Chapter 01 2006

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

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strategic HRM

Transcript of Chapter 01 2006

  • CHAPTER 1:AN INVESTMENT PERSPECTIVE OF HUMAN RESOURCE MANAGEMENTCopyright 2005 South-Western. All rights reserved.

    Copyright 2005 South-Western. All rights reserved.

  • Copyright 2005 South-Western. All rights reserved. 1*The Strategic View of Human ResourcesEmployees are human assets Increase in value to organization and marketplace when investments of appropriate policies & programs are appliedEffective organizations recognize that employees have valueMuch as organizations physical & capital assets have valueEmployees are valuable source of sustainable competitive advantage

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  • Copyright 2005 South-Western. All rights reserved. 1*Sources of Employee ValueTechnical KnowledgeMarkets, processes, customers, environmentAbility to Learn and GrowOpenness to new ideasAcquisition of knowledge & skillsDecision Making CapabilitiesMotivationCommitmentTeamworkInterpersonal skills, leadership ability

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  • Copyright 2005 South-Western. All rights reserved. 1*Adopting an Investment PerspectiveDetermines how to best invest in peopleCostsOpportunityHuman assets become competitive advantageRequired skills become less manual, more knowledge-basedAppropriate, integrated, strategy-consistent approach is needed

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  • Copyright 2005 South-Western. All rights reserved. 1*A DilemmaFailure to invest in employees causes Inefficiency Weakening of organizations competitive positionHuman assets are risky investment Require extra effort to ensure that they are not lost

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  • Copyright 2005 South-Western. All rights reserved. 1*Types of Organizational Assets/Capital

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  • Copyright 2005 South-Western. All rights reserved. 1*Research FindingsHR practices directly related to profitability & market valuePrimary reason for profitability: Effective management of human capitalIntegrated management of human capital can result in 47% increase in market valueTop 10% of organizations studied experienced 391% return on investment in management of human capital

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  • Copyright 2005 South-Western. All rights reserved. 1*Exhibit 1-3HR Value Chain

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  • Copyright 2005 South-Western. All rights reserved. 1*Reading 1.1 Model for Management SuccessRefocusing staff on whats important Performance management as disciplined, strategic, value-added processClearly define, differentiate & balance between core competencies & resultsBuilding return on compensationLink base-pay progression to competency achievementLink incentive pay to annual, semiannual, or quarterly results

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  • Copyright 2005 South-Western. All rights reserved. 1*Reading 1.2 (Rynes et al.) Seven Common Misconceptions (Fallacy)Conscientiousness is a better predictor of performance than intelligence.Companies that screen job applicants for values have higher performance than those that screen for intelligence.Integrity tests dont work well in practice because so many people lie on them.Integrity tests have adverse impact on racial minorities.

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  • Copyright 2005 South-Western. All rights reserved. 1*Reading 1.2Seven Common MisconceptionsEncouraging employee participation is more effective for improving organizational performance than setting performance goals.Most errors in performance appraisal can be eliminated by providing training to managers on how to avoid them.If employees are asked how important pay is to them, they are likely to overestimate its true importance.

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  • Copyright 2005 South-Western. All rights reserved. 1*Reading 1.2Seven Common Misconceptions: ImplicationsSelect new employees on both intelligence and conscientiousness.Assess intelligence and conscientiousness before values. Define the values that are important and assess them through carefully developed, valid procedures.Use integrity tests with ability tests for high predictability.

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  • Copyright 2005 South-Western. All rights reserved. 1*Reading 1.2 Seven Common Misconceptions: ImplicationsDevelop compelling goals; enlist participation and support it through rewards.Training and feedback are important, but errors are difficult to eliminate. Top managers should serve as role models in quality of performance reviews.Attitude surveys are subject to biases; study behaviors as well as attitudes.

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  • Copyright 2005 South-Western. All rights reserved. 1* Reading 1.3 (Pfeffer) Effective HRM Practices Employment SecuritySelectivity in RecruitingHigh WagesIncentive payEmployee OwnershipInformation SharingSelf-Managed TeamsTraining & DevelopmentCross-Utilization & Cross-TrainingWage CompressionPromotion From WithinTaking the Long ViewMeasurement of PracticeOverall Philosophy

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