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capital forms the foundation of any organization, and employee performance has a
significant impact on the bottom line. In fact, research indicates that a five per cent increase in employee engagement is linked to a three percent growth in revenues
in the subsequent year. Yet, most HR
departments struggle in the management of employee
often perceive performance reviews as a process that inclines heavily towards
traditional practices (Bell Curve Method), is subjective and consumes time. If
they are not satisfied with outcomes, their morale, productivity and
performance may plunge. Consequently, it may lead to high turnover. However, it
is an important exercise given that it creates a high-performing culture and motivates top-performing employees. It
enables the organization to identify
skill gaps, develop learning and development programs, retain employees and do
Most organizations have realized
that conventional performance review systems are outdated, do not capture
real-time performance, and fail to provide timely feedback and improvement
opportunities to employees. According to the Randstad India HR Game Changers 2016 Survey, 28% of HR
leaders feel employee performance methods need to undergo a significant structural
change and evolve into something more transparent. In fact, a PwC report titled ‘Performance
Management in India – A Change Beckons’ highlights that 52 percent of
organizations have made or are planning to make changes to employee performance
in the near future.
For example, India’s leading IT
services companies, Tata Consultancy Services and Infosys, have shifted to a continuous
performance system. By doing so, these two organizations believe that they will
be able to monitor employee performance at regular intervals and predict their behavior, which could affect their engagement
Technology is being touted as a key enabler that HR is now
considering to predict employee performance. A survey titled ‘State of Performance Management System in
India’ conducted by Salto Dee Fe Consulting
Service, reiterates that digital tools could improve the performance of
employees. Analytics is one such tool that can help organizations predict
employees’ performance based on historical
and real-time data. It provides both retrospective
as well as forward-looking analysis.
Predictive analytics can be applied to the workforce to identify traits/patterns that
account for bad or good performance on an individual
and team basis. Since analytics is an amalgamation of powerful mathematical
algorithms, it also gives objective insight into their work preferences and the
factors that drive their performance. An article published in The Times of India talks about a case study
on how analytics helped a manufacturing firm predict what was wrong with
employee performance. Using analytics,
this company discovered that morale of ten employees was down due to their
issues with manager. The management quickly stepped in to resolve the situation
and take preventive measures before the employee performance deteriorated
Adani Group has hired an
analytics startup firm Vahanalytics, which uses machine learning for driver
profiling, behavior and performance. The startup will track the
vehicles deployed at Adani Group’s Mundra Port and capture information on
whether drivers have been speeding, taking sharp turns or not following driving
norms. These reports will help Adani Group to predict the performance factors
of drivers and make timely innervations in regards to their training.
With the help of analytics, HR
can also identify engagement activities which have the maximum and minimum
impact on employee performance. This exercise has two-fold advantages. One, an organization can direct their investment
towards initiatives that generate the highest
interest in the engagement levels. Two, an organization
can define measurable metrics that co-relate engagement and performance.
Since organizations usually
review employee performance annually, it leaves little time for HR to act on
possible flight risks. However, performance analytics gives real-time
information to take timely decisions. HR can recognize red flags of performance
and predict which employees fall in the highest flight risk category. It can
then either discuss the matter directly with the employees or implement tailor-made
retention programs to re-engage them. When HR can gauge employee performance
from analytics, succession planning also becomes easier. It can anticipate
promotions, transfers and firing in advance. Accordingly, it can forecast
workforce requirements and work towards filling the open positions.
HR is also discovering advantages
of analytics in predicting employee performance and improving quality of hiring
during recruitment. Analytics can mine data on candidate’s personality, behavioral traits and skills to throw useful insights into whether he or she would be
the right fit for the organization. In a TJinsite
Survey from TimesJobs.com, 90 percent of companies agree
that predictive analytics is a promising hiring tool and could be the future of
talent hunting. However, only seven percent of companies are using it for
performance assessment during hiring.
Take the energy and automation
conglomerate Schneider Electric India for example. It uses predictive analytics
in addition to psychometric assessments, behavioral
event interviews, PAPI (Personality and Preference Inventory) and Hogan
assessments to avoid gut-based recruitment. Analytics helps it to prioritize
and target only those candidates who are most qualified for a specific role or position.
The company’s CHRO Rachna Mukherjee says, “The use of data and predictive
analytics can impact the manner in which companies interact with customers,
besides transforming how they search for, discover and retain promising
The Indian arm of the multi-level
marketing company Amway has also been
using analytics to identify the right-fit candidates from internal job postings.
In fact, it was able to hire a candidate who was two levels below in the
organizational hierarchy for a desired
position. Apparently, his behavioral and
performance indicators showed him a perfect fit,
so he was promoted.
With business dynamics changing
swiftly, real-time talent decisions are the need of the hour. There is no scope
for taking a backward approach to analyzing
employee performance. Or else, organizations stand a high risk of losing the business advantage. What better tool than
analytics to peek into the future? There is no doubt that analytics can be a
powerful data-driven tool for organizations to anticipate performance outcomes
and develop pro-active strategies for
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