CHAPTER 1

AN INVESTMENT
PERSPECTIVE OF
HUMAN RESOURCE
MANAGEMENT

The
The Strategic
Strategic View
View of
of Human
Human
Resources
Resources
Employees
Employees are
are human
human assets
assets that
that increase
increase in
in value
value
to
to the
the organization
organization and
and the
themarketplace
marketplacewhen
when
investments
investments of
ofappropriate
appropriate policies
policies and
and programs
programs
are
are applied.
applied.
Effective
Effective organizations
organizations recognize
recognize that
that their
their
employees
employees do
do have
have value,
value, much
much as
as same
same as
as the
the
organizations
organizationsphysical
physical and
and capital
capital assets
assets have
have
value.
value.
Employees
Employees are
are aa valuable
valuable source
source of
of sustainable
sustainable
competitive
competitive advantage.
advantage.
12

13

Sources
Sources of
of Employee
Employee Value
Value
Technical
Technical Knowledge
Knowledge

Markets,
Markets,Processes,
Processes,Customers,
Customers,Environment
Environment

Ability
Ability to
to Learn
Learn and
and Grow
Grow

Openness
Opennesstotonew
newideas
ideas
Acquisition
Acquisitionofofknowledge
knowledgeand
andskills
skills

Decision
Decision Making
Making Capabilities
Capabilities
Motivation
Motivation
Commitment
Commitment
Teamwork
Teamwork

Interpersonal
Interpersonalskills,
skills,Leadership
Leadershipability
ability

14

Valuation
Valuation of
of Human
Human Assets
Assets
Implications
Implications for
for Individuals
Individuals and
and Organizations
Organizations
Determination
Determinationofofcompensation
compensation

Internal
Internaland
andexternal
externalequity
equityfor
foremployees
employeesininreturn
returnfor
fortheir
their
contributions
contributionstotothe
theorganization.
organization.
Organization
Organizationplacement
placementof
ofresources
resourcesand
andreturns
returnson
onemployee
employee
development
developmentare
arealigned
alignedand
andwell-matched.
well-matched.

Advancement
Advancementopportunities
opportunities

Developing
Developingcurrent
currentemployees
employeescreates
createsmotivation
motivationand
andpermits
permits
promotion
promotionfrom
fromwithin.
within.

Development
Developmentofofretention
retentionstrategies
strategies

Effective
Effectivemeans
meansof
ofretaining
retainingvaluable
valuableemployees
employeesallows
allowsfor
for
the
therecapture
recaptureof
of the
theinvested
investedcosts
costsof
oftheir
theirdevelopment.
development.

15

Investment
Investment Orientation
Orientation

16

The
The Investment-Oriented
Investment-Oriented
Organization
Organization
Organizational
Organizational Characteristics
Characteristics

Sees
Seespeople
peopleas
ascentral
centraltotoits
itsmission/strategy.
mission/strategy.
Has
Hasaamission
missionstatement
statementand
andstrategic
strategicobjectives
objectivesthat
that
espouse
espousethe
thevalue
valueofofhuman
humanassets
assetsininachieving
achievinggoals.
goals.
Has
Hasaamanagement
managementphilosophy
philosophythat
thatencourages
encouragesthe
the
development
developmentand
andretention
retentionofofhuman
humanassets
assetsand
anddoes
doesnot
not
treat
treatororregard
regardhuman
humanassets
assetsininthe
thesame
sameways
waysas
asphysical
physical
assets.
assets.

17

Investment
Investment Orientation
Orientation Factors
Factors
Senior
Senior Management
ManagementValues
Values and
andActions
Actions

An
Anorganizations
organizationswillingness
willingnesstotoinvest
investininits
itshuman
human
resources
resourcesisisdetermined
determinedby
bythe
theinvestment
investmentorientation
orientationofofits
its
managers.
managers.

Attitude
AttitudeToward
Toward Risk
Risk

Investment
Investmentininhuman
humanresources
resourcesisisinherently
inherentlyriskier
riskierdue
duetoto
lack
lackofofabsolute
absoluteownership
ownershipofofthe
theasset.
asset.

Nature
Nature of
ofSkills
Skills Needed
Needed by
by Employees
Employees

The
Themore
morelikely
likelythat
thatskills
skillsdeveloped
developedby
byemployees
employeesare
are
marketable
marketableoutside
outsidethe
thefirm,
firm,the
themore
morerisky
riskythe
thefirms
firms
investment
investmentininthe
thedevelopment
developmentofofthose
thoseskills.
skills.
18

Investment
Investment Orientation
Orientation Factors
Factors
Utilitarian
Utilitarian (Bottom
(BottomLine)
Line) Mentality
Mentality

An
Anattempt
attemptisismade
madetotoquantify
quantifyemployee
employeeworth
worthtotothe
the
organization
organizationthrough
throughaacost-benefit
cost-benefitanalysis
analysis..
The
Thesoft
softbenefits
benefitsofofHR
HRprograms
programsand
andpolices
policesare
aredifficult
difficulttoto
objectively
objectivelyquantify
quantifybecause
becausethey
theyaffect
affectmany
manydifferent
different
organizational
organizationalareas
areasand
andhave
havedifferential
differentialeffects
effectson
on
individual
individualemployees.
employees.

Availability
Availability of
of Outsourcing
Outsourcing

IfIfcost-effective
cost-effectiveoutsourcing
outsourcingisisavailable,
available,investments
investmentswill
willbe
be
made
madeonly
onlyininHR
HRactivities
activitiesproducing
producingthe
thehighest
highestreturns
returnsand
and
largest
largestsustainable
sustainablecompetitive
competitiveadvantages.
advantages.
19

CHAPTER 2
TRENDS AFFECTING
HUMAN RESOURCE
MANAGEMENT

110

Major
Major Factors
Factors Affecting
Affecting HRM
HRM

Technological
Advancement

Demographics
and Diversity

Strategic
HRM

Globalization

111

Technology
Technology and
and HRM
HRM

112

Technology
Technology Challenges
Challenges for
for HRM
HRM

113

Workforce
Workforce Demographic
Demographic Changes
Changes
The
The Graying
Graying of
ofthe
theWorkforce
Workforce
Negative
NegativeAspects
Aspectsof
ofOlder
OlderWorkers
Workers

Perceived
Perceivedresistance
resistancetotochange
changeby
byolder
olderworkers.
workers.
Increased
Increasedhealth-care
health-carecosts
costsfor
forsenior
seniorworkers
workers
Blocking
Blockingadvancement
advancementopportunities
opportunitiesfor
foryounger
youngerworkers
workers
Higher
Higherwage
wageand
andsalary
salarycosts
costsfor
forsenior
seniorworkers
workers

Positive
PositiveAspects
Aspectsof
ofOlder
OlderWorkers
Workers

As
Asproductive
productiveorormore
moreproductive
productivethan
thanyounger
youngerworkers
workers
Have
Havemore
moreorganizational
organizationalloyalty
loyaltythan
thanyounger
youngerworkers
workers
Possess
Possessbroader
broaderindustry
industryknowledge
knowledgeand
andprofessional
professional
networks
networks

114

Workforce
Workforce Demographic
Demographic Changes
Changes
Baby
Baby Boomers
Boomers (1945
(19451962)
1962)

InInexcess
excesssupply
supplyininmiddle
middlemanagement
managementranks
ranks
HR
HRchallenge
challengeisistotomanage
manageplateaued
plateauedworkers
workers

Baby
Baby Busters
Busters (1963
(1963mid-1970s)
mid-1970s)

Are
Arecareer
careerbottlenecked
bottleneckedby
bythe
theBoomers
Boomers
Who
Whohave
haveskills
skillsininhigh
highdemand
demandare
aredoing
doingand
andwill
willdo
dowell
well

Generation
Generation Xers
Xers (late
(late 1970s
1970searly
early 1980s)
1980s)

Have
Havelife-long
life-longexposure
exposuretototechnology
technologyand
andconstant
constantchange
change
Seek
Seekself-control,
self-control,independence,
independence,personal
personalgrowth,
growth,creativity
creativity
Are
Arenot
notfocused
focusedon
onjob
jobsecurity
securityororlong-term
long-termemployment.
employment.
115

New
New Employee/Workplace
Employee/Workplace Dynamics
Dynamics
Emphasis
Emphasison
onthe
theManagement
Managementof
ofProfessionals
Professionals
Establishment
Establishmentofofseparate
separatecareer
careertracks
tracks

Technical/Professional,
Technical/Professional,Managerial
Managerial/Administrative
/Administrative

Use
Useofofproject
projectteams
teams

Less
LessEmployee
EmployeeLoyalty,
Loyalty,More
MoreLoyal
Loyalto
toSelf
Self

Staying
Stayingwith
withemployers
employersfor
forshorter
shorterperiods;
periods;demanding
demandingmore
moremeaningful
meaningful
work
workand
andinvolvement
involvementininorganizational
organizationaldecisions
decisions

Increased
IncreasedPersonal
Personaland
andFamily
FamilyDynamic
DynamicEffects
Effects

More
Moresingle-parent
single-parentfamilies,
families,dual-career
dual-careercouples,
couples,and
anddomestic
domesticpartners
partners

Increased
IncreasedNontraditional
NontraditionalWork
WorkRelationships
Relationships

Part-time,
Part-time,consulting,
consulting,and
andtemporary
temporaryemployment
employmentflexibility
flexibility
Outsourcing
Outsourcingand
andentrepreneurial
entrepreneurialopportunities
opportunities

116

Managing
Managing Workplace
Workplace Diversity
Diversity
Understanding
Understandingand
andAppreciating
AppreciatingDiversity
Diversity

IsIscritical
criticaltotoeffectively
effectivelymarketing
marketingtotoethnic
ethnicand
andminority
minoritygroups
groups
IsIspromoted
promotedby
byhaving
havingaadiverse
diverseworkforce
workforceatatall
allorganization
organizationlevels
levels
Helps
Helpsensure
ensurethat
thathiring
hiringand
andpromotion
promotiondecisions
decisionsare
areunbiased
unbiasedby
by
person
persondifferences
differences

Diversity
DiversityManagement
ManagementPrograms/Initiatives
Programs/Initiatives

Must
Mustbe
beintegrated
integratedwith
withorganizations
organizationsmission
missionand
andobjectives
objectives
Help
Helpkey
keydecision
decisionmakers
makersidentify
identifydiversitys
diversitysbenefits
benefitstotothe
the
organization
organization
Make
Makecritical
criticaldecisions
decisionsabout
aboutimplementing
implementingthe
theoptimal
optimal
program/initiative
program/initiativecontingent
contingenton
onthe
theorganization
organizationand
andits
itspeople,
people,
mission
missionand
andculture.
culture.

117