HRA AI – 2

Human Resource Accounting is a method to measure the effectiveness of personnel management activities and the
use of people in an organization

Historical cost approach

This approach is develpoed by Brummet, Flamholtz and Pyle but the first attempt towards employee valuation made
by R. G. Barry Corporation of Columbus, Ohio in the year 1967. This method measures the organization’s
investment in employees using the five parameters: recruiting, acquisition; formal training and, familiarization;
informal training, Informal familiarization; experience; and development. The costs were amortized over the
expected working lives of individuals and unamortized costs (for example, when an individual left the firm) were
written off.

Limitations

 The valuation method is based on false assumption that the dollar is stable.
 Since the assets cannot be sold there is no independent check of valuation.
 This method measures only the costs to the organization but ignores completely any measure of the value
of the employee to the organization (Cascio 3).

Replacement Cost approach

This approach measures the cost of replacing an employee. According to Likert (1985) replacement cost include
recruitment, selection, compensation, and training cost (including the income foregone during the training period).
The data derived from this method could be useful in deciding whether to dismiss or replace the staff.

Limitations

 Substitution of replacement cost method for historical cost method does little more than update the
valuation, at the expense of importing considerably more subjectivity into the measure. This method may
also lead to an upwardly biased estimate because an inefficient firm may incur greater cost to replace an
employee (Cascio 3-4).

Present Value of Future Earnings

Lev and Schwartz (1971) proposed an economic valuation of employees based on the present value of future
earnings, adjusted for the probability of employees’ death/separation/retirement. This method helps in determining
what an employee’s future contribution is worth today.

According to this model, the value of human capital embodied in a person who is ‘y’ years old, is the present value
of his/her future earnings from employment and can be calculated by using the following formula:

E(Vy) = Σ Py(t+1) Σ I(T)/(I+R)t-y

where E (Vy) = expected value of a ‘y’ year old person’s human capital T = the person’s retirement age Py (t) =
probability of the person leaving the organisation I(t) = expected earnings of the person in period I r = discount rate

Limitations

 The measure is an objective one because it uses widely based statistics such as census income return and
mortality tables.
  The measure assigns more weight to averages than to the value of any specific group or individual (Cascio
4-5).

Value to the organization

Hekimian and Jones (1967) proposed that where an organization had several divisions seeking the same employee,
the employee should be allocated to the highest bidder and the bid price incorporated into that division’s investment
base. For example a value of a professional athlete’s service is often determined by how much money a particular
team, acting in an open competitive market is willing to pay him or her.

Limitations

 The soundness of the valuation depends wholly on the information, judgment, and impartiality of the bidder
(Cascio 5).

Expense model

According to Mirvis and Mac, (1976) this model focuses on attaching dollar estimates to the behavioral outcomes
produced by working in an organization. Criteria such as absenteeism, turnover, and job performance are measured
using traditional organizational tools, and then costs are estimated for each criterion. For example, in costing labor
turnover, dollar figures are attached to separation costs, replacement costs, and training costs.

HRA AII - 1

HRD Score Card

The HRD Score card assigns a four letter rating for each organization on the extent of maturity level of HRD in it.
The letters represent the four critical dimensions of HRD that contribute to business performance or organizational
performance (for non-profit organizations). These four dimensions include:

* HRD Systems Maturity

* HRD Competencies in the Company
* HRD Styles, Culture and Values
* Business linkages with HRD

HRD Audit and HRD Score Card

The HRD scorecard is an assessment of the HRD maturity level of any organization. The score card is resultant of
the HRD audit. The external auditors assign such scoring and the HRD audit is the ideal time to assign such scores.

HRD Score Card

1.Aims at evaluating and improving HRD competencies in any organization

2.Applicable to all types of organizations
3.Based on integrated HRD systems models and HRD Audit methods developed by Rao and Pareek in India
4.Certification available as HRD Auditors
5.Also focuses on People and HR practices
6.Based on HRD - HRD strategies, structure, competencies, styles, and culture and takes into consideration Quality
concerns and OD
7.Does not believe that organization could be classified into any one stage or level, assumes that any organization
could be assessed on a 10-point maturity scale on any given dimension
8.Gives a letter grade to the organization on each of the five dimensions
9.Focus is on bringing more professionalism in HRD and aligning or realigning HRD with business goals.
10.Comprehensive from the point of view of HRD systems, practices and business linkages
11.Well defined HRD systems in the HRD audit questionnaire - but levels not specified
12.Levels broadly indicated
13.Useful to improve HRD competencies (strategies, structure, systems, people competencies) of any organization
14.Provides insights into strengthening HRD and making it more business driven.

Most improvement programs in software organizations have emphasized improvements in process and technology
and not people. Improving software organizations however, requires continual improvement of its people and of the
conditions that empower their performance. To motivate its people the organization must perceive them assets. Old
labour relations methodologies cannot be carried into knowledge industry where people deal with high technology
and intellectual complexity. The people Capability Maturity Model (P-CMM) aims at providing guidance to
organizations that want to improve the way they address the people related issues. It provides guidance on how to
improve the ability of software organizations to attract, develop, motivate, organize and retain the talent needed to
steadily improve their software development capability.

The strategic objectives of PCMM are:

* Improving the capability of software organizations by increasing the capability of the workforce;
* Ensuring that the software development capability is an attribute of an organization rather than that of a few
individuals;
* Aligning the motivation of individuals with that of the organization;
* Retaining human assets (i.e. people with critical knowledge and skills within the organization

A fundamental premise of the maturity framework is that a practice cannot be improved if it cannot be repeated. In
an organization's least mature state systematic and repeated performance of practices is sporadic. The repeatable
level of the CMM

The P-CMM describes an evolutionary improvement path from an ad hoc. Inconsistently performed practices, to a
continuously mature, disciplined, and continuously improving development of the knowledge, skills, and motivation
of the work force.

It is intended to help the software organizations to:

a) Characterize the maturity of their work force practices;

b) guide a program of continuous workforce development;
c) set priorities for immediate actions;
d) integrate work force development with process improvement; and
e) establish a culture of software engineering excellence.

It is designed to guide software organizations in selecting immediate improvement actions based on the current
maturity of their workforce practices. The P-CMM includes practices such as work environment, communication,
staffing, managing performance, training, compensation, competency development, career development, team
building, and culture development.

The P-CMM is based on the assumptions that organizations establish and improve their people management
practices progress through the following five stages of maturity:

Level 1: Initial
Level 2: Repeatable
Level 3: Defined
Level 4: Managed
Level 5: Optimizing

Each of the maturity levels comprises of several Key Process Areas (KPAs) that identify clusters of related
workforce practices. When performed collectively, the practices of a key process area achieve a set of goals
considered important for enhancing work force capability.

" In maturing from the Initial to the repeatable level, the organization installs the discipline of performing basic
practices for managing its work force.

In maturing to the defined level, these practices are tailored to enhance the particular knowledge, skills, and work
methods that best support the organization's business. The core competencies of the organization are identified; the
work force activities are aligned to the development of these competencies.

In maturing to the Managed level, the organization uses data to evaluate how effective its work force practices are
and to reduce variation in their execution. The organization quantitatively manages organizational growth in work
force capabilities, and when appropriate, establishes competency-based teams.
In maturing to the Optimizing level, the organization looks continuously for innovative ways to improve its overall
talent. The organization is actively involved in applying and continuously improving methods for developing
individual and organizational competence.

PCMM

1. Aims at improving work force practices in software industry

2. Focus is on software industry
3. Based on CMM models developed for software industry by Bill Curtis and team
4. Certification available
5. Focus is on People and HR practices
6. Based on Quality, TQM and process improvement models
7. Conceptualizes the organization as passing through five maturity levels, one superior to the other and describes
process areas of each level
8. Assesses an organization in terms of levels
9. Focus is on improving software organizations and their capabilities
10. Comprehensive from the point of view of software industry
11. Well defined Key Process Areas at every level
12. Levels well defined
13. Useful to improve and institutionalize software development capabilities through people practices
14. Provides guidance to move from one level to another

DBA 1743 – Assignment II - 1

Traditionally, performance has been viewed as a function of ability and motivation. I think something’s missing
from this neat equation: an accurate idea of the manager’s true role. Increasingly, the failure to boost performance
reflects not a lack of motivation or ability, but an inaccurate reading of the manager's role, which has change
significantly from what was needed yesterday, especially in our fast-paced, information-limited, and highly
competitive technology-based organizations

correlations that clearly differentiate highly- and less-effective managers. As you read, consider how you rate
yourself, and how others may rate you, on these attributes.

Embracing change. Less-effective managers dislike change, and prefer predictability, order and stability. Many
believe that turbulence in their firms is temporary or blame it on senior management, and prefer to wait until "things
settle down" before tackling big problems.

In contrast, highly effective managers recognize turbulence, flux, and ambiguity as facts of life. They know the
environment will never "settle down." Many of these managers are energized by turbulence, because it creates
opportunities. Some said they would soon be bored by a predictable, stable work situation.
Attending to external realities. Less-effective managers focus their time and attention on the routines of the
internal organization. Their memos and meetings revolve around budget variances, paper flow, procedures, and
personnel, and they are hypersensitive to company politics.

In contrast, to the extent that the highly effective managers attend to the organization, they are trying to accelerate it
and cut the bureaucracy. In addition, much of their attention, in and out of meetings and memos, focuses on external
issues, such as changes in markets and technology. Many take it upon themselves to regularly meet with customers,
suppliers, and consultants.

Creating power. Less-effective managers consider their power to get things done severely limited, since they
believe that real power resides with top management. They say, "It doesn't pay to try to get things done until senior
management gets its act together." They also believe that power comes from job titles and positions on
organizational charts.

Highly effective managers distinguish formal authority and power. Although they recognize that top management
has more formal authority, they believe that power, like respect, is earned, not given out. Since these managers view
power as the ability to influence people and get things done, anyone can have power.

Promoting a coaching style. Less-effective managers spend relatively little time coaching their people, and they
see coaching in terms of delegation: assigning well-defined tasks and carefully following up.

Highly effective managers want people to devise new ways to do things and encourage them to "challenge the
system" with an eye to improving efficiency, containing costs, and enhancing revenue. Once they outline the
fundamental do's and don'ts, these managers get out of the way.

Expanding job responsibilities. Less-effective managers see their primary responsibility as meeting the demands
of bosses, job descriptions, and annual goals. They assume that it’s up to the boss to expand their job
responsibilities and goals and often complain of being in dead-end positions. Yet when responsibilities are
increased, they often complain about feeling overburdened.

In contrast, highly effective managers envision opportunities and accomplishments and thus seek out and grab new
responsibilities. They constantly think about how they can make things better. In effect, they’re continually
reshaping their jobs.

Creating expertise. Less-effective managers recognize the importance of expertise but are "too busy" to grow (or
hire) it; often, they see developing expertise as someone else's job. They tend to discourage curiosity (under the
guise of "keeping people focused") and discourage efforts to keep abreast of developments in the technical field, the
company, and the industry. In dealing with lower levels and other departments, they see their role as moderating
and filtering information flow, assuming that this will give people what they need to know to do "most things right."

Highly effective managers, however, see their roles as developing experts and expertise throughout the organization.
They promote specific skills and "deep talent" in everything from computers to business literacy. They encourage
subordinates to find applications for new technologies, and promote mentoring and education programs to ensure
professional vitality. They concentrate on helping people understand the business and emphasize the importance of
widening information flow and building internal systems to pump more knowledge through the organization.

Driving out fear. Less-effective managers work from a primitive philosophy of fear (how often have you been told,
in effect, "these are times that separate the men from the boys?"). They think fear is (with the possible exception of
greed) the best motivator in business. They also use— as a matter of style—intimidation, rudeness, abruptness,
broken promises, a rush to judgment, and a general tone of "the workplace is a jungle." Ironically, even as they use
fear to "motivate" others, these managers often demonstrate their own fears by dampening other's ideas--especially
when they differ from the manager's preferences, or from standard operating procedures.
Highly effective managers acknowledge the corrosive effect of fear. While they keep high standards and exhibit a
sense of urgency, they see their top priority as making it safer to challenge the process so long as it’ll benefit
organizational goals. They’re also comfortable working with individuals with heterogeneous ideas and values.
They see their role as defusing personal fears about confrontation, loss of influence, and being left behind by
changes in technology and organizational structure. They use a variety of techniques, including open-door policies,
supportive feedback, and training programs; but most important is their belief that the leader must reduce fear and
prevent it from enervating the workplace and thwarting change.

Exhibiting readiness for an entrepreneurial environment. This factor cut through all others we found. Less-
effective and highly effective managers alike want initiative and creativity from their work associates. They all
speak of their employees' need to "think and act like businesspeople." Yet less-effective managers typically refuse
to share financial details with other levels and departments. They guard the processes for allocating resources.
They don’t share decisions about alliance opportunities and results of marketing or competitive analysis studies
before thoroughly scrubbing them.

Highly effective managers see their role as developing a culture in which everyone has the information to make
decisions and take risks, and are compensated for getting the information and acting on it. These managers know
this approach flies in the face of traditional compensation schemes. They also organize projects to encourage
ownership and accountability by the group doing the work--for example, in self-directed work teams. They
constantly seek to find and strengthen ways to enable and motivate everyone in the group to act as an owner.

Keeping balance. Less-effective managers seldom distinguish consequential changes from insignificant ones.
Often they “play it safe” while appearing busy. For example, one director saw switching to a different vendor as a
high-impact change even as he stayed with the same unresponsive distribution channel. In general, less-effective
managers fiddle around the edges of a problem, psychologically "hanging out in familiar places."

Highly effective managers distinguish high- and low-impact interventions. They recognize that high-impact change
often involves a restructuring of operations, not just manipulation of superficial forms. For example, they’re
reluctant to layer new technology on an old system, at least until the process is overhauled.

Maintaining a sense of continuity. Less-effective managers operate in the here and now. They demonstrate no
appreciation of how the past affects the present, for the way prior conditions (markets, corporate culture, strategic
decisions, leadership styles) influence today’s organizational processes.

Highly effective managers try to connect past circumstances to the current situation, yet while they appreciate the
past, they don’t cling to it. Finally, they explain prior circumstances without rationalizing and justifying errors or
missed opportunities; in other words, they don’t allow a “victim” mentality.

Demonstrating emotional maturity. There were two components to this factor. First, less-effective managers
have difficulty maintaining their composure under stress, and allow their immediate personal needs to distort the
way they see themselves as managers. Second, they’re also turf- and status-conscious. They see little value in
mingling with people in “lower” levels, or in pitching in to perform menial or nontraditional tasks during a crunch.

Highly effective managers project a combination of urgency, passion, composure, and confidence during tough
times. They’re not afraid to work collegially with anyone (regardless of department or level), or doing whatever is
needed to get the job done.

Providing the long view. Less-effective managers, even those who talk about “vision,” seem unable to draw a
coherent, practical “big picture” context for themselves or their colleagues. They doubt the value of providing shape
and overview to events.

Highly effective managers also talk about vision, but their approach is to make and share best bets about where the
world is going, where the organization ought to go, and how all that might affect daily work. Effective managers are
concerned to help others avoid terminal vision and managerial myopia. Accordingly, they invite discussion of
changes in technology, markets, and the business environment.

Standing for an idea. Less-effective managers are unaware of what values they represent, short of “making plans”
or “meeting budget.” There’s little coherence in the pattern of their decisions. On one hand, they seem to favor
everything—cost-reduction, quality, innovation, service—but their decisions lack consistency and continuity.
Indeed, they often take contradictory positions, depending on the political circumstances, and are susceptible to fads
and programs-of-the-month.

Highly effective managers stand for one or two ideas—self-management or speed, for example—and are tough,
persistent, and consistent in how they express those ideas. They’re also eager to enroll others in the same point of
view. They go to great lengths to avoid acting expediently or appearing opportunistic.

In summary, the tumultuous changes around us demand new behaviors and actions. It’s much more critical that we
understand how our management style influences our effectiveness

DBA 1743 - Assignment II - 2

Managing projects in any type of organization is not an easy task. Structures vary from functional to projectized to a
blend of both, the matrix organization.
In this scenario, project managers usually report to a member of the management team and the project team consists
of resources from different functional areas. In weak and balanced matrix organizations, project managers have
limited authority and independence, while in strong ones they have full control of the project.
Resource availability and project priority can trigger conflict between functional and project managers and be a
challenge in weak and balanced matrix organizations. Team members may struggle with issues of:

 Loyalty (functional boss vs. project manager);

 Communication styles (delivering the message their boss expects without offending the project manager);
and
 Decision-making ability (whose approval is needed?).
The human factor is always hard to manage and only increases in complexity when combined with culturally based
differences.
The following are important points to consider*:
Does your organization have a more hierarchical or egalitarian culture? 
Open information sharing and a positive view of collaboration are essential for successful projects. Hierarchical
environments tend to create an added limitation in weak and balanced matrix organizations. Information is protected
based on rank. Roles and responsibilities are rigid, and cooperation is therefore impeded. In egalitarian
environments, information flows more freely as it becomes available, creating less of a barrier to project
success.
Is your culture focused more on rules or relationships?
Matrix organizations require more loyalty to projects than to people. In relationship-based cultures, loyalty tends to
be long-term and reside in people, not positions in the organization. There is an "it depends" attitude. Project team
members place loyalty to those with whom they have personal relationships ahead of loyalty to the project manager,
creating an added constraint. In rules-based cultures, project team members consider that there is less of a
choice and "the rules are the rules."
Are matrix organizations aligned with your organizational culture?
Organizational culture is developed at the headquarters and disseminated locally to support a mission and vision.
Local external factors, including national culture, geography, government regulations and market conditions, will
impact whether an organizational culture is effectively assimilated. An organizational culture will not be adopted
100% everywhere—effectiveness is conceived locally and not globally. Trying to make matrix organizations
work everywhere is denying the differences that exist.
How can project managers overcome challenges posed by a company’s culture? Suggestions for helping to create a
more effective project environment in a matrix organization include:

 Familiarize yourself with and assimilate the organizational chart. Hierarchical cultures appreciate, desire
and value order. Your position comes first in the hierarchy—and then your function in the organization.
 Develop a clear project charter and establish the project steering committee responsibilities including
conflict management and delegation of authority. Allow higher level conflicts to be managed by the
steering committee.
 As a project manager, you should always establish a strong network to help you influence from both
inside and outside the project. Make the important distinction between your job and your role: Your job is
to manage the project. Your role may be that of a trainer, teacher, facilitator, coach, liaison or
representative, for example.
Regardless of the matrix organization, the project manager should lead and persuade counterparts, stressing the
importance of the project and the benefits that it will bring when successfully completed.