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CONTENTS
Introduction Risks involved in investing in
human resources Factors determining the
investment orientation of an organization
Conclusion Bibliography
INTRODUCTION
Traditional viewModern view
TRADITIONAL VIEW
Human resource is a cost of the organization. Company has to pay cost for the human resource in terms of salaries, training…
MODERN VIEW
Emergence of knowledge economy.
Human skills and knowledge are crucial to everything that is produced.
Organizations have now begun to consider employees as valuable investment.
RISKS INVOLVED IN INVESTING IN HUMAN
ASSET
Difficult to retain current employees who see no opportunity for growth
Risk of loosing the efficient employees
Trained employees are more sought after, especially by employees
Competing firms are often willing to pay more to trained employees since it saves training cost.
FACTORS DETERMINING THE
INVESTMENT ORIENTATION OF AN
ORGANISATION
Management values
Attitude towards risk
Nature of skills
Utilitarian/bottom line perspective
Availability of outsourcing
MANAGEMENT VALUES
The values of senior management play a vital role
An organization is investment oriented if its people are the core of its mission.
ATTITUDE TOWARDS RISK
Investment with higher risk result in greater potential return
Investment in human assets is more risky then investment in physical assets
Organization will develop strategies to minimize the potential risks of loosing their investment.
NATURE OF SKILLS
Investment is less risky when specific skills are not applicable to other organizations
When specific skills are on a high demand, and who can move from one employer to another, then investment involves risk.
UTALITARIAN PERSPECTIVE Also known as bottom line
perspective.
Organization evaluates investments through cost-benefit analysis
Cost of any investment is compared with its benefits
AVAILABILITY OF OUTSOURCING Emphasizes on availability of
specialists outside the firm
When investment in human assets does not give higher returns, an organization should invest in employees at the cost of other resources
CONCLUSION
To survive in the competition, every organization has to invest in its human resources so that they can in return give higher output to the organization and as a result earn higher profit.
BIBLIOGRAPHY
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