chapter_1_hrm_Jeffrey Mello.ppt including slides

PPT

1. CHAPTER 1:
AN INVESTMENT
PERSPECTIVE OF
HUMAN
RESOURCE
MANAGEMENT

2. Who coined first trem “SHRM?”
Fombrun, Tichy, and Devanna: In their influential
book titled "Strategic Human Resource Management"
published in 1984, David Ulrich and others (Fombrun,
Tichy, and Devanna) were among the first to formally
introduce and discuss the concept of SHRM. They
argued that HRM should be integrated with strategic
planning to enhance organizational effectiveness and
achieve competitive advantage through human
resources.
Copyright © 2002 South-Western. All rights reserved. 1–2

3. The Strategic View of Human
Resources
Employees are human assetsthat 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.
Employees are a valuable source of sustainable
competitive advantage.
1–3

4. History of Human Capital
History of Human Capital
The idea of human capital can be traced back to the
18th century. Adam Smith referred to the concept in
his book "An Inquiry into the Nature and Causes of
the Wealth of Nations,"in which he explored
thewealth, knowledge, training, talents, and
experiences of a nation. Adams suggested that
improving human capital through training and
education leads to a more profitable enterprise,
which adds to the collective wealth of society.
According to Smith, that makes it a win for everyone.
Copyright © 2002 South-Western. All rights reserved. 1–4

5. 1–5

6. Sources of Employee Value
Technical Knowledge
Markets, Processes, Customers, Environment
Ability to Learn and Grow
Openness to new ideas
Acquisition of knowledge and skills
Decision Making Capabilities
Motivation
Commitment
Teamwork
Interpersonal skills, Leadership ability
1–6

7. 1–7
Adopting an Investment Perspective
Human assets are core competencies and have become a
source of competitive advantage
HCL Technologies
MANTRA:
“EMPLOYEES FIRST
CUSTOMERS SECOND”.
-Vineet Nayar, CEO

8. 1–8
Adopting an Investment Perspective
(Cont.)
Required skills become less manual, more knowledge-
based
Appropriate, integrated, strategy-consistent approach is
needed

9. 1–9
A Dilemma
Failure to invest in employees causes
Inefficiency
Weakening of organization’s competitive
position
Human assets are risky investment
Require extra effort to ensure that
they are not lost

10. Retention Strategies
Employee growth and training and development
Pay for performance programs
1–10

11. Hygienefactors (extrinsic
factors)
Motivators(intrinsic
factors)
Better pay and working
condition
Recognition,appreciation
and providing challenging
work
Thesefactors just keep the
employees from becoming
dissatisfied
Thebest way to motivate a
person is to provide with
motivator factors
Adding moreof these factors
will not generate extra
motivation for the employees
Adding more of these factors
will enrich the job and get the
employees further motivated

12. 1–12
Valuation of Asset and Types of
Organizational Assets/Capital

13. 1–
13
Research Findings
HR practices directly related to profitability & market
value
Primary reason for profitability:
Effective management of human capital
Integrated management of human capital can result
in 47% increase in market value
Top 10% of organizations studied experienced 391%
return on investment in management of human
capital

14. 1–14
Exhibit 1-3
HR Value Chain

15. 1–15
HR Metrics Are Complex
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 impacts
Profits
Shareholder value

16. 1–
16
Mercer Model of Measuring HR
Impact
Identify a problem HR can impact
Calculate actual cost of the problem
Choose HR solution that addresses the problem
Calculate the the cost of solution
Calculate value of improvement 6 to 24 months after
implementation
Calculate specific return on investment
ROI in human assets often not realized until some time in
future

17. Copyright © 2002 South-Western. All rights reserved. 1–17

18. Traditional HR Model
This pyramid illustrates what the HR function does
today, typically spending more time on the
operational aspects of HR at the bottom and less
time on strategic initiatives. The challenge is to
reshapethe model into a diamond by transforming
from a transactional to a strategic focus through
automation and radical simplification.
https://www.mercer.com/en-
in/solutions/transformation/
Copyright © 2002 South-Western. All rights reserved. 1–18

19. Copyright © 2002 South-Western. All rights reserved. 1–19

20. Digital HR Model
The first column refers to the customers of HR
including candidates, the external workforce,
employees, people leaders, and top management.
The second column describe the opportunities to
introduce digital tools effectively and in an engaging
way (e.g. people operations platforms as a self-
service). In the third column, personal support comes
into the equation.
Copyright © 2002 South-Western. All rights reserved. 1–20

21. These include people operations, advisory and
administration, leadership partners, and people
strategy advisers. In the final column, we typically
see two main categories: HR customer-facing
communities for talent acquisition and talent
development, and enterprise-serving communities
including project portfolio management,
compensation and benefits, Diversity, equity and
inclusion, and HR analytics.
Copyright © 2002 South-Western. All rights reserved. 1–21

22. 1–
22
Exhibit 1-4
Factors Influencing Investment
Orientation

23. 1–23
Investment Orientation Factors
Senior Management Values & Actions
Managers need “investment orientation” toward
people
Attitude Toward Risk
Investment in human resources inherently riskier
Human assets never absolutely “owned”
Nature of Skills Needed by Employees
The more marketable employee skills, the riskier
the firm’s investment in skill development

24. 1–24
Investment Orientation Factors
Utilitarian (“Bottom Line”) Mentality
Attempt made to quantify employee worth
through cost-benefit analysis
“Soft” benefits of HR programs difficult to
objectively quantify
Availability of Outsourcing
Given availability of cost-effective
outsourcing, investments in HR should
produce highest returns& sustainable
competitive advantages.

25. Thank You!

26. https://www.youtube.com/watch?v=cJCqpdJgeFM
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