Compiled and Presented by:

M. Mahi Uddin
Assistant Prof. of HRM
IIUC-DC.
Human resource Investment
Considerations.
 Management Values: Fundamental values must be
addressed in many human resources issues. When
senior managers formulate and implement strategies,
their values and philosophies are communicated to
the members of the organization through human
resource policies and practices.
Continued---
 Risk and Return on Investment: Investing in human
resources is inherently more risky than investing in
physical capital because the employer does not own
the resources. The return must be great enough to
overcome the risks.
 Economic Rationale for Investment in Training: It is
instructive to consider the difference between specific
and general training.
Continued--
 Utility Theory: There must e a method for evaluating
the financial attractiveness of such investments. This
theory attempts to determine the economic value of
human resource programs, activities, and procedures.
Utility theory might be used to determine dollar value
of a selection test.
Outsourcing as an Alternative to
Investment in Human Resources
 Outsourcing is advocated where –world class
capabilities and a strategic advantages can not be
developed-the resources devoted to services
performed internally will be greater than those needed
to outsource the service, and excessive dependency on
suppliers can be avoided.
Firms routinely outsource the administration plan,
executive search activities, payroll functions, employee
assistance programs, human resource information
system, benefits administration, and outplacement.
Investments in Training and
Development
 Investments in Employability: Companies are now
investing in their human resources by providing
developmental experiences that make employees much
more employable. These development investments might
include the provision for growth opportunities, a learning
environment, training and retraining.
- Employability is necessary prerequisite for corporate
survival.
- Strong managers make structural major changes necessary
to increase their competitiveness and ultimate
survivability, through the eliminations of unneeded jobs.
Conversely, weak mangers endanger the competitiveness
of their companies, ultimately causing the loss of jobs.
Continued--
 Investment in Management Development: The
continued development of managerial personnel is a
critical strategic issue in most organizations. Some
important issues:
- Organizations are becoming less hierarchical that
many middle-management positions are eliminated.
- A larger number of workers are better educated and
many are professionals.
- More work is expected to be performed, power will be
shared, managerial status will be de-emphasized, and
leadership responsibilities may be rotated.
 Prevention of Skill Obsolescence: To prevent of obsolescence
a number of suggestions have been given:
i. To provide challenge, particularly of a technical nature for
technical specialists, in all phases of their careers.
ii. Responsibility, authority, participation, and employee
interaction also appear to be related to the prevention of
obsolescence.
iii. Periodic assignments requiring new learning also help to
prevent obsolescence and facilitate development.
iv. Preventing employees becoming overspecialized.
v. Encouraging employees to stay abreast of developments in the
field by incorporating knowledge acquisition activities.
vi. Setting goals for updating knowledge and reward such goal
accomplishments.
 Reductions in Career Plateauing: Career plateaus occur
when employees have occupied a job in an organization for
period of time, have mastered all aspects of the job, and
have low prospects for promotion. Plateauing are natural
consequences of a lack of organizational growth or change.
Causes:
i. Pyramidal shape of organizations and organizational
inflexibility.
ii. Personal choices of employees,
iii. Lack of career skills resulting from naïve perception of
organizational realities, and lack of requisite for
promotion.
iv. Lack of appropriate skills.
Plateaus May be Avoided
 Identification of stars and solid citizens(satisfactory or
outstanding performers with less potential).
 More developmental assignments, challenges, and lateral
mores for both categories can produce pool of qualified
managerial talent.
 Job rotation for plateaued employees can reduce frustration
and increase the chance for improved performance.
 Managerial actions that provide recognition and
appreciation in the absence of promotion, job enrichment,
mentoring assignments, and lateral transfers that provide
growth opportunities.
Investment in Job-secure
Workforces
 Recognition of the cost of downsizing and layoffs:
Nontraditional Investment
Approaches
 Investment in Disabled Employees: A
nontraditional area of human resource investment
involves providing support for programs that return
disabled employees back to the workforce. There are
obvious humanitarian benefits. In order to facilitate
the exchange of knowledge on how to accommodate
disabled workers, companies such as AT& T, Du Pont,
Hartford Insurance, IBM, and Sears are sharing with
other companies the knowledge they have acquired in
accommodating disabled workers.
 Investment on Employee Health: Such investment can
increase the productivity of employees. Health related
programs are directed at reduction of smoking because
the relationship between health problems and
smoking is well known. It has been found that
employee absenteeism rates are approximately 50
percent higher for smokers. Rates of early disability
and mortality are approximately 300 percent higher.
Because of this some employers have adopted hard-
line policies against smoking.
 Countercyclical hiring: It is hiring a limited number
of mangers and professional during economic
downturns. In essence, companies would be
stockpiling a limited number of high quality key
personnel for future use in pursuing strategies
requiring certain personnel capabilities. Successful
companies employ systematic approaches toward
human resource management and are more likely to
make investments in human capital by hiring during
down-turns.