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CHAPTER 1

AN INVESTMENTPERSPECTIVE OF

HUMAN RESOURCE

MANAGEMENT

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The Strategic View of Human Resources

Employees are human assetsthat increase in value

to the organization and the marketplace when

investments of appropriate policies and programs

are applied.

Effective organizations recognize that their

employees do have value, much as same as the

organizations physical and capital assets have

value. Employees are a valuable source of sustainable

competitive advantage.

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Sources of Employee Value

Technical Knowledge

Markets, Processes, Customers, Environment

Ability to Learn and Grow

Openness to new ideas Acquisition of knowledge and skills

Decision Making Capabilities

Motivation

Commitment

Teamwork

Interpersonal skills, Leadership ability

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Valuation of Human Assets

Implications for Individuals and Organizations

Determination of compensation

Internal and external equity for employees in return for their

contributions to the organization.

Organization placement of resources and returns on employeedevelopment are aligned and well-matched.

Advancement opportunities

Developing current employees creates motivation and permits

promotion from within.

Development of retention strategies

Effective means of retaining valuable employees allows for

the recapture of the invested costs of their development.

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Investment Orientation

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The Investment-Oriented Organization

Organizational Characteristics

Sees people as central to its mission/strategy.

Has a mission statement and strategic objectives that

espouse the value of human assets in achieving goals.

Has a management philosophy that encourages the

development and retention of human assets and does not

treat or regard human assets in the same ways as physical

assets.

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Investment Orientation Factors

Senior Management Values and Actions

An organizations willingness to invest in its human

resources is determined by the investment orientation of its

managers.

Attitude Toward Risk

Investment in human resources is inherently riskier due to

lack of absolute ownership of the asset.

Nature of Skills Needed by Employees The more likely that skills developed by employees are

marketable outside the firm, the more risky the firms

investment in the development of those skills.

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Investment Orientation Factors

Utilitarian (Bottom Line) Mentality

An attempt is made to quantify employee worth to the

organization through a cost-benefit analysis.

The soft benefits of HR programs and polices are difficult

to objectively quantify because they affect many different

organizational areas and have differential effects on

individual employees.

Availability of Outsourcing

If cost-effective outsourcing is available, investments will be

made only in HR activities producing the highest returns and

largest sustainable competitive advantages.

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CHAPTER 2

TRENDS AFFECTINGHUMAN RESOURCE

MANAGEMENT

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Major Factors Affecting HRM

Strategic

HRM

Technological

Advancement

Demographics

and Diversity

Globalization

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Technology and HRM

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Technology Challenges for HRM

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Workforce Demographic Changes

The Grayingof the Workforce

Negative Aspects of Older Workers

Perceived resistance to change by older workers.

Increased health-care costs for senior workers Blocking advancement opportunities for younger workers

Higher wage and salary costs for senior workers

Positive Aspects of Older Workers

As productive or more productive than younger workers

Have more organizational loyalty than younger workers

Possess broader industry knowledge and professional

networks

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Workforce Demographic Changes

Baby Boomers (19451962)

In excess supply in middle management ranks

HR challenge is to manage plateaued workers

Baby Busters (1963mid-1970s) Are career bottlenecked by the Boomers

Who have skills in high demand are doing and will do well

Generation Xers (late 1970searly 1980s)

Have life-long exposure to technology and constant change

Seek self-control, independence, personal growth, creativity

Are not focused on job security or long-term employment.

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New Employee/Workplace Dynamics

Emphasis on the Management of Professionals

Establishment of separate career tracks

Technical/Professional, Managerial /Administrative

Use of project teams

Less Employee Loyalty, More Loyal to Self

Staying with employers for shorter periods; demanding more

meaningful work and involvement in organizational decisions

Increased Personal and Family Dynamic Effects More single-parent families, dual-career couples, and

domestic partners

Increased Nontraditional Work Relationships

Part-time, consulting, and temporary employment flexibility

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Managing Workplace Diversity

Understanding and Appreciating Diversity

Is critical to effectively marketing to ethnic and minority

groups

Is promoted by having a diverse workforce at all organization

levels

Helps ensure that hiring and promotion decisions are

unbiased by person differences

Diversity Management Programs/Initiatives

Must be integrated with organizations mission and

objectives

Help key decision makers identify diversitys benefits to the

organizationMake critical decisions about im lementin the o timal