Scribd Logo
Upload

Welcome to Scribd!

  • 1K views

    Strategic Human Resource Management 5th

    Uploaded by

    Anna
    This chapter introduces the concept of treating human resources as strategic assets and making investments in employees. It discusses the value employees provide organizations through their skills, knowledge, decision-making and other attributes. While humans are among the most difficult assets to measure, the chapter outlines approaches for evaluating HR initiatives and developing meaningful metrics to assess employee and financial performance. These include identifying business problems HR can impact, calculating costs and returns on HR solutions, and benchmarking metrics against goals and competitors. Factors like management values, risk tolerance, and employee skill types influence an organization's willingness to adopt an investment orientation toward human capital.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Strategic Human Resource Management 5th

    Uploaded by

    Anna
    1K views11 pages
    This chapter introduces the concept of treating human resources as strategic assets and making investments in employees. It discusses the value employees provide organizations through their skills, knowledge, decision-making and other attributes. While humans are among the most difficult assets to measure, the chapter outlines approaches for evaluating HR initiatives and developing meaningful metrics to assess employee and financial performance. These include identifying business problems HR can impact, calculating costs and returns on HR solutions, and benchmarking metrics against goals and competitors. Factors like management values, risk tolerance, and employee skill types influence an organization's willingness to adopt an investment orientation toward human capital.

    Original Description:

    Solution Manual for Strategic Human Resource Management 5th Edition by Mello

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This chapter introduces the concept of treating human resources as strategic assets and making investments in employees. It discusses the value employees provide organizations through their skills, knowledge, decision-making and other attributes. While humans are among the most difficult assets to measure, the chapter outlines approaches for evaluating HR initiatives and developing meaningful metrics to assess employee and financial performance. These include identifying business problems HR can impact, calculating costs and returns on HR solutions, and benchmarking metrics against goals and competitors. Factors like management values, risk tolerance, and employee skill types influence an organization's willingness to adopt an investment orientation toward human capital.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    1K views11 pages

    Strategic Human Resource Management 5th

    Uploaded by

    Anna
    This chapter introduces the concept of treating human resources as strategic assets and making investments in employees. It discusses the value employees provide organizations through their skills, knowledge, decision-making and other attributes. While humans are among the most difficult assets to measure, the chapter outlines approaches for evaluating HR initiatives and developing meaningful metrics to assess employee and financial performance. These include identifying business problems HR can impact, calculating costs and returns on HR solutions, and benchmarking metrics against goals and competitors. Factors like management values, risk tolerance, and employee skill types influence an organization's willingness to adopt an investment orientation toward human capital.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 11

    Solution Manual for Strategic Human Resource Man-

    agement 5th Edition by Mello


    http://testbankbell.com/product/solution-manual-for-strategic-human-resource-man-
    agement-5th-edition-by-mello/

    CHAPTER 1
    AN INVESTMENT PERSPECTIVE OF HUMAN RESOURCE MANAGEMENT

    A. OVERVIEW
    This chapter introduces the concept of treating human resource management processes,
    practices and procedures from a strategic point of view. The skills and knowledge possessed
    by individuals can be valuable assets to any organization, and should be treated as such. Ex-
    ecutives and managers need to understand how to value/measure and manage from an in-
    vestment point of view all assets, including their employees. However, many factors can in-
    fluence the investment orientation of an organization. Understanding the risks and benefits
    to the organization of investing in human capital is of great importance.

    B. LECTURE OUTLINE

    1. OPENING CASE - NORDSTROM


    A strategic competitive advantage for Nordstrom includes a successful human resource (HR)
    approach, involving heavy investment in their sales force of associates. Nordstrom consis-
    tently produces above-industry-average profits and has continued to be profitable when its
    competitors have declined or fallen flat.
    2. INTRODUCTION
    1. The human element is often the most important element of performance for
    any organization. Thus, appropriate resources and investments must be com-
    mitted to facilitate systems for attracting, motivating and managing human
    resources. Adopting a strategic view of HR involves considering employees
    as “human assets,” and developing appropriate policies and procedures to
    manage them as valuable investments.
    2. See Exhibit 1-1: SOURCES OF EMPLOYEE VALUE
    1. Technical Knowledge
    2. Ability to Learn and Grow
    3. Decision Making Capabilities
    4. Motivation
    5. Commitment
    6. Teamwork
    3. ADOPTING AN INVESTMENT PERSPECTIVE
    1. Characterizing employees as human assets implies the strategic management
    of human resources should include considering HR from an investment per-
    spective.
    2. Cost/Benefit basis analysis may be used to evaluate HR programs, such as
    training and development.
    3. Investment perspective toward human assets facilitates their becoming a
    competitive advantage as most other resources/assets can be cloned, copied
    or imitated by competitors.
    4. A strategic approach to HR, however, does not always involve a human rela-
    tions approach to employee relations, as noted in the Managing Employees at
    United Parcel Service example
    5. Investments in employees must be undertaken in tandem with strategies to re-
    tain employees long enough to realize an acceptable return on investments in
    employees. This requires valuation of the employee as an asset, which can be
    difficult to do.

    4. VALUATION OF ASSETS
    See Exhibit 1-2: TYPES OF ORGANIZATIONAL ASSETS/CAPITAL - from easiest to
    most difficult to measure
    1. Financial
    2. Physical
    3. Market
    4. Operational
    5. Human

    5. UNDERSTANDING AND MEASURING HUMAN CAPITAL


    1. Employees are both a significant resource and significant cost for an organi-
    zation, thus employee contributions to the bottom line must be measured.
    2. Watson Wyatt Worldwide found the primary reason for organizational prof-
    itability is the effective management of human capital.
    3. Dyer and Reeves defined the HR “value chain,” arguing performance could
    be measured via four different sets of outcomes: employees, organizational,
    financial and accounting, which have a sequential cause-effect relationship
    on each other. (Exhibit 1-3: HR VALUE CHAIN)
    4. Employees are increasingly attempting to develop and measure meaningful
    HR metrics to aid them in developing effective strategies for managing hu-
    man capital.
    5. Fortune 500 firms often evaluate HR in limited, non-monetary ways, includ-
    ing dimensions of retention, turnover, corporate morale, and employee satis-
    faction
    6. Accounting practices tend to favor valuation methods stressing past and cur-
    rent asset value, while much of the value of human assets lies in the future.
    Thus, organizations must be future-oriented in valuing HR.
    7. Measuring Human Assets/Capital at Dow Chemical example illustrates how
    Dow as developed two meaningful metrics; expected human capital return
    and actual human capital return.
    8. Six step model of valuation of HR initiatives
    1. Identify specific business problem that HR can impact
    2. Calculate actual cost of the problem
    3. Choose an HR solution that addresses all or part of the problem
    4. Calculate the cost of the solution
    5. After implementation, calculate the value of the improvement
    6. Calculate the specific return on investment (ROI)
    9. HR must provide senior level management with value-added human capital
    investments.
    10. Moneyball and the Oakland Athletics example illustrates how nonconven-
    tional staffing metrics analytical techniques resulted in championship teams
    despite these teams having one of the lowest payrolls in the “industry.”

    6. HUMAN RESOURCE METRICS


    1. Wall Street analysts still generally fail to acknowledge human capital in as-
    sessing the value of an organization and the effect that human resources can
    have on stock price
    2. This is rooted in the fact that there are no “standard” metrics or measures of
    human capital, much as there are for other organizational assets.
    3. Exhibit 1.4 lists some Common HR Metrics while Exhibit 1.5 displays the
    means of calculating five common metrics. However, the appropriate metrics
    for any given organization will be dependant on that organization’s strategy.
    4. Labor Supply Chain Management at Valero Energy describes how Valero has
    applied principles of supply chain management to its staffing and employee
    development functions.

    7. ANALYTICS
    1. Analytics is the systematic collection, reporting and analysis of various met-
    rics which are critical to effective performance
    2. Analytics often involve the process of benchmarking where the organization
    compares actual performance to goals and/or to the performance on a similar
    metric by competing organizations.
    3. Exhibit 1.6 shows some examples of the types of relationships which HR an-
    alytics can document and analyze
    4. Measuring Employee Impact and Financial Performance at Lowe’s Compa-
    nies describes how Lowe’s used HR analytics to significantly improve oper-
    ating performance.
    5. People Analytics at Google illustrates how Google has used analytics to de-
    velop employees and improve its recruiting processes.

    8. FACTORS INFLUENCING “INVESTMENT ORIENTATION” OF AN


    9. ORGANIZATION
    Exhibit 1-7 describes the major factors which influence how investment oriented an organi-
    zation is:
    1. Management values
    2. Utilitarianism
    3. Attitude toward risk
    4. Availability of outsourcing
    5. Nature of employment skills

    10. CONCLUSION
    1. Effective strategies to manage human assets utilize HR practices and policies
    are in sync with the organization’s overall strategy and encourage the organi-
    zation to invest in its best opportunities.
    2. Organizations should retain employees at least to the point of achieving an
    adequate return on investment.
    3. Organizations often do not follow an investment perspective of HR because it
    involves making a longer-term commitment to employees, and all human as-
    sets and their contribution to the bottom line must be assessed, which can be
    difficult.
    4. Once an organization develops a competitive advantage through its employ-
    ees, the positive outcome is likely to be enduring, and difficult to duplicate by
    competitors.
    5. Although investment in human assets can be risky and the return long to de-
    velop, investment in people continues to be the main source of competitive
    advantage for organizations.
    EXHIBIT 1.1
    EXHIBIT 1.2
    EXHIBIT 1.3
    EXHIBIT 1.4
    EXHIBIT 1.5
    EXHIBIT 1.6
    EXHIBIT 1.7

    You might also like