CHAPTER 1 AN INVESTMENT PERSPECTIVE OF HUMAN RESOURCE MANAGEMENT

1–21–2 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.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 organization’s physical and capital assets have value.Effective organizations recognize that their employees do have value, much as same as the organization’s physical and capital assets have value. Employees are a valuable source of sustainable competitive advantage.Employees are a valuable source of sustainable competitive advantage. Employees are human assets that increase in value to the organization and the marketplace when investments of appropriate policies and programs are applied.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 organization’s physical and capital assets have value.Effective organizations recognize that their employees do have value, much as same as the organization’s physical and capital assets have value. Employees are a valuable source of sustainable competitive advantage.Employees are a valuable source of sustainable competitive advantage.

1–31–3

1–41–4 Sources of Employee Value Technical KnowledgeTechnical Knowledge –Markets, Processes, Customers, Environment Ability to Learn and GrowAbility to Learn and Grow –Openness to new ideas –Acquisition of knowledge and skills Decision Making CapabilitiesDecision Making Capabilities MotivationMotivation CommitmentCommitment TeamworkTeamwork –Interpersonal skills, Leadership ability Technical KnowledgeTechnical Knowledge –Markets, Processes, Customers, Environment Ability to Learn and GrowAbility to Learn and Grow –Openness to new ideas –Acquisition of knowledge and skills Decision Making CapabilitiesDecision Making Capabilities MotivationMotivation CommitmentCommitment TeamworkTeamwork –Interpersonal skills, Leadership ability

1–51–5 Valuation of Human Assets Implications for Individuals and OrganizationsImplications for Individuals and Organizations –Determination of compensation Internal and external equity for employees in return for their contributions to the organization.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.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.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.Effective means of retaining valuable employees allows for the recapture of the invested costs of their development. Implications for Individuals and OrganizationsImplications for Individuals and Organizations –Determination of compensation Internal and external equity for employees in return for their contributions to the organization.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.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.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.Effective means of retaining valuable employees allows for the recapture of the invested costs of their development.

1–61–6 Investment Orientation

1–71–7 The Investment-Oriented Organization Organizational CharacteristicsOrganizational 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. Organizational CharacteristicsOrganizational 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.

1–81–8 Investment Orientation Factors Senior Management Values and ActionsSenior Management Values and Actions –An organization’s willingness to invest in its human resources is determined by the “investment orientation” of its managers. Attitude Toward RiskAttitude Toward Risk –Investment in human resources is inherently riskier due to lack of absolute “ownership” of the asset. Nature of Skills Needed by EmployeesNature of Skills Needed by Employees –The more likely that skills developed by employees are marketable outside the firm, the more risky the firm’s investment in the development of those skills. Senior Management Values and ActionsSenior Management Values and Actions –An organization’s willingness to invest in its human resources is determined by the “investment orientation” of its managers. Attitude Toward RiskAttitude Toward Risk –Investment in human resources is inherently riskier due to lack of absolute “ownership” of the asset. Nature of Skills Needed by EmployeesNature of Skills Needed by Employees –The more likely that skills developed by employees are marketable outside the firm, the more risky the firm’s investment in the development of those skills.

1–91–9 Investment Orientation Factors Utilitarian (“Bottom Line”) MentalityUtilitarian (“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 OutsourcingAvailability 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. Utilitarian (“Bottom Line”) MentalityUtilitarian (“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 OutsourcingAvailability 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.

1–10 CHAPTER 2 TRENDS AFFECTING HUMAN RESOURCE MANAGEMENT

1–11 Major Factors Affecting HRM Strategic HRM Technological Advancement Demographics and Diversity Globalization

1–12 Technology and HRM

1–13 Technology Challenges for HRM

1–14 Workforce Demographic Changes The “Graying” of the WorkforceThe “Graying” of the Workforce Negative Aspects of Older WorkersNegative 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 WorkersPositive 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 The “Graying” of the WorkforceThe “Graying” of the Workforce Negative Aspects of Older WorkersNegative 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 WorkersPositive 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

1–15 Workforce Demographic Changes Baby Boomers (1945–1962)Baby Boomers (1945–1962) –In excess supply in middle management ranks –HR challenge is to manage “plateaued” workers Baby Busters (1963–mid-1970s)Baby Busters (1963–mid-1970s) –Are career bottlenecked by the Boomers –Who have skills in high demand are doing and will do well Generation “X”ers (late 1970s–early 1980s)Generation “X”ers (late 1970s–early 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. Baby Boomers (1945–1962)Baby Boomers (1945–1962) –In excess supply in middle management ranks –HR challenge is to manage “plateaued” workers Baby Busters (1963–mid-1970s)Baby Busters (1963–mid-1970s) –Are career bottlenecked by the Boomers –Who have skills in high demand are doing and will do well Generation “X”ers (late 1970s–early 1980s)Generation “X”ers (late 1970s–early 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.

1–16 New Employee/Workplace Dynamics Emphasis on the Management of ProfessionalsEmphasis on the Management of Professionals –Establishment of separate career tracks Technical/Professional, Managerial /AdministrativeTechnical/Professional, Managerial /Administrative –Use of project teams Less Employee Loyalty, More Loyal to SelfLess 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 EffectsIncreased Personal and Family Dynamic Effects –More single-parent families, dual-career couples, and domestic partners Increased Nontraditional Work RelationshipsIncreased Nontraditional Work Relationships –Part-time, consulting, and temporary employment flexibility –Outsourcing and entrepreneurial opportunities Emphasis on the Management of ProfessionalsEmphasis on the Management of Professionals –Establishment of separate career tracks Technical/Professional, Managerial /AdministrativeTechnical/Professional, Managerial /Administrative –Use of project teams Less Employee Loyalty, More Loyal to SelfLess 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 EffectsIncreased Personal and Family Dynamic Effects –More single-parent families, dual-career couples, and domestic partners Increased Nontraditional Work RelationshipsIncreased Nontraditional Work Relationships –Part-time, consulting, and temporary employment flexibility –Outsourcing and entrepreneurial opportunities

1–17 Managing Workplace Diversity Understanding and Appreciating DiversityUnderstanding 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/InitiativesDiversity Management Programs/Initiatives –Must be integrated with organization’s mission and objectives –Help key decision makers identify diversity’s benefits to the organization –Make critical decisions about implementing the optimal program/initiative contingent on the organization and its people, mission and culture. Understanding and Appreciating DiversityUnderstanding 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/InitiativesDiversity Management Programs/Initiatives –Must be integrated with organization’s mission and objectives –Help key decision makers identify diversity’s benefits to the organization –Make critical decisions about implementing the optimal program/initiative contingent on the organization and its people, mission and culture.