AN INVESTMENT

PERSPECTIVE OF
HUMAN
RESOURCES

MD. MAHI UDDIN, PHD

ASSOCIATE PROFESSOR
DBA, IIUC.
 AN INVESTMENT
PERSPECTIVE OF HRM
Effective Organization:
Sources of competitive advantage is not only from product or
service, marketing strategy or financial services but having
appropriate system for attracting, motivating, retaining and
managing organization’s HR.
Adopting a strategic view of HR, in large, part, involves
considering employees as human assets.
Appropriate policies and programs as investment in human assets
to increase their value to the organization and market
When an asset actually is something of value and worth: then -
employees do have value and worth
 AN INVESTMENT
PERSPECTIVE----
Sources of Employee value:
Technical knowledge-markets, customers, process,
environment
Ability to learn and grow: openness to new ideas,
acquisition of knowledge/skills.
Decision making capabilities
Commitment
Teamwork-interpersonal skills, leadership ability
 ADOPTING AN INVESTMENT
PERSPECTIVE
Physical and capital assets in organizations such as plan, property,
machinery, and technology are acquired and subsequently
managed most effectively by treating them as investments.
-Return of such expenditures?
-Expenses of new training program for employees
-Costs against potential benefits of training
-Taking investment perspective towards HR is critical.
 UNDERSTANDING AND
MEASURING HUMAN CAPITAL
Demonstrated that integrated, strategically focused HR
practices were directly related to profitability and market
value.
Organizational profitability is the effective management of
human capital
Human capital can result in up to 47% increase in market
value
Variety of HR management quality indices found that
organizations enjoyed 391 percent on ROI in human capital.
Its HR value chain.
HUMAN RESOURCE INVESTMENT
CONSIDERATIONS.
Management Values: Fundamental values must be addressed
in many human resources issues. When senior managers
formulate and implement strategies, their values and
philosophies are communicated to the members of the
organization through human resource policies and practices.
CONTINUED---
Risk and Return on Investment: Investing in human resources is
inherently more risky than investing in physical capital because the
employer does not own the resources. The return must be great enough
to overcome the risks.
Economic Rationale for Investment in Training: It is instructive to
consider the difference between specific and general training.
CONTINUED--
Utility Theory: There must e a method for evaluating the
financial attractiveness of such investments. This theory
attempts to determine the economic value of human
resource programs, activities, and procedures. Utility theory
might be used to determine dollar value of a selection test.
 OUTSOURCING AS AN
ALTERNATIVE TO INVESTMENT IN
HUMAN RESOURCES
Outsourcing is advocated where –world class capabilities
and a strategic advantages can not be developed-the
resources devoted to services performed internally will be
greater than those needed to outsource the service, and
excessive dependency on suppliers can be avoided.
Firms routinely outsource the administration plan,
executive search activities, payroll functions, employee
assistance programs, human resource information system,
benefits administration, and outplacement.
 INVESTMENTS IN TRAINING
AND DEVELOPMENT
Investments in Employability:Companies are now investing in
their human resources by providing developmental experiences
that make employees much more employable. These
development investments might include the provision for
growth opportunities, a learning environment, training and
retraining.
-Employability is necessary prerequisite for corporate survival.
- Strong managers make structural major changes necessary to
increase their competitiveness and ultimate survivability,
through the eliminations of unneeded jobs. Conversely, weak
mangers endanger the competitiveness of their companies,
ultimately causing the loss of jobs.
CONTINUED--
Investment in Management Development: The continued
development of managerial personnel is a critical strategic issue
in most organizations. Some important issues:
- Organizations are becoming less hierarchical that many
middle-management positions are eliminated.
- A larger number of workers are better educated and many are
professionals.
- More work is expected to be performed, power will be shared,
managerial status will be de-emphasized, and leadership
responsibilities may be rotated.
 INVESTMENT
CONTINUED--------
Prevention of Skill Obsolescence: To prevent of obsolescence a
number of suggestions have been given:
i. To provide challenge, particularly of a technical nature for
technical specialists, in all phases of their careers.
ii. Responsibility, authority, participation, and employee interaction
also appear to be related to the prevention of obsolescence.
iii. Periodic assignments requiring new learning also help to prevent
obsolescence and facilitate development.
iv. Preventing employees becoming overspecialized.
v. Encouraging employees to stay abreast of developments in the
field by incorporating knowledge acquisition activities.
vi. Setting goals for updating knowledge and reward such goal
accomplishments.
INVESTMENT------
Reductions in Career Plateauing: Career plateaus occur when
employees have occupied a job in an organization for period of
time, have mastered all aspects of the job, and have low
prospects for promotion. Plateauing are natural consequences of
a lack of organizational growth or change. Causes:
i. Pyramidal shape of organizations and organizational
inflexibility.
ii. Personal choices of employees,
iii. Lack of career skills resulting from naïve perception of
organizational realities, and lack of requisite for promotion.
iv. Lack of appropriate skills.
 PLATEAUS MAY BE AVOIDED
Identification of stars and solid citizens(satisfactory or
outstanding performers with less potential).
More developmental assignments, challenges, and lateral
mores for both categories can produce pool of qualified
managerial talent.
Job rotation for plateaued employees can reduce frustration
and increase the chance for improved performance.
Managerial actions that provide recognition and appreciation
in the absence of promotion, job enrichment, mentoring
assignments, and lateral transfers that provide growth
opportunities.
 INVESTMENT IN JOB-SECURE
WORKFORCES
Recognition of the cost of downsizing and layoffs:
 NONTRADITIONAL
INVESTMENT APPROACHES
Investment in Disabled Employees: A nontraditional area of
human resource investment involves providing support for
programs that return disabled employees back to the workforce.
There are obvious humanitarian benefits. In order to facilitate the
exchange of knowledge on how to accommodate disabled
workers, companies such as AT& T, Du Pont, Hartford Insurance,
IBM, and Sears are sharing with other companies the knowledge
they have acquired in accommodating disabled workers.
 NONTRADITIONAL
APPROACHES---
Investment on Employee Health: Such investment can increase
the productivity of employees. Health related programs are
directed at reduction of smoking because the relationship
between health problems and smoking is well known. It has been
found that employee absenteeism rates are approximately 50
percent higher for smokers. Rates of early disability and mortality
are approximately 300 percent higher. Because of this some
employers have adopted hard-line policies against smoking.
 NONTRADITIONAL
APPROACHES---
Countercyclical hiring: It is hiring a limited number of mangers
and professional during economic downturns. In essence,
companies would be stockpiling a limited number of high quality
key personnel for future use in pursuing strategies requiring
certain personnel capabilities. Successful companies employ
systematic approaches toward human resource management and
are more likely to make investments in human capital by hiring
during down-turns.