INTRODUCTION:

Human resources is a term used to describe the individuals who comprise the workforce of an
organization, although it is also applied in labor economics to, for example, business sectors or
even whole nations. Human resources is also the name of the function within an organization
charged with the overall responsibility for implementing strategies and policies relating to the
management of individuals (i.e. the human resources). This function title is often abbreviated to
the initials 'HR'.

Human resources is a relatively modern management term, coined in the 1960s. The origins of
the function arose in organizations that introduced 'welfare management' practices and also in
those that adopted the principles of 'scientific management'. From these terms emerged a largely
administrative management activity, co-ordinating a range of worker related processes and
becoming known, in time as the 'personnel function'. Human resources progressively became the
more usual name for this function, in the first instance in the United States as well as
multinational corporations, reflecting the adoption of a more quantitative as well as strategic
approach to workforce management, demanded by corporate management and the greater
competitiveness for limited and highly skilled workers.

KEY FACTORS OF HR:

• Recruitment, selection, and onboarding (resourcing)
• Organizational design and development
• Business transformation and change management
• Performance, conduct and behaviour management
• Industrial and employee relations
• Human resources (workforce) analysis and workforce personnel data management
• Compensation, rewards, and benefits management
• Training and development (learning management)
REVIEW OF LITERATURE:
Article 1: Critical challenges facing human resources
By: Candace Walters

As the end of the year prompts human resource professionals to examine HR priorities for 2007,
several key issues call for consideration. To be effective, strategic HR planning must occur
within the context of the organization’s overall business plan. Business strategies and objectives
both short and long-term will dictate what human resources will be needed, in what areas, with
what job responsibilities and performing at what level. These strategies and objectives will shape
HR decisions on organizational design, selection, retention, training and development,
performance management and rewards. Further, proactive organizations will be looking at fresh
ways in 2007 to elicit optimal performance from employees, integrate new technology to
streamline the HR function, leverage new pension legislation to support HR and organizational
goals, control benefit costs – and, of course, communicate effectively with employees about
these and other changes.

http://www.hrworks-inc.com/topics-in-hr/articles/29-hrbenefits-consulting-articles/100-critical-
challenges-facing-human-resources

Article 2: Investment in HR Reaps Benefits - human

resource management
By: Bill Leonard

The increasingly tough competition for skilled workers in today's ultratight labor market has put
the human resource function in an uncustomary position--the spotlight. According to an ongoing
benchmarking and best HR practices study, employers are shifting their HR departments' focus
from administrative and risk management functions to more strategic and critical business
functions such as employee selection, retention and development. "Most organizations are
embracing proven HR best practices and are re-evaluating priorities to reflect the shifting needs
of the company," says Richard T. Roth, managing director of Hackett Benchmarking/ solutions, a
division of Akron, Ohio-based Answer Think Consulting Group. "Business leaders are realizing
that a more efficient and effective HR organization can be a critical competitive weapon." "Top-
performing companies have realized the critical nature of effective HR operations and are taking
significant steps to address ways that HR can be a driver of strategic initiatives, says Roth.
"Companies that lag behind in this area are losing employees, are spending more to do less and
are losing the battle against their competitors."
http://findarticles.com/p/articles/mi_m3495/is_1_45/ai_59283653/

Article 3: Human resources for health policies: a critical

component in health policies
By: Gilles Dussault and Carl-Ardy Dubois

In the last few years, increasing attention has been paid to the development of health policies.
But side by side with the presumed benefits of policy, many analysts share the opinion that a
major drawback of health policies is their failure to make room for issues of human resources.
Current approaches in human resources suggest a number of weaknesses: a reactive, ad hoc
attitude towards problems of human resources; dispersal of accountability within human
resources management (HRM); a limited notion of personnel administration that fails to
encompass all aspects of HRM; and finally the short-term perspective of HRM.
There are three broad arguments for modernizing the ways in which human resources for health
are managed:
• the central role of the workforce in the health sector;
• the various challenges thrown up by health system reforms;
• the need to anticipate the effect on the health workforce (and consequently on service
provision) arising from various macroscopic social trends impinging on health systems.
The absence of appropriate human resources policies is responsible, in many countries, for a
chronic imbalance with multifaceted effects on the health workforce: quantitative mismatch,
qualitative disparity, unequal distribution and a lack of coordination between HRM actions and
health policy needs.

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC166115/

Article 4: Measuring Human Resource management's effectiveness

in improving performance.
By: Ramlall, Sunil J

This article examines the strategic role of HR and its main practices, describes the outcomes of
respective categories of HR practices, explains the critical reasons for measuring HR's efforts,
and proposes a framework for assessing HR. Ultimately, organizations will be able to utilize the
information to determine how particular HR practices correlate with better business results;
determine potential areas for investments, expansions, and reductions; justify budget allocations;
and be more accountable for each dollar spent within the organization. The framework proposed
does not merely explain the cost for each major HR activity, but demonstrates the value of the
activity and, hence, the opportunity to determine if it is a worthwhile investment and strategy for
creating a competitive advantage. What value does the HR function contribute to the bottom line
of the organization? Over the years, tremendous emphasis has been placed on making HR
practitioners strategic business partners and a value-added source within organizations.
Traditionally, HR professionals could talk generally and conceptually about employee morale,
turnover, and employee commitment as outcomes of HR efforts. Furthermore, the HR function
was often viewed as an expense-generator and administrative function and not as a value-added
partner. Ulrich (1997b) reiterated that to fulfill the business partnership role of HR. concepts
need to be replaced with evidence, ideas with results, and perceptions with assessments.

http://www.accessmylibrary.com/article-1G1-99146561/measuring-human-resource-
management.html

Article 5: A worthwhile investment

By: Patti Dunham

According to a survey conducted by World at Work and the National Association of Employee
Recognition (NAER), 87% of employers have some type of recognition program for employees,
up from 64% in 2002. From those figures, it appears that we do not have a problem recognizing
employees. However, we continue to hear from our existing employees that they are not being
recognized. According to the Saratoga Institute, 60% of exiting employees indicate one of the
reasons for leaving an organization is that they are not recognized and are taken for granted. So,
where is the disconnect? The desire to be recognized and praised is one of our deepest cravings.
Employee’s expectations on the job have increased. One of those expectations includes
recognition and it appears that our programs have not kept up with the increasing level of
importance employees place of this need. Evaluating the programs we have in place is just the
first step in successfully implementing programs that will result in a positive
investment...retaining our quality employees.

http://www.strategichrinc.com/articles/Jan2006.htm

Article 6: Making the right investment

By: Peter Cheese, Christian

Historically, human resource management and investments in workforce capabilities have largely
been applied in the same way across all types of jobs and roles. This has been, in part, due to
assumptions that all types of jobs were equally valuable, but also due to a lack of understanding
how different jobs and roles contribute to business outcomes and how investments in people
drive value. At today's leading organizations, executives are becoming more sophisticated and
discriminating in the way they make investments in workforce services and employee
development.

Indeed, it is becoming apparent that not all workforces are created equal. All jobs are important,
to be sure. However, based on immediate marketplace and economic needs, there are roles at
every organization, whether in the public or private sector, that are simply more critical to the
organization's mission and strategy than others. With that in mind, leading organizations are now
investing in workforce performance in a more focused way. When it comes to the allocation of
human resource services, knowledge management, and learning and development resources, they
are targeting the specific workforces and processes that are most critical to the business's
strategic goals and performance.

It's easy to understand why. Indiscriminate allocations can be a waste of time and resources.
Organizations may end up providing human resource services and workforce development
initiatives that fail to fulfill a business need, or that are out of alignment with the mission and
strategy of the company.

Article 7: Searching for Strong ROI: Investing in Human

Resources
By: George Christopher Raspa

Strategically placed investments in human resources will develop a more skilled, innovative,
productive and loyal workforce thus providing an organization with a competitive advantage
over a less progressive competitor. Investment in human capital offers both short and long term
gains that help produce not only skilled, productive employees, but those that are both loyal and
ethical. Human resource investments should not simply be made in the traditional sense often
thought of as compensation and benefits, vacation allotments and holiday pay. Rather, these
investments should also include those that impact the organizational culture of the firm. By
investing in its human resources an organization can gain a competitive advantage within the
marketplace.

http://www.associatedcontent.com/article/832791/investing_in_human_resources_searching.html

Article 8: Competing pressures for human resource investment

By: Gloria Harrell Cook and Gerald R. Ferris

Since the late 1970s, many organizations have professed to view human resources as valued
assets rather than liabilities, and the investment in human resources as strategically imperative to
corporate competitiveness. However, over the past fifteen years, there has been considerable
variability in the extent to which corporate America has embraced and implemented this new
view. This article brings agency, resource dependence, and institutional theories to bear in an
effort to understand the variability in emphasis that organizations place on human resources
investment. The argument is made that the pressures exerted on organizations by stockholders for
short-term financial performance will have consequences which are to the detriment of
investment in human resources and of long-term corporate competitiveness and viability.

http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W4J-45GNS4J-
C&_user=10&_coverDate=07%2F01%2F1997&_rdoc=1&_fmt=high&_orig=search&_sort=d&
_docanchor=&view=c&_searchStrId=1335489184&_rerunOrigin=google&_acct=C000050221&
_version=1&_urlVersion=0&_userid=10&md5=ee3c69aba367f56b35301fbe3906efbb
Article 9: Training: Your Investment in People Development
and Retention
By: Susan M. Heathfield

The right employee training, development and education, at the right time, provides big payoffs
for the employer in increased productivity, knowledge, loyalty, and contribution. Learn the
approaches that will guarantee your training brings a return on your investment. The American
Society for Training and Development (ASTD) "estimates that U.S. organizations spend $109.25
billion on employee learning and development annually, with nearly three quarters ($79.75
billion) spent on the internal learning function, and the remainder ($29.50 billion) spent on
external services." Licensing, certification, continuing education, and training to retain and grow
skills are becoming increasingly important.

http://humanresources.about.com/od/educationgeneral/a/training_invest.htm

Article 10: Human capital development on investment

perspective
By: Hotelmule

The article presents information concerning the benefits associated with investments in existing
human capital within hospitality and tourism enterprises. It begins with an introduction that
discusses the research framework. Then discusses concepts and definitions concerning human
resource development, human capital, resource-based view of the organization, training and
development, and return on investment (ROI). Next, the service-profit chain will be reviewed as
one of the strategic framework models that capture the essence of the role of human capital in the
hospitality/service industry. Following that, a review of research is presented on the topic of
human capital as it relates to the hospitality industry with a ROI perspective. Finally, applications
of the concept of human capital and ROI will be discussed, as well as suggestions concerning
directions for future research on the subject of human capital and ROI.

http://www.hotelmule.com/management/html/92/n-2392.html
WHT HR IS CALLED AS A CRITICAL INVESTMENT:

1. Is money invested will give supposed output:

The money in HR is invested with an aim to increase productivity of the employee. So every
company expects to achieve this output of each employee. But even after investing money on HR
the productivity of an employee does not increase then this would leads to wastage of
investment.

2. Are employees recruited at best suited to company’s requirement

or not:
The recruitment is the basic function of HR department. The recruitment is done to select the
most suited employees for particular jobs. But if wrong persons get selected due to biasness or
some other reason it would not help the organization. Infact it would cause wastage of
investment. Further weak employees.

3. Money spend on training will be useful or not?

The foregoing naturally leads to a troublesome conclusion. Training, inappropriately selected or
insufficiently supported by other interventions, results in waste. The most obvious waste stems
from the attempt to decrease a human performance gap through training courses when the
problems lie elsewhere.

Causes of wasted training expenditures include:

• Poor selection of persons to attend training. A study conducted in a major Canadian

transportation company demonstrated that almost 30% of employees enrolled in various
courses were inappropriate for these. Reasons for enrolling were: manager had registered
them without consultation; down period so time for training was available; close to
retirement, training probably helpful; recommended by others as good or fun; had to
fulfill training days quota; nothing else available, etc.
• Persons enrolled in training without clear expectations from supervisors. Result:
uncertain about how or when to apply new skills.
• Lack of support back on the job.
• Lack of post-training performance monitoring.
• Lack of resources to implement new skills.
• Lack of incentives to apply new skills and knowledge.
4. Money spend on their development will give desired result or not?
Human Resource is the most important asset for any organization. Some companies have got HR
as their competitive advantage. So it is very important to have very good human resource to
produce desired results. After all objectives of any company are foremost thing. If the HR fails to
achieve these objectives the company will bear the loss and the investment will not generate any
rate of return.

WHAT HAPPENS IF INVESTMENT DECISION GOES

WRONG:
The workforce and the company’s inability to recruit and maintain good workforce, constitute
the bottleneck for the company’s performance. One of the main reason that the company’s
hampered is due to wrong investment made by them in HR.

1. No rate of return:
Every investment is made with the view to gain rate of return. But if investment goes wrong
inspite of generating rate of return it leads to loss.

2. Wastage of the company’s resources:

If the investment is not made in proper way without analyzing, it will lead to wastage of
company’s resources. The utilization of these resources would be totally useless or below the
average. The resources are meant to be utilized optimally otherwise these will to wastage and
increase in cost.

3. Goodwill be effected:
Wrong investment decisions will lead to bad reputation of the organization. With wrong
investment decisions company does not bear loss monetary but also in goodwill.

4. Wrong investment will lead to wrong performance of the

company:
Investment in wrong place will cause wastage of both time and money. This will further cause
decrease in the performance of the company. Money would be wasted.
COMPANIES ARE HANDLING THESE ISSUES BY
MEASURING RETURN ON INVESTMENT:
Calculating ROI has been a valuable measurement tool for a long time – it is not the latest
management fad. A century ago, ROI was the emerging tool to place a value on the payoff
capital investments. In the 1920’s, the Harvard Business Review proclaimed ROI as the tool to
measure results. In recent years, the application of the concept has been expanded to all types of
investments, including human capital investment. This reflects the growing demand for evidence
of positive returns on investing in people and in HR programs. Today, key clients – those
funding HR initiatives – require critical evaluation data, and measuring ROI can be a valuable
tool for communicating the positive impact of HR’s work on the organization. For an ROI
process to be feasible, it must balance many issues, including feasibility, simplicity, credibility,
and soundness. The ROI methodology described in this article meets these challenges.

MAXIMIZING RATE OF RETURN ON INVESTMENT:

1. Diffusion of best practice

Much has been written about the diffusion of HR management best practice in multinational
companies from developed countries. However, multinationals from rapidly developing
countries, such as China and India, appear to be adopting the HR management practice of a host
country as a way of acquiring advanced skills that enable them to compete more effectively in
international markets. A study of Chinese multinational companies operating in the UK found
extensive use of UK HR management practice in the Chinese subsidiaries. They not only adapted
to UK cultural and regulatory constraints, but also used this as a means of transferring and
diffusing best practice expertise and management back to China as well as into other global
subsidiaries. However, ties with the parent company remain strong, so some Chinese
management practices continue, especially in higher level management decision-making and
some of the “soft'' areas of HR management, such as recruitment and remuneration.

2. Strategic orientation
Companies in developing countries can also benefit financially by strategically aligning and
investing in their HR policies and practices. Strategic HR orientation is defined as the alignment
of HR planning, selection, performance evaluation, compensation, development and staffing
practices with the business strategies of the organization. A study of 19 Indian manufacturing
and service companies showed that strategic HR-oriented firms performed significantly better
than firms with a lower emphasis by making better use of a low-cost sustainable advantage.
The traditional role of HR is the attraction, retention, motivation and development of human
resources according to current and future requirements. However, HR can also help develop and
sustain competitive advantage. This suggests that the head of the HR function should be included
in strategic decision-making by senior management. This will enable the HR director to
formulate HR strategies that support organizational strategies.
3. Multi-country shared service operations
The transformation from a focus on administrative and transactional activities to one of HR
strategy development in multinational corporations can be achieved by implementing multi-
country shared service operations. Shared service centers for HR can be considered across all its
functions, including compensation, benefits, payroll, and organization development and
performance management.
The potential benefits are significant cost savings, consistency, and better and more efficient
administrative services. Most importantly, shared services can free up HR resources for activities
that can maximize the return on human capital investment - a critical success factor.
Shared service centers are particularly useful for large, geographically dispersed organizations
with several lines of business. They can dramatically improve the performance of the HR
function. However, the implementation of a regional or multi-country approach to shared
services introduces additional challenges. First is the decision to share services. Factors that have
to be considered include: demographics, cultural and language differences, infrastructure,
investments, labor costs, consistency of programs and processes, availability of expertise and
regulatory requirements. These can vary considerably from one country to another (and also from
one company to another within an organization).
Making the decision to invest in shared services then depends on a sound business case that
demonstrates a consolidated service center will actually provide better services at lower cost.

4. Visible executive sponsorship

The existing corporate structure will also have an influence on how a shared services approach
can be supported. Before serious consideration can be given to the introduction of shared
services, an organization will probably need to have integrated businesses with a strong central
leadership that is prepared to mandate consistency of HR programs and processes across the
whole company. The issues of governance, ownership and engagement must also be addressed.

This leadership must also be able to identify the critical drivers of a shared service initiative such
as:
• HR becoming more of a strategic partner;
• the elimination of duplicate resources;
• consistency of programs and services; and
• Improved quality of services.

Having identified these drivers, senior management must understand the contribution that HR
shared services can make to the organization and be able to support and defend the strategic
decision for its implementation. The next step is to consider which services to consolidate. This
will depend on the ease or feasibility of centralizing and their likely impact on business strategy.
CONCLUSION:
1. HR investment is considered as critical issue because it is ground for the survival of the
company.

2. Investment criteria should be carried further with SWOT analysis.

3. In what particular area HR investment is required should be cleared.

4. HR act as a competitive advantage, so companies should try to gain quality out of the
investment.

5. Rate of return should be properly analyzed.

BIBLIOGRAPHY:
http://www.hrworks-inc.com/topics-in-hr/articles/29-hrbenefits-consulting-articles/100-critical-
challenges-facing-human-resources

http://findarticles.com/p/articles/mi_m3495/is_1_45/ai_59283653/

http://www.accessmylibrary.com/article-1G1-99146561/measuring-human-resource-
management.html

http://www.strategichrinc.com/articles/Jan2006.htm

www.wikipedia.com

www.google.com