CHAPTER 1: AN INVESTMENT PERSPECTIVE OF HUMAN RESOURCE MANAGEMENT Copyright © 2005 South-Western. All rights reserved.

1–21–2 The Strategic View of Human Resources Employees are human assetsEmployees are human assets –Increase in value to organization and marketplace when investments of appropriate policies & programs are applied Effective organizations recognize that employees have valueEffective organizations recognize that employees have value –Much as organization’s physical & capital assets have value Employees are valuable source of sustainable competitive advantageEmployees are valuable source of sustainable competitive advantage Employees are human assetsEmployees are human assets –Increase in value to organization and marketplace when investments of appropriate policies & programs are applied Effective organizations recognize that employees have valueEffective organizations recognize that employees have value –Much as organization’s physical & capital assets have value Employees are valuable source of sustainable competitive advantageEmployees are valuable source of sustainable competitive advantage

Copyright © 2005 South-Western. All rights reserved.1–31–3 Exhibit 1-1 Sources of Employee Value

Copyright © 2005 South-Western. All rights reserved.1–41–4 Exhibit 1-2 Types of Organizational Assets/Capital

Copyright © 2005 South-Western. All rights reserved.1–51–5 Exhibit 1-3 HR Value Chain

Copyright © 2005 South-Western. All rights reserved.1–61–6 HR Metrics Are Complex 90% of Fortune 500 organizations evaluate HR operations on basis of three metrics:90% of Fortune 500 organizations evaluate HR operations on basis of three metrics: –Employee retention and turnover –Corporate morale –Employee satisfaction These metrics do not necessarily illustrate how HR impactsThese metrics do not necessarily illustrate how HR impacts –Profits –Shareholder value 90% of Fortune 500 organizations evaluate HR operations on basis of three metrics:90% of Fortune 500 organizations evaluate HR operations on basis of three metrics: –Employee retention and turnover –Corporate morale –Employee satisfaction These metrics do not necessarily illustrate how HR impactsThese metrics do not necessarily illustrate how HR impacts –Profits –Shareholder value

Copyright © 2005 South-Western. All rights reserved.1–71–7 Adopting an Investment Perspective Determines how to best invest in peopleDetermines how to best invest in people CostsCosts –Out-of-pocket –Opportunity Human assets become competitive advantageHuman assets become competitive advantage Required skills become less manual, more knowledge-basedRequired skills become less manual, more knowledge-based Appropriate, integrated, strategy-consistent approach is neededAppropriate, integrated, strategy-consistent approach is needed Determines how to best invest in peopleDetermines how to best invest in people CostsCosts –Out-of-pocket –Opportunity Human assets become competitive advantageHuman assets become competitive advantage Required skills become less manual, more knowledge-basedRequired skills become less manual, more knowledge-based Appropriate, integrated, strategy-consistent approach is neededAppropriate, integrated, strategy-consistent approach is needed

Copyright © 2005 South-Western. All rights reserved.1–81–8 Investment-Oriented Organization Sees people as central to mission & strategySees people as central to mission & strategy Mission statement & strategic objectives espouse value of human assets in achieving goalsMission statement & strategic objectives espouse value of human assets in achieving goals Management philosophy encouraging development & retention of human assetsManagement philosophy encouraging development & retention of human assets Does not treat human assets in same ways as physical assetsDoes not treat human assets in same ways as physical assets Sees people as central to mission & strategySees people as central to mission & strategy Mission statement & strategic objectives espouse value of human assets in achieving goalsMission statement & strategic objectives espouse value of human assets in achieving goals Management philosophy encouraging development & retention of human assetsManagement philosophy encouraging development & retention of human assets Does not treat human assets in same ways as physical assetsDoes not treat human assets in same ways as physical assets

Copyright © 2005 South-Western. All rights reserved.1–91–9 Exhibit 1-4 Factors Influencing Investment Orientation

Copyright © 2005 South-Western. All rights reserved.1–10 Investment Orientation Factors Senior Management Values & ActionsSenior Management Values & Actions –Managers need “investment orientation” toward people Attitude Toward RiskAttitude Toward Risk –Investment in human resources inherently riskier –Human assets never absolutely “owned” Nature of Skills Needed by EmployeesNature of Skills Needed by Employees –The more marketable employee skills, the riskier the firm’s investment in skill development Senior Management Values & ActionsSenior Management Values & Actions –Managers need “investment orientation” toward people Attitude Toward RiskAttitude Toward Risk –Investment in human resources inherently riskier –Human assets never absolutely “owned” Nature of Skills Needed by EmployeesNature of Skills Needed by Employees –The more marketable employee skills, the riskier the firm’s investment in skill development

Copyright © 2005 South-Western. All rights reserved.1–11 Investment Orientation Factors Utilitarian (“Bottom Line”) MentalityUtilitarian (“Bottom Line”) Mentality –Attempt made to quantify employee worth through cost-benefit analysis –“Soft” benefits of HR programs difficult to objectively quantify Availability of OutsourcingAvailability of Outsourcing –Given availability of cost-effective outsourcing, investments in HR should produce highest returns & sustainable competitive advantages. Utilitarian (“Bottom Line”) MentalityUtilitarian (“Bottom Line”) Mentality –Attempt made to quantify employee worth through cost-benefit analysis –“Soft” benefits of HR programs difficult to objectively quantify Availability of OutsourcingAvailability of Outsourcing –Given availability of cost-effective outsourcing, investments in HR should produce highest returns & sustainable competitive advantages.

CHAPTER 2: CHALLENGES IN STAFFING HUMAN RESOURCE MANAGEMENT Copyright © 2005 South-Western. All rights reserved.

1–13 Major Factors Affecting HRM Strategic HRM Technological Advancement Demographics and Diversity Globalization

Copyright © 2005 South-Western. All rights reserved.1–14 Technology Challenges for HRM Integrating new technologiesIntegrating new technologies TelecommutingTelecommuting Employee surveillance & monitoringEmployee surveillance & monitoring e-HRe-HR Ethical behaviorEthical behavior Integrating new technologiesIntegrating new technologies TelecommutingTelecommuting Employee surveillance & monitoringEmployee surveillance & monitoring e-HRe-HR Ethical behaviorEthical behavior

Copyright © 2005 South-Western. All rights reserved.1–15 Exhibit 2-1 Issues for Integrating New Technologies

Copyright © 2005 South-Western. All rights reserved.1–16 TelecommutingTelecommuting Dramatic growth in number of Americans working from homeDramatic growth in number of Americans working from home –3.4 million in 1990 –19.6 million by beginning of 2000 Dramatic growth in number of Americans working from homeDramatic growth in number of Americans working from home –3.4 million in 1990 –19.6 million by beginning of 2000 Issues affecting success of telecommuting programsIssues affecting success of telecommuting programs – Clear performance measurement system is key – Deciding which employees will be offered participation – Equipment expense – Some managers uncomfortable having direct reports away from office

Copyright © 2005 South-Western. All rights reserved.1–17 Employee Surveillance and Monitoring More than 80% of large employers utilize monitoring technologyMore than 80% of large employers utilize monitoring technology –Internet usage – s –Computer files –Voic –Telephone usage Under Electronic Communications Privacy Act (ECPA) employees have only limited privacy rightsUnder Electronic Communications Privacy Act (ECPA) employees have only limited privacy rights More than 80% of large employers utilize monitoring technologyMore than 80% of large employers utilize monitoring technology –Internet usage – s –Computer files –Voic –Telephone usage Under Electronic Communications Privacy Act (ECPA) employees have only limited privacy rightsUnder Electronic Communications Privacy Act (ECPA) employees have only limited privacy rights

Copyright © 2005 South-Western. All rights reserved.1–18 E-HRE-HR Opportunity to deliver transactional types of services onlineOpportunity to deliver transactional types of services online –Payroll –Employee benefits –Scheduling –Recruiting –Training –Career development Opportunity to deliver transactional types of services onlineOpportunity to deliver transactional types of services online –Payroll –Employee benefits –Scheduling –Recruiting –Training –Career development

Copyright © 2005 South-Western. All rights reserved.1–19 Ethical Behavior Majority of jobs are considered to be “at- will”Majority of jobs are considered to be “at- will” Movement toward greater protection for employees in regard to off-duty behaviorMovement toward greater protection for employees in regard to off-duty behavior Ownership of workOwnership of work Fairness of noncompete clausesFairness of noncompete clauses Majority of jobs are considered to be “at- will”Majority of jobs are considered to be “at- will” Movement toward greater protection for employees in regard to off-duty behaviorMovement toward greater protection for employees in regard to off-duty behavior Ownership of workOwnership of work Fairness of noncompete clausesFairness of noncompete clauses Sarbanes-Oxley Act of 2002Sarbanes-Oxley Act of 2002 –Eliminates deception in accounting & management practices by increasing government oversight –Holds senior executives more directly responsible for violations –Protects “whistle- blowers”

Copyright © 2005 South-Western. All rights reserved.1–20 Demographics & Diversity Challenges for HRM Graying of workforceGraying of workforce Dimensions of diversityDimensions of diversity Graying of workforceGraying of workforce Dimensions of diversityDimensions of diversity

Copyright © 2005 South-Western. All rights reserved.1–21 Exhibit 2-6 Individual Dimensions of Diversity

Copyright © 2005 South-Western. All rights reserved.1–22 Workforce Demographic Changes: “Graying” of 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 & salary costs for senior workers 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 & 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 & professional networks

Copyright © 2005 South-Western. All rights reserved.1–23 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 Boomers –Who have skills in high demand are doing & will do well 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 Boomers –Who have skills in high demand are doing & will do well

Copyright © 2005 South-Western. All rights reserved.1–24 Workforce Demographic Changes Generation “X”ers (late 1970s–early 1980s)Generation “X”ers (late 1970s–early 1980s) –Have life-long exposure to technology & constant change –Seek self-control, independence, personal growth, creativity –Not focused on job security or long-term employment Generation “Y”: “Baby Boom Echo” (after 1979)Generation “Y”: “Baby Boom Echo” (after 1979) –High comfort level with technology –Global & tolerant outlook on life –Highly entrepreneurial –Shorter attention span –Opting for more transient & variable project work Generation “X”ers (late 1970s–early 1980s)Generation “X”ers (late 1970s–early 1980s) –Have life-long exposure to technology & constant change –Seek self-control, independence, personal growth, creativity –Not focused on job security or long-term employment Generation “Y”: “Baby Boom Echo” (after 1979)Generation “Y”: “Baby Boom Echo” (after 1979) –High comfort level with technology –Global & tolerant outlook on life –Highly entrepreneurial –Shorter attention span –Opting for more transient & variable project work

Copyright © 2005 South-Western. All rights reserved.1–25 Workforce Demographic Changes Sexual orientationSexual orientation –More than 200 Fortune 500 employers offer full benefits for domestic partners –Sexual orientation issues can impact bottom line DisabilitiesDisabilities –54 million Americans with disabilities –Often not included in diversity initiatives –Many supervisors do not understand needs of employees with disabilities –Stereotypes Sexual orientationSexual orientation –More than 200 Fortune 500 employers offer full benefits for domestic partners –Sexual orientation issues can impact bottom line DisabilitiesDisabilities –54 million Americans with disabilities –Often not included in diversity initiatives –Many supervisors do not understand needs of employees with disabilities –Stereotypes

Copyright © 2005 South-Western. All rights reserved.1–26 New Employee/Workplace Dynamics Emphasis on management of professionalsEmphasis on 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 & involvement in organizational decisions Emphasis on management of professionalsEmphasis on 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 & involvement in organizational decisions

Copyright © 2005 South-Western. All rights reserved.1–27 New Employee/Workplace Dynamics Increased personal & family dynamic effectsIncreased personal & family dynamic effects –More single-parent families, dual-career couples, & domestic partners Increased nontraditional work relationshipsIncreased nontraditional work relationships –Part-time, consulting, & temporary employment flexibility –Outsourcing & entrepreneurial opportunities Increased personal & family dynamic effectsIncreased personal & family dynamic effects –More single-parent families, dual-career couples, & domestic partners Increased nontraditional work relationshipsIncreased nontraditional work relationships –Part-time, consulting, & temporary employment flexibility –Outsourcing & entrepreneurial opportunities

Copyright © 2005 South-Western. All rights reserved.1–28 EthnicityEthnicity By 2050By 2050 –Close to 50% of US population will be non-Caucasian By 2005By 2005 –Ethnic minority share of workforce will be 28% –Up from 22% in 1990 & 18% in 1980 By 2050By 2050 –Close to 50% of US population will be non-Caucasian By 2005By 2005 –Ethnic minority share of workforce will be 28% –Up from 22% in 1990 & 18% in 1980 By 2025By 2025 –African-Americans will represent 14% of population –Up from 12% in 1994 –Hispanics will represent 17% of population –Up from 10% in 1994 –Asians & Pacific Islanders will represent 8% of population –More than double from 1994

WORKFORCE TRENDS In-Class Activity Copyright © 2005 South-Western. All rights reserved.1–29

Six Articles Harvard Business Review Jul-Aug 2007 The Next 20 Years: How Customer and Workforce Attitudes Will EvolveHarvard Business Review Jul-Aug 2007 The Next 20 Years: How Customer and Workforce Attitudes Will Evolve Fortune 5/15/07 Attracting the Twentysomething WorkerFortune 5/15/07 Attracting the Twentysomething Worker The Futurist May-Jun 2007 Men Not At WorkThe Futurist May-Jun 2007 Men Not At Work Benefits Quarterly 2006 vol 22 issue 4 Are Employers Prepared for the Aging of the U. S. Workforce?Benefits Quarterly 2006 vol 22 issue 4 Are Employers Prepared for the Aging of the U. S. Workforce? Hudson Institute 2/1/04 America and the Coming Global WorkforceHudson Institute 2/1/04 America and the Coming Global Workforce Human Resource Planning 2002 vol 25 issue 3 The Coming Decade of the EmployeeHuman Resource Planning 2002 vol 25 issue 3 The Coming Decade of the Employee Harvard Business Review Jul-Aug 2007 The Next 20 Years: How Customer and Workforce Attitudes Will EvolveHarvard Business Review Jul-Aug 2007 The Next 20 Years: How Customer and Workforce Attitudes Will Evolve Fortune 5/15/07 Attracting the Twentysomething WorkerFortune 5/15/07 Attracting the Twentysomething Worker The Futurist May-Jun 2007 Men Not At WorkThe Futurist May-Jun 2007 Men Not At Work Benefits Quarterly 2006 vol 22 issue 4 Are Employers Prepared for the Aging of the U. S. Workforce?Benefits Quarterly 2006 vol 22 issue 4 Are Employers Prepared for the Aging of the U. S. Workforce? Hudson Institute 2/1/04 America and the Coming Global WorkforceHudson Institute 2/1/04 America and the Coming Global Workforce Human Resource Planning 2002 vol 25 issue 3 The Coming Decade of the EmployeeHuman Resource Planning 2002 vol 25 issue 3 The Coming Decade of the Employee Copyright © 2005 South-Western. All rights reserved.1–30

In Your Teams Read/skim the articles assigned to your group and prepare a synopsis of each to share with the class.Read/skim the articles assigned to your group and prepare a synopsis of each to share with the class. –Each team will need the following: A time keeperA time keeper A recorder (you will turn your notes in … they should be legible…)A recorder (you will turn your notes in … they should be legible…) A spokespersonA spokesperson Questions to ponder while you read:Questions to ponder while you read: –According to this article, what challenges are ahead for HR? –How might these predictions impact an organization’s strategic choices? Read/skim the articles assigned to your group and prepare a synopsis of each to share with the class.Read/skim the articles assigned to your group and prepare a synopsis of each to share with the class. –Each team will need the following: A time keeperA time keeper A recorder (you will turn your notes in … they should be legible…)A recorder (you will turn your notes in … they should be legible…) A spokespersonA spokesperson Questions to ponder while you read:Questions to ponder while you read: –According to this article, what challenges are ahead for HR? –How might these predictions impact an organization’s strategic choices? Copyright © 2005 South-Western. All rights reserved.1–31