## How to calculate and work out accrued vacation, holiday or annual leave

To calculate accrued vacation, you need to divide the annual holiday allowance by 12 to get a monthly figure, then multiply by the number of months worked.

Accruing means “building up”. When employees accrue vacation (holiday), it means that their holiday entitlement builds up in proportion to the amount of time they’ve been employed. The accrual system works out how much holiday an employee can take if they work for an employer for part of the holiday year.

Joining or leaving part-way through the year

Here’s the principle. If an employee starts work part-way through your holiday year, they will accrue (build up) one twelfth of their vacation in each month they work. So, after working for you for two months, they would get one sixth of the total annual entitlement. After six months, they would’ve accrued half of it. The accrual system makes the holiday calculation fair for both the employee and employer. Employees can’t take their full annual entitlement in the first months of their employment and then leave. But they can take increasing amounts of holiday as their tenure increases or save them up to use later in the year.

If an employee leaves part way through the holiday year, the same method applies. They are entitled to the same proportion of their holiday as the months they’ve worked in that holiday year. If they leave with accrued holiday in hand, their employer must pay them for it. If they’ve taken too much, the employer can reclaim the value from their final wage packet.

How to work it out

In the UK, to calculate accrued holiday you must include public holidays. The minimum statutory holiday allowance is 28 days (20 days plus 8 UK bank holidays.) Divide the total annual holiday days by 12, to get a monthly figure. Then multiply by the number of months worked. Round the figure up to get complete days or half days. You can’t round it down.

There’s a useful calculator on the government’s website, which you can find here.

Using an HR system to work it out

Modern HR teams don’t have to work it out manually. Many use HR management systems to cut manual admin, save time and improve accuracy. For example, Sage People’s attendance and leave management functionality offers a flexible framework for defining your absence management processes across multiple geographies. Absence, vacation, and paid time-off (PTO) options can be created to determine how employees accrue or are granted time off automatically. Each group of settings, called an ‘Absence Accrual Pattern’, uses rules to define parameters for accruals and limits for each type of absence recorded in your organization.

After employees are enrolled in a plan, using predefined policy settings, they can submit time-off requests for approval by managers. The system calculates accruals based on the rules you’ve setup. Policy linking enables absence management to be tailored to country, region, or other organizational grouping of your choosing. With this kind of record, managers, People teams and Human Resources (HR) can see who is taking time off and how much time off each employee has left.

## What are the top issues in HR?

The top HR issues range from long-standing challenges such as recruitment and retention to topical, market-led issues like the gig economy and data security.

Many organizations conduct surveys annually to find out about the top People and HR issues. There’s no definitive list: different research reveals different perspectives and priorities, depending on who’s being asked and what the questions are.

Here are some common issues that crop up both in current research and in our latest experience working with HR leaders and their teams.

• Recruitment: Finding and hiring the right people in a competitive employment marketplace – sometimes called ‘the war for talent’.
• Retention: Keeping your talented staff once you’ve hired and trained them. High staff turnover leads to low productivity and erodes profits and reputation.
• Reward and recognition: Setting pay that’s competitive but affordable and motivating employees through a range of attractive and relevant rewards.
• Flexible working: Many workers have higher expectations of employer flexibility in terms of when, where and how they work, to support their work-life balance. Companies that don’t adapt may not be able to access the best pool of candidates.
• Data security: Companies need robust policies to protect employee data and make sure they have permission to hold it. Once they have it, they need to make good use of it.
• The move from HR to People: In an era of employee engagement, ‘People Companies’ recognize that their success depends on their peoples’ motivation, engagement and efforts. Therefore, they focus on creating the optimal environment for their talented employees to thrive and prosper rather than on HR admin.
• Evidence-based HR: Data-driven insights can help organizations make better business decisions. Performance and People data combined with external market and benchmarking data create insight into how to nurture and get the most from a workforce.
• Employee engagement: In a competitive labor market, savvy employers seek to engage their employees not just with pay and rewards but through principles, policies and ways of working that chime with people’s own values and lifestyles. Respect, trust, two-way communication and maintaining an employer brand that will attract talented employees are part of this.
• Discrimination: Recent publicity about gender pay gaps and the rules about disclosing them have focused employers on pay equality. The #MeToo campaign has focused attention on sexual harassment in the workplace. Employers need clear policies and processes to spot and correct intended or unintended anti-equality behavior.
• The gig economy: Workers seek freedom and variety in their work, and new opportunities are emerging to work freelance. Traditional employers need to compete for staff who now have more options. Gig employers need to make sure they’re supporting workers fairly, to avoid accusations of exploitation.
• Productivity: Industry surveys regularly reveal that workers are productive for far less than 100% of the time they are paid. This impacts organizations’ profitability. Employers need to tackle the causes of this, from lack of motivation to poor facilities, bias against flexible working and outdated digital infrastructure.
• Compliance and regulations: From recruiting to retirement, HR and People leaders handle a variety of compliance issues. Organizations face ever-changing regulation and compliance requirements and legal developments such as GDPR.

## Five of today's common HR challenges

HR teams tackle diverse challenges every day, from simple admin to individual performance and management to complex data-related strategic and market issues. Here are five examples.

• Work-life balance is a big issue for employees. Talented people demand flexible terms and choices, and they vote with their feet if employers don’t offer them. Ambitious employers need to cultivate trust and flexibility – allowing home working, flexible hours and a range of rewards and benefits to attract the best people. Good technology, processes and communication underpin these freedoms, so teams can be productive and collaborative, wherever and whenever they’re working.
• Artificial intelligence (AI) is a high-profile workforce concern. Staff worry that automation will put them out of a job. In fact, research suggests that AI will create almost as many jobs as it replaces. The challenge for employers and employees is retraining and investing in skills development so people can adapt to a more automated workplace. AI will change the way people work across every industry in the next few years: HR teams themselves are making use of process automation and systems to take over routine admin and offer workers self-service access to common requests and functions. Automation doesn’t replace HR professionals – it means they can concentrate on higher-value strategic activities and planning.
• Analytics and People Science are changing the way HR teams work, increasing their contribution at board level. Data about who employees are, how they work and what they like and don’t like means companies can tailor their employment offers and working culture to attract the people they most want. People data helps employers to maintain their brand and reputation and plan ahead to meet market changes. Sophisticated systems can report on performance and model future changes, combining HR data with wider business information to produce People insight that affects business goals and plans.
• Pay and benefits – including salaries and bonuses – are still very important to most workers. HR teams need to operate within company budgets to set salaries and make sure there are fair systems in place for reviewing and increasing pay. Bonuses and rewards need to be administered fairly, with managers using a clear and consistent set of criteria to decide which employees will receive them. HR professionals benchmark salary packages against the market to make sure they are offering competitive remuneration, so they can attract the best people without unacceptably eroding profits.
• Administration is a big part of the HR workload today. Many HR teams spend a lot of time entering, reviewing or checking data about employees. People data is confidential and can be sensitive, so companies need to have robust processes in place and good data security measures to protect employees and comply with the law. HR systems can help reduce this workload using self-service (where employees can view and update their own information) and process automation, to ensure data is captured and held securely and complies with legal demands like GDPR.

## What is employee engagement?

Employee engagement means going beyond the basics of what employees find acceptable at work – fair practices and a neutral culture, to make a connection at a deeper level, so they understand and care about the company’s goals and know how they contribute to its success.

To achieve an engaged workforce, employers need to look at every aspect of their employees’ experience. That goes from pay and incentives to working hours and the workplace itself, the company’s values, culture and working practices. It can also include making it easy for employees to self-serve for development, training, information updates and HR admin like booking holidays.

The aim is to build and retain an engaged and productive workforce, employing people who care about the business and making sure the organization is a place they are proud and fulfilled to work in.

In a competitive talent marketplace, leading employers are focusing on employee engagement to help them attract and retain the people they need to grow their successful businesses.

## What is HCM (human capital management) software?

HCM (human capital management) software, sometimes called an HRIS (human resources information system) or an HRMS (human resources management system), is a technology application that can help employers manage and look after their employees, usually supporting a range of HR functions, from payroll and benefits administration to recruitment and performance management.

With a modular system, you can include whichever functions your organization needs. HCM software records and stores data about employees in a database. Leading solutions like Sage People offer advanced analytics, helping employers to gain insight into the best way to recruit and retain talented employees, as well as handling HR admin and giving employees access to their own data and tools, for example, to request holiday using a mobile app.

## What is HRIS (human resources information system)?

HRIS stands for human resources information system. It’s a computer application that handles HR processing, data storage and administration.

An HRIS can help HR teams work more productively, cutting down on admin by automating processes and reducing human error. It can also speed up response to employees, like holiday requests or benefits entitlement. Today’s sophisticated systems play a more strategic role, providing vital data analytics for People planning and business decision-making. They free up HR teams from routine admin, so they can spend more time on the creative side of HR: this could mean designing employee engagement strategy, planning and delivering training or improving talent acquisition.

## What is HRMS (human resources management system)?

The acronym HRMS means “human resources management system”. It’s a clever bit of technology that underpins the work of many modern HR teams, helping them keep track of employee data, produce reports and carry out many more sophisticated People-related functions with less manual effort and human error.

There are lots of systems on the market and they’re all different. Many larger and growing organizations look for a solution that can integrate with other management information systems, like financial software, payroll or operational systems. As well as automating admin and storing data safely in one place, an HRMS can produce valuable management insight by analyzing data about employees and how they work.

## What is HR software?

Human resources (HR) software is any kind of IT system or application used by the HR function to help manage and look after employees. Today’s efficient and powerful HCM solutions support a range of HR functions, bringing together payroll, benefits administration, recruitment, performance management and management information, using a single source of employee data.

Human resources software may also be called HCM (human capital management) software, an HRIS (human resources information system) or an HRMS (human resources management system).

Historically, organizations used lots of different software and spreadsheets to handle HR admin like payroll or holiday allocations. With people now recognized as the organization’s most valuable asset, using human resources software frees People specialists from admin tasks and let them concentrate on attracting and nurturing talent and delivering great employee experiences. The People function is also increasingly focused on data insights that support their workforce and business performance (sometimes called People Science). These activities are critical to the success of many of today’s fastest-growing firms.

## What is an HR system?

An HR system is usually a computer system that supports the HR team or manager in an organization. But it can also apply to the overall system that the HR department uses to manage all of its functions – they may not all be within a single application.

HR systems are increasingly sophisticated. They can speed up and enhance everything from job advertising, recruitment, on-boarding, employee experience, performance management, rewards and benefits and employee communication. Different organizations pick the solution that works best for them – and for their budget.

HR technology systems are designed to hold employee data securely. Today, this data is used not just to keep records but to gain insight into employee experience and talent management, helping organizations better plan their resourcing and give their workforce a great experience. That’s how HR systems support People teams to play a more strategic role in their business; in a market where there’s competition for the most talented workers, employers need to understand what their people want and need so they can attract and retain them.

## What does HR mean?

HR stands for human resources. This used to be known as personnel. Nowadays, the term is increasingly being replaced by “People”. In an era of employee engagement, it can be unhelpful and dehumanizing to think of the people who power your organization as “resources”.

The term “human resources” refers to the people who work in a company. The human resources or HR department is the team that usually looks after employee management and development. Typical responsibilities include data administration, recruitment, pay and benefits, training, talent management, absence and grievance management, health and safety, working practices and policies. Increasingly, HR or People leaders are playing a strategic role at board level, providing vital insight into the employer brand and the current and future workforce as key success factors in business growth. Productivity, motivation, talent and working practices are all strategic People issues that affect profitability, competitiveness and ability to attract and retain the right people. The old HR role is broadening to become a more proactive and business-critical discipline instead of a mainly administrative function.

## What is a human resource strategy?

Human resources (HR) strategy means high level planning that sets out the priorities for People management and development in an organization. It connects HR goals with the overall goals of the company and shows how effective HR contributes to profitability and success.

A good HR strategy sets clear goals in context of the overall business vision. It then breaks down how those goals will be achieved. There will be an action plan, detailing the projects and processes the company will implement and measures to track progress and determine whether the projects and processes are working effectively. Typical focus areas in an HR strategy might be recruitment, retention, training, productivity, pay, engagement, employee benefits, employee communication, recognition, motivation, performance management, flexible working and the organizational structure.

## What is HR technology?

HR technology helps HR and People specialists work more effectively and deliver a better employee experience. It stores data in a complete and secure way, automates routine processes and provides analytics that give management reports and insights for better business decision-making.

Depending on the system, HR technology can support a range of HR functions. For example, pay, rewards, benefits, talent management, recruitment and on-boarding, performance management and employee communications.

Today, innovative HR technology can give growing and ambitious firms a competitive edge. AI tools can help them predict the staff they’ll need and model the environment and working culture that will be most attractive to the target workforce. It can help them offer and manage flexible working and give employees choice in their benefits and pay. Cloud-based HR technology is available through mobile devices and remotely, making it easier for HR teams and workforces to communicate and share information.

## Why work in HR?

If you want to work in HR, an interest in people and good communication skills are prerequisites, given the nature of the profession, but depending on the role, HR can demand a range of other capabilities. There are many specialist disciplines within HR (or People) and wealth of career opportunities.

HR leaders and strategists need strong analytical and financial capabilities. In employee relations, you may need legal knowledge. If you go into recruitment, you’ll need sales and negotiation skills. You might also need creativity, empathy, influencing skills, gravitas, approachability, resilience, management expertise, organizational and administrative flair.

Successful HR professionals give diverse reasons for enjoying their role and continually finding motivation. Discover why fifteen different HR experts love their jobs.

With the war for talent and an ever-changing employment landscape, employers from start-up to corporate understand the value of HR strategy, so there’s growing demand for high caliber professionals with board-level potential. Pay varies widely: a junior HR officer might earn £25K but at a senior level in a large commercial organization, six figure salaries and bonuses are common. Successful recruitment consultants earn substantial commissions.

## What is global human resources management?

Global human resources (HR) management means the practice of recruiting, managing and developing people working in an international organization.

In this digital age, with advanced, real-time communications technology to help, it’s easier than ever for businesses to expand overseas. Global organizations bring a new set of people-related challenges, so they need HR staff with specialist knowledge of global HR management.

Global HR managers look after the same elements of HR as a national or local HR manager, such as employee management and development, data administration, recruitment, pay and benefits, training, talent management, absence and grievance management, health and safety, working practices and policies. But they also need to accommodate cultural and geographical differences, local laws and employment legislation. For a global business operating under a single brand, it’s vital to respect and comply with local needs whilst preserving overall company values and identity.

HR or People leaders may play a strategic role at board level, championing the employer brand and providing vital insight into current and future workforce availability and needs.

## What is HR analytics?

Human resources (HR) analytics, or People Analytics, means using data about people to gain insight that helps improve organizational performance and find solutions to problems. The information can be HR data or come from external sources or other company departments.

Today, big data is a hot topic. Many organizations hold a great deal of current and historical information about their people, such as pay, length of service, attendance, qualifications, training and performance. People Science takes this a step further: rather than just storing, mining and reporting data, powerful algorithms scrutinize this data and identify trends or anomalies that could influence HR and business strategy.

Analytics systems can draw on external information such as benchmarking data, or internal operational and financial information, to create even more actionable, detailed and useful HR management information.

Legally, employers need to comply with data protection rules (such as GDPR in Europe) when they hold and process data about employees.

## What are employee benefits?

Employee benefits are extra compensation or “perks” given by an employer to a worker on top of their wages. The benefits may be a service or product that employees can use, a discount or facility.

A good benefits package can help attract and retain employees and enhance the employer’s reputation.

Employee benefits can be small perks, like free coffee in the office, an annual Christmas party or a subsidized canteen, or they may have substantial value. If they’re of direct individual benefit to the employee, they’re usually taxable. For instance, if an employee has a company car that they use for both business and personal journeys, they’ll pay tax on the value of the personal element. Other traditional benefits include healthcare schemes, pension schemes, childcare vouchers, enhanced parental leave, insurance, share options, employee share schemes and interest free season ticket loans.

Some employers offer employee discounts on their own products and services or negotiate discounts with other providers. Flexible benefits let employees pick and choose a range of benefits that they particularly value. These might also include wellbeing benefits (gym membership, dentistry, physio, massage or counselling) extra holiday, education and training.

If a company offers benefits in exchange for an element of wages, this is called salary packaging or salary exchange.

## What is benefits management?

Benefits management is the specialist discipline of HR that plans and delivers employee benefits within an organization. Employee benefits are extra compensation or “perks” given by an employer to a worker on top of their wages.

An appealing benefits package can help attract and retain employees and enhance the employer’s reputation. That’s why focused benefits management can influence company performance by motivating the best people to join – and stay.

Companies may offer a wide range of different types of benefit, giving employees different options at different levels and even allowing them to pick and choose the benefits that match their own priorities. Employee benefits can be small perks, like free coffee in the office, an annual Christmas party or a subsidized canteen. Or they may be more valuable, such as a company car available for personal use, private healthcare, pension schemes, childcare vouchers, enhanced parental leave, insurance, share options, employee share schemes and interest free season ticket loans.

Wellbeing benefits are currently a popular focus. Responsible employers want to help their people maintain a healthy work-life balance and look after themselves physically and mentally. Subsidized or free gym memberships, massage, counselling, dentistry, maternity services, life coaching, podiatry and personal training are just a few examples. Employers may offer their employees a choice of benefits, so they can choose the package that suits their needs and lifestyle best.

## What is compensation management?

Compensation management means the specialist HR discipline of planning and administering everything of financial value that an employer gives an employee in exchange for their work. It includes their salary but also benefits, bonuses and rewards.

The compensation package is a key factor in employees’ decisions to join or remain with an employer, so compensation strategy and planning is an important role in organizations that are focused on attracting and retaining the best talent. Traditionally, a senior level compensation package might have included salary, pension, bonus, share options, company car, private healthcare and life insurance.

Today, leading employers are even more creative about offering tailored compensation packages that meet their target employees’ needs. Employees may be able to pick and mix a package that meets their needs, including extra holiday days, childcare vouchers or wellbeing benefits.

Administering, managing and monitoring compensation schemes can be a complex and time-consuming HR activity. Today’s advanced HR software can help to automate this process in the most efficient way for both employees and employers.

## Stock options as compensation

Stock options as compensation means when an employer offers employees stock options (or share options – they mean the same thing) that have no value at the time, but which could be worth a lot in the future. Options mean the employee will have the right to purchase a certain number of shares at today’s price on a defined future date.

Stock options can be an attractive part of a compensation package if your company has ambitious growth plans and might potentially make a public share issue in the future (such as floating on AIM or the London stock market.) They can motivate employees to work hard to help grow the business, because they will potentially get to share the bounty if the company floats.

However, share option schemes can be expensive to set up, especially for small or start-up businesses. They’re of no value to employees unless the company’s shares are likely to increase in value and there’s a realistic prospect that they will be able to sell them to external shareholders at a profit in the future.

## How to increase employee motivation?

Increasing employee motivation means a wide range of activities and approaches, because people are motivated by lots of different things. Traditionally, money has been at the top of the list, but it’s not the only thing that motivates employees: company culture, values, workplace, working style and a wider range of benefits also matter.

Companies that prioritize understanding what’s important to employees and putting them into practice are “People Companies” – they understand that their business success depends on their people being motivated and successful themselves.

Sage People asked 500 leaders at progressive and successful People Companies what the most important things were to motivate employees. Offering flexible working was one priority. It builds trust between employer and employee and helps workers feel that their need for work-life balance is recognized. Another was getting rid of annual appraisals and having continuous feedback conversations with workers, then feeding this into performance-related rewards. Employees feel valued all year round and see that their employer is being fair and transparent about rewarding their work.

Find out more about what motivates employees in leading People Businesses, according to the Sage People survey.

## What is an internal customer?

Internal customers are people within your organization who receive goods or services from another part of your organization. They are stakeholders who might be employees, subcontractors, partner businesses or individuals or – by some definitions – suppliers.

In HR terms, treating employees as internal customers can help improve employees’ experience of working at the company. It means encouraging everyone in your organization to treat colleagues with the same respect as customers and to strive to give them excellent service, just as they would for a customer.

For the HR or People team, workers in the business are their direct internal customers. Treating them this way means the HR team is a service provider aiming to satisfy and delight, rather being a purely administrative organization. Instead of imposing policies and systems on employees, these HR teams seek to understand and meet or exceed employees’ needs and preferences. This helps organizations to be truly valued employers who attract and keep the best talent and whose loyal employees are positive external ambassadors. Find out more about the competitive advantage that comes from treating employees as internal customers.

## What is People management?

People management is a term increasingly used to describe the business function of looking after an organization’s workers. A People management system collates all your people information – from contract and salary to time and skills – in a single, secure system of record.

People management is also known as human resources (HR) management – now less frequently – as personnel management. In an era of employee engagement, it’s more helpful to regard the people who power your organization as “people” rather than “resources”.

The People or HR team typically looks after employee management and development. Responsibilities include basic functions like data administration, recruitment, pay and benefits, training, talent management, absence and grievance management, health and safety, working practices and policies.

Increasingly, HR or People leaders are playing a strategic role at board level, providing vital insight into the employer brand and the current and future workforce as key success factors in business growth. Productivity, motivation, talent and working practices are all strategic issues that affect profitability, competitiveness and ability to attract and retain the right people. People management professionals use data analytics and implement innovative programs that motivate and engage employees, aiming to make them as satisfied, loyal and productive as possible.

## What is a talent management system?

A talent management system (or talent management software) is an IT application that can help employers recruit, select, onboard and nurture valued employees.

In the current economic climate, you hear a lot about the “war for talent” – it’s a competitive market and employees are increasingly discerning about where they want to work. It’s vital to have the best processes in place to recruit and retain the best people.

Talent management systems typically help automate and integrate recruitment, selection and onboarding. They help employers track the skills and capabilities of their existing workforce, identifying high performers, skills gaps and internal candidates for roles. They make administration easier with online job ads, application processes and forms.

Talent management systems can upload resumes and extract information, using customized criteria to screen and select candidates from applications. They can manage communication with candidates throughout the process and support efficient new starter administration, including generating requests for buildings, facilities and systems access to make sure the new hire has a great experience and can be productive right from their first day.

## What is talent management software?

Talent management software is a system that automates and streamlines an organization’s talent management activities, helping them attract and nurture the best people to work for them.

Today, leaders of successful organizations know that motivated, capable people are the key to outperformance in competitive markets. Getting them on board is a key focus area for HR. Competitor organizations are fishing in the same talent pool, so talent management tools that can help employers act faster and engage their desired workforce more effectively are strongly in demand.

Recruitment activities are one important aspect of talent management. Talent management software often integrates with popular recruitment sites so HR teams can easily post job ads to a range of portals, target the right candidates, manage responses and enquiries and gather resumes and application forms online. During the recruitment, selection and onboarding process, there’s lots of information to exchange and share: talent management software can receive and store it securely as well as keeping the process moving along with reminders to managers and candidates to review, respond and react at appropriate stages.

## What are performance objectives?

Employee performance objectives are goals and targets agreed between the employee and their employer. They help employees understand their role and their contribution to the business, so they can focus on activities, development and progression that contribute to the organization’s overall goals.

Once the performance objectives are agreed and written down, the employee and their manager use them as a context for prioritizing work, assessing progress and making sure they’re doing what’s expected. They’re used as a framework for regular performance reviews or dialogues.

Attainment of performance objectives may be tied to employees’ rewards or bonuses, promotion opportunities and career development.

Performance objectives are usually designed to be ‘SMART’ – specific, measurable, achievable, relevant and time-bound. Many forward-looking firms use HR management systems (HRMS) to manage the processes around employee performance objectives, ensuring that they’re agreed on-time, with clear record-keeping for reviews, achievements and improvement plans.

## 3 great HR strategy examples

Great HR strategy examples are high-level People management and development plans that have contributed to high performance and organization success. They connect HR goals with the overall goals of the company and show how effective HR contributes to profitability and success.

Typical focus areas in an HR strategy might be recruitment, retention, training, engagement, employee communication, productivity, pay, employee benefits, recognition, motivation, performance management, flexible working or organization structure. Here are three examples of innovative employer HR strategies:

1. Using smart technology for competitive edge: Singapore company OCBC Bank has developed a mobile app for employees. Called HR In Your Pocket, it lets workers apply for leave, claim expenses, track benefits and check for internal jobs using their smartphones. The app has a chatbot function built in, so it’s easy to get answers to common questions. OCBC Bank’s digitalization strategy makes employees’ experience better and its HR operation more efficient all whilst contributing to the company’s reputation as an excellent employer and for leading its industry with forward thinking strategies.
2. Using HR analytics to optimize performance: Google develops its employee engagement and experience initiatives based on data it collects about its workers’ preferences and behavior. For example, its maternity leave plan in the USA is five months rather than 12 weeks. This benefit was brought in because Google’s employee data showed that new mothers were twice as likely to leave the company compared to other staff. Crunching the numbers on recruitment, it’s cheaper for Google to retain new mothers in this way than to hire replacements. A win-win situation for the worker and the employer.
3. Prioritizing social impact to deepen employee commitment: Vertex Pharmaceuticals has linked innovation and social responsibility by getting behind a mission that really matters to its workers. The company only develops medicines that it believes will be transformative for sufferers of life-threatening illnesses. Vertex maintains strong connections between its employees and patients who are taking its medications. It puts social responsibility at the heart of its work, because that’s what matters to the talented scientific specialists it recruits and employs.

## People as part of the marketing mix

People are the fifth “P” of the marketing mix in modern marketing theory, augmenting the traditional “4 Ps”: product, price, place and promotion. These are the focal areas that marketers can design, influence and change to optimize the marketing of their products and services.

People are included in the marketing mix because they design and produce the products, provide the services and interact directly with customers. Employees have the most far-reaching impact of any of the “5 Ps”, from designing and making quality items to giving great customer service and sales experiences.

Putting people in the marketing mix acknowledges how important it is to nurture loyal customers through an excellent relationship at every touchpoint. The “4 Ps” alone aren’t enough: without motivated and customer-focused people, it’s very hard to build a successful business.

The “5 Ps” model has been further developed in recent years, to become “7Ps”, adding process and physical evidence to the mix. This model can be applied very effectively to employer branding or People Marketing.

## Types of employee performance appraisal systems

There are many types of employee performance appraisal systems. The best are designed to help employers to recognize and reward workers fairly and help workers understand what they contribute to their organization.

Employee performance appraisal systems provide a framework for improvement and development. Good performance appraisal systems are motivating for employees, because they help them work towards their own career goals as well as hitting employer targets. Less evolved appraisal systems are designed to achieve HR compliance and can be constraining rather than motivating.

Appraisal systems are typically based on a set of individual objectives for each employee, which they agree with their manager. At regular intervals, often annually, their manager will assess how well they’ve performed against them. Employees come to their appraisals with evidence to back up their achievements. They may receive a numeric or verbal rating – for instance on a scale of 1/outstanding to 5/unacceptable.

Another popular system is 360-degree feedback, where co-workers, managers, customers, suppliers and subordinates all give feedback about the employee. These reviews from the employee’s “internal customers” are used to measure performance.

Performance appraisals may also be behavior-based or trait-focused, designed to encourage employees to work in a way that supports the company values and culture. Today, companies are moving away from rigid annual processes towards a more flexible approach, designed to reinforce the critical behaviors that drive high performance in the organization.

## How to successfully develop employees

To successfully develop employees takes time and effort. Typically, successful organizations use a range of schemes and tools to help employees set career and personal development goals and work towards them in a fulfilling and supported way.

Developing employees makes sense, because an organization has already invested in finding and recruiting talented people. Supporting them to develop themselves in-role is a good way to retain them. Employees are motivated to achieve their own career and skills goals as well as meeting job-related targets: if you can help them achieve both it’s a win-win.

You need effective, skillful managers who know how to develop their team members. So, a first step is to make sure you train and appoint managers who are focused on employee development. Putting in place a formal development system is a good idea, to make sure everyone has a chance to identify and act on development opportunities. That could be an individual development plan created by every employee in consultation with their manager. The plan is logged and regularly reviewed to make sure it’s working out.

Some organizations run mentoring or buddying schemes with senior colleagues who help employees advance towards their career goals. Another effective scheme is to offer secondments, job swaps and shadowing, so people can discover other roles and broaden their experience in areas that interest them.

## What is a competency assessment?

A competency assessment is an evaluation of a person’s skills and abilities. Employers use competency assessments to map an employee’s existing capabilities against the capabilities the employee needs to carry out their role.

Competency assessments are also used in recruitment, to determine whether a candidate has the right skills for a job. They can be part of an interview or review process, where a manager questions the employee about their experience to find out whether and where they have applied a particular set of competencies.

The first step in a competency assessment is to break down all of the skills needed to do the job well, and to decide how expert the employee or candidate needs to be in each skill. In-role, employees may self-assess against this list and provide examples to support their rating, showing where they have successfully used each competency. A completed competency assessment will reveal areas of strength and weakness and target areas for development. Once this is agreed, manager and employee may work on an action plan to address any skills gaps. This might include training, shadowing or setting a series of goals to move the employee up to the required level.

## What is a performance appraisal?

Performance appraisals are one-to-one reviews between a manager and an employee. They help employers to recognize and reward workers fairly and enable workers to understand what they contribute to their organization and where they can improve and develop.

Well managed performance appraisals of all types are motivating for employees, because they help them work towards their own career goals as well as hitting employer targets.

A traditional performance appraisal happens once a year, though there may be interim reviews at more frequent intervals, so the manager and employee can talk about how they’re getting on. The appraisal will review progress against a set of objectives, agreed at the start of the year or during a set performance period.

Employees may need to bring evidence of achievements to their review, including feedback from colleagues or customers (this is sometimes called 360-degree feedback) or prepare information that shows what they’ve done to meet their objectives. A supportive manager will discuss attainment to date, recognizing achievement and highlighting areas for more focus. The employee and manager may discuss training or support needs and other factors affecting progress and agree actions to stay on course.

The rating and report that an employee receives in their performance review may determine their bonus, pay rise and/or promotion, so it’s can be a very significant meeting for financial as well as developmental and career reasons.

## What are the characteristics of high potential employees?

High potential employees are typically people who are able, willing and motivated to advance up the management ladder to a leadership position, but they can also be people who inspire and empower colleagues and advance the business in other ways.

High potential is not to be confused with high performance. High potential employees drive organizational growth and attainment, while high performance employees are individual high achievers.

Many organizations use personality assessments or psychometric testing as well as ongoing performance appraisals to spot high potential employees. Their characteristics may vary depending on the organization’s values and activities. There’s no definitive list, but traits like good social skills, resilience, intellectual or practical ability and drive or motivation are often linked to high potential employees.

Using People Science, organizations are better positioned than ever to identify high potential employees, looking at patterns in People data. These might relate to behavior, achievement, experience and other characteristics of leaders and leaders-in-waiting. Read leading HR experts’ advice for developing high potential employees.

## What is the performance review process?

A performance review process is a structured way for employers to assess, recognize and reward workers fairly. Performance reviews help workers understand what they contribute to their organization and where they can improve and develop.

The performance review is a regular opportunity to discuss and act on career development ambitions. It’s a discussion of attainment and ambition – usually focused on an employee’s previously agreed objectives for the year and how effectively they’ve achieved them. Performance reviews can be motivating for employees, because they help them work towards their own goals and draw management attention to their skills and potential, as well as hitting employer targets. They can be very significant for individual employees when the outcome of the review determines pay rise, bonus and next career steps.

There are different ways to set up the performance review process. It often includes a formal annual review, where the employee is rated and rewarded in salary or bonus, with interim reviews throughout the preceding year.

There may be a structured preparation process, with review forms or evidence requests to complete and feedback to gather from colleagues or clients (sometimes called 360-degree feedback.) HR teams need to manage the performance review process, making sure it’s consistent and fair throughout the organization, whichever manager carries out the review.

Some organizations use a continuous feedback process rather than annual or quarterly snapshot reviews – this may be managed through an online performance review system that records feedback and insight throughout the year.

## What is staff planning?

Staff planning is the process of making sure you have the right people in your organization – now and in the future – to carry out the work needed for business success.

To plan effectively, you need to understand your business needs, the skills and potential of your current employees whilst considering what each employee needs will be as the company grows and your market evolves.

Staff planning is sometimes called workforce planning. It also relates to succession planning, which is specifically about how to fill roles with minimal disruption to your business, when current employees progress or leave. Succession planning also includes making sure employees can progress internally, with a development and promotions process that allows workers to move upwards or sideways, making room for others to step into their shoes.

Getting staff planning right in a fast-growing or international organization is particularly challenging. You need to match up detailed staff data including skills, potential, aspirations and location with business plans. Adapting your staffing plan will be paramount to accommodate changes in company strategy or the market that affects the workforce. A single, business-wide people database and effective, easily directed analytics tools are key for accurate staff planning, seamless succession planning and timely recruitment. Find out more about tactics and tools for staff planning.

## What is strategic staffing?

Strategic staffing means making sure your organization has the workforce it needs to deliver its current and planned business objectives. Markets and plans can change: many organizations have short, medium and long-term strategic staffing plans and review them regularly in context of overall business strategy.

Business leaders look ahead to the work they hope to deliver and planned growth over the coming months and years. From this, they can determine how many employees they need and the kinds of skills they’ll require. HR teams can map this against current staff profiles, numbers and skills. The strategic staffing plan means identifying gaps and working to fix them so that when the time comes, there are enough appropriately skilled staff available at the right times to meet business and market demands. This may mean recruitment and retraining, upskilling or reviewing the mix of permanent, contract, freelance and temporary staff.

HR managers can use historic data to look at patterns of staffing in the past, along with projections to model future needs, taking into account company growth, plans and focus. This may include attrition and recruitment information as well as characteristics of successful leaders and executives, skills, potential, aspirations and location.

HR technology to support strategic staffing can help make sense of a vast amount of data in the context of business needs. It’s key to have a single, business-wide People database for accurate planning. Easy-to-use but powerful analytics tools make forecasts more reliable and can continually update requirements as market and company data changes.

## What is talent acquisition?

Talent acquisition is the process of recruiting new staff members from outside your organization. Basic tasks range from advertising vacancies, managing search and recruitment agencies, receiving and screening candidate applications, testing, assessing, hiring and onboarding.

In today’s competitive recruitment environment, talent acquisition has become a far more strategic and sophisticated activity. Leading employers maintain a talent pipeline, so they always know what their current and future needs are, can predict who might leave and know who has potential to be promoted internally.

Where there are internal gaps, recruitment professionals use tactics more usually associated with customer marketing to engage with and attract potential candidates. This “People Marketing” approach may include a focus on social media, establishing and nurturing an employer brand and tailoring your compensation, benefits and working culture to suit the needs and values of the people you want to attract. Find out more about building a talent pipeline.

Talent acquisition software can make the entire process easier, helping you to attract, screen and recruit people faster, get them on board smoothly, ensure that candidates and recruits become advocates for your brand and begin the process of nurturing and engaging employees right from the beginning.