SlideShare une entreprise Scribd logo
1  sur  22
CHAPTER 1:
AN INVESTMENT
PERSPECTIVE OF
HUMAN
RESOURCE
MANAGEMENT
Copyright © 2005 South-Western. All rights reserved.
Copyright © 2005 South-
Western. All rights reserved. 1–2
The Strategic View of Human ResourcesThe Strategic View of Human ResourcesThe Strategic View of Human ResourcesThe Strategic View of Human Resources
• Employees areEmployees are human assetshuman assets
– Increase in value to organization and marketplace whenIncrease in value to organization and marketplace when
investments of appropriate policies & programs are appliedinvestments of appropriate policies & programs are applied
• Effective organizations recognize that employeesEffective organizations recognize that employees
have valuehave value
– Much as organization’s physical & capital assets have valueMuch as organization’s physical & capital assets have value
• Employees are valuable source ofEmployees are valuable source of sustainablesustainable
competitive advantagecompetitive advantage
• Employees areEmployees are human assetshuman assets
– Increase in value to organization and marketplace whenIncrease in value to organization and marketplace when
investments of appropriate policies & programs are appliedinvestments of appropriate policies & programs are applied
• Effective organizations recognize that employeesEffective organizations recognize that employees
have valuehave value
– Much as organization’s physical & capital assets have valueMuch as organization’s physical & capital assets have value
• Employees are valuable source ofEmployees are valuable source of sustainablesustainable
competitive advantagecompetitive advantage
Copyright © 2005 South-
Western. All rights reserved. 1–3
Sources of Employee ValueSources of Employee ValueSources of Employee ValueSources of Employee Value
• Technical KnowledgeTechnical Knowledge
– Markets, processes, customers, environmentMarkets, processes, customers, environment
• Ability to Learn and GrowAbility to Learn and Grow
– Openness to new ideasOpenness to new ideas
– Acquisition of knowledge & skillsAcquisition of knowledge & skills
• Decision Making CapabilitiesDecision Making Capabilities
• MotivationMotivation
• CommitmentCommitment
• TeamworkTeamwork
– Interpersonal skills, leadership abilityInterpersonal skills, leadership ability
• Technical KnowledgeTechnical Knowledge
– Markets, processes, customers, environmentMarkets, processes, customers, environment
• Ability to Learn and GrowAbility to Learn and Grow
– Openness to new ideasOpenness to new ideas
– Acquisition of knowledge & skillsAcquisition of knowledge & skills
• Decision Making CapabilitiesDecision Making Capabilities
• MotivationMotivation
• CommitmentCommitment
• TeamworkTeamwork
– Interpersonal skills, leadership abilityInterpersonal skills, leadership ability
Copyright © 2005 South-
Western. All rights reserved. 1–4
Adopting an Investment PerspectiveAdopting an Investment PerspectiveAdopting an Investment PerspectiveAdopting an Investment Perspective
• Determines how to best invest in peopleDetermines how to best invest in people
• CostsCosts
– Out-of-pocketOut-of-pocket
– OpportunityOpportunity
• Human assets become competitive advantageHuman assets become competitive advantage
• Required skills become less manual, moreRequired skills become less manual, more
knowledge-basedknowledge-based
• Appropriate, integrated, strategy-consistentAppropriate, integrated, strategy-consistent
approach is neededapproach is needed
• Determines how to best invest in peopleDetermines how to best invest in people
• CostsCosts
– Out-of-pocketOut-of-pocket
– OpportunityOpportunity
• Human assets become competitive advantageHuman assets become competitive advantage
• Required skills become less manual, moreRequired skills become less manual, more
knowledge-basedknowledge-based
• Appropriate, integrated, strategy-consistentAppropriate, integrated, strategy-consistent
approach is neededapproach is needed
Copyright © 2005 South-
Western. All rights reserved. 1–5
A DilemmaA DilemmaA DilemmaA Dilemma
• Failure to invest in employees causesFailure to invest in employees causes
– InefficiencyInefficiency
– Weakening of organization’s competitiveWeakening of organization’s competitive
positionposition
• Human assets are risky investmentHuman assets are risky investment
• Require extra effort to ensure that theyRequire extra effort to ensure that they
are not lostare not lost
• Failure to invest in employees causesFailure to invest in employees causes
– InefficiencyInefficiency
– Weakening of organization’s competitiveWeakening of organization’s competitive
positionposition
• Human assets are risky investmentHuman assets are risky investment
• Require extra effort to ensure that theyRequire extra effort to ensure that they
are not lostare not lost
Copyright © 2005 South-
Western. All rights reserved. 1–6
Exhibit 1-2Exhibit 1-2
Types of Organizational Assets/CapitalTypes of Organizational Assets/Capital
Exhibit 1-2Exhibit 1-2
Types of Organizational Assets/CapitalTypes of Organizational Assets/Capital
Copyright © 2005 South-
Western. All rights reserved. 1–7
Research FindingsResearch FindingsResearch FindingsResearch Findings
• HR practices directly related to profitability &HR practices directly related to profitability &
market valuemarket value
• Primary reason for profitability:Primary reason for profitability:
– Effective management of human capitalEffective management of human capital
• Integrated management of human capital canIntegrated management of human capital can
result in 47% increase in market valueresult in 47% increase in market value
• Top 10% of organizations studied experiencedTop 10% of organizations studied experienced
391% return on investment in management of391% return on investment in management of
human capitalhuman capital
• HR practices directly related to profitability &HR practices directly related to profitability &
market valuemarket value
• Primary reason for profitability:Primary reason for profitability:
– Effective management of human capitalEffective management of human capital
• Integrated management of human capital canIntegrated management of human capital can
result in 47% increase in market valueresult in 47% increase in market value
• Top 10% of organizations studied experiencedTop 10% of organizations studied experienced
391% return on investment in management of391% return on investment in management of
human capitalhuman capital
Copyright © 2005 South-
Western. All rights reserved. 1–8
Exhibit 1-3Exhibit 1-3
HR Value ChainHR Value Chain
Exhibit 1-3Exhibit 1-3
HR Value ChainHR Value Chain
Copyright © 2005 South-
Western. All rights reserved. 1–9
HR Metrics Are ComplexHR Metrics Are ComplexHR Metrics Are ComplexHR Metrics Are Complex
• 90% of Fortune 500 organizations evaluate90% of Fortune 500 organizations evaluate
HR operations on basis of three metrics:HR operations on basis of three metrics:
– Employee retention and turnoverEmployee retention and turnover
– Corporate moraleCorporate morale
– Employee satisfactionEmployee satisfaction
• These metrics do not necessarily illustrateThese metrics do not necessarily illustrate
how HR impactshow HR impacts
– ProfitsProfits
– Shareholder valueShareholder value
• 90% of Fortune 500 organizations evaluate90% of Fortune 500 organizations evaluate
HR operations on basis of three metrics:HR operations on basis of three metrics:
– Employee retention and turnoverEmployee retention and turnover
– Corporate moraleCorporate morale
– Employee satisfactionEmployee satisfaction
• These metrics do not necessarily illustrateThese metrics do not necessarily illustrate
how HR impactshow HR impacts
– ProfitsProfits
– Shareholder valueShareholder value
Copyright © 2005 South-
Western. All rights reserved. 1–10
Mercer Model of Measuring HR ImpactMercer Model of Measuring HR ImpactMercer Model of Measuring HR ImpactMercer Model of Measuring HR Impact
• Identify problem HR can impactIdentify problem HR can impact
• Calculate actual cost of problemCalculate actual cost of problem
• Choose HR solution that addresses problemChoose HR solution that addresses problem
• Calculate cost of solutionCalculate cost of solution
• Calculate value of improvement 6 to 24 monthsCalculate value of improvement 6 to 24 months
after implementationafter implementation
• Calculate specific return on investmentCalculate specific return on investment
• ROI in human assets often not realized until someROI in human assets often not realized until some
time in futuretime in future
• Identify problem HR can impactIdentify problem HR can impact
• Calculate actual cost of problemCalculate actual cost of problem
• Choose HR solution that addresses problemChoose HR solution that addresses problem
• Calculate cost of solutionCalculate cost of solution
• Calculate value of improvement 6 to 24 monthsCalculate value of improvement 6 to 24 months
after implementationafter implementation
• Calculate specific return on investmentCalculate specific return on investment
• ROI in human assets often not realized until someROI in human assets often not realized until some
time in futuretime in future
Copyright © 2005 South-
Western. All rights reserved. 1–11
Exhibit 1-4Exhibit 1-4
Factors Influencing InvestmentFactors Influencing Investment
OrientationOrientation
Exhibit 1-4Exhibit 1-4
Factors Influencing InvestmentFactors Influencing Investment
OrientationOrientation
Copyright © 2005 South-
Western. All rights reserved. 1–12
Investment-Oriented OrganizationInvestment-Oriented OrganizationInvestment-Oriented OrganizationInvestment-Oriented Organization
• Sees people as central to mission & strategySees people as central to mission & strategy
• Mission statement & strategic objectivesMission statement & strategic objectives
espouse value of human assets in achievingespouse value of human assets in achieving
goalsgoals
• Management philosophy encouragingManagement philosophy encouraging
development & retention of human assetsdevelopment & retention of human assets
• Does not treat human assets in same waysDoes not treat human assets in same ways
as physical assetsas physical assets
• Sees people as central to mission & strategySees people as central to mission & strategy
• Mission statement & strategic objectivesMission statement & strategic objectives
espouse value of human assets in achievingespouse value of human assets in achieving
goalsgoals
• Management philosophy encouragingManagement philosophy encouraging
development & retention of human assetsdevelopment & retention of human assets
• Does not treat human assets in same waysDoes not treat human assets in same ways
as physical assetsas physical assets
Copyright © 2005 South-
Western. All rights reserved. 1–13
Investment Orientation FactorsInvestment Orientation FactorsInvestment Orientation FactorsInvestment Orientation Factors
• Senior Management Values & ActionsSenior Management Values & Actions
– Managers need “investment orientation” towardManagers need “investment orientation” toward
peoplepeople
• Attitude Toward RiskAttitude Toward Risk
– Investment in human resources inherently riskierInvestment in human resources inherently riskier
– Human assets never absolutely “owned”Human assets never absolutely “owned”
• Nature of Skills Needed by EmployeesNature of Skills Needed by Employees
– The more marketable employee skills, the riskier theThe more marketable employee skills, the riskier the
firm’s investment in skill developmentfirm’s investment in skill development
• Senior Management Values & ActionsSenior Management Values & Actions
– Managers need “investment orientation” towardManagers need “investment orientation” toward
peoplepeople
• Attitude Toward RiskAttitude Toward Risk
– Investment in human resources inherently riskierInvestment in human resources inherently riskier
– Human assets never absolutely “owned”Human assets never absolutely “owned”
• Nature of Skills Needed by EmployeesNature of Skills Needed by Employees
– The more marketable employee skills, the riskier theThe more marketable employee skills, the riskier the
firm’s investment in skill developmentfirm’s investment in skill development
Copyright © 2005 South-
Western. All rights reserved. 1–14
Investment Orientation FactorsInvestment Orientation FactorsInvestment Orientation FactorsInvestment Orientation Factors
• Utilitarian (“Bottom Line”) MentalityUtilitarian (“Bottom Line”) Mentality
– Attempt made to quantify employee worth throughAttempt made to quantify employee worth through
cost-benefit analysiscost-benefit analysis
– ““Soft” benefits of HR programs difficult to objectivelySoft” benefits of HR programs difficult to objectively
quantifyquantify
• Availability of OutsourcingAvailability of Outsourcing
– Given availability of cost-effective outsourcing,Given availability of cost-effective outsourcing,
investments in HR should produceinvestments in HR should produce highest returnshighest returns &&
sustainable competitive advantagessustainable competitive advantages..
• Utilitarian (“Bottom Line”) MentalityUtilitarian (“Bottom Line”) Mentality
– Attempt made to quantify employee worth throughAttempt made to quantify employee worth through
cost-benefit analysiscost-benefit analysis
– ““Soft” benefits of HR programs difficult to objectivelySoft” benefits of HR programs difficult to objectively
quantifyquantify
• Availability of OutsourcingAvailability of Outsourcing
– Given availability of cost-effective outsourcing,Given availability of cost-effective outsourcing,
investments in HR should produceinvestments in HR should produce highest returnshighest returns &&
sustainable competitive advantagessustainable competitive advantages..
Copyright © 2005 South-
Western. All rights reserved. 1–15
Reading 1.1: The Hidden Leverage of Human Capital (Oxman)Reading 1.1: The Hidden Leverage of Human Capital (Oxman)
Model for Management SuccessModel for Management Success
Reading 1.1: The Hidden Leverage of Human Capital (Oxman)Reading 1.1: The Hidden Leverage of Human Capital (Oxman)
Model for Management SuccessModel for Management Success
• Strengthen keyStrengthen key
relationshipsrelationships
– CustomersCustomers
– EmployeesEmployees
– ShareholdersShareholders
• Strengthen keyStrengthen key
relationshipsrelationships
– CustomersCustomers
– EmployeesEmployees
– ShareholdersShareholders
• LeverageLeverage
downtimedowntime
– Use variable-payUse variable-pay
– Address neglectedAddress neglected
areas:areas:
• InfrastructureInfrastructure
• MarketingMarketing
• OperationsOperations
• LeverageLeverage
downtimedowntime
– Use variable-payUse variable-pay
– Address neglectedAddress neglected
areas:areas:
• InfrastructureInfrastructure
• MarketingMarketing
• OperationsOperations
Copyright © 2005 South-
Western. All rights reserved. 1–16
Reading 1.1Reading 1.1
Model for Management SuccessModel for Management Success
Reading 1.1Reading 1.1
Model for Management SuccessModel for Management Success
• Refocusing staff onRefocusing staff on
what’s importantwhat’s important
– PerformancePerformance
management asmanagement as
disciplined, strategic,disciplined, strategic,
value-added processvalue-added process
– Clearly define,Clearly define,
differentiate & balancedifferentiate & balance
between corebetween core
competencies & resultscompetencies & results
• Refocusing staff onRefocusing staff on
what’s importantwhat’s important
– PerformancePerformance
management asmanagement as
disciplined, strategic,disciplined, strategic,
value-added processvalue-added process
– Clearly define,Clearly define,
differentiate & balancedifferentiate & balance
between corebetween core
competencies & resultscompetencies & results
• Building return onBuilding return on
compensationcompensation
– Link base-payLink base-pay
progression toprogression to
competencycompetency
achievementachievement
– Link incentive pay toLink incentive pay to
annual, semiannual, orannual, semiannual, or
quarterly resultsquarterly results
• Building return onBuilding return on
compensationcompensation
– Link base-payLink base-pay
progression toprogression to
competencycompetency
achievementachievement
– Link incentive pay toLink incentive pay to
annual, semiannual, orannual, semiannual, or
quarterly resultsquarterly results
Copyright © 2005 South-
Western. All rights reserved. 1–17
Reading 1.2 (Rynes et al.)Reading 1.2 (Rynes et al.)
Seven Common MisconceptionsSeven Common Misconceptions
Reading 1.2 (Rynes et al.)Reading 1.2 (Rynes et al.)
Seven Common MisconceptionsSeven Common Misconceptions
1.1. Conscientiousness is a better predictor ofConscientiousness is a better predictor of
performance than intelligence.performance than intelligence.
2.2. Companies that screen job applicants for valuesCompanies that screen job applicants for values
have higher performance than those that screenhave higher performance than those that screen
for intelligence.for intelligence.
3.3. Integrity tests don’t work well in practiceIntegrity tests don’t work well in practice
because so many people lie on them.because so many people lie on them.
4.4. Integrity tests have adverse impact on racialIntegrity tests have adverse impact on racial
minorities.minorities.
1.1. Conscientiousness is a better predictor ofConscientiousness is a better predictor of
performance than intelligence.performance than intelligence.
2.2. Companies that screen job applicants for valuesCompanies that screen job applicants for values
have higher performance than those that screenhave higher performance than those that screen
for intelligence.for intelligence.
3.3. Integrity tests don’t work well in practiceIntegrity tests don’t work well in practice
because so many people lie on them.because so many people lie on them.
4.4. Integrity tests have adverse impact on racialIntegrity tests have adverse impact on racial
minorities.minorities.
Copyright © 2005 South-
Western. All rights reserved. 1–18
Reading 1.2Reading 1.2
Seven Common MisconceptionsSeven Common Misconceptions
Reading 1.2Reading 1.2
Seven Common MisconceptionsSeven Common Misconceptions
5.5. Encouraging employee participation is moreEncouraging employee participation is more
effective for improving organizationaleffective for improving organizational
performance than setting performance goals.performance than setting performance goals.
6.6. Most errors in performance appraisal can beMost errors in performance appraisal can be
eliminated by providing training to managers oneliminated by providing training to managers on
how to avoid them.how to avoid them.
7.7. If employees are asked how important pay is toIf employees are asked how important pay is to
them, they are likely to overestimate its truethem, they are likely to overestimate its true
importance.importance.
5.5. Encouraging employee participation is moreEncouraging employee participation is more
effective for improving organizationaleffective for improving organizational
performance than setting performance goals.performance than setting performance goals.
6.6. Most errors in performance appraisal can beMost errors in performance appraisal can be
eliminated by providing training to managers oneliminated by providing training to managers on
how to avoid them.how to avoid them.
7.7. If employees are asked how important pay is toIf employees are asked how important pay is to
them, they are likely to overestimate its truethem, they are likely to overestimate its true
importance.importance.
Copyright © 2005 South-
Western. All rights reserved. 1–19
Reading 1.2Reading 1.2
Seven Common Misconceptions: ImplicationsSeven Common Misconceptions: Implications
Reading 1.2Reading 1.2
Seven Common Misconceptions: ImplicationsSeven Common Misconceptions: Implications
1.1. Select new employees on both intelligence andSelect new employees on both intelligence and
conscientiousness.conscientiousness.
2.2. Assess intelligence and conscientiousness beforeAssess intelligence and conscientiousness before
values.values.
3.3. Define the values that are important and assessDefine the values that are important and assess
them through carefully developed, validthem through carefully developed, valid
procedures.procedures.
4.4. Use integrity tests with ability tests for highUse integrity tests with ability tests for high
predictability.predictability.
1.1. Select new employees on both intelligence andSelect new employees on both intelligence and
conscientiousness.conscientiousness.
2.2. Assess intelligence and conscientiousness beforeAssess intelligence and conscientiousness before
values.values.
3.3. Define the values that are important and assessDefine the values that are important and assess
them through carefully developed, validthem through carefully developed, valid
procedures.procedures.
4.4. Use integrity tests with ability tests for highUse integrity tests with ability tests for high
predictability.predictability.
Copyright © 2005 South-
Western. All rights reserved. 1–20
Reading 1.2Reading 1.2
Seven Common Misconceptions: ImplicationsSeven Common Misconceptions: Implications
Reading 1.2Reading 1.2
Seven Common Misconceptions: ImplicationsSeven Common Misconceptions: Implications
5.5. Develop compelling goals; enlist participationDevelop compelling goals; enlist participation
and support it through rewards.and support it through rewards.
6.6. Training and feedback are important, but errorsTraining and feedback are important, but errors
are difficult to eliminate. Top managers shouldare difficult to eliminate. Top managers should
serve as role models in quality of performanceserve as role models in quality of performance
reviews.reviews.
7.7. Attitude surveys are subject to biases; studyAttitude surveys are subject to biases; study
behaviors as well as attitudes.behaviors as well as attitudes.
5.5. Develop compelling goals; enlist participationDevelop compelling goals; enlist participation
and support it through rewards.and support it through rewards.
6.6. Training and feedback are important, but errorsTraining and feedback are important, but errors
are difficult to eliminate. Top managers shouldare difficult to eliminate. Top managers should
serve as role models in quality of performanceserve as role models in quality of performance
reviews.reviews.
7.7. Attitude surveys are subject to biases; studyAttitude surveys are subject to biases; study
behaviors as well as attitudes.behaviors as well as attitudes.
Copyright © 2005 South-
Western. All rights reserved. 1–21
Reading 1.3 (Pfeffer)Reading 1.3 (Pfeffer)
Effective HRM PracticesEffective HRM Practices
Reading 1.3 (Pfeffer)Reading 1.3 (Pfeffer)
Effective HRM PracticesEffective HRM Practices
• Employment SecurityEmployment Security
• Selectivity in RecruitingSelectivity in Recruiting
• High WagesHigh Wages
• Incentive payIncentive pay
• Employee OwnershipEmployee Ownership
• Information SharingInformation Sharing
• Participation &Participation &
OwnershipOwnership
• Self-Managed TeamsSelf-Managed Teams
• Employment SecurityEmployment Security
• Selectivity in RecruitingSelectivity in Recruiting
• High WagesHigh Wages
• Incentive payIncentive pay
• Employee OwnershipEmployee Ownership
• Information SharingInformation Sharing
• Participation &Participation &
OwnershipOwnership
• Self-Managed TeamsSelf-Managed Teams
• Training & DevelopmentTraining & Development
• Cross-Utilization &Cross-Utilization &
Cross-TrainingCross-Training
• Symbolic EgalitarianismSymbolic Egalitarianism
• Wage CompressionWage Compression
• Promotion From WithinPromotion From Within
• Taking the Long ViewTaking the Long View
• Measurement of PracticeMeasurement of Practice
• Overall PhilosophyOverall Philosophy
• Training & DevelopmentTraining & Development
• Cross-Utilization &Cross-Utilization &
Cross-TrainingCross-Training
• Symbolic EgalitarianismSymbolic Egalitarianism
• Wage CompressionWage Compression
• Promotion From WithinPromotion From Within
• Taking the Long ViewTaking the Long View
• Measurement of PracticeMeasurement of Practice
• Overall PhilosophyOverall Philosophy
Copyright © 2005 South-
Western. All rights reserved. 1–22
Reading 1.3Reading 1.3
Effective HRM PracticesEffective HRM Practices
Reading 1.3Reading 1.3
Effective HRM PracticesEffective HRM Practices
• Very few firms will engage in all practicesVery few firms will engage in all practices
• While these practices are important forWhile these practices are important for
success, there are other determinants assuccess, there are other determinants as
wellwell
• Downsides existDownsides exist
– Requires more involvement and responsibility thanRequires more involvement and responsibility than
some employees wantsome employees want
– Managers & others may resist them as wellManagers & others may resist them as well
– Turnover may resultTurnover may result
• Very few firms will engage in all practicesVery few firms will engage in all practices
• While these practices are important forWhile these practices are important for
success, there are other determinants assuccess, there are other determinants as
wellwell
• Downsides existDownsides exist
– Requires more involvement and responsibility thanRequires more involvement and responsibility than
some employees wantsome employees want
– Managers & others may resist them as wellManagers & others may resist them as well
– Turnover may resultTurnover may result

Contenu connexe

Tendances

Strategic human resource management
Strategic human resource managementStrategic human resource management
Strategic human resource management
Kuddey Kudabe
 
Strategic Human Resource Management
Strategic Human Resource ManagementStrategic Human Resource Management
Strategic Human Resource Management
Chanima Bhattacharya
 
Investment perspective of human resource management
Investment perspective of human resource managementInvestment perspective of human resource management
Investment perspective of human resource management
Seredup Maya
 
T & d in ihrm
T & d in ihrmT & d in ihrm
T & d in ihrm
jsindu
 
Assessment of HRD Needs
Assessment of HRD Needs	Assessment of HRD Needs
Assessment of HRD Needs
Shafiq Khan
 

Tendances (20)

Strategic human resource management
Strategic human resource managementStrategic human resource management
Strategic human resource management
 
Shrm notes
Shrm notesShrm notes
Shrm notes
 
Strategic Human Resource Management
Strategic Human Resource ManagementStrategic Human Resource Management
Strategic Human Resource Management
 
Chapter 5 international compensation
Chapter   5 international compensationChapter   5 international compensation
Chapter 5 international compensation
 
Strategic Role of HR
Strategic Role of HRStrategic Role of HR
Strategic Role of HR
 
Talent management
Talent managementTalent management
Talent management
 
Hr With Business Strategy 1
Hr With Business Strategy 1Hr With Business Strategy 1
Hr With Business Strategy 1
 
Intro shrm 1
Intro shrm 1Intro shrm 1
Intro shrm 1
 
STRATEGIC HUMAN RESOURCE MANAGEMENT NOTES
STRATEGIC HUMAN RESOURCE MANAGEMENT NOTESSTRATEGIC HUMAN RESOURCE MANAGEMENT NOTES
STRATEGIC HUMAN RESOURCE MANAGEMENT NOTES
 
Global hrm
Global hrmGlobal hrm
Global hrm
 
Investment perspective of human resource management
Investment perspective of human resource managementInvestment perspective of human resource management
Investment perspective of human resource management
 
Training & Development HRM
Training & Development HRMTraining & Development HRM
Training & Development HRM
 
Human Resource Planning
Human Resource PlanningHuman Resource Planning
Human Resource Planning
 
Trends in human resource management
Trends in human resource managementTrends in human resource management
Trends in human resource management
 
Ethical Issues in Human Resource Management
Ethical Issues in Human Resource ManagementEthical Issues in Human Resource Management
Ethical Issues in Human Resource Management
 
T & d in ihrm
T & d in ihrmT & d in ihrm
T & d in ihrm
 
Talent management slides
Talent management slidesTalent management slides
Talent management slides
 
International Human Resource Management - Meaning, Nature, characteristics an...
International Human Resource Management - Meaning, Nature, characteristics an...International Human Resource Management - Meaning, Nature, characteristics an...
International Human Resource Management - Meaning, Nature, characteristics an...
 
Assessment of HRD Needs
Assessment of HRD Needs	Assessment of HRD Needs
Assessment of HRD Needs
 
International Human Resources Management
International Human Resources ManagementInternational Human Resources Management
International Human Resources Management
 

En vedette

HR Communication In Infosys
HR Communication In InfosysHR Communication In Infosys
HR Communication In Infosys
Nandita Sadani
 
Hr functions and strategy ppt
Hr functions and strategy pptHr functions and strategy ppt
Hr functions and strategy ppt
LOLITA GANDIA
 
Employee benefits hr ppt
Employee benefits hr pptEmployee benefits hr ppt
Employee benefits hr ppt
Mark Sammy
 
Basic of telecommunication presentation
Basic of telecommunication presentationBasic of telecommunication presentation
Basic of telecommunication presentation
hannah05
 
Career Planning PowerPoint
Career Planning PowerPointCareer Planning PowerPoint
Career Planning PowerPoint
emurfield
 
Career development
Career developmentCareer development
Career development
rehmdil
 
telecommunication-ppt
telecommunication-ppttelecommunication-ppt
telecommunication-ppt
secomps
 
career planning
career planningcareer planning
career planning
IIIM
 
Career planning presentation
Career planning presentationCareer planning presentation
Career planning presentation
kesiamargot
 

En vedette (20)

Bonus Act
Bonus ActBonus Act
Bonus Act
 
Career planning
Career planningCareer planning
Career planning
 
HR Communication In Infosys
HR Communication In InfosysHR Communication In Infosys
HR Communication In Infosys
 
Hrm class ppt
Hrm class pptHrm class ppt
Hrm class ppt
 
Employee Communication & Role of HRM [MAY 2010]
Employee Communication & Role of HRM [MAY 2010]Employee Communication & Role of HRM [MAY 2010]
Employee Communication & Role of HRM [MAY 2010]
 
Satellite communications ppt
Satellite communications pptSatellite communications ppt
Satellite communications ppt
 
HRM in telecom
HRM in telecomHRM in telecom
HRM in telecom
 
Hr functions and strategy ppt
Hr functions and strategy pptHr functions and strategy ppt
Hr functions and strategy ppt
 
Employee benefits hr ppt
Employee benefits hr pptEmployee benefits hr ppt
Employee benefits hr ppt
 
Basic of telecommunication presentation
Basic of telecommunication presentationBasic of telecommunication presentation
Basic of telecommunication presentation
 
Career Planning PowerPoint
Career Planning PowerPointCareer Planning PowerPoint
Career Planning PowerPoint
 
Career Planning and Development
Career Planning and DevelopmentCareer Planning and Development
Career Planning and Development
 
Career development
Career developmentCareer development
Career development
 
Career Guidance Seminar
Career Guidance SeminarCareer Guidance Seminar
Career Guidance Seminar
 
telecommunication-ppt
telecommunication-ppttelecommunication-ppt
telecommunication-ppt
 
Compensation ppt
Compensation pptCompensation ppt
Compensation ppt
 
career planning
career planningcareer planning
career planning
 
Career planning
Career planningCareer planning
Career planning
 
work life balance ppt
work life balance pptwork life balance ppt
work life balance ppt
 
Career planning presentation
Career planning presentationCareer planning presentation
Career planning presentation
 

Similaire à SHR ppt 1

Chapter 04 Human Resources Planning and Recruitment
Chapter 04 Human Resources Planning and RecruitmentChapter 04 Human Resources Planning and Recruitment
Chapter 04 Human Resources Planning and Recruitment
Rayman Soe
 
Effective people-and-productivity-management
Effective people-and-productivity-managementEffective people-and-productivity-management
Effective people-and-productivity-management
min chan myae
 
Facility Management Trends Presentation final_1
Facility Management Trends Presentation final_1Facility Management Trends Presentation final_1
Facility Management Trends Presentation final_1
Hugh Swan
 

Similaire à SHR ppt 1 (20)

Invest.persp1.
Invest.persp1.Invest.persp1.
Invest.persp1.
 
The strategic role of HRM
The strategic role of HRMThe strategic role of HRM
The strategic role of HRM
 
Strategic planning model
Strategic planning modelStrategic planning model
Strategic planning model
 
Bba chap 3 full
Bba chap 3 fullBba chap 3 full
Bba chap 3 full
 
Shrm
ShrmShrm
Shrm
 
Hrm2
Hrm2Hrm2
Hrm2
 
Strategic planning model
Strategic planning modelStrategic planning model
Strategic planning model
 
Creating Business Value Through HR Function
Creating Business Value Through HR FunctionCreating Business Value Through HR Function
Creating Business Value Through HR Function
 
Chapter 04 Human Resources Planning and Recruitment
Chapter 04 Human Resources Planning and RecruitmentChapter 04 Human Resources Planning and Recruitment
Chapter 04 Human Resources Planning and Recruitment
 
Workshop on the Strategic Planning Model
 Workshop on the Strategic Planning Model Workshop on the Strategic Planning Model
Workshop on the Strategic Planning Model
 
Strategic hr masterclass thoughts
Strategic hr masterclass thoughtsStrategic hr masterclass thoughts
Strategic hr masterclass thoughts
 
Effective people-and-productivity-management
Effective people-and-productivity-managementEffective people-and-productivity-management
Effective people-and-productivity-management
 
Presentation (6)-1.pdf
Presentation (6)-1.pdfPresentation (6)-1.pdf
Presentation (6)-1.pdf
 
Making the Invisible Visible HRMAB 2018
Making the Invisible Visible HRMAB 2018 Making the Invisible Visible HRMAB 2018
Making the Invisible Visible HRMAB 2018
 
compensation management
compensation managementcompensation management
compensation management
 
Facility Management Trends Presentation final_1
Facility Management Trends Presentation final_1Facility Management Trends Presentation final_1
Facility Management Trends Presentation final_1
 
Ch 02 modif
Ch 02 modifCh 02 modif
Ch 02 modif
 
Talent Acquisition Tool (TAT)
Talent Acquisition Tool (TAT)Talent Acquisition Tool (TAT)
Talent Acquisition Tool (TAT)
 
Human Capital Measurement Model
Human Capital Measurement Model Human Capital Measurement Model
Human Capital Measurement Model
 
Hr value proposition
Hr value proposition  Hr value proposition
Hr value proposition
 

Dernier

Spellings Wk 3 English CAPS CARES Please Practise
Spellings Wk 3 English CAPS CARES Please PractiseSpellings Wk 3 English CAPS CARES Please Practise
Spellings Wk 3 English CAPS CARES Please Practise
AnaAcapella
 
1029 - Danh muc Sach Giao Khoa 10 . pdf
1029 -  Danh muc Sach Giao Khoa 10 . pdf1029 -  Danh muc Sach Giao Khoa 10 . pdf
1029 - Danh muc Sach Giao Khoa 10 . pdf
QucHHunhnh
 
Vishram Singh - Textbook of Anatomy Upper Limb and Thorax.. Volume 1 (1).pdf
Vishram Singh - Textbook of Anatomy  Upper Limb and Thorax.. Volume 1 (1).pdfVishram Singh - Textbook of Anatomy  Upper Limb and Thorax.. Volume 1 (1).pdf
Vishram Singh - Textbook of Anatomy Upper Limb and Thorax.. Volume 1 (1).pdf
ssuserdda66b
 
Activity 01 - Artificial Culture (1).pdf
Activity 01 - Artificial Culture (1).pdfActivity 01 - Artificial Culture (1).pdf
Activity 01 - Artificial Culture (1).pdf
ciinovamais
 

Dernier (20)

Food safety_Challenges food safety laboratories_.pdf
Food safety_Challenges food safety laboratories_.pdfFood safety_Challenges food safety laboratories_.pdf
Food safety_Challenges food safety laboratories_.pdf
 
On National Teacher Day, meet the 2024-25 Kenan Fellows
On National Teacher Day, meet the 2024-25 Kenan FellowsOn National Teacher Day, meet the 2024-25 Kenan Fellows
On National Teacher Day, meet the 2024-25 Kenan Fellows
 
Fostering Friendships - Enhancing Social Bonds in the Classroom
Fostering Friendships - Enhancing Social Bonds  in the ClassroomFostering Friendships - Enhancing Social Bonds  in the Classroom
Fostering Friendships - Enhancing Social Bonds in the Classroom
 
TỔNG ÔN TẬP THI VÀO LỚP 10 MÔN TIẾNG ANH NĂM HỌC 2023 - 2024 CÓ ĐÁP ÁN (NGỮ Â...
TỔNG ÔN TẬP THI VÀO LỚP 10 MÔN TIẾNG ANH NĂM HỌC 2023 - 2024 CÓ ĐÁP ÁN (NGỮ Â...TỔNG ÔN TẬP THI VÀO LỚP 10 MÔN TIẾNG ANH NĂM HỌC 2023 - 2024 CÓ ĐÁP ÁN (NGỮ Â...
TỔNG ÔN TẬP THI VÀO LỚP 10 MÔN TIẾNG ANH NĂM HỌC 2023 - 2024 CÓ ĐÁP ÁN (NGỮ Â...
 
Spellings Wk 3 English CAPS CARES Please Practise
Spellings Wk 3 English CAPS CARES Please PractiseSpellings Wk 3 English CAPS CARES Please Practise
Spellings Wk 3 English CAPS CARES Please Practise
 
1029 - Danh muc Sach Giao Khoa 10 . pdf
1029 -  Danh muc Sach Giao Khoa 10 . pdf1029 -  Danh muc Sach Giao Khoa 10 . pdf
1029 - Danh muc Sach Giao Khoa 10 . pdf
 
ICT Role in 21st Century Education & its Challenges.pptx
ICT Role in 21st Century Education & its Challenges.pptxICT Role in 21st Century Education & its Challenges.pptx
ICT Role in 21st Century Education & its Challenges.pptx
 
Google Gemini An AI Revolution in Education.pptx
Google Gemini An AI Revolution in Education.pptxGoogle Gemini An AI Revolution in Education.pptx
Google Gemini An AI Revolution in Education.pptx
 
Python Notes for mca i year students osmania university.docx
Python Notes for mca i year students osmania university.docxPython Notes for mca i year students osmania university.docx
Python Notes for mca i year students osmania university.docx
 
Mehran University Newsletter Vol-X, Issue-I, 2024
Mehran University Newsletter Vol-X, Issue-I, 2024Mehran University Newsletter Vol-X, Issue-I, 2024
Mehran University Newsletter Vol-X, Issue-I, 2024
 
Key note speaker Neum_Admir Softic_ENG.pdf
Key note speaker Neum_Admir Softic_ENG.pdfKey note speaker Neum_Admir Softic_ENG.pdf
Key note speaker Neum_Admir Softic_ENG.pdf
 
This PowerPoint helps students to consider the concept of infinity.
This PowerPoint helps students to consider the concept of infinity.This PowerPoint helps students to consider the concept of infinity.
This PowerPoint helps students to consider the concept of infinity.
 
General Principles of Intellectual Property: Concepts of Intellectual Proper...
General Principles of Intellectual Property: Concepts of Intellectual  Proper...General Principles of Intellectual Property: Concepts of Intellectual  Proper...
General Principles of Intellectual Property: Concepts of Intellectual Proper...
 
SKILL OF INTRODUCING THE LESSON MICRO SKILLS.pptx
SKILL OF INTRODUCING THE LESSON MICRO SKILLS.pptxSKILL OF INTRODUCING THE LESSON MICRO SKILLS.pptx
SKILL OF INTRODUCING THE LESSON MICRO SKILLS.pptx
 
Introduction to Nonprofit Accounting: The Basics
Introduction to Nonprofit Accounting: The BasicsIntroduction to Nonprofit Accounting: The Basics
Introduction to Nonprofit Accounting: The Basics
 
Vishram Singh - Textbook of Anatomy Upper Limb and Thorax.. Volume 1 (1).pdf
Vishram Singh - Textbook of Anatomy  Upper Limb and Thorax.. Volume 1 (1).pdfVishram Singh - Textbook of Anatomy  Upper Limb and Thorax.. Volume 1 (1).pdf
Vishram Singh - Textbook of Anatomy Upper Limb and Thorax.. Volume 1 (1).pdf
 
UGC NET Paper 1 Mathematical Reasoning & Aptitude.pdf
UGC NET Paper 1 Mathematical Reasoning & Aptitude.pdfUGC NET Paper 1 Mathematical Reasoning & Aptitude.pdf
UGC NET Paper 1 Mathematical Reasoning & Aptitude.pdf
 
Activity 01 - Artificial Culture (1).pdf
Activity 01 - Artificial Culture (1).pdfActivity 01 - Artificial Culture (1).pdf
Activity 01 - Artificial Culture (1).pdf
 
FSB Advising Checklist - Orientation 2024
FSB Advising Checklist - Orientation 2024FSB Advising Checklist - Orientation 2024
FSB Advising Checklist - Orientation 2024
 
Dyslexia AI Workshop for Slideshare.pptx
Dyslexia AI Workshop for Slideshare.pptxDyslexia AI Workshop for Slideshare.pptx
Dyslexia AI Workshop for Slideshare.pptx
 

SHR ppt 1

  • 1. CHAPTER 1: AN INVESTMENT PERSPECTIVE OF HUMAN RESOURCE MANAGEMENT Copyright © 2005 South-Western. All rights reserved.
  • 2. Copyright © 2005 South- Western. All rights reserved. 1–2 The Strategic View of Human ResourcesThe Strategic View of Human ResourcesThe Strategic View of Human ResourcesThe Strategic View of Human Resources • Employees areEmployees are human assetshuman assets – Increase in value to organization and marketplace whenIncrease in value to organization and marketplace when investments of appropriate policies & programs are appliedinvestments of appropriate policies & programs are applied • Effective organizations recognize that employeesEffective organizations recognize that employees have valuehave value – Much as organization’s physical & capital assets have valueMuch as organization’s physical & capital assets have value • Employees are valuable source ofEmployees are valuable source of sustainablesustainable competitive advantagecompetitive advantage • Employees areEmployees are human assetshuman assets – Increase in value to organization and marketplace whenIncrease in value to organization and marketplace when investments of appropriate policies & programs are appliedinvestments of appropriate policies & programs are applied • Effective organizations recognize that employeesEffective organizations recognize that employees have valuehave value – Much as organization’s physical & capital assets have valueMuch as organization’s physical & capital assets have value • Employees are valuable source ofEmployees are valuable source of sustainablesustainable competitive advantagecompetitive advantage
  • 3. Copyright © 2005 South- Western. All rights reserved. 1–3 Sources of Employee ValueSources of Employee ValueSources of Employee ValueSources of Employee Value • Technical KnowledgeTechnical Knowledge – Markets, processes, customers, environmentMarkets, processes, customers, environment • Ability to Learn and GrowAbility to Learn and Grow – Openness to new ideasOpenness to new ideas – Acquisition of knowledge & skillsAcquisition of knowledge & skills • Decision Making CapabilitiesDecision Making Capabilities • MotivationMotivation • CommitmentCommitment • TeamworkTeamwork – Interpersonal skills, leadership abilityInterpersonal skills, leadership ability • Technical KnowledgeTechnical Knowledge – Markets, processes, customers, environmentMarkets, processes, customers, environment • Ability to Learn and GrowAbility to Learn and Grow – Openness to new ideasOpenness to new ideas – Acquisition of knowledge & skillsAcquisition of knowledge & skills • Decision Making CapabilitiesDecision Making Capabilities • MotivationMotivation • CommitmentCommitment • TeamworkTeamwork – Interpersonal skills, leadership abilityInterpersonal skills, leadership ability
  • 4. Copyright © 2005 South- Western. All rights reserved. 1–4 Adopting an Investment PerspectiveAdopting an Investment PerspectiveAdopting an Investment PerspectiveAdopting an Investment Perspective • Determines how to best invest in peopleDetermines how to best invest in people • CostsCosts – Out-of-pocketOut-of-pocket – OpportunityOpportunity • Human assets become competitive advantageHuman assets become competitive advantage • Required skills become less manual, moreRequired skills become less manual, more knowledge-basedknowledge-based • Appropriate, integrated, strategy-consistentAppropriate, integrated, strategy-consistent approach is neededapproach is needed • Determines how to best invest in peopleDetermines how to best invest in people • CostsCosts – Out-of-pocketOut-of-pocket – OpportunityOpportunity • Human assets become competitive advantageHuman assets become competitive advantage • Required skills become less manual, moreRequired skills become less manual, more knowledge-basedknowledge-based • Appropriate, integrated, strategy-consistentAppropriate, integrated, strategy-consistent approach is neededapproach is needed
  • 5. Copyright © 2005 South- Western. All rights reserved. 1–5 A DilemmaA DilemmaA DilemmaA Dilemma • Failure to invest in employees causesFailure to invest in employees causes – InefficiencyInefficiency – Weakening of organization’s competitiveWeakening of organization’s competitive positionposition • Human assets are risky investmentHuman assets are risky investment • Require extra effort to ensure that theyRequire extra effort to ensure that they are not lostare not lost • Failure to invest in employees causesFailure to invest in employees causes – InefficiencyInefficiency – Weakening of organization’s competitiveWeakening of organization’s competitive positionposition • Human assets are risky investmentHuman assets are risky investment • Require extra effort to ensure that theyRequire extra effort to ensure that they are not lostare not lost
  • 6. Copyright © 2005 South- Western. All rights reserved. 1–6 Exhibit 1-2Exhibit 1-2 Types of Organizational Assets/CapitalTypes of Organizational Assets/Capital Exhibit 1-2Exhibit 1-2 Types of Organizational Assets/CapitalTypes of Organizational Assets/Capital
  • 7. Copyright © 2005 South- Western. All rights reserved. 1–7 Research FindingsResearch FindingsResearch FindingsResearch Findings • HR practices directly related to profitability &HR practices directly related to profitability & market valuemarket value • Primary reason for profitability:Primary reason for profitability: – Effective management of human capitalEffective management of human capital • Integrated management of human capital canIntegrated management of human capital can result in 47% increase in market valueresult in 47% increase in market value • Top 10% of organizations studied experiencedTop 10% of organizations studied experienced 391% return on investment in management of391% return on investment in management of human capitalhuman capital • HR practices directly related to profitability &HR practices directly related to profitability & market valuemarket value • Primary reason for profitability:Primary reason for profitability: – Effective management of human capitalEffective management of human capital • Integrated management of human capital canIntegrated management of human capital can result in 47% increase in market valueresult in 47% increase in market value • Top 10% of organizations studied experiencedTop 10% of organizations studied experienced 391% return on investment in management of391% return on investment in management of human capitalhuman capital
  • 8. Copyright © 2005 South- Western. All rights reserved. 1–8 Exhibit 1-3Exhibit 1-3 HR Value ChainHR Value Chain Exhibit 1-3Exhibit 1-3 HR Value ChainHR Value Chain
  • 9. Copyright © 2005 South- Western. All rights reserved. 1–9 HR Metrics Are ComplexHR Metrics Are ComplexHR Metrics Are ComplexHR Metrics Are Complex • 90% of Fortune 500 organizations evaluate90% of Fortune 500 organizations evaluate HR operations on basis of three metrics:HR operations on basis of three metrics: – Employee retention and turnoverEmployee retention and turnover – Corporate moraleCorporate morale – Employee satisfactionEmployee satisfaction • These metrics do not necessarily illustrateThese metrics do not necessarily illustrate how HR impactshow HR impacts – ProfitsProfits – Shareholder valueShareholder value • 90% of Fortune 500 organizations evaluate90% of Fortune 500 organizations evaluate HR operations on basis of three metrics:HR operations on basis of three metrics: – Employee retention and turnoverEmployee retention and turnover – Corporate moraleCorporate morale – Employee satisfactionEmployee satisfaction • These metrics do not necessarily illustrateThese metrics do not necessarily illustrate how HR impactshow HR impacts – ProfitsProfits – Shareholder valueShareholder value
  • 10. Copyright © 2005 South- Western. All rights reserved. 1–10 Mercer Model of Measuring HR ImpactMercer Model of Measuring HR ImpactMercer Model of Measuring HR ImpactMercer Model of Measuring HR Impact • Identify problem HR can impactIdentify problem HR can impact • Calculate actual cost of problemCalculate actual cost of problem • Choose HR solution that addresses problemChoose HR solution that addresses problem • Calculate cost of solutionCalculate cost of solution • Calculate value of improvement 6 to 24 monthsCalculate value of improvement 6 to 24 months after implementationafter implementation • Calculate specific return on investmentCalculate specific return on investment • ROI in human assets often not realized until someROI in human assets often not realized until some time in futuretime in future • Identify problem HR can impactIdentify problem HR can impact • Calculate actual cost of problemCalculate actual cost of problem • Choose HR solution that addresses problemChoose HR solution that addresses problem • Calculate cost of solutionCalculate cost of solution • Calculate value of improvement 6 to 24 monthsCalculate value of improvement 6 to 24 months after implementationafter implementation • Calculate specific return on investmentCalculate specific return on investment • ROI in human assets often not realized until someROI in human assets often not realized until some time in futuretime in future
  • 11. Copyright © 2005 South- Western. All rights reserved. 1–11 Exhibit 1-4Exhibit 1-4 Factors Influencing InvestmentFactors Influencing Investment OrientationOrientation Exhibit 1-4Exhibit 1-4 Factors Influencing InvestmentFactors Influencing Investment OrientationOrientation
  • 12. Copyright © 2005 South- Western. All rights reserved. 1–12 Investment-Oriented OrganizationInvestment-Oriented OrganizationInvestment-Oriented OrganizationInvestment-Oriented Organization • Sees people as central to mission & strategySees people as central to mission & strategy • Mission statement & strategic objectivesMission statement & strategic objectives espouse value of human assets in achievingespouse value of human assets in achieving goalsgoals • Management philosophy encouragingManagement philosophy encouraging development & retention of human assetsdevelopment & retention of human assets • Does not treat human assets in same waysDoes not treat human assets in same ways as physical assetsas physical assets • Sees people as central to mission & strategySees people as central to mission & strategy • Mission statement & strategic objectivesMission statement & strategic objectives espouse value of human assets in achievingespouse value of human assets in achieving goalsgoals • Management philosophy encouragingManagement philosophy encouraging development & retention of human assetsdevelopment & retention of human assets • Does not treat human assets in same waysDoes not treat human assets in same ways as physical assetsas physical assets
  • 13. Copyright © 2005 South- Western. All rights reserved. 1–13 Investment Orientation FactorsInvestment Orientation FactorsInvestment Orientation FactorsInvestment Orientation Factors • Senior Management Values & ActionsSenior Management Values & Actions – Managers need “investment orientation” towardManagers need “investment orientation” toward peoplepeople • Attitude Toward RiskAttitude Toward Risk – Investment in human resources inherently riskierInvestment in human resources inherently riskier – Human assets never absolutely “owned”Human assets never absolutely “owned” • Nature of Skills Needed by EmployeesNature of Skills Needed by Employees – The more marketable employee skills, the riskier theThe more marketable employee skills, the riskier the firm’s investment in skill developmentfirm’s investment in skill development • Senior Management Values & ActionsSenior Management Values & Actions – Managers need “investment orientation” towardManagers need “investment orientation” toward peoplepeople • Attitude Toward RiskAttitude Toward Risk – Investment in human resources inherently riskierInvestment in human resources inherently riskier – Human assets never absolutely “owned”Human assets never absolutely “owned” • Nature of Skills Needed by EmployeesNature of Skills Needed by Employees – The more marketable employee skills, the riskier theThe more marketable employee skills, the riskier the firm’s investment in skill developmentfirm’s investment in skill development
  • 14. Copyright © 2005 South- Western. All rights reserved. 1–14 Investment Orientation FactorsInvestment Orientation FactorsInvestment Orientation FactorsInvestment Orientation Factors • Utilitarian (“Bottom Line”) MentalityUtilitarian (“Bottom Line”) Mentality – Attempt made to quantify employee worth throughAttempt made to quantify employee worth through cost-benefit analysiscost-benefit analysis – ““Soft” benefits of HR programs difficult to objectivelySoft” benefits of HR programs difficult to objectively quantifyquantify • Availability of OutsourcingAvailability of Outsourcing – Given availability of cost-effective outsourcing,Given availability of cost-effective outsourcing, investments in HR should produceinvestments in HR should produce highest returnshighest returns && sustainable competitive advantagessustainable competitive advantages.. • Utilitarian (“Bottom Line”) MentalityUtilitarian (“Bottom Line”) Mentality – Attempt made to quantify employee worth throughAttempt made to quantify employee worth through cost-benefit analysiscost-benefit analysis – ““Soft” benefits of HR programs difficult to objectivelySoft” benefits of HR programs difficult to objectively quantifyquantify • Availability of OutsourcingAvailability of Outsourcing – Given availability of cost-effective outsourcing,Given availability of cost-effective outsourcing, investments in HR should produceinvestments in HR should produce highest returnshighest returns && sustainable competitive advantagessustainable competitive advantages..
  • 15. Copyright © 2005 South- Western. All rights reserved. 1–15 Reading 1.1: The Hidden Leverage of Human Capital (Oxman)Reading 1.1: The Hidden Leverage of Human Capital (Oxman) Model for Management SuccessModel for Management Success Reading 1.1: The Hidden Leverage of Human Capital (Oxman)Reading 1.1: The Hidden Leverage of Human Capital (Oxman) Model for Management SuccessModel for Management Success • Strengthen keyStrengthen key relationshipsrelationships – CustomersCustomers – EmployeesEmployees – ShareholdersShareholders • Strengthen keyStrengthen key relationshipsrelationships – CustomersCustomers – EmployeesEmployees – ShareholdersShareholders • LeverageLeverage downtimedowntime – Use variable-payUse variable-pay – Address neglectedAddress neglected areas:areas: • InfrastructureInfrastructure • MarketingMarketing • OperationsOperations • LeverageLeverage downtimedowntime – Use variable-payUse variable-pay – Address neglectedAddress neglected areas:areas: • InfrastructureInfrastructure • MarketingMarketing • OperationsOperations
  • 16. Copyright © 2005 South- Western. All rights reserved. 1–16 Reading 1.1Reading 1.1 Model for Management SuccessModel for Management Success Reading 1.1Reading 1.1 Model for Management SuccessModel for Management Success • Refocusing staff onRefocusing staff on what’s importantwhat’s important – PerformancePerformance management asmanagement as disciplined, strategic,disciplined, strategic, value-added processvalue-added process – Clearly define,Clearly define, differentiate & balancedifferentiate & balance between corebetween core competencies & resultscompetencies & results • Refocusing staff onRefocusing staff on what’s importantwhat’s important – PerformancePerformance management asmanagement as disciplined, strategic,disciplined, strategic, value-added processvalue-added process – Clearly define,Clearly define, differentiate & balancedifferentiate & balance between corebetween core competencies & resultscompetencies & results • Building return onBuilding return on compensationcompensation – Link base-payLink base-pay progression toprogression to competencycompetency achievementachievement – Link incentive pay toLink incentive pay to annual, semiannual, orannual, semiannual, or quarterly resultsquarterly results • Building return onBuilding return on compensationcompensation – Link base-payLink base-pay progression toprogression to competencycompetency achievementachievement – Link incentive pay toLink incentive pay to annual, semiannual, orannual, semiannual, or quarterly resultsquarterly results
  • 17. Copyright © 2005 South- Western. All rights reserved. 1–17 Reading 1.2 (Rynes et al.)Reading 1.2 (Rynes et al.) Seven Common MisconceptionsSeven Common Misconceptions Reading 1.2 (Rynes et al.)Reading 1.2 (Rynes et al.) Seven Common MisconceptionsSeven Common Misconceptions 1.1. Conscientiousness is a better predictor ofConscientiousness is a better predictor of performance than intelligence.performance than intelligence. 2.2. Companies that screen job applicants for valuesCompanies that screen job applicants for values have higher performance than those that screenhave higher performance than those that screen for intelligence.for intelligence. 3.3. Integrity tests don’t work well in practiceIntegrity tests don’t work well in practice because so many people lie on them.because so many people lie on them. 4.4. Integrity tests have adverse impact on racialIntegrity tests have adverse impact on racial minorities.minorities. 1.1. Conscientiousness is a better predictor ofConscientiousness is a better predictor of performance than intelligence.performance than intelligence. 2.2. Companies that screen job applicants for valuesCompanies that screen job applicants for values have higher performance than those that screenhave higher performance than those that screen for intelligence.for intelligence. 3.3. Integrity tests don’t work well in practiceIntegrity tests don’t work well in practice because so many people lie on them.because so many people lie on them. 4.4. Integrity tests have adverse impact on racialIntegrity tests have adverse impact on racial minorities.minorities.
  • 18. Copyright © 2005 South- Western. All rights reserved. 1–18 Reading 1.2Reading 1.2 Seven Common MisconceptionsSeven Common Misconceptions Reading 1.2Reading 1.2 Seven Common MisconceptionsSeven Common Misconceptions 5.5. Encouraging employee participation is moreEncouraging employee participation is more effective for improving organizationaleffective for improving organizational performance than setting performance goals.performance than setting performance goals. 6.6. Most errors in performance appraisal can beMost errors in performance appraisal can be eliminated by providing training to managers oneliminated by providing training to managers on how to avoid them.how to avoid them. 7.7. If employees are asked how important pay is toIf employees are asked how important pay is to them, they are likely to overestimate its truethem, they are likely to overestimate its true importance.importance. 5.5. Encouraging employee participation is moreEncouraging employee participation is more effective for improving organizationaleffective for improving organizational performance than setting performance goals.performance than setting performance goals. 6.6. Most errors in performance appraisal can beMost errors in performance appraisal can be eliminated by providing training to managers oneliminated by providing training to managers on how to avoid them.how to avoid them. 7.7. If employees are asked how important pay is toIf employees are asked how important pay is to them, they are likely to overestimate its truethem, they are likely to overestimate its true importance.importance.
  • 19. Copyright © 2005 South- Western. All rights reserved. 1–19 Reading 1.2Reading 1.2 Seven Common Misconceptions: ImplicationsSeven Common Misconceptions: Implications Reading 1.2Reading 1.2 Seven Common Misconceptions: ImplicationsSeven Common Misconceptions: Implications 1.1. Select new employees on both intelligence andSelect new employees on both intelligence and conscientiousness.conscientiousness. 2.2. Assess intelligence and conscientiousness beforeAssess intelligence and conscientiousness before values.values. 3.3. Define the values that are important and assessDefine the values that are important and assess them through carefully developed, validthem through carefully developed, valid procedures.procedures. 4.4. Use integrity tests with ability tests for highUse integrity tests with ability tests for high predictability.predictability. 1.1. Select new employees on both intelligence andSelect new employees on both intelligence and conscientiousness.conscientiousness. 2.2. Assess intelligence and conscientiousness beforeAssess intelligence and conscientiousness before values.values. 3.3. Define the values that are important and assessDefine the values that are important and assess them through carefully developed, validthem through carefully developed, valid procedures.procedures. 4.4. Use integrity tests with ability tests for highUse integrity tests with ability tests for high predictability.predictability.
  • 20. Copyright © 2005 South- Western. All rights reserved. 1–20 Reading 1.2Reading 1.2 Seven Common Misconceptions: ImplicationsSeven Common Misconceptions: Implications Reading 1.2Reading 1.2 Seven Common Misconceptions: ImplicationsSeven Common Misconceptions: Implications 5.5. Develop compelling goals; enlist participationDevelop compelling goals; enlist participation and support it through rewards.and support it through rewards. 6.6. Training and feedback are important, but errorsTraining and feedback are important, but errors are difficult to eliminate. Top managers shouldare difficult to eliminate. Top managers should serve as role models in quality of performanceserve as role models in quality of performance reviews.reviews. 7.7. Attitude surveys are subject to biases; studyAttitude surveys are subject to biases; study behaviors as well as attitudes.behaviors as well as attitudes. 5.5. Develop compelling goals; enlist participationDevelop compelling goals; enlist participation and support it through rewards.and support it through rewards. 6.6. Training and feedback are important, but errorsTraining and feedback are important, but errors are difficult to eliminate. Top managers shouldare difficult to eliminate. Top managers should serve as role models in quality of performanceserve as role models in quality of performance reviews.reviews. 7.7. Attitude surveys are subject to biases; studyAttitude surveys are subject to biases; study behaviors as well as attitudes.behaviors as well as attitudes.
  • 21. Copyright © 2005 South- Western. All rights reserved. 1–21 Reading 1.3 (Pfeffer)Reading 1.3 (Pfeffer) Effective HRM PracticesEffective HRM Practices Reading 1.3 (Pfeffer)Reading 1.3 (Pfeffer) Effective HRM PracticesEffective HRM Practices • Employment SecurityEmployment Security • Selectivity in RecruitingSelectivity in Recruiting • High WagesHigh Wages • Incentive payIncentive pay • Employee OwnershipEmployee Ownership • Information SharingInformation Sharing • Participation &Participation & OwnershipOwnership • Self-Managed TeamsSelf-Managed Teams • Employment SecurityEmployment Security • Selectivity in RecruitingSelectivity in Recruiting • High WagesHigh Wages • Incentive payIncentive pay • Employee OwnershipEmployee Ownership • Information SharingInformation Sharing • Participation &Participation & OwnershipOwnership • Self-Managed TeamsSelf-Managed Teams • Training & DevelopmentTraining & Development • Cross-Utilization &Cross-Utilization & Cross-TrainingCross-Training • Symbolic EgalitarianismSymbolic Egalitarianism • Wage CompressionWage Compression • Promotion From WithinPromotion From Within • Taking the Long ViewTaking the Long View • Measurement of PracticeMeasurement of Practice • Overall PhilosophyOverall Philosophy • Training & DevelopmentTraining & Development • Cross-Utilization &Cross-Utilization & Cross-TrainingCross-Training • Symbolic EgalitarianismSymbolic Egalitarianism • Wage CompressionWage Compression • Promotion From WithinPromotion From Within • Taking the Long ViewTaking the Long View • Measurement of PracticeMeasurement of Practice • Overall PhilosophyOverall Philosophy
  • 22. Copyright © 2005 South- Western. All rights reserved. 1–22 Reading 1.3Reading 1.3 Effective HRM PracticesEffective HRM Practices Reading 1.3Reading 1.3 Effective HRM PracticesEffective HRM Practices • Very few firms will engage in all practicesVery few firms will engage in all practices • While these practices are important forWhile these practices are important for success, there are other determinants assuccess, there are other determinants as wellwell • Downsides existDownsides exist – Requires more involvement and responsibility thanRequires more involvement and responsibility than some employees wantsome employees want – Managers & others may resist them as wellManagers & others may resist them as well – Turnover may resultTurnover may result • Very few firms will engage in all practicesVery few firms will engage in all practices • While these practices are important forWhile these practices are important for success, there are other determinants assuccess, there are other determinants as wellwell • Downsides existDownsides exist – Requires more involvement and responsibility thanRequires more involvement and responsibility than some employees wantsome employees want – Managers & others may resist them as wellManagers & others may resist them as well – Turnover may resultTurnover may result