Eng Mgt 6113

Advanced Personnel Management

(Strategic Human Resource Management & Measurement)

Investment Perspectives on
Strategic HR Management
David G. Spurlock, Ph.D., Instructor
 Investment Perspectives on SHRM
Our perspective emphasizes the value of
employees as investments (aka
human capital)
We may not cover all related topics
explicitly to the same depth due to time
constraints so if upon reflection you have a
question about something in my comments
or in the text please ask me
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Investment Perspectives on SHRM
We will examine various topics and practices,
but the following functions are central
Recruitment & retention
Selection
Performance appraisal & evaluation
Training & development
Compensation & benefits
Employee attitudes & motivation (engagement,
satisfaction, etc.)

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 Investment Perspectives on SHRM

Scanning the Environment for Strategic

Investment Intelligence
Managers formulating or executing an investment
oriented HR strategy must recognize the
importance of scanning the environment to
spot trends and anticipate developments
Some major trend areas:
Demographics and labor markets
Technology & org structure
Worker values & attitudes
Use of workers (alternatives to full-time)
Management techniques/strategies
International developments
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 Investment Perspectives on SHRM

Examples of sources of information

O*NET for occupational trends including job growth, wage
and salary information: http://www.onetonline.org/
Bureau of Labor Statistics: http://www.bls.gov/
Dept. of Commerce :http://www.commerce.gov/
Pew Research Foundation (e.g., worker attitudes, society
trends): http://www.pewresearch.org/
Other public (open source) intelligence includes academic
journals, government agency reports (gray literature),
general business news sources (see S&T library database
file I provided)
Proprietary research firms, e.g., Mercer ($$$$) if you can
pay for your own studies

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Investment Perspectives on SHRM
SHRM Investment Considerations
Management Values
This is important but often hard to discern
some CEOs or influential stockholders have
agendas that are not consistent with the
interests of the current employees but they
arent necessarily explicit about their plans
(sending jobs offshore for example)

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Investment Perspectives on SHRM
Risk and Return on Investment
The term risk is sometimes used in different senses:
Risk can mean the exposure to the chance of injury or loss
(this is the broadest sense covering the largest range of
contexts) but, for our purposes, it refers to the variability
associated with returns on investment (common in
financial contexts)
TODAY we will briefly examine investment in
(I) Training
(II) Retention
(III) Investments in job security (helps retention and
recruitment)
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(I) Economic Rationale for Investment in
Training
(1) Outsourcing as an Alternative to Investment in
Human Resources
Similar to the make or buy decision that engineers and
engineering managers must wrestle with in routine practice
(2) Investments in Employability
Reasonable alternative to the expense of a policy of job
security (e.g., a no layoff policy) but it is more complex to
implement because employability will vary between positions
and with changes in the overall economy

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(I) Economic Rationale for Investment in
Training
(3) On-the-Job Training
Organizational practices vary widely but you may find
that a large portion of your training is OJT because of
the costs associated with paying workers while they train
Older, more highly compensated workers typically have
more difficulty escaping for training sessions or
programs
Certification is often very important as well as it
serves as an official record of completion of training but
some certs may be more meaningful to some
managers/employers than to others

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(I) Economic Rationale for Investment in
Training
(4) Management Development
Management training & executive development
are very broad activities that can mean wildly different
things in different organizations
Some orgs have relatively little formal management training while
other orgs have very extensive programs that all managers above
a certain level must pass through
Typical forms include job rotations, cross-functional
assignments, off-site training in leadership skills or
other interpersonal skills

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(I) Economic Rationale for Investment in
Training
(5) Prevention of Skill Obsolescence
Certification vs. actual knowledge
For all technical workers as well as their managers, there
is always a constant tension between getting todays
work done and training for tomorrows possibilities if
you can establish a valid reputation for being a quick
study, you will have more opportunities to stay current
It is especially difficult to train yourself to do something
even slightly unrelated to what your actual work is simply
because of the time demands (Reading want ads can
help focus your goals)

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(I) Economic Rationale for Investment in
Training
(6) Reductions in Career Plateauing
Youre plateaued when you have achieved mastery of
your current responsibilities (you do your job well) but
there are few or no promotion possibilities
Very important to recognize that this situation is a
function of both the individual and the organization
Can result from self-fulfilling prophecies and/or single
elimination tournaments
Many people wildly overestimate their chances of
promotion beyond a certain level within the same
organization (overconfidence and other cognitive biases)

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 (II) Investment Practices for
Improved Retention
rule of thumb that departure of a salaried employee
costs 150% of salary
one could argue that there is significant variability
depending upon the circumstances (in some cases,
with incompetent or otherwise difficult employees,
retaining them can be even more expensive)
7 common approaches to improving retention (follow
on next slides)

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 (II) Investment Practices for
Improved Retention
(1) Organizational Cultures Emphasizing
Interpersonal Relationship Values
Fostering a cooperative people-oriented
environment improves retention
(2) Effective Selection Procedures
Choosing employees carefully in the first place
is also helpful of course
(3) Compensation and Benefits
golden handcuffs
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 (II) Investment Practices for
Improved Retention
(4) Job Enrichment & Job Satisfaction
Contented workers stick around (usually)
(5) Practices Providing Work Life Balance
Flextime, telecommuting, etc.
(6) Organizational Direction Creating
Confidence in the Future
Vision & values beyond the bottom line
(7) Retention of Technical Employees
Training, dress, work schedules
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 (III) Investments in
Job-Secure Workforces
Recognition of Costs of Downsizing & Layoffs
The wrong people quit
(best workers leave because theyre the ones who can get
jobs elsewhere)
Dont quit till were ready to lay you off
Harder to hire new people why work someplace
thats downsizing?
Bumping introduces inefficiencies
(higher seniority employees bumped down to lower skill jobs following
layoffs)
5 common approaches (follow on next slides)
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 (III) Investments in
Job-Secure Workforces
(1) Alternatives to Layoffs
The Work Effort/Job Insecurity Relationship
The inverted-U simplistic; ignores individual differences
Pay cuts; furloughs; reduced workweeks; hiring
freezes; loaning employees
(2) Employment Guarantees
Understaffing (use OT in good times)
Flexibility in job assignments (union rules often
restrict this option though)
Work sharing

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 (III) Investments in
Job-Secure Workforces
Nontraditional approaches
(3) Investments in disabled workers
Can work very well if done intelligently
Many win-win scenarios possible
(4) Investment in health of employees
Persuasive arguments in favor of doing this but
sometimes hard to measure results
Privacy & discrimination concerns (no free lunch)
(5) Countercyclical hiring
Just like buying stocks that are temporarily out of favor

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Reference:
Greer, Charles, R. (2001). Strategic Human
Resource Management: A general managerial
approach. 2nd Ed. Upper Saddle River, NJ:
Prentice Hall

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END OF SLIDE SET

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