Measuring Talent ROI Loss from Performance-Score Inflation and Faulty Promotion Mapping.

Talent ROI, performance inflation, promotion mapping, agency theory, HR analytics, employee evaluation, incentive distortion

Talent ROI is the value created by employees as compared to the amount spent on hiring, developing, and retaining the employees. Systems of performance evaluation are at the core of this measure of this value, as they inform compensation, promotion and the allocation of talents. But performance-score inflation, in which employees are graded systematically higher than deserved, has become a serious perversion in contemporary organisations. Such inflation does not match the evaluation results to the real employee ability and the results result in defective promotion choices and resource wastage. The proposed paper, which is based on the Agency Theory, Expectancy Theory, and the Resource-Based View (RBV), analyses that inflated performance metrics misalign incentive arrangements and undermine the performance-reward relationship. It is found in the analysis that such distortions lead to great loss of Personal ROI in promoting poor performers and poor utilisation of high-potential employees. Moreover, inflated appraisals deter organisational competitiveness by inefficiently allocating strategic human capital. The research finds that there should be a sound calibration system and data-driven performance system to make precise assessments and value sustainability.