CHAPTER 1

AN INVESTMENT PERSPECTIVE OF HUMAN RESOURCE MANAGEMENT

The Strategic View of Human Resources

Employees are human assets that 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 employee development 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 AFFECTING HUMAN RESOURCE MANAGEMENT

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Major Factors Affecting HRM

Technological Advancement

Demographics and Diversity

Strategic HRM

Globalization
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Technology and HRM

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Technology Challenges for HRM

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Workforce Demographic Changes

The Graying of 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 organization Make critical decisions about implementing the optimal

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