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Human Resources Glossary

Human Resources is a complex, ever-changing industry. It’s no surprise that HR has its own terminology,  abbreviations, and industry jargon. This glossary aims to define the most common terms you are likely to encounter as an HR professional.

Whether you are new to HR or a seasoned veteran with decades under your belt, we hope this resource serves as a convenient reference for the most common HR terms!

A

Absenteeism

The habitual non-presence of an employee at their job. It can be categorized as excused or unexcused and has significant impacts on productivity and workplace morale.

Accrued Leave

Accrued leave is the time off an employee earns based on the amount of time they've worked. Over time, employees accrue a certain amount of leave as they complete their work hours.

Adaptive Device

An adaptive device helps a disabled person to do daily activities, like reading. An example of an adaptive device is speech recognition software. The software can help anyone who does not have full use of their hands to perform their duties.

Adverse Impact

Adverse impact is an employment practice that has a discriminatory consequence on a protected group. It often appears to be neutral, but that is not the case. The adverse impact can happen during a performance appraisal, layoffs, or transfers.

Affirmative Action (AA)

Affirmative Action policies ensure equal employment opportunities for people in minority groups. Affirmative action plays an essential role in the employment of people with disabilities, minorities, women, and veterans. It also provides civil rights protection for all individuals.

Ageism

Ageism involves discrimination or prejudice against people of a certain age bracket. The law does not support workplace discrimination because of age. Furthermore, bias in the workplace can limit work efficiency.

Agile HR

Agile HR applies principles of agile methodology to human resources, emphasizing flexibility, collaboration, and rapid adaptation to change. It includes iterative feedback cycles, cross-functional team collaboration, and a focus on continuous improvement in HR practices, such as recruiting, performance management, and employee engagement.

Agile Organization

It happens when a company can adapt to the customers’ needs when the market changes. Companies often have ready procedures that ensure they can meet the industry changes. The guidelines provide that they can redeploy employees to meet the changes. An agile organization is essential in ensuring that a company runs well.

Alternative Work Arrangements

These are non-traditional work setups, including telecommuting, flextime, compressed workweeks, and job sharing. They cater to employees' needs for flexibility and work-life balance, aiming to improve job satisfaction and productivity by allowing employees to work outside the conventional 9-to-5 schedule.

Americans with Disabilities Act (ADA)

The Americans with Disabilities Act is a federal law prohibiting discrimination against people with disabilities. The law is essential in the workplace as it protects employees with disabilities. For instance, it is against the law for companies to discriminate against a person with a disability during the application process.

Annualized Salary

Annualized salary is a way to calculate your salary based on a year's work. Instead of just looking at your weekly or monthly pay, you consider the expected earnings for the entire year. Figuring out your annualized salary is just a matter of doing some simple math.

Applicant Tracking System (ATS)

ATS is a record hiring system that ensures effective recruiting takes place. The system starts from the candidate application to the hiring process. The best thing about ATS is that it is available in different sizes and features. Thus, ensuring its ideal for all company sizes. The system promotes efficiency in the workplace. It also encourages good talent acquisition.

Artificial Intelligence in HR

The use of AI technologies, such as machine learning and natural language processing, to improve HR processes, including recruitment, performance evaluation, and employee engagement.

Assessment Centers

A method used in the recruitment process where candidates undergo a series of exercises designed to simulate real-life tasks and challenges of the job they are applying for.

ASO (Administrative Services Organization)

A third-party company that provides administrative services such as payroll, benefits administration, and HR support, without becoming a co-employer like a PEO.

Attrition

Attrition is the rate at which employees reduce over time. It involves the voluntary retirement or resignation of employees. It also consists of a situation where a company does not move to replace the employees. Attrition ensures that an organization’s workforce reduces.

At-Will Employment

At-will employment means an employer can end someone's job anytime for almost any reason without warning. The employee can also leave a job anytime and for any reason.

B

Baby Boomers

The generation born between 1946 & 1964. As of 2022, Baby Boomers make up approximately 25% of the US workforce. They grew up experiencing the Vietnam War and the Civil Rights Movement. They are often motivated by loyalty to the organization and seeking opportunities to be mentors.

Backpay

The wages or benefits an employee is entitled to but did not receive during the correct time period. Often occurs due to payroll errors or legal disputes.

Behavioral Competencies

These are a combination of skills, knowledge, and behaviors that contribute to an individual’s ability to perform well in a specific role. They include interpersonal skills, decision-making abilities, and personal attributes such as resilience and adaptability, which are essential for effective job performance and career progression.

Behavior-Based Interviewing

Behavior-based interviewing is a type of interviewing in which the interviewer asks questions about the interviewee’s past behavior to predict their future behavior. This type of interviewing is based on the idea that past behavior is the best predictor of future behavior.

Benchmarking

Benchmarking involves using various metrics to measure a team or company’s performance. The metrics include turnover rates, sales, retention, and customer satisfaction. Companies can use benchmarking to compare their competitors’ and internal performances. The metrics can help determine whether there are any performance changes.

Bereavement Leave

Bereavement is a type of leave granted to employees following the death of a family member, such as a spouse, child, parent, or sibling. Most companies offer this type of leave to employees who have experienced a death in their immediate family. 

Biweekly Pay

Biweekly pay means employees get paid every two weeks. In this structure, employees will get two paychecks each month.

Blended Learning

This educational approach combines online digital media with traditional classroom methods. It allows for a mix of self-paced learning and face-to-face interactions, providing flexibility and personalized learning experiences. Blended learning can include webinars, e-learning modules, and in-person workshops.

Blind Recruitment

A hiring process where information that could indicate a candidate's gender, ethnicity, or age is removed from applications to prevent unconscious bias.

Boilerplate Clause

A standardized section of a contract or legal document that is often used in multiple agreements without significant change. These clauses cover general provisions such as confidentiality, dispute resolution, and termination terms, ensuring consistency and legal protection across contracts.

Bona Fide Occupational Qualification

A Bona Fide Occupational Qualification is a legal provision that lets employers make decisions about hiring based on protected characteristics like age, gender, race, religion, or national origin.

Bonus

An additional financial reward given to employees on top of their regular salary. Bonuses are often performance-based or tied to company profits.

Broadbanding

A compensation strategy that consolidates multiple salary grades into fewer broad bands. This approach provides greater flexibility in employee movement within the bands, encourages skill development, and supports a more flexible approach to job evaluation and salary management.

Business Necessity

Companies use business necessity to justify their employment technique. The techniques often impact a specific group of people. The defense helps to legitimize the reasons why a company uses strict employment practices. Some of the most common business necessities include; experience and education requirements.

Business Process Reengineering

The radical redesign of core business processes to achieve significant improvements in productivity, cycle times, and quality. This involves analyzing existing processes, identifying inefficiencies, and implementing new, streamlined workflows to optimize organizational performance.

C

Candidate Experience

The perception and feelings of a job applicant about an employer based on their interactions throughout the hiring process. A positive candidate experience can enhance an employer's brand.

Career Anchors

These are fundamental values and motivations that guide an individual’s career choices. Developed by Edgar Schein, career anchors include categories such as technical competence, managerial competence, security, autonomy, and creativity, influencing career decisions and job satisfaction.

Career Coaching

A professional service that helps individuals identify career goals, develop skills, and create actionable plans to achieve their objectives. Career coaches provide personalized guidance on career transitions, job searches, skill development, and overcoming workplace challenges.

Career Pathing

A development tool that charts the potential future career progression of an employee within an organization, highlighting the steps and skills required to advance.

Career Plateau

A career plateau phase is where an individual perceives a lack of growth or advancement in their career progression. This halt is not merely a pause but a perceived stagnation in gaining new skills, knowledge, responsibilities, or a rise in job rank. 

Certified Payroll

A specialized payroll report that contractors must submit for federally funded projects, ensuring compliance with prevailing wage laws.

Change Management

The approach to transitioning individuals, teams, and organizations to a desired future state. It involves preparing, supporting, and helping employees in making organizational changes.

CHRO (Chief Human Resources Officer)

An executive-level role responsible for overseeing an organization’s human resources strategies, including talent acquisition, development, and organizational culture.

Compa-ratio

Compa-ratio compares an employee's salary or total compensation to the midpoint or market rate for their job. It's expressed as a percentage, with a compa-ratio of 100%, meaning that an employee's pay is at the midpoint or market rate for their role. 

COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a health insurance plan that gives workers and their dependents who lose their health benefits due to certain circumstances (such as job loss, reduction in hours, death, divorce, etc) the chance to continue health benefits provided by their group plan for a limited time.

COBRA generally requires that group health plans (sponsored by employers with 20 or more employees in the prior year) offer employees and their families the opportunity for a temporary extension of health coverage. This is called the continuation of coverage, which may occur when coverage under the plan would otherwise end.

For employers under 20 employees, continued coverage is handled at the state level rather than the federal, and will vary by state.

Co-employment

Co-employment happens when two or more organizations use the same employee. Organizations often have legal responsibility for that worker. Co-employment often happens in employment service providers or staffing firms.

Cognitive Bias

Systematic patterns of deviation from rationality in judgment, leading to illogical decision-making. Examples include confirmation bias, where individuals favor information that confirms their beliefs, and anchoring bias, where initial information disproportionately influences decisions.

Compensation Analysis

The process of reviewing and analyzing employee compensation to ensure it is competitive, fair, and aligned with industry standards and company goals.

Compensatory Time Off (Comp Time)

Compensatory time off, commonly referred to as “comp time,” is a practice where employees receive time off in lieu of overtime pay. Instead of being paid for hours worked beyond their normal schedule, employees are granted equivalent paid time off that they can use at a later date. Comp time is often used in the public sector, as it’s regulated by the Fair Labor Standards Act (FLSA) for government employees, but it may also be offered in the private sector depending on state laws.

Competency Framework

A structured set of competencies that define the skills, knowledge, and behaviors needed to perform a job effectively within an organization.

Compliance

HR compliance is the development of procedures and policies that ensure a firm carries out fair practices according to state and federal laws and regulations. The objective is to adhere to all laws and regulations while also making ensuring the firm’s human capital resources objectives are met.

Conflict Resolution

The methods and processes involved in facilitating the peaceful ending of conflict and retribution in a workplace setting.

Constructive Discharge

Constructive discharge is a breach of contract by the employer. It occurs when the behavior of an employer causes an employee to resign. The behavior involves incidents that establish an unfavorable environment for working. The employer’s conduct gives the employee a right to sue for compensation.

Contingent Worker

Contingent workers are a temporary workforce that companies use to supplement their employees. They include; freelancers, independent contractors, temps, or consultants. Employers pay contingent workers to complete specific tasks.

Continuous Feedback

An ongoing process of providing employees with regular, real-time feedback on their performance, rather than relying solely on annual performance reviews.

Corporate Culture

The beliefs, behaviors, and values that determine how a company's employees and management interact and handle business transactions. A strong corporate culture can lead to higher employee engagement and productivity.

CP-575 Letter

An official IRS letter that notifies a business of its Employer Identification Number (EIN). This document is critical for tax filing and other business processes.

Cultural Competence

The ability to interact effectively with people from different cultures. It involves understanding, appreciating, and respecting cultural differences, and adapting communication and behavior to bridge cultural gaps, fostering an inclusive and harmonious work environment.

D

Digital Transformation

The integration of digital technology into all areas of a business, fundamentally changing how the organization operates and delivers value to customers. It involves adopting technologies like cloud computing, artificial intelligence, and data analytics to enhance business processes, customer experiences, and innovation.

Direct Report

Direct reports are employees who work under an immediate supervisor or manager and report directly to them. They are an essential part of the workforce, providing the necessary skills and labor to make an organization thrive.

Direct Threat

A direct threat is a risk of significant harm to the safety or health of employees. One cannot reduce or end it via a reasonable accommodation.

Disciplinary Action

Disciplinary action involves actions against employees who do not observe company policies. The non-compliance could be; rules violation, poor performance, misbehavior, and misconduct. Companies often create measures to ensure employees follow company regulations and policies.

Disparate Treatment

Disparate employment offers discriminated employees a chance to validate employment discrimination. The employee can prove that a company did not treat them the same despite being in a similar situation as other employees. They can also claim that the difference in treatment is in protected characteristics.

Disposable Earnings

The portion of an employee’s wages that remain after legally required deductions, such as taxes, and is subject to garnishment for debt repayment.

Disregarded Entity

A disregarded entity is a business that's not considered separate from its owner for income tax purposes. The entity's income, deductions, and credits are reported directly on the owner's tax return.

Diversity Council

A group within an organization dedicated to promoting diversity and inclusion. This council develops and implements strategies to create a diverse workforce, foster an inclusive culture, and address issues related to equity and representation in the workplace.

Diversity, Equity & Inclusion (DEI)

The practice of including and valuing individuals from a wide range of backgrounds, perspectives, and experiences. It aims to create a more equitable and inclusive workplace.

E

Earned Income Credit (EIC)

A tax credit for low- to moderate-income workers, designed to reduce the tax burden and incentivize employment. Eligibility depends on income and number of dependents.

EEO-1 Report

The EEO-1 Report is a form used by the U.S. Equal Employment Opportunity Commission (EEOC) to collect data about an employer’s workforce. The survey collects information about the employer’s workforce demographics, job categories, and compensation levels.

EIN (Employer Identification Number)

A unique nine-digit number assigned by the IRS to businesses for tax identification purposes. Employers must have an EIN to report payroll taxes and hire employees.

Emotional Intelligence

Emotional intelligence is an essential tool for individuals to have. It is one’s ability to manage and understand emotions. People with high emotional intelligence can determine how their emotions affect others and what they mean.

Emotional Labor

The management of emotions by employees as part of their job role, often to create a desired emotional response in customers or colleagues. This concept, introduced by sociologist Arlie Hochschild, highlights the often unrecognized effort required to maintain a professional demeanor and provide excellent service.

Employee Advocacy

The promotion of a company by its employees through personal and professional networks. Employee advocates share positive information about the company, contribute to its brand reputation, and help attract talent and customers by acting as authentic brand ambassadors.

Employee Assistance Program

An employee assistance program (EAP) is an employer-offered benefits program designed to help employees with issues such as stress or burnout that could potentially impact their workplace performance.

Employee Engagement

Employee engagement involves how enthusiastic and involved an employee is. It is a business management concept that explains an employee’s commitment to a company’s goal. The more engaged employees are, the higher the chances they achieve company objectives.

Employee Handbook

An employee handbook contains valuable information that employees need. It often includes a company’s mission, history, and policies. Employers can use the handbook to protect themselves from claims of unfair treatment.

Employee Life Cycle

The stages an employee goes through during their time with a company, from recruitment and onboarding to development, retention, and exit.

Employee Personas

Semi-fictional representations of different employee types based on demographics, job roles, behaviors, and needs. These personas help HR and management understand the diverse segments of the workforce, tailor engagement strategies, and improve employee experience.

Employee Retention Credit (ERC)

A refundable tax credit designed to encourage businesses to retain employees during economic disruptions like the COVID-19 pandemic.

Employer Branding

The process of promoting a company as an employer of choice to a desired target group, which the company needs and wants to attract, recruit, and retain.

Employer Value Proposition (EVP)

The unique set of benefits and values that an employer offers to attract and retain employees, differentiating the organization from competitors.

ENPS (Employee Net Promoter Score)

Employee Net Promoter Score (ENPS) is a metric used by organizations to measure employee engagement, satisfaction, and loyalty. It’s based on a single survey question: “On a scale of 0 to 10, how likely are you to recommend your company as a place to work to others?”

EOI (Evidence of Insurability)

A form employees must submit when they apply for insurance coverage beyond the standard group policy limits. It requires proof of good health.

Equal Employment Opportunity (EEO)

The principle that all individuals should have equal access to employment opportunities based on merit, without regard to race, color, religion, sex, national origin, age, disability, or genetic information.

Equal Pay for Equal Work

The principle that individuals performing the same work should receive equal pay, regardless of gender, race, or other characteristics. This concept aims to eliminate pay disparities and promote fairness and equity in compensation practices.

Ergonomics

The science of designing workplaces, products, and systems to fit the people who use them. Ergonomic design aims to optimize human well-being and overall system performance by considering factors such as body posture, repetitive movements, and workplace layout.

Exempt Employee

An exempt employee does not get minimum wage or overtime. The employee is also exempted from protections that employers give to non-exempt workers. Employers pay the workers a salary instead of hourly wages.

Exit Interview

An exit interview involves a conversation between an employee who wants to leave a company and the employer. The employer asks the employee why they want to leave employment.

F

Fair Labor Standards Act (FLSA)

FLSA is the federal law that determines the child labor and employee overtime pay standards. It also establishes minimum wage standards that impact part-time and full-time workers. FLSA applies to local, state, federal, and private workers. All US employees have an FLSA status and are classified as "exempt" or "non-exempt".

Families First Coronavirus Response Act (FFCRA)

A law requiring certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. Generally, the FFCRA provides that covered employers must provide up to two weeks of paid leave to all employees.

Family and Medical Leave Act (FMLA)

Family and Medical Leave Act (FMLA) is the federal law that provides employees with unpaid, job-protected leave and benefits continuation in certain circumstances. FMLA generally provides 12 weeks of leave in a 12-month period (more if caring for an injured or ill service member).

Federal ID Number (Tax ID)

A number issued by the IRS used to identify a business entity for federal tax purposes. This number is also known as an Employer Identification Number (EIN).

Federal Income Tax (FIT)

A tax levied by the federal government on personal and business income. Employers are responsible for withholding and remitting federal income tax from employee wages.

FITW (Federal Income Tax Withholding)

The portion of an employee’s wages that employers are required to withhold for federal income tax. These withholdings are reported to the IRS and affect the employee’s annual tax return.

Federal Unemployment Tax Act (FUTA)

FUTA is a federal law that created a system of unemployment insurance to help people who lose their jobs find other work. Unemployment taxes are a type of tax collected by the government and then redistributed to the unemployed.

Flexible Working Arrangements

Work arrangements that allow employees to have flexibility in terms of when, where, and how they work. This can include telecommuting, flextime, compressed workweeks, and job sharing.

Floating Holidays

Paid days off that employees can take at their discretion, often used in place of traditional fixed holidays. They provide greater flexibility in managing personal and cultural observances.

Form 1120

The tax form used by corporations to report their income, gains, losses, and other financial information to the IRS. It is filed annually.

Form 2106

Form 2106 lets employees deduct expenses for work, including transportation, lodging, meals, or entertainment. Employees must have receipts for these expenses.

Form 2553

Form 2553 is a document required by the IRS for a company to file as an S Corporation. It has four main sections: Election Information, Selection of Fiscal Tax Year, Qualified Subchapter S Trust (QSST) Election, and Late Corporate Classification Election Representations. 

Form 2555

Form 2555 is used by US citizens and resident aliens to calculate their foreign-earned income exclusion and their housing exclusion or deduction.

Form 5498-SA

A tax form that reports contributions to Health Savings Accounts (HSA) and Medical Savings Accounts (MSA) to the IRS.

Form 5884

Employers can use Form 5884 to claim the Work Opportunity Tax Credit (WOTC). The WOTC is available to employers who hire people from groups that have faced barriers to employment.

Form 8233

A form used by non-resident aliens to claim exemption from withholding on income such as scholarships, grants, or compensation for personal services.

Form 8832

A form that allows a business entity to choose how it will be classified for tax purposes, such as a corporation, partnership, or disregarded entity.

Form 941

A quarterly tax form used by employers to report income taxes, Social Security tax, and Medicare tax withheld from employee wages.

Form W-3

Form W-3 is a document that employers use to report how much money they paid their employees and how much tax they took out.

Freelancer Management System (FMS)

A platform used to manage and streamline the hiring, onboarding, and payment processes of freelancers and contract workers.

Frontline Workers

Employees who work directly with customers or in the operations that are core to a business. Frontline workers are essential in industries such as healthcare, retail, and manufacturing.

Full Time-Equivalent (FTE)

Companies often use FTE to determine their employee’s workload. It calculates the number of full-time or part-time workers that make up the full-time workers. FTE can help in company cost management.

Furlough

A furlough is a temporary leave a company gives employees due to special needs. The special needs can be due to social or economic factors. Employers expect employees to return to work at the end of the leave.

G

Gamified Learning

The application of game design elements in non-game contexts to enhance learning and engagement. This approach uses elements like points, badges, and leaderboards to motivate learners, improve retention, and make training programs more interactive and enjoyable.

Gamification

The application of game-design elements and principles in non-game contexts, such as HR, to engage and motivate employees.

Garnishment

A legal process where a portion of an employee’s wages is withheld by their employer to pay off a debt, such as child support or tax obligations.

Generation Alpha

The cohort of individuals born from 2010 onwards, following Generation Z. Generation Alpha is characterized by its upbringing in a highly digital and connected world, with access to advanced technology from a young age, shaping their learning, communication, and social behaviors.

Generation X

The generation born between 1965 & 1980. As of 2022, they make up approximately 33% of the US workforce. Gen X grew up experiencing the AIDS epidemic and the dot-com boom. They are often motivated by work-life balance, and more so than previous generations, tend to seek flexible work arrangements.

Generation Z

The generation born between 2001 & 2020. As of 2022, they make up approximately 5% of the US workforce. Gen Z grew up experiencing broad access to the internet and technology, the Great Recession, and life after 9/11. More so than previous generations, they tend to be motivated by the chance to be independent, self-directed, and creative. Sometimes referred to as Zoomers.

Gig Economy

A labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs. Gig workers are typically independent contractors or freelancers.

Glass Ceiling

This analogy describes career and professional obstacles encountered by women and minorities in an attempt to make it to top positions. The word “glass” is because the barrier is considered invisible.

Global Mobility

The ability of an organization to move employees across different geographic locations to meet business needs. This includes expatriate assignments, international transfers, and short-term relocations, facilitating knowledge transfer, leadership development, and global talent management.

Green HR

HR practices that promote environmental sustainability within the organization. Green HR initiatives include reducing carbon footprints, encouraging eco-friendly behaviors, and integrating environmental goals into HR policies, such as green recruitment and sustainable workplace practices.

Gross Misconduct

The term refers to grave deviation from the workplace’s prescribed code of conduct. It is considered severe and yields adverse consequences like dismissal (through a fair and legal procedure), disciplinary hearing, or pay in place of notice. Examples in the US include illegal drug use at the workplace, fraud, serious policy breaches, and theft.

Gross Up

The process of increasing an employee’s net pay to cover taxes so that their total compensation remains unaffected by tax withholdings.

Gross Wages

The total amount of money earned by an employee before taxes, benefits, and other deductions. Gross wages include regular pay, overtime, bonuses, and any other earnings.

H

Harassment

Workplace harassment is unfair treatment—physical or verbal—inflicted by the employer, supervisor, client, or coworker resulting in humiliation or negative mental health issues. It could attack one’s sexual orientation, gender, race, age, or disability. The Equal Employment Opportunity Commission (EEOC) lists offensive jokes, insults, and physical assaults as examples.

An account set up and funded by employers for employee reimbursement of out-of-pocket medical expenses. It covers costs like medical expenses not typically covered by the existing health plan or medical bills incurred before meeting a deductible. The reimbursement is tax-free in the US.

Health Risk Assessment (HRA)

A tool used to evaluate an individual’s health risks and quality of life. HRAs typically involve a questionnaire covering medical history, lifestyle habits, and biometric data, providing personalized feedback and recommendations for health improvement.

Health Savings Account (HSA)

An HSA is an employee’s tax-free interest-earning account that caters to qualified medical expenses. It can be funded by the employee or employer and has an annual limit. To qualify, the employee must:

• Have a high-deductible health plan

• Have no health coverage or Medicare

• Not be dependent on someone else’s tax returns

High Potential Employee (HiPo)

An employee identified as having the potential to grow into a leadership role. HiPos are often part of succession planning programs and receive targeted development opportunities to prepare them for future responsibilities within the organization.

HMO (Health Maintenance Organization)

A type of health insurance plan that requires members to receive care through a network of doctors and hospitals. HMO plans often have lower premiums but require referrals for specialists.

Holiday Pay

Compensation provided to employees for time worked on holidays, or paid time off given during holidays. It may be mandated by law or offered as a benefit by employers.

Human Capital Management (HCM)

Human Capital Management (HCM) is the process of workforce management to deliver HR administrative functions effectively for productivity and revenue generation. It governs functions like recruitment, training and development, and performance management.

HR Analytics

The application of data analysis techniques to HR data in order to make better decisions and improve organizational performance. HR analytics can help in areas such as talent acquisition, employee retention, and workforce planning.

HR Business Partner (HRBP)

An HR professional who collaborates with business leaders to align HR strategies with organizational goals. HRBPs provide strategic guidance on talent management, workforce planning, and organizational development to drive business performance and employee engagement.

HR Compliance

The process of ensuring that an organization’s HR policies and practices adhere to federal, state, and local laws and regulations. This includes areas like employment law, health and safety, and employee rights.

HR Consultant

A professional who provides expert advice and services on human resources issues, such as organizational design, compliance, employee relations, and talent management.

HRCI (Human Resource Certification Institute)

An organization that offers certifications to HR professionals, validating their knowledge and expertise in the field.

HRIS (Human Resource Information System)

A software solution used by HR departments to manage employee data, track HR processes, and automate tasks such as payroll, benefits administration, and performance management.

Human Resource Management System (HRMS)

HRMS refers to a collection of systems used in HR management processes. You can call it a smart digital personal assistant for managing HR functions like payroll administration, leave management, appraisal, tax filing automation, employee re-hiring, and onboarding. HRMS empowers employees through self-service portals, online training, and complaint reporting.

HR Metrics

Measurements used to evaluate and track the effectiveness of HR policies and practices. Common HR metrics include turnover rates, time to fill positions, and employee satisfaction scores.

I

Implicit Bias

Unconscious attitudes or stereotypes that affect understanding, actions, and decisions. Implicit bias can influence hiring, promotion, and interactions in the workplace, and addressing it requires awareness and proactive measures to ensure fair and equitable treatment of all employees.

Imputed Income

Imputed income is the value of employees’ non-monetary fringe benefits added to their gross income for Social Security and Medicare taxes. Examples include company cars and large gifts.

Inclusion

The practice of exercising workplace equality is called inclusion. It enables HR managers to provide fair and equal access to opportunities and resources regardless of employee gender, race, or physical and mental state.

Inclusive Leadership

Leadership that values diversity and actively seeks to create an inclusive work environment. Inclusive leaders promote a culture of respect, ensure diverse perspectives are heard, and foster a sense of belonging among all team members, enhancing innovation and performance.

Independent Contractor

An independent contractor is a service provider that an organization outsources on a contractual basis. Their payments are exempted from withholding tax. Hiring these professionals, also called freelancers or consultants, saves costs like recruitment expenses, payroll taxes, and employee benefits.

Injunction Relief

A legal remedy where a court orders a party to refrain from doing a particular act, often used in employment disputes to prevent wrongful actions or enforce compliance.

Internal Recruiting

The process of filling job vacancies by promoting or transferring existing employees rather than hiring externally. Internal recruiting helps retain talent and promote career development.

Intranet

A private, secure network used by organizations to share internal information and resources with employees, such as policies, forms, and collaboration tools.

IPO (Initial Public Offering)

The process by which a private company offers shares to the public for the first time. An IPO allows a company to raise capital and expand its operations.

J

Job Analysis

It is the process of analyzing and creating a job description by defining responsibilities, salary, and candidate qualifications. Job analysis helps select the right candidate and provides clear expectations and guidelines.

Job Classification

In job classification, HR reviews the job’s responsibilities to determine its most accurate standard, title, and rank.

Job Description

A job description is a document that outlines expectations and what the position covers, extracted from the job analysis. It includes:

• Job title

• Who performs the job

• Duties and responsibilities

• Reporting lines

• Qualifications

• Working conditions

• The job’s purpose in the company’s objectives

Job Dissatisfaction

Job Dissatisfaction refers to employees’ discontentment with their job due to issues like:

• Harassment,

• Minimal work-life balance,

• Underpayment,

• Poor working conditions,

• Unsupportive bosses,

• Limited career growth,

• Personal goals are misaligned.

It results in frustration, unproductivity, demotivation, and workplace attrition.

Job Embeddedness

The extent to which employees feel connected to their job and community, influencing their decision to stay with the organization. Job embeddedness considers factors like fit, links, and sacrifice, emphasizing the importance of creating a supportive and engaging work environment.

Job Rotation

A strategy where employees are moved between different jobs to increase their skills, knowledge, and experience, and to reduce job monotony.

K

Knowledge Management

The process of creating, sharing, using, and managing the knowledge and information of an organization to enhance performance.

Knowledge Transfer

The process of sharing knowledge, skills, and expertise within an organization to maintain and enhance performance. Effective knowledge transfer involves documentation, training, mentoring, and collaboration to ensure continuity and innovation in business processes.

L

Labor Force

The term means the total number of employed individuals and the unemployed seeking employment. It can define the population of your organization, industry, or country. You can also use the term “workforce.”

Layoff

A layoff means you are terminating your worker’s employment either temporarily or permanently. Temporary layoffs can happen if your company closes down entirely for several days, weeks, etc., but plans to reopen in the future. Permanent layoffs happen when you terminate a worker’s employment, and rehiring isn’t an option. Some of the causes of permanent layoffs can be a business closing down, a reduction of the labor force, or employee performance.

Leadership Development

Programs and activities designed to improve the skills, abilities, and confidence of current and future leaders within an organization. Leadership development can include training, mentoring, coaching, and experiential learning.

Learning Management System (LMS)

A software application used to plan, deliver, and manage all learning and training activities within an organization. An LMS can be used for employee onboarding, compliance training, and professional development.

M

Managerial Grid

A model developed by Robert Blake and Jane Mouton to evaluate leadership styles based on concern for people and concern for production. The grid identifies five main styles, including country club, team, middle-of-the-road, impoverished, and authority-compliance leadership, guiding leaders in balancing these concerns.

Medical Leave of Absence

A leave granted to an employee for medical reasons, often protected under laws like the Family and Medical Leave Act (FMLA). It ensures job protection while the employee recovers.

Mentorship Programs

Structured programs where experienced employees (mentors) provide guidance, support, and advice to less experienced employees (mentees) to help them develop their skills and advance their careers.

Microaggressions

Subtle, often unintentional, actions or comments that convey prejudiced or discriminatory attitudes. Microaggressions can undermine inclusivity and affect the well-being and performance of employees, making it crucial for organizations to address and educate about these behaviors.

Micromanagement

A management style characterized by closely monitoring and controlling the work of subordinates, often resulting in reduced autonomy and employee satisfaction.

Millennials

The generation born between 1981 & 1996. As of 2022, they make up approximately 35% of the US workforce. Millennials grew up experiencing events like Columbine and 9/11. They also tend to be motivated by work-life balance and interesting work experiences and are often seeking challenge, growth, and development.

Mindfulness Training

Programs designed to enhance employees' focus, emotional regulation, and resilience through mindfulness practices such as meditation, breathing exercises, and mindful movement. Mindfulness training can reduce stress, improve mental health, and increase productivity and job satisfaction.

N

Nepotism

An unfair workplace practice where the powerful favor their relatives and friends without basis on professional qualifications is nepotism. For example, authoritative managers or executives can use their influence to facilitate favors like placement or salary increments.

Net Pay

The amount of money an employee takes home after deductions such as taxes, benefits, and garnishments. Net pay is also known as take-home pay.

New Hire Checklist

HR professionals use a new hire checklist to ensure a smooth onboarding process. The document should include tasks associated with preboarding, onboarding, and follow-up.

Non-Compete Agreement

A non-compete agreement safeguards a firm against employees who leave one company to work for another in the same field. A non-compete agreement forbids an employee from working for a direct rival for a specific amount of time and in one particular geographic area.

Non-Exempt Employee

Employees who are entitled to minimum wage and overtime pay under the Fair Labor Standards Act (FLSA). Non-exempt employees typically perform duties that do not meet the criteria for exemption, such as manual labor or routine tasks, requiring careful tracking of work hours.

Nondisclosure Agreement (NDA)

A nondisclosure agreement (NDA) protects proprietary information in a business. New employees may have access to a company’s business plans, employee contact information, client information, and other confidential information. A nondisclosure agreement requires them to promise to maintain confidentiality.

O

Offboarding

It is the disentanglement process when an employee leaves. An offboarding checklist includes a formal handover, returning company assets, deactivating access rights, and exit interviews.

Onboarding

The onboarding process entails assimilating new employees into the organization. It includes training, filling in employee onboarding documents, orientation, and the allocation of a buddy.

Operating Budget

A financial plan that outlines an organization’s expected revenues and expenses for a specific period, typically one year. It is essential for managing resources and controlling costs.

Open Door Policy

A management practice where employees are encouraged to approach their supervisors with concerns or suggestions, fostering transparent communication.

Organizational Citizenship Behavior (OCB)

Voluntary, extra-role behaviors that contribute to organizational effectiveness. OCB includes actions like helping colleagues, being flexible with work requirements, and showing initiative, which enhance team dynamics and overall organizational performance.

Organizational Culture

Organizational culture is a set of rules that describe how the organization expects employees to behave. It lays down the company’s values, beliefs, expectations, objectives, mission, and vision.

Organizational Development

The practice of improving an organization’s effectiveness and capacity to achieve its goals through planned interventions in its processes, structure, and culture.

Org Chart

An organizational chart, or org chart, is a document that contains key information about everyone in a company, including their names, job titles, and what department they’re a part of. The chart visually organizes this information into an aerial view of the organization’s hierarchy.

Orientation

Employee orientation is the introduction of a new employee to the organization. For successful orientation, you may include a workplace tour, introduction to colleagues, familiarization with the organization’s dress code, culture, and policies, and answering the employees’ questions.

OSHA (Occupational Safety and Health Administration)

A federal agency that sets and enforces workplace safety standards, ensuring that employers provide a safe and healthy environment for employees.

OSHA Form 301

A form used by employers to report serious workplace injuries and illnesses to OSHA. It is part of the federal requirement for maintaining accurate injury and illness records.

P

Parental Leave

A benefit allowing employees to take time off from work to care for a new child, whether through birth, adoption, or foster care. Parental leave policies vary by country and company.

Passive Candidate

A member of the workforce who has neither applied for a job nor is actively looking. Usually, you (the employer) are considering them for a position or have sought them out.

Pay Compression

When there is little—usually higher—or no pay difference between a new employee and a long-serving one in the same position, regardless of any difference in experience or knowledge.

This occurrence, also called wage or salary compression, results from the new employee’s negotiation, previous salary, or changes in the industry’s stipulated starting salaries.

While it is not illegal in the US, it may cause demotivation and inequalities, contravening equal pay laws.

Pay Equity Audit

A thorough analysis of an organization’s compensation practices to identify and address pay disparities based on gender, race, or other characteristics. Pay equity audits help ensure fair pay practices, compliance with legal standards, and support for a diverse and inclusive workforce.

Pay Stub

A document provided to employees that details their earnings, deductions, and net pay for a specific pay period. Pay stubs are important for tracking income and taxes.

PCORI Fees (Patient-Centered Outcomes Research Institute Fees)

A fee imposed on health insurers and self-insured employers to fund research on health outcomes. It is part of the Affordable Care Act.

Payroll Integration

The process of linking an organization’s payroll system with other HR systems, such as time tracking and benefits administration, to ensure seamless data flow and reduce administrative burden.

PEO (Professional Employer Organization)

A third-party company that manages HR services such as payroll, benefits, and compliance for businesses. PEOs co-employ workers and assume certain legal responsibilities for them.

Peer Feedback

A process where employees provide feedback on their colleagues’ performance. Peer feedback is commonly used in performance reviews to offer a well-rounded view of an employee’s strengths and areas for improvement.

Peer Review Panel

A group of employees who review and resolve workplace disputes or performance issues. Peer review panels offer a fair and impartial process for addressing grievances, promoting transparency, and fostering trust in the organization's conflict resolution mechanisms.

Per Diem

A daily allowance provided to employees for expenses incurred while traveling for work. It typically covers meals, lodging, and incidental costs.

People Strategy

A long-term plan focused on managing and developing an organization’s workforce. A well-defined people strategy aligns HR goals with business objectives to foster a productive and engaged workforce.

Performance Appraisal

The evaluation of an employee’s job performance against pre-established criteria. Performance appraisals are typically conducted annually and are used to inform decisions about promotions, raises, and development needs.

Performance Improvement Plan (PIP)

A PIP is a plan to improve an employee’s performance upon failure to meet their KPIs. It specifies the areas of improvement, timelines, and practical consequences and includes periodic reviews.

Performance Management

It is the process where HR managers plan, set, and communicate objectives on job performance expectations. A proper performance management plan must be aligned to the organization’s objectives and include monitoring, reviews, feedback, and rewarding employees.

As an HR professional, you can use the balanced scorecard, management by objectives, or budget-driven performance management plans with the help of smart performance management tools.

Personal Development Plan (PDP)

A document outlining an individual’s career goals, strengths, development needs, and action plans to achieve their objectives. PDPs are used in performance management and career development processes to guide employee growth and align their aspirations with organizational goals.

Proof of Insurance

A document that confirms an individual or business has the required insurance coverage, such as liability or health insurance. Proof of insurance is often requested by employers, lenders, and government agencies.

Protected Class

Protected classes are groups of people that the law protects from being unfairly treated because of specific characteristics they have (called protected characteristics).

Psychometric Testing

A standardized test used to measure individuals' mental capabilities and behavioral style, often used in recruitment and development processes.

Q

Qualifying Life Event

Shortened as QLE, it is a health insurance term referring to an employee’s change in life situation, warranting adjustment to their existing benefits plan. The changes could be child adoption, divorce, marriage, having a baby, or permanent relocation. They trigger special open enrollment, allowing employees to enroll in a health plan outside the yearly Open Enrollment Period.

R

Reasonable Accommodation

Reasonable accommodation refers to provisions made in a work environment and hiring process through specific changes to cater to employees and applicants with disabilities. The adjustments aim to provide equal opportunities to enable qualified disabled employees to perform their job. Examples include the introduction of flexible schedules, user-friendly software, reserved parking, accessible work areas, and machinery modification.

Remote Work Policies

Guidelines and procedures established by an organization to manage and support employees who work remotely. Remote work policies can cover areas such as communication, data security, and performance expectations.

Reskilling

The process of teaching employees new skills to enable them to perform different jobs within the organization, often in response to technological or market changes.

Retaliation

The term describes an employer’s disciplinary or unfair response to punish an employee for engaging in protected activity. According to the Equal Employment Opportunity Commission (EEOC), a protected activity where an employee filed a formal complaint about workplace discrimination or harassment. Examples of retaliation are:

• Salary cuts

• Transfers

• Dismissal

• Demotion

• Withholding workplace privileges

Retention Strategies

Techniques and practices used by an organization to retain its employees and reduce turnover. Effective retention strategies can include career development opportunities, competitive compensation, and a positive work environment.

Retro Pay

A payment made to an employee to correct an underpayment or missed wages from a previous pay period. Retro pay is common in cases of payroll errors, promotions, or wage increases.

Rightsizing

A strategy used by businesses to adjust the size of their workforce to better align with company goals, often involving layoffs or restructuring to improve efficiency and profitability.

Risk Management

Risk Management is the process of analyzing employees’ risks to the organization. The company then uses the information to manage (minimize, avoid, or transfer) the risks to mitigate their impacts. Threats can be from employee behaviors or HR processes.

RTO (Return to Office)

A company policy or initiative that requires employees to resume working from a physical office after a period of remote work, such as during the COVID-19 pandemic.

S

Salary Transparency

The sharing of information about employee salaries within an organization. This can be done through a variety of means, such as posting salaries online, sharing salary ranges with employees, or being open about salaries during the hiring process.

Seasonal Employment

Temporary work that occurs during specific times of the year, such as the holiday shopping season or summer tourism. Seasonal employees often fill short-term staffing needs for businesses.

Secondary Insurance

A type of insurance coverage that pays for medical expenses not covered by a primary insurance plan. Secondary insurance helps reduce out-of-pocket costs for policyholders.

Section 125 Plan

A Section 125 plan is a written plan that allows employees to receive cash or benefits on a pre-tax basis. These plans are also known as Premium Only Plans (POP).

SHRM (Society for Human Resource Management)

A professional organization that provides resources, certifications, and networking opportunities for HR professionals. SHRM sets industry standards and advocates for HR best practices.

Shadowing

An on-the-job training technique where an employee follows and observes a more experienced colleague to learn about their role and responsibilities.

Shift Differential

Additional compensation given to employees who work non-standard hours, such as night shifts or weekends. Shift differentials are used to incentivize employees to work undesirable hours.

Skills Gap

A skills gap is the misalignment between your employees’ skills and the essential skills needed for their job.

SMB (Small and Medium-Sized Business)

A business that falls within certain size criteria, typically based on the number of employees or annual revenue. SMBs often have fewer resources and need cost-effective HR solutions to manage their workforce.

Social Media Recruiting

The practice of using social media platforms like LinkedIn, Facebook, and Twitter to attract, engage, and hire job candidates. Social media recruiting helps businesses expand their talent pool and build employer brand awareness.

Sourcing

This term defines looking for and identifying qualified candidates for current or future positions. It helps lessen the recruitment process by identifying the candidate in advance.

Statutory Employee

A statutory employee is a service provider contracted by a business for a certain period, treated as staff, but subject only to two tax withholdings—Medicare and Social Security tax. Usually, they have more freedom over their work than typical employees.

Stay Interview

A proactive meeting between managers and employees aimed at identifying and addressing any issues or concerns that could lead to employee turnover. This helps improve employee satisfaction and retention.

Stock Option

A benefit offered by companies that gives employees the right to buy company stock at a set price after a certain period. Stock options are often used to incentivize employees to contribute to the company’s long-term success.

Succession Planning

When an HR manager starts developing potential talent for positions, they are said to be working on a succession plan. It is a strategy to fill a current or anticipated vacancy in a critical role.

SUI (State Unemployment Insurance)

A state-level program that provides temporary financial assistance to workers who lose their jobs through no fault of their own. Employers pay into the SUI fund through payroll taxes.

SUTA Tax (State Unemployment Tax Act)

A payroll tax paid by employers to fund state unemployment benefits. SUTA tax rates vary by state and are based on an employer’s history of claims and turnover rates.

T

Talent Acquisition

Talent acquisition is an HR department’s function that entails acquiring skilled labor. It is achieved by identifying the company’s future and current workforce needs and sourcing and recruiting the right talent to fulfill those needs.

Talent Management

In talent management, HR managers engage in a process to attract, recruit, and retain employees. It is achieved through the HR department’s functions like employee engagement and development, motivation, and training to retain high performers. Talent management also entails performance management and succession planning.

Tangible Rewards

These rewards are physical benefits, with monetary value awarded to employees to recognize for excellent performance. For example, paid holidays, cash bonuses, and gift cards.

Termination Letter

A formal document issued by an employer to an employee notifying them of their dismissal from the company. A termination letter typically includes reasons for termination, final pay details, and any severance information.

Time-to-Hire

Time-to-Hire refers to the period between the company’s first contact with a potential candidate and the time of employment (offer acceptance). Hiring managers must utilize intelligent systems and methods like an e-signature-embedded offer letter to ensure an efficient process.

Total Rewards

The combination of all the benefits, compensation, and incentives an organization offers to its employees in exchange for their work. Total rewards can include salary, bonuses, health benefits, retirement plans, and work-life balance initiatives.

Traditionalists

This generation was born between 1925 and 1945. They grew up experiencing The Great Depression and World War II. They’re often motivated by recognition and seeking stability and opportunities to contribute. As of 2022, they make up approximately 2% of the US workforce.

Training and Development

Programs and activities designed to improve the skills, knowledge, and performance of employees. Training and development can include on-the-job training, workshops, e-learning, and professional certifications.

Transgender

The term transgender refers to individuals whose gender identity does not correspond with their assigned sex at birth. It is vital to know that terms like “transgenders” and “transgendered” are inappropriate. Instead, HR professionals should use the term “transgender people.”

Turnover Rate

Employee turnover rate indicates the percentage of employee attrition—voluntary or involuntary—within a specified period. To measure it, compare the number of leavers against that period’s average workforce headcount.

How to calculate turnover rate:

The number of employees who left within a specified timeframe/Average number of employees during that period (headcount at the start + headcount at the end/2) X 100.

U

Uniformed Services Employment and Reemployment Rights Act (USERRA)

The Uniformed Services Employment and Reemployment Rights Act (USERRA) is a federal law that provides employment protections for individuals who serve or have served in the United States military, including the National Guard and Reserves.

Unlimited PTO

A flexible paid time off policy that allows employees to take an unlimited amount of vacation or sick leave, as long as it doesn’t interfere with their work performance or the company’s needs.

Upskilling

The process of teaching employees new skills or enhancing their current capabilities to improve job performance and career growth. Upskilling helps companies remain competitive and employees stay relevant in their roles.

Utilization Analysis

Utilization analysis is scrutiny of an organization’s demographics in comparison to the demographic of the industry’s available workforce. It can help HR managers determine if the company’s rate of employing a certain group aligns with the available workforce’s ratio. With the data, a company can ensure inclusion and equal employment opportunities. For ease of accessing the statistics, a company can utilize compliance software to help with the accurate collection and storage of employee data.

V

Variable Compensation

A form of pay that is based on performance or other factors, such as sales commissions, bonuses, or profit-sharing. Variable compensation incentivizes employees to achieve specific business outcomes.

Volunteer Time Off (VTO)

Volunteer Time Off is a form of paid leave that is specifically designed for employees who are volunteering in the community. This can be volunteering at an event, or otherwise providing assistance to a community-based nonprofit or charity. While some employers designate an organization (or a list of several organizations) that they already have a relationship with for approved VTO, other employers leave it to the discretion of the employee to determine where to spend their VTO.

W

W-2

A tax form used by employers to report wages paid to employees and the taxes withheld from those wages. Employees use their W-2 to file their annual tax returns.

W-3

A tax form that summarizes all W-2 forms issued by an employer. The W-3 is filed with the Social Security Administration and helps ensure that employee wages and taxes are properly reported.

Whistleblower

Employees who disclose a company’s dangerous or illegal activity are called whistleblowers.

Whistleblowing

The act of an employee reporting unethical, illegal, or unsafe practices within an organization to internal or external authorities.

Withholding

The term refers to a chunk of the employee’s wages retained from their paycheck. The amount goes towards taxes and is indicated in the W-2 forms, generated by placing calculations from W-4 alongside the employee’s annual earnings.

Workforce Planning

The workforce planning process involves examining an organization’s human resources (workforce) to determine future needs. In this analysis, the company looks into future expected skills supply and demands and formulates a plan to acquire new or build its existing workforce to satisfy the needs when the time comes.

Work-Life Balance

Work-life balance is symmetry between the time available for an employee’s professional life and personal life. A fair work-life balance grants the employee fair working hours and adequate rest and leisure away from work, ensuring their well-being. Work-life balance is a critical employee retention factor.

Workers’ Compensation

Also known as employee compensation, it refers to benefits paid to workers upon injury or disability on the job. It can cover medical expenses, lost wages, death benefits, and rehabilitation costs. The coverage aims to protect both the employee and the employer. Important to note: When employees accept this benefit, they relinquish their right to sue the employer when an issue occurs.

Workplace Flexibility

This term refers to a mutually agreed leeway for employees to decide how to run their work day. It includes factors like when, where, how, and how long the employee works, as long as they deliver

Workplace Wellness Programs

Initiatives designed to promote the health and well-being of employees. Workplace wellness programs can include activities such as fitness challenges, health screenings, stress management workshops, and mental health support.

Work Week

A work week is a period of seven consecutive 24 hours, totaling 168 hours. A typical work week for hourly workers totals 40 hours, with any extra considered overtime. Salaried employees, on the other hand, earn only their salary despite any additional hours, except in companies that provide overtime as a benefit. An easy way to determine accuracy is by using employee time-tracking software.

Wrongful Termination

When an employer dismisses an employee illegally, they are said to have practiced wrongful termination. Illegal reasons include any ground that violates employment law or the employee’s contract.

Y

Yellow-Dog Contract

A yellow-dog contract is an employment agreement that stops employees’ or potential candidates’ existing labor union memberships. It also stops them from joining a new one. The conditions state that failure to adhere to these conditions results in termination or denial of an employment opportunity.

Yield Ratios

This term refers to the percentage of candidates progressing from one stage of the hiring process to another. For example, it measures the time between first contact and the interview. The ratios enable HR professionals to evaluate the success of different recruitment methods to select the best hiring process.

Z

Zero-based Budgeting

Zero-based budgeting is a funding method of formulating a new budget, starting with zero funds. It is an alternative to beginning with the previous period’s budget with necessary adjustments. This method provides the foundation and budget guide for effective budget-tracking, justification of operating expenses, and insight into the most profitable areas.

#

147c Letter

A 147c letter is a document that requests an organization's Employee Identification Number (EIN) or verifies an EIN that has been provided.

1099-SA

A tax form used to report distributions from a Health Savings Account (HSA) or Medical Savings Account (MSA). It’s crucial for tracking medical expenses and ensuring compliance with IRS regulations.

360-Degree Review

A comprehensive performance review system where an employee receives feedback from supervisors, peers, and subordinates. This multi-source feedback method helps in personal development and performance evaluation.

9-Box Grid

The 9-box grid is a talent management tool commonly used in succession planning and employee development. It plots employees on a matrix based on two key factors: performance (on one axis) and potential (on the other axis). The grid consists of nine boxes arranged in a 3x3 layout, with performance categorized as low, moderate, or high on the vertical axis, and potential categorized as low, moderate, or high on the horizontal axis.

The purpose of the 9-box grid is to help organizations visually assess and categorize employees for decision-making regarding promotions, development, and

succession planning. Employees in the top-right box (high performance, high potential) are often considered strong candidates for leadership roles, while those in the bottom-left (low performance, low potential) may require further development or performance improvement plans.

Updated 10/08/2024