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1 VIEW SSttrraatteeggiicc HHuummaann RReessoouurrccee MMaannaaggeemmeenntt Taken from: Strategic Human Resource management , Second Edition by Charles R. Greer Copyright 2001, 1995 by Prentice-Hall, Inc. A Pearson Education Company Upper Saddle River, New Jersey 07458 Compilation Copyright 2003 by Pearson Custom Publishing All rights reserved. This copyright covers material written expressly for this volume by the editor/s as well as the compilation itself. It does not cover the individual selections herein that first appeared elsewhere. ii Permission to reprint these has been obtained by Pearson Custom Publishing for this edition only. Further reproduction by any means, electronic or mechanical, including photocopying and recording, or by any information storage or retrieval system, must be arranged with the individual copyright holders noted.

2 This special edition published in cooperation with Pearson Custom Publishing. Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 Please visit our web site at ISBN 0 536 72690 6 BA 996748 PEARSON CUSTOM PUBLISHING 75 Arlington Street, Suite 300 Boston, MA 02116 A Pearson Education Company iii iv Table of Contents SECTION An Investment Perspective and Human HUMAN RESOURCE INVESTMENT INVESTMENTS IN TRAINING AND INVESTMENT PRACTICES FOR IMPROVED INVESTMENTS IN JOB-SECURE ETHICAL IMPLICATIONS OF EMPLOYMENT NONTRADITIONAL INVESTMENT STRATEGIC HUMAN RESOURCE management Table of Contents SECTION The Human Resource TECHNOLOGY AND ORGANIZATIONAL WORKER VALUES AND ATTITUDINAL management DEMOGRAPHIC TRENDS IN THE UTILIZATION OF HUMAN INTERNATIONAL Strategy IMPORTANCE OF HUMAN RESOURCES TO THEORETICAL INTERNATIONAL HUMAN RESOURCE

3 CONTRIBUTIONS TO STRATEGY-DRIVEN ROLE BEHAVIORS AND STRATEGIC HUMAN RESOURCE ACTIVITY CLASSIFYING HUMAN RESOURCE NETWORK ORGANIZATIONS AND vi STRATEGIC HUMAN RESOURCE management Table of Contents ORGANIZATIONAL INTEGRATION OF STRATEGY AND HUMAN RESOURCE THE HUMAN RESOURCE MANAGER AND STRATEGIC vii STRATEGIC HUMAN RESOURCE management Table of Contents SECTION Human Resource THE STRATEGIC ROLE OF HUMAN RESOURCE OVERVIEW OF HUMAN RESOURCE MANAGERIAL ISSUES IN 314 SELECTING FORECASTING FORECASTING THE SUPPLY OF HUMAN FORECASTING THE DEMAND FOR HUMAN viii STRATEGIC HUMAN RESOURCE management Table of Contents SECTION Strategy Implementation: Workforce Utilization and Employment EFFICIENT UTILIZATION OF HUMAN 386 DEALING WITH EMPLOYEE SELECTION OF DEALING WITH EMPLOYEE SPECIAL IMPLEMENTATION Strategy Implementation: Reward and Development STRATEGICALLY ORIENTED PERFORMANCE MEASUREMENT STRATEGICALLY ORIENTED COMPENSATION EMPLOYEE ix STRATEGIC HUMAN RESOURCE management Table of Contents SECTION The Performance Impact of Human Resource INDIVIDUAL HIGH-PERFORMANCE LIMITATIONS OF INDIVIDUAL EVOLUTION OF SYSTEMS OF HIGH-PERFORMANCE HUMAN RESOURCE INDIVIDUAL BEST PRACTICES VS.

4 SYSTEMS OF UNIVERSAL PRACTICES VS. CONTINGENCY EMPIRICAL EVIDENCE: THE CASE FOR UNIVERSAL BEST EMPIRICAL EVIDENCE: THE CASE FOR THE CONTINGENCY SORTING THROUGH THE x STRATEGIC HUMAN RESOURCE management Table of Contents SECTION Human Resource OVERVIEW OF APPROACHES TO PREVALENCE OF EVALUATING STRATEGIC CONTRIBUTIONS OF TRADITIONAL EVALUATING STRATEGIC CONTRIBUTIONS IN EMERGING MACRO-LEVEL EVALUATION OF HUMAN RESOURCE xi STRATEGIC HUMAN RESOURCE management Table of Contents xii SECTION ONE STRATEGIC HUMAN RESOURCE management Section One AAnn IInnvveessttmmeenntt PPeerrssppeeccttiivvee aanndd HHuummaann RReessoouurrcceess The conceptual framework for this text begins with an investment perspective for guiding managerial strategic decisions regarding

5 Human resources. Human resource management practitioners and management scholars have long advocated that human resources should be viewed from an investment perspective. Current practices in many organizations indicate that employees are viewed as valuable investments. However, some still view their employees as variable costs of production, while physical assets are treated as investments. When employees are viewed as variable costs, there is little recognition of the firm s contribution to their training or the costs of recruiting and training their replacements. Likewise, there is less incentive to provide training or make other investments in them. A respected human resource scholar described the existing state of affairs as follows: I am constantly amazed at the contrast between the concern that strategists show for potential capital costs and the casual indifference they tend to display toward potential human resource costs (until, of course, the latter have gotten completely out of hand).

6 1 Page 2 STRATEGIC HUMAN RESOURCE management Section One A focus solely on investment in physical resources, as opposed to human resources, is short-sighted. Strategists have found that having superior production facilities or a superior product are usually not enough to sustain an advantage over competitors. Physical facilities can be duplicated, cloned, or reverse-engineered and no longer provide a sustainable Strategists James Quinn, Thomas Doorley, and Penny Paquette have argued that maintainable advantage usually derives from outstanding depth in selected human skills, logistics capabilities, knowledge bases, or other service strengths that competitors cannot reproduce ..3 Thus, with their perspective, there is recognition of the importance of having superior human resources.

7 There is little doubt that organizations will need to invest heavily in their human resources in order to be competitive during the twenty-first century. management scholar Edward Lawler has described these investment requirements as follows: To be competitive, organizations in many industries must have highly skilled, knowl-edgeable workers. They must also have a relatively stable labor force since employee turnover works directly against obtaining the kind of coordination and organizational learning that leads to fast response and high-quality products and Page 3 STRATEGIC HUMAN RESOURCE management Section One According to Lawler, these investments will become increasingly important due to forecasts of shifts in skill needs from manual to cerebral.

8 Contemporary management practices indicate that many leading companies have recognized the strategic importance of human resources and have adopted an investment perspective toward these resources. Further, there is greater awareness of the costs of treating employees as variable costs, which is beginning to change views of human resource There is also a growing recognition of the relationship between companies overall strategies and their human resource practices. For example, companies pursuing strategies of innovation have the potential to be severely damaged by turnover because of reliance on individual expertise and unrecorded knowledge that has been quickly acquired. Accordingly, such companies tend to provide greater job security for some A final reason for beginning this text with an investment perspective is to reinforce the idea that for human resource management to play a meaningful role in the strategic management of organizations, it must be viewed as contributing to the bottom line.

9 An investment perspective provides a valuable guide for strategic management . Page 4 STRATEGIC HUMAN RESOURCE management Section One This section begins with consideration of factors relevant to strategy-based human resource investment decisions. Factors to be discussed include the organization s managerial values, risk and return trade-offs, the economic rationale for investments in training, the investment analysis approach of utility theory, and outsourcing as an alternative to investments in human resources. Following the discussion of these factors, specific investments in strategy-related training and devel-opment will be considered. This discussion will include investments in the future employability of employees, current practices in training investment, on-the-job training, management development, prevention of skill obsolescence, and reductions in career plateauing.

10 Practices for investing in improved retention and reduced turnover will be discussed, beginning with an examination of organizational cultures that emphasize interpersonal relationship values. This will be followed by discussions of effective selection procedures, compensation and benefits, job enrichment and job satisfaction, practices providing work life balance, organizational direction, and other practices that facilitate retention. Next, there will be a discussion of the costs of downsizing and layoffs. This will be followed by a discussion of how to avoid business cycle based layoffs, alternatives to layoffs, and employment guarantees. There will also be a discussion of the relationship between job insecurity and work Page 5 STRATEGIC HUMAN RESOURCE management Section One effort.