Day 7 HR analytics.pdf for everyone and business

Introduction to Performance Management

Performance Management is a continuous process of planning, monitoring, evaluating,
and improving employee performance to align individual and organizational goals. It
involves setting clear expectations, providing regular feedback, conducting performance
appraisals, and offering development opportunities to enhance productivity and
efficiency. Effective performance management ensures that employees contribute to
business success while also growing in their careers.

➢ Objectives of Performance Management:
1. To enable the employees towards achievement of superior standards of work performance.
2. To help the employees in identifying the knowledge and skills required for performing the job
efficiently as this would drive their focus towards performing the right task in the right way.
3. Boosting the performance of the employees by encouraging employee empowerment,
motivation and implementation of an effective reward mechanism.
4. Promoting a two way system of communication between the supervisors and the employees for
clarifying expectations about the roles and accountabilities, communicating the functional and
organizational goals, providing a regular and a transparent feedback for improving employee
performance and continuous coaching.
5. Identifying the barriers to effective performance and resolving those barriers through constant
monitoring, coaching and development interventions.
6. Creating a basis for several administrative decisions strategic planning, succession planning,
promotions and performance based payment.
7. Promoting personal growth and advancement in the career of the employees by helping them
in acquiring the desired knowledge and skills.

❑ Some of the essential pre requisites without which performance management system
will not function effectively in an organization are:
• Should attract very high levels of participation from all the members concerned in an
organization. It should be a participative process.
• Top management support and commitment is very essential for building a sound performance
culture in an organization.
• Organizational vision, mission and goals should be clearly defined and understood by all levels so
that the efforts are directed towards the realization of the organizational ambitions.
• Clear definition of the roles for performing a given job within the organizational framework
which emanates from the departmental and the organizational objectives. The system should
also be able to explain the linkages of a role with other roles.
• Open and transparent communication should prevail which will motivate the employees for
participating freely and delivering high performance. Communication is an essential pre requisite
for a performance management process as it clarifies the expectations and enables the parties in
understanding the desired behaviours or expected results.
• Identification of major performance parameters and definition of key performance indicators.
• Consistency and fairness in application.

• A commitment towards recognition of high performance. Rewards and recognitions
should be built within the framework of performance management framework.
• Proper organizational training should be provided to the staff members based on the
identification of training needs from periodic evaluation and review of performance.
This will motivate the employees for a superior performance.

❖ Key concerns of a performance management system in an organization are:
1. Concerned with the output (the results achieved), outcomes, processes required for reaching the
results and also the inputs (knowledge, skills and attitudes).
2. Concerned with measurement of results and review of progress in the achievement of set targets.
3. Concerned with defining business plans in advance for shaping a successful future.
4. Striving for continuous improvement and continuous development by creating a learning culture
and an open system.
5. Concerned with establishing a culture of trust and mutual understanding that fosters free flow of
communication at all levels in matters such as clarification of expectations and sharing of
information on the core values of an organization which binds the team together.
6. Concerned with the provision of procedural fairness and transparency in the process of decision
making.
The performance management approach has become an indispensable tool in the hands of the
corporates as it ensures that the people uphold the corporate values and tread in the path of
accomplishment of the ultimate corporate vision and mission. It is a forward looking process as it
involves both the supervisor and also the employee in a process of joint planning and goal setting in
the beginning of the year.

➢ Components of Performance Management System:
❖ Any effective performance management system includes the following components:
Performance Planning:
• Performance planning is the first crucial component of any performance management process
which forms the basis of performance appraisals. Performance planning is jointly done by the
appraisee and also the reviewee in the beginning of a performance session.
• During this period, the employees decide upon the targets and the key performance areas which
can be performed over a year within the performance budget., which is finalized after a mutual
agreement between the reporting officer and the employee.
❖ Performance Appraisal and Reviewing:
• The appraisals are normally performed twice in a year in an organization in the form of mid
reviews and annual reviews which is held in the end of the financial year. In this process, the
appraisee first offers the self filled up ratings in the self appraisal form and also describes his/her
achievements over a period of time in quantifiable terms.
• After the self appraisal, the final ratings are provided by the appraiser for the quantifiable and
measurable achievements of the employee being appraised.
• The entire process of review seeks an active participation of both the employee and the appraiser
for analyzing the causes of loopholes in the performance and how it can be overcome.
• This has been discussed in the performance feedback section.

❖ Potential Appraisal:
Potential appraisal forms a basis for both lateral and vertical movement of employees. By
implementing competency mapping and various assessment techniques, potential appraisal is
performed. Potential appraisal provides crucial inputs for succession planning and job rotation.

❑ Performance Management Process:
• Performance management is a management style that has grown increasingly
popular.
• It involves a process in which a company, organization, or institution creates a
work environment that empowers employees to work to the best of their
abilities.
• The process that an employer uses to accomplish this often varies from one
business to the next.
• Despite these variations, the performance management process generally
involves some form of goal setting, evaluation and reward.
• In addition, coaching is often offered throughout the process.

❖ Planning:
The planning stage of the performance management process is meant to set achievement
goals for the employee and discuss the expected level of performance for the job. The
expectations for any given employee will typically depend on the work they are doing or
the department they are in. At the end of the planning stage both the employee and
management must be in agreement in terms of what is expected. In addition, the goals
that are set are ones that should be achieved within the course of one year.
❖ Assessment:
The assessment is an annual evaluation of the employees' performance. This often takes
feedback from co-workers and clients into consideration, in addition to observations by
management. Assessments also include a review of the previous years' evaluation and an
assessment of skills. Some employers may have an employee complete an evaluation of
their own performance that is then discussed during the evaluation and compared to the
official evaluation.

❖ Recognition:
This portion of the process is about recognizing the employee's accomplishments as well
as any areas that need improvement. During this process the manager/employer and the
employee should discuss ways to make improvements. Management should also be open
to things that they can do differently in efforts to help the employee. In terms of
accomplishments, employees may be given recognition verbally and/or in the form of
bonuses or promotions.
❖ Career Development:
This phase of the process is to promote and encourage future improvement and
development of the employee. It should meet the needs of the business or organization,
enhance the strengths of the employee and work to eliminate areas of weakness. This may
involve training on site as well as sending the individual to off-site training. As with other
phases or stages of the process, communication between management and the employee
is important.

❑ Performance Appraisal and Performance Management:
The contemporary organizations are undergoing a transformation for coping
against the changing needs of the environment and excelling in the business by
building up their adaptive capabilities for managing change proactively.
The traditional performance appraisal system did not suffice the needs of the
changing scenario as it was mainly used as a tool for employee evaluation in which
the managers were impelled to make subjective judgments about the performance
and behavior of the employees against the predetermined job standards.
The main objective of the performance appraisal system was to exercise control
over the activities of the employees through disciplinary actions and management
of rewards and promotions.
The supervisors were expected to rate their employees on certain traits ranging
between a scale of unsatisfactory to outstanding performance and these ratings
were susceptible to various errors like central tendency, bias, halo effect, etc.

Performance Appraisal Performance Management
Focus is on top down assessment Stresses on mutual objective setting
through a process of joint dialogue
Performed annually Continuous reviews are performed
Usage of ratings is very common Usage of ratings is less common
Focus is on traits Focus is on quantifiable objectives, values
and behaviors
Monolithic system Flexible system
Are very much linked with pay Is not directly linked with pay
• A table depicted below shows a comparison between performance appraisal and
performance management:

Performance management is concerned with assumptions, mutual obligations,
expectations and promises (Guest, D E et al, 1996).
• The views of some of the leading organizations of performance management
approach are given below:
1. According to Eli Lilly and Co., performance management focuses on aligning the
individual goals with the goals of the organization and ensures that the employees
work on the right tasks and do the right things.
2. According to Standard Chartered Bank, performance management is concerned with
those processes and behaviors by way of which the managers manage the
performance of the employees for developing high achieving organizations.

❖ Benefits of a Performance Management System:
A good performance management system works towards the improvement of the
overall organizational performance by managing the performances of teams and
individuals for ensuring the achievement of the overall organizational ambitions and
goals.
An effective performance management system can play a very crucial role in managing
the performance in an organization by:
1. Ensuring that the employees understand the importance of their contributions to
the organizational goals and objectives.
2. Ensuring each employee understands what is expected from them and equally
ascertaining whether the employees possess the required skills and support for
fulfilling such expectations.
3. Ensuring proper aligning or linking of objectives and facilitating effective
communication throughout the organization.
4. Facilitating a cordial and a harmonious relationship between an individual employee
and the line manager based on trust and empowerment.

Organization’s Benefits Improved organizational performance, employee retention
and loyalty, improved productivity, overcoming the barriers
to communication, clear accountabilities, and cost
advantages.
Manager’s Benefits Saves time and reduces conflicts, ensures efficiency and
consistency in performance.
Employee’s Benefits Clarifies expectations of the employees, self assessment
opportunities clarifies the job accountabilities and
contributes to improved performance, clearly defines career
paths and promotes job satisfaction.
• An effectively implemented performance management system can benefit the
organization, managers and employees in several ways as depicted in the table given
below:

Correlation
• It is a measure of Relationship. It is a measure of association
between two or more variables.
• It describe the strength of linear relationship between two variable.
• Correlation involves various methods and techniques used for
studying and measuring the relation between the variables.

Cont.…
• The data can be represented by the ordered pairs (x,y) where X is
the independent variable and y is the Dependent Variable.
• Correlation lie outside the range of -1 to 1

Examples of Correlation
• Height and Weight of children
• Hours Study and Marks
• Nature and Degree

Types of Correlation
• Positive Correlation and Negative Correlation
• Linear Correlation and Non-Linear Correlation
• Simple and Multiple Correlation

Positive Correlation
• If both the variables move in the same directions. We say that
there is a Positive Correlation. When one variable increase, the
other variable tends to increase as well. It Mean that direct
Relationship.
❑ Example:
• Study time and Grades

Negative Correlation
• A variable move in opposite direction we say that it’s a negative
relationships. When one variable increases, the other variable
tends to decrease. It mean indirect/inverse relation.
❑ Example:
• More exercise, lower your body weight
• TV Time increases, grade decrease
• Price and Quantity Demands

No Correlation
• In some cases change in one variable is not related to change in
other variable. In these case there is said to no correlation or
zero correlation between the two variables.
❑ For Example:
• There is no relationship between heights of students and grades
Scored in Examination.

Positive Correlation Negative Correlation No Correlation

Linear Correlation
The ratio of Change between two variables is uniform
then there will be linear Correlation. The graph will
be a straight line.

Nonlinear Correlation
• The Amount of Change between one variables does not bear a
constant ratio to the amount of change in the other variables.
The graph will be curve
❑ For Example:
• The relationship between distance and the brightness of a light
source can be inverse. As you move away, brightness decreases,
but it may not decrease linearly.

Linear Correlation Non Linear Correlation
Y -axis
X- axis
Y -axis
X- axis

Simple and Multiple Correlation
❑ Simple Correlation:
• If only two variable are involved in a study then a Simple
Correlation.
❑ Multiple Correlation:
• If three or more then three variable are involved in a study
then a Multiple Correlation.

Correlation Coefficient
• A correlation coefficient is a numerical representation of the
relationship between a pair of random variables. There are
several different correlation coefficients, the most commonly
used of which is the Pearson correlation coefficient.
• Correlation Coefficient denoted by r.
• r lie between + 1 to -1.
• -1 ≤ r ≤ +1

Interpretation of Correlation Coefficient (r)
• The value of correlation coefficient ‘r’ ranges from -1 to +1
• If r = +1, then the correlation between the two variables is
said to be perfect and positive
• If r = -1, then the correlation between the two variables is
said to be perfect and negative
• If r = 0, then there exists no correlation between the
variables

Properties of Correlation Coefficient (r)
• The correlation coefficient lies between -1 & +1
symbolically ( - 1≤ r ≥ 1 )
• The coefficient of correlation is the geometric mean of two
regression coefficient.
𝑟 = 𝑏𝑥𝑦 × 𝑏𝑦𝑥

Method of Studying Correlation
Coefficient
1. Scatter diagram
2. Karl Pearson's coefficient of correlation
3. Spearman’s Rank correlation coefficient
4. Method of least squares

1. Scatter Diagram
• Scatter Diagram is a graph of observed plotted points where
each points represents the values of X & Y as a coordinate. It
portrays the relationship between these two variables
graphically.
• For example, a plot of weight vs. height will show a positive
correlation: as height increases, weight also increases.
• One variable is shown on X-axis and Horizontal axis and the
other on the Y-axis and Vertical axis.

2. Karl Pearson Correlation Coefficient
• The Pearson correlation coefficient (r), also referred to as
Pearson's r, is a value between -1 and +1 that describes the
linear relationship between two random variables.
• Pearson’s ‘r’ is the most common correlation coefficient.
• Karl Pearson’s Coefficient of Correlation denoted by- r
-1 ≤ r ≥ +1

Karl Pearson Correlation Coefficient
• r = 1: perfect positive correlation
• r = -1: perfect negative correlation
• r = 0: no correlation
• The coefficient of correlation between the two variables x
and y is symmetric.
𝑟𝑥𝑦= 𝑟𝑦𝑥

Formula of Karl Pearson Method
𝑟 =
𝑛 σ 𝑥𝑦 − σ 𝑥 σ 𝑦
(𝑛 σ 𝑥2 − σ 𝑥 2)(𝑛 σ 𝑦2 − σ 𝑦 2)

X Y
1 3
2 2
3 1
4 3
5 4
Question
• Find Correlation Coefficient?

𝑟 =
(𝑛 σ 𝑥2 − σ 𝑥 2)(𝑛 σ 𝑦2 − σ 𝑦 2)

𝒙 𝒚 𝒙𝟐 𝒚𝟐 𝒙𝒚
1 3 1 9 3
2 2 4 4 4
3 1 9 1 3
4 3 16 9 12
5 4 25 16 20
15 13 55 39 42
Solution
by Putting values in Formula

𝑟 =
(𝑛 σ 𝑥2 − σ 𝑥 2)(𝑛 σ 𝑦2 − σ 𝑦 2)
𝑟 =
5(42) − (15)(13)
(55)5 − 15 2)(5(39) − 13 2)

𝑟 =
3
52
=
3
7.211
= 0.4
𝑟 = 0.4
−1 ≤ 𝑟 ≤ +1
Then Correlation is Weak Positive.

3. Spearman’s Rank correlation
coefficient
• "Spearman's rank correlation coefficient is a statistical
measure that assesses how well the ranks of two variables
are related. It is used when the variables are ordinal (can be
ranked) but not necessarily measured on a specific scale."

Formula of Rank correlation coefficient
𝑟 = 1 −
6 σ 𝑑2
𝑛 𝑛2 − 1
𝑛 = 𝑛𝑢𝑚𝑏𝑒𝑟𝑠
𝑑 = 𝑥 − 𝑦
0 ≤ 𝑟 ≤ 1

States Math's
1 2
2 4
3 3
4 1
5 7
6 5
7 8
8 10
9 6
10 9
Question
Find Coefficientof rank correlation from the following of 10 students
in statistics and Mathmatics?

Formula:
𝑟 = 1 −
6 σ 𝑑2
𝑛 𝑛2 − 1
𝑛 = 𝑛𝑢𝑚𝑏𝑒𝑟𝑠
𝑑 = 𝑥 − 𝑦
0 ≤ 𝑟 ≤ 1

𝒙 𝒚 𝒅 = 𝒙 − 𝒚 𝒅𝟐
1 2 -1 1
2 4 -2 4
3 3 0 0
4 1 3 9
5 7 -2 4
6 5 1 1
7 8 -1 1
8 10 -2 4
9 6 3 9
10 9 1 1

Formula:
𝑟 = 1 −
6 σ 𝑑2
𝑛 𝑛2 − 1
𝑟 = 1 −
6 34
10 100 − 1
𝑟 = 1 −
204
990
= 1 − 0.20
𝑟 = 0.8

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Correlation Techniques
in Human Resource
Management
Correlation techniques are statistical tools used to measure relationships
between variables. In HRM, these techniques help understand how
factors like employee engagement, training, and performance relate. By
applying these methods, HR can make data-driven decisions to enhance
organizational effectiveness and employee satisfaction.
by badrul amin

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Understanding Correlation Techniques
When one variable increases, the
other also increases. For example,
employee engagement and job
satisfaction often show a positive
correlation.
When one variable increases, the
other decreases. Absenteeism and
productivity often exhibit a negative
correlation.
No Correlation
No significant relationship between
the variables. For example, age and
creativity may show no correlation in
certain tasks.

preencoded.png
Common Correlation
Techniques
1 Pearson Correlation
Coefficient (r)
Measures the linear relationship
between two continuous
variables, ranging from -1 to 1. +1
indicates a perfect positive
relationship, -1 a perfect
negative, and 0 no linear
relationship.
2 Spearman's Rank
Correlation
A non-parametric method used
when data is not normally
distributed or when variables
are ordinal, providing a measure
of the strength and direction of
association.
3 Kendall’s Tau
A non-parametric test similar to Spearman's rank but with different
statistical properties, used to measure the strength of association
between two variables.

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Employee Engagement and
Performance Correlation
HR can study the
relationship between
employee engagement
and performance. A
positive correlation
might show that
engaged employees
perform better, leading
to higher productivity
and job satisfaction.
By calculating the
Pearson correlation
coefficient, HR can
determine if higher
engagement scores are
strongly linked to
improved job
performance or
productivity metrics.
If the correlation is
positive, HR can
implement engagement
programs like
recognition and career
development to boost
performance and
overall job satisfaction.

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Training and Development
Impact on Job Performance
Training Completion
HR analyzes the relationship between training completion and job
performance metrics such as sales, efficiency, and error rates to measure the
effectiveness of training programs.
If there’s a strong positive correlation between training and performance, HR
can conclude that the training programs are effective and plan future
programs accordingly.
Investment Justification
HR can use the results to justify more investment in training programs or
optimize training methods to ensure continuous performance improvements
across the organization.

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Job Satisfaction and Retention Rates
Satisfaction Surveys
HR correlates job satisfaction
surveys with employee turnover
rates to understand how satisfied
employees are in relation to their
likelihood of leaving the organization.
1
A negative correlation may show that
as job satisfaction decreases,
turnover rates increase, indicating a
need for retention strategies to
address dissatisfaction.
2
Retention Strategies
HR can focus on initiatives to improve
satisfaction, such as competitive pay
and work-life balance, to reduce
turnover and retain valuable
employees within the company.
3

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Absenteeism and Productivity
1
Absenteeism
Correlation techniques assess the relationship between employee absenteeism and overall productivity to
determine the impact of absences on organizational output.
2
Negative Impact
A strong negative correlation suggests that absenteeism is impacting productivity,
prompting HR to investigate underlying reasons and implement strategies to improve
attendance.
3
Wellness Programs
HR can create wellness programs or flexible work policies to
address absenteeism, ultimately improving overall productivity
and employee well-being within the workplace.

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Conclusion
Powerful Tool
Correlation techniques are a
powerful tool in HRM, helping
organizations identify and
understand the relationships
between key HR factors and
outcomes.
Data-Driven Decisions
By leveraging statistical
analysis, HR professionals can
make data-driven decisions
that enhance employee
performance, engagement,
retention, and overall
organizational success.
Enhance Success
Correlation techniques help HR professionals make data-driven
decisions that enhance employee performance, engagement, retention,
and overall organizational success.

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