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Employee Valuation

August 11, 2010

This is a strange title, to begin with. we have heard of appraisals, performance evaluation, ratings etc- but Valuation ? As in finding the value or better, the right value of an employee?

In the real world, an employee is valued (basically we mean salaries & bonus etc) on the basis of his current remuneration, the position & designation that he /she holds, current organisation and very often even the place of work. Experience & capability are used as filtration parameters &  to decide the hike. Every increment or bonus is based on the current salaries . no exercise is carried out to see  if the “current ” salaries reflect the correct value of an employee or not.

Imagine a scenario where a human resource could be valued like a stock. What fundamentals will we look for ? Capability, experience, skills, attitude, pedigree, background, education, school, college ? Anything that can fundamentally define the valuation of the resource.

Taking this further, can a prospective or existing employee be valued for the skills that the person possesses suitably adjusted for the future value that one expects the employee to deliver. As the employee gains experience and acquires new skill sets and as the capability gets proved, the valuation goes up. On the other hand, the same should stagnate or even go down, in the opposite scenario. Various performance trends will also have an impact. This also means that the valuation will be absolute and not relative to any other person. However in case of 2 equally valued employees,a comparative analysis is unavoidable .

What about the market scenarios, in this case business prospects & growth of the particular industry or company ? and what about the demand & supply for a particular skill ?  should the valuation ( and therefore employee benefits) go up or down based on these factors even while a person remains in the same organisation ? Can this also mean that instead of laying off people, the impact will be only on the remuneration.

Frightening ! Are we looking at a future with a full variable- Valuation based remuneration ?

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  1. September 9, 2010 at 8:25 pm

    @UDAY SAVUR

    Good points Uday.

    Experience is a critical factor for most middle & senior level roles. In fact, at times even more than the functional knowledge. Many companies which understand this, realize that some of the capabilities come only with the duration that one spends on doing such jobs. At the same time, I feel it is not advisable to treat age & experience as interchangeable and equal parameters. You also have to accept that many a times fresh ideas can come from a completely inexperienced ” outsider” as they do not carry the burden of knowing how something is being done since ages.

    An important filter in the whole employment process is the Hr department. It is a no brainer that unless the filter is appropriate you can’t get the right employees. This factor does not show so critically where Hr departments play just the ” supporting role ” to business. The reason being that the selection then happens more on the basis of functional knowledge or track record. and as there are large number of line managers involved in such selections, the overall effect is that of a evened out team.

    However in cases where HR is the first level filter, this is absolutely Critical & key. You should also read this article in wsj blogs http://blogs.wsj.com/indiarealtime/2010/09/09/career-journal-why-hr-makes-hiring-mistakes/

    regarding the versatility – it all depends on how the profile is interpreted. someone may see it as a wide ranging experience while another may look at it & say – this candidate does not have in-depth knowledge of anything. So what is his expertise actually ?

  2. UDAY SAVUR
    September 8, 2010 at 2:23 pm

    What fundamentals will we look for ?
    Capability, experience, skills, attitude, pedigree, background, education, school, college Anything that can fundamentally define the valuation of the resource

    The ability to perform in crisis, adapatablity to new change management, and totally different parameters and VARIETY OF job profile and performing well and giving the best deliverables to best of the satisfaction previously defined should also be the fundamentals that should be valued appropriately rather than looking out for no of years experience in only one particular field – a person who has done all his career the same profile , THAT SHOULD BE THEE VALUATION OF THE STOCK OPTION CALLED HUMAN RESOURCE WHEN SELECTED FOR A PROFILE, AND THEY SHOULD BE VALUED MORE THAN THE PERSON HAVING LOTS AND LOTS OF EXPERIENCE IN ONE FIELD ONLY

    can a prospective or existing employee be valued for the skills that the person possesses suitably adjusted for the future value that one expects the employee to deliver. As the employee gains experience and acquires new skill sets and as the capability gets proved, the valuation goes up

    The additional value additions which we like to discuss only on paper is not practised by HR Professionals . A 25 YEARS EXPOSURE VERSATILE CANDIDATE WITH FINANCIAL SERVICES, SALES MARKETING, OPERATIONS, RECOVERY SBU HEAD, ALONG WITH PRODUCT HEAD, ADMINISTRATION , FACILITATION FOR PAN INDIA MANAGEMENT POLICY MAKING IS NOT CONSIDERED USEFUL COMPARED TO THE SAME AGED PERSON WHO HAS HANDLED THE ENTIRE LIFE THE SAME PROFILE. The remuneration for the latter would be leaps and bounds over the former what use is the varied and value additions the former has invested life years to acquire them

    UDAY SAVUR

  1. December 20, 2011 at 9:28 am
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