vary among individual and collective cultures. Also, the process of gaining input from colleagues can be easy and expected in some cultures but very guarded in others. 2.2. Management by objectives (MBO) MBO can be defined as a process whereby the employees and the superiors come together to identify common goals, the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of their performance and 37 Attainable Attainable goals figure out ways we can make them come true. There should be a realistic chance that a goal can be accomplished. This does not mean or imply that goals should be easy. On the contrary, a goal should be challenging. It should be set by or in concert with the person responsible for its achievement. The organization's leadership, and where appropriate its stakeholders, should agree that the goal is important and that appropriate time and resources will be focused on its accomplishment. An attainable goal should also allow for flexibility. A goal that can no longer be achieved should be altered or abandoned. Relevant Individual goals should be appropriate to and consistent with the strategic and operational goals of the organization. Each goal adopted by the organization should be one that moves the organization toward the achievement of its strategic goals. Relevant goals will not conflict with other organizational goals. It is important that all short-term goals be relevant (e.g., consistent) with the longer-term and broader goals of the organization. Time-bound Finally a goal must be bound by time. Timely goals outline actions we can apply immediately. That is, it must have a starting and ending point. It should also have some intermediate points at which progress can be assessed. Limiting the time in which a goal must be accomplished helps to focus effort toward its achievement. 2.4. Objectives and Key Results (OKR) In line with MBO (management by objectives), OKR (Objectives and Key Results) is a goal system used by Intel, Google, and others. It is a simple tool to create alignment and engagement around measurable goals. The big difference from traditional performance planning method is that OKRs are frequently set, tracked, and reevaluated – usually quarterly. OKR has two components, the Objective and the Key Results: Objectives Objectives are memorable qualitative descriptions of what you want to achieve. Objectives should be short, inspirational and engaging. An Objective should motivate and challenge the team. Key Results Key Results are a set of metrics that measure your progress towards the Objective. For each Objective, you should have a set of 2 to 5 Key Results. More than that and no one will remember them. A critical element of why OKRs work so well is their transparency up, down and across the entire organization. This transparency enables every person in the workforce to see how what they do ladders up to the most important goals of the organization. This visibility and alignment are critical for recruiting, engaging and 39 positive and required behavior. For example, immediately praising an employee for coming early for job. This will increase probability of outstanding behavior occurring again. Reward is a positive reinforce, but not necessarily. If and only if the employees’ behavior improves, reward can said to be a positive reinforce. Positive reinforcement stimulates occurrence of a behavior. It must be noted that more spontaneous is the giving of reward, the greater reinforcement value it has. Stimulus Desirability of stimulus Contingencies of reinforcement Strength of response Presented Pleasant Positive reinforcement Increases Unpleasant Punishment Decreases Withdrawn Pleasant Extinction Decreases Unpleasant Negative reinforcement Increases 3.2.2. Negative Reinforcement This reinforcement strengthens a behavior because a negative condition is stopped or avoided as a consequence of the behavior. This implies rewarding an employee by removing negative / undesirable consequences. Both positive and negative reinforcement can be used for increasing desirable or required behavior. 3.2.3. Punishment Punishment weakens a behavior because a negative condition is introduced or experienced as a consequence of the behavior. It implies removing positive consequences so as to lower the probability of repeating undesirable behavior in future. In other words, punishment means applying undesirable consequence for showing undesirable behavior. For instance, suspending an employee for breaking the organizational rules. Punishment can be equalized by positive reinforcement from alternative source. 3.2.4. Extinction Extinction removes something in order to decrease a behavior. It implies absence of reinforcements. In other words, extinction implies lowering the probability of undesired behavior by removing reward for that kind of behavior. For instance - if an employee no longer receives praise and admiration for his good work, he may feel that his behavior is generating no fruitful consequence. Extinction may unintentionally lower desirable behavior. 3.3. Conversations, Feedback and Recognition (CFR) Increasingly, though, leading organizations are phasing out the once-a-year review in favor of ongoing, informal “Check-ins” with employees. The goal: to create a culture of ongoing dialogues focused on building a continuous, dynamic and mutually rewarding 40 approach to development. Like OKR, CFR (Conversations, Feedback and Recognition) champions transparency, accountability, empowerment, and teamwork, at all levels of the organization. It is a complete delivery system to measure what matters. When companies Annual Reviews are accompanied by regular Check-ins and real-time feedback they are in a better position to make progress throughout the year. It also brings in better alignment and transparency to the entire process. 3.3.1. Conversations The employee and his superiors are supposed to regularly meet (one-on-ones) and discuss the MBO or OKR as per the predefined schedule. T employee must set the agenda and proceedings of the meeting. And the supervisor should provide coaching, guidance, and support necessary for employee development and achievement of the Objectives. The conversation must focus on future improvements and development instead of negative criticism. The one-on-ones may be arranged Weekly, Monthly or Quarterly depending on the circumstances. However, these meetings should discuss things in detail apart from the day to day work. As workplace conversations become integral, managers are evolving from taskmasters to teachers, coaches, and mentors. 3.3.2. Feedback Effective feedback foster performance improvement, however, it has to be specific and integral part of the process. In developing organizations, HR has the responsibility for delivering feedback according to the schedule. Whereas in mature organizations feedback is multidirectional, ad hoc, and real-time open discussion between people anywhere within the organization. There are some organizations using 360 degree feedback as an additional tool for continuous performance management. When it comes to effective problem-solving in the cross-functional team environment, constructive feedback enhances connections and team bonding. It also results in eradicating silos in the organization and foster teamwork within departments. However, one has to be cautious while providing negative feedback to the employees. It is relatively easy to provide favorable feedback. There is ample material available online on "How-to" effectively deliver feedback. There are many software tools available these days with an option to provide anonymous feedback as well. 3.3.3. Recognition Celebrating makes people feel like winners and creates an atmosphere of recognition and positive energy. Recognition should be frequent and public. Create a highperformance culture with real-time praise and feedback for successful teams and Individuals. Recognition these days is horizontal and based on performance. Using the inbuilt system anyone can cheer anyone else's goal regardless of the Function, Department or title. 43 affiliations with managers or owners. This approach relies on employee testing or evaluations (similar as forced distribution) to determine the efficacy of each worker, with only those scoring in the lowest percentiles, or below a predetermined standard, losing their jobs. 4.1.7. Training Performance appraisals can identify the necessary training and development the employee needs to close the gap between current performance and desired performance. By reviewing the data from performance appraisals, HR can make good decisions about where the organization should concentrate company-wide training efforts. If the performance appraisal procedure includes a requirement that individual development plans be determined and discussed, individuals can then make good decisions about the skills and competencies they need to acquire to make a greater contribution to the company. 4.2. Process of Performance Appraisals A performance appraisal is a formal interaction between an employee and her manager. This is when the performance of the employee is assessed and discussed in thorough detail, with the manager communicating the weaknesses and strengths observed in the employee and also identifying opportunities for the employee to develop professionally. Here is the process involved in performance appraisal 4.2.1. Conducting Job analysis. This is logically our first step because if we don’t know what a job consists of, how can we possibly evaluate an employee’s performance? We should realize that the job must be based on the organizational mission and objectives, the department, and the job itself. 4.2.2. Establishing Performance Standards In this we use as the base to compare the actual performance of the employees. In this step it requires to set the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms. If employee doesn't come up to expectance, then it should be taken extra care for it. 4.2.3. Communicating the standards It is the responsibility of the management to communicate the standards to all the employees of the organization. The employees should be informed and the standards should be clearly explained. This will help them to understand their roles and to know what exactly is expected from them. 4.2.4. Measuring the actual Performance The most difficult part of the performance appraisal process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a nonstop process which involves monitors the 44 performance all over the year. This stage requires the watchful selection of the suitable techniques of measurement, taking care that individual bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work. 4.2.5. Comparing the Actual with the Desired Performance In this the actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employees' performance. 4.2.6. Discussing Results The result of the appraisal is communicated and discussed with the employees on oneto-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the employees' future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better. Performance feedback can be very different across cultures. Managers must learn how feedback that should be given in that culture. 4.2.7. Decision Making The last step of the process is to take decisions which can be taken either to improve the performance of the employees, take the required corrective actions, or the related HR decisions like rewards, promotions, demotions, transfers etc. 4.3. Acceptability of Performance Appraisals Performance appraisal is provided the employees perceive the system as accurate is a major component of Performance Management System which measures employees’ performance relevant to the specified standards and against clearly defined objectives. A major challenge for performance appraisal systems is to have its maximum acceptability among employees. The system itself and its outcomes can have an important influence on the employees, attitude towards their work, their supervisors and their organization. The system can also become a source of frustration and extreme dissatisfaction if it is considered to be biased unreliable or irrelevant. Organizational justice prevails when its employees believe that rewards are fair and justified. In the HR existing literature, perceptions of fairness are ordinarily categorized as Distributive, Procedural Interactional and Informational. In the context of performance appraisal, distributive justice focuses on the perceived fairness of the appraisal rating or outcome received in relation to the actual work performed, whereas procedural justice focuses on the perceived fairness of procedures followed to arrive at that outcome (ratings). Interactional justice focuses on the perceived fairness of the interpersonal treatment employees receive during the appraisal process. Informational 45 justice refers to the explanation of decisions and communication environment in the organization. Procedural/Interactional/ Distribution Informational Justice Justice Performance appraisal process Appraisal outcome Procedural/Interpersonal/Informational Fairness Unfair Fair Perceive fair Perceive fair Perceive unfair Perceive fair Positive outcome Negative outcome 4.3.1. Distributive Justice / Fairness Distributive Justice, concept originated from Adam’s Equity Theory, which claims that individuals formulate fairness perceptions by comparing their perceived work outcomes (rewards) to their perceived work inputs (contribution) in relation to the perceived input to outcome ratio of a coworker. Thus, employees view their appraisal rating and any consequent rewards, as fair when these reflect the individual’s inputs and contributions. The fairness of outcomes in the appraisal context means fairness of the performance ratings given by the supervisors. Perception of fairness will prevail if employees see raters trying to motivate employees, improve performance and expand their perception of satisfaction. However fairness perception will not prevail if element of conflict avoidance, favoritism and politics is seen in appraisals. Many appraisers have a vested interest in making their subordinates look good on papers which, in most cases, reflect a problematic organizational culture that may be intolerant of failures or appraisers may be fearful of repercussions – both for themselves and the appraisee. Researchers found that accuracy in appraisals is impossible to achieve because people protect their own personal interest while playing social and political games. Some managers consciously fudge the numbers when they are let loose no matter what checks and balances are put in place. Many managers have actually defended fudging appraisal results by declaring it as an effective management tactics. There can be different motives for fudging, for example; hope for a better future performance, avoid unpleasant confrontation, hide employee weaknesses, punish or reward an employee. Therefore the rater is likely to have biases that distort ratings and this influences employee perception of accuracy and fairness. 4.3.2. Procedural Justice / Fairness Procedural Justice / Fairness means the fairness of the procedures adopted to decide the outcomes. Process of assigning well trained raters, mutually establishing 46 performance criteria and having appeals process adds to employee perception of procedural justice. A justice model for performance appraisal, rooted in the due process of law and possessing three basic factors: adequate notice, a fair hearing and judgment based on evidence. Adequate notice involves giving employees knowledge of the appraisal system and how it affects them. More specifically, it entails developing performance standards and objectives before the appraisal period commences which must be well documented, clearly explained, fully understood and preferably set by mutual agreement with employees so that they are only held accountable for standards and objectives properly communicated to them. Adequate notice also involves giving employees constant feedback on a timely basis throughout the performance evaluation period, so that employees can rectify any performance deficiencies before the appraisal is conducted. Studies show that adequate notice is important to employee perceptions of procedural fairness. Clarity of appraisal expectations and a thorough employee understanding of the appraisal process were important predictors of procedural fairness. The second factor that affects employee perceptions of procedural fairness is a fair hearing which means: an opportunity to influence the evaluation decision through evidence and argument, access to the evaluation decision and an opportunity to challenge the evaluation decision. Fundamentally, a fair hearing entails two-way communication, with employee input or ‘voice’ in all aspects of the appraisal decision-making process. The third procedural justice factor is judgment based on evidence. This means convincing employees that ratings do accurately reflect performance by justifying evaluation decisions in terms of performance-related evidence. Ratings overtly based on tangible performance records and evidence appears objective and unbiased. Those based on covert evidence appear subjective and judgmental. If a judgment is based on the evidence, it necessarily means that it is not based on external pressure, personal bias and dishonesty. A performance rating must therefore withstand scrutiny and reflect principles of sincerity and fairness. 4.3.3. Interactional Justice / Fairness Interactional Justice / Fairness refers to the quality of appraisal interview, appraisal system and performance interaction between the rater and the rate. Individuals are highly influenced by the emotional intelligence of their supervisors and other representatives within the organization. This is especially true when raters show concern for employees regarding the outcomes that they receive. Other expressions of remorse by raters, especially apologies, have enabled to reduce employees’ perception of unfairness. There are four factors that influence how fairly employees feel they have been treated by supervisors: deception, invasion of the employee’s privacy, disrespectful treatment and derogatory judgments. Deception occurs if a supervisor’s words and actions are inconsistent, as, for example, when a supervisor promised a pay increase if performance improved, but later refused to honor that promise. Invasions of privacy occur if the supervisor gossips, spreads rumors, or unnecessarily discloses confidential information about an employee. Disrespect is demonstrated if supervisors are abusive or inconsiderate in their words or actions. Abuse includes every conceivable kind of insult from racist remarks to ‘name-calling’ to public humiliation. Derogatory judgments refer to wrongful and unfair statements and judgments about the employee’s performance, for example when a supervisor fails to supply adequate resources and yet accuses a subordinate of not having satisfactorily completed a task. 48 5.1. Performance Improvement Plans (PIPs) From time to time, it may become apparent that a person in your department is not performing up to expectations. If a frank ‘sit down’ conversation isn’t effective, they may need the structure of a Performance Improvement Plan (PIP) to help them regain the focus and execution prowess needed for them to be successful. The communication of poor performance should never be a surprise. The key is to have regular conversations with each person concerning their performance – the good, the bad and the ugly. If you and your direct reports are not perfectly aligned on your perception of their performance, you are failing them as their leader. Remember, PIPs are (or should be) designed to correct poor performance and put the individual on a path toward success. They should never be used to railroad someone out of an organization. The first person to know that their performance is sub-par is, of course, the employee. Constructing a PIP is similar as goal setting that must follow the S.M.A.R.T principle. 5.1.1. Document Performance Issues The first step in the PIP process is for the supervisor to document the areas of the employee's performance that need improvement. In documenting the main performance issues, the supervisor should be objective, factual and specific and provide facts and examples to further clarify the severity or pattern of performance concerns. Examples of detailed documentation are included in the two scenarios at the end of this guide. When developing a performance improvement plan, it is generally a best practice to use an established format to ensure consistency in the information given to all employees and to help protect the employer should legal claims arise at some point in the future. The format of the performance improvement plan will vary by employer and should include the following components: Employee information. Relevant dates. Description of performance discrepancy or gap. Description of expected performance. Description of actual performance. Description of consequences. Plan of action. Signatures of the manager and the employee. Evaluation of the plan of action and overall performance improvement plan. At the end of this guide are sample performance improvement plan templates that may assist supervisors in their documentation and communication. 5.1.2. Develop an Action Plan 49 Next, the supervisor should establish a provisional action plan for improvement, which may be adjusted based on employee feedback in the meeting. Making the process collaborative can help in identifying areas of confusion or misunderstanding on the employee's part and can encourage ownership of the issue by the employee. This action plan should include specific and measurable objectives that are accurate, relevant and time-bound (otherwise known as SMART goals). When developing a performance improvement plan, it would be useful to draw on the job description and HR policies to clearly identify the performance or behavioral issues and expectations. The supervisor should determine if the employee may need any additional resources, time, training or coaching to meet these objectives. The plan should identify exactly what management will do or provide to assist the employee in achieving these goals. This action plan should help set performance expectations and should include a statement about the consequences for not meeting those objectives. If termination is a possibility, it should be clearly communicated in the plan document. 5.1.3. Review the Performance Plan Prior to meeting with the employee, the supervisor should seek assistance from his or her manager or an HR professional to review the PIP. This third party should ensure the documentation is stated clearly and without emotion. The third party can also review the suggested action plan to make certain it is speci