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Questions and Answers
Employees are considered human assets that do not increase in value without investments of appropriate policies & programs.
False
The ability to learn and grow is one of the sources of employee value.
True
Investing in employees can lead to inefficiency and a weakened competitive position for an organization.
False
Top organizations can experience returns as high as 391% from effective management of human capital.
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There are standard metrics for assessing human capital similar to other organizational assets.
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Study Notes
Strategic View of Human Resources
- Employees are human assets that increase in value when investments of appropriate policies and programs are applied.
- Organizations, like physical and capital assets, recognize the value of their employees.
- Employees are a valuable source of sustainable competitive advantage.
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.
Adopting an Investment Perspective
- Determines how to best invest in people.
- Costs: Out-of-pocket and opportunity.
- Human assets become competitive advantage.
- Required skills become less manual, more knowledge-based.
- Requires an appropriate, integrated, strategy-consistent approach.
A Dilemma
- Failure to invest in employees causes inefficiency and weakens the organization's competitive position.
- Human assets are a risky investment.
- Requires extra effort to ensure they are not lost.
Research Findings
- HR practices directly related to profitability and market value.
- Primary reason for profitability: Effective management of human capital.
- Integrated management of human capital can result in a 47% increase in market value.
- The top 10% of organizations studied experienced a 391% return on investment in management of human capital.
Human Resource Metrics
- Wall Street analysts generally fail to acknowledge human capital in assessing the value of an organization and its impact on stock price.
- There are no "standard" metrics or measures of human capital, unlike other organizational assets.
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Description
This quiz explores the strategic view of human resources, emphasizing the importance of treating employees as valuable human assets. It covers key aspects such as investing in employee development, the sources of employee value, and the impact of sustained investment on organizational competitive advantage.
