stevenson operations management 3e - Chapter 1

7/24/2019 stevenson operations management 3e - Chapter 1

1/28

AN INVESTMENT PERSPECTIVE OF

HUMAN RESOURCE MANAGEMENT


2/28

The Strategic View of HumanThe Strategic View of Human

ResourcesResources

The Strategic View of HumanThe Strategic View of Human

ResourcesResources

Employees areEmployees are human assetshuman assets

Increase in value to organization and marketplace whenIncrease in value to organization and marketplace when

investments of appropriate policies & programs are appliedinvestments of appropriate policies & programs are applied

Effective organizations recognize that employeesEffective organizations recognize that employeeshave valuehave value

Much as organizations physical & capital assets have valueMuch as organizations physical & capital assets have value

Employees are valuable source ofEmployees are valuable source ofsustainablesustainable

competitive advantagecompetitive advantage

Employees areEmployees are human assetshuman assets

Increase in value to organization and marketplace whenIncrease in value to organization and marketplace when

investments of appropriate policies & programs are appliedinvestments of appropriate policies & programs are applied

Effective organizations recognize that employeesEffective organizations recognize that employeeshave valuehave value

Much as organizations physical & capital assets have valueMuch as organizations physical & capital assets have value

Employees are valuable source ofEmployees are valuable source ofsustainablesustainable

competitive advantagecompetitive advantage


3/28

Exhibit 1.1Exhibit 1.1

Sources of Employee ValueSources of Employee Value




4/28



Technical KnowledgeTechnical Knowledge

Markets, processes, customers, environmentMarkets, processes, customers, environment

Ability to Learn and GrowAbility to Learn and Grow

Openness to new ideasOpenness to new ideas Acuisition of knowledge & skillsAcuisition of knowledge & skills

Decision a!ing "apabilitiesDecision a!ing "apabilities

otivationotivation "ommitment"ommitment

Teamwor!Teamwor!

Interpersonal skills, leadership a!ilityInterpersonal skills, leadership a!ility

Technical KnowledgeTechnical Knowledge

Markets, processes, customers, environmentMarkets, processes, customers, environment

Ability to Learn and GrowAbility to Learn and Grow

Openness to new ideasOpenness to new ideas Acuisition of knowledge & skillsAcuisition of knowledge & skills

Decision a!ing "apabilitiesDecision a!ing "apabilities

otivationotivation

"ommitment"ommitment

Teamwor!Teamwor!

Interpersonal skills, leadership a!ilityInterpersonal skills, leadership a!ility


5/28

Adopting an n!estment "erspecti!eAdopting an n!estment "erspecti!e

Adopting an n!estment "erspecti!eAdopting an n!estment "erspecti!e

Determines how to best invest in peopleDetermines how to best invest in people

"osts"osts

Out"of"pocketOut"of"pocket

OpportunityOpportunity

#uman assets become competitive advantage#uman assets become competitive advantage

$e%uired s!ills become less manual& more$e%uired s!ills become less manual& more

!nowledge'based!nowledge'based Appropriate& integrated& strategy'consistentAppropriate& integrated& strategy'consistent

approach is neededapproach is needed

Determines how to best invest in peopleDetermines how to best invest in people

"osts"osts

Out"of"pocketOut"of"pocket

OpportunityOpportunity

#uman assets become competitive advantage#uman assets become competitive advantage

$e%uired s!ills become less manual& more$e%uired s!ills become less manual& more

!nowledge'based!nowledge'based Appropriate& integrated& strategy'consistentAppropriate& integrated& strategy'consistent

approach is neededapproach is needed


6/28

A #ilemmaA #ilemma

A #ilemmaA #ilemma

(ailure to invest in employees causes(ailure to invest in employees causes

InefficiencyInefficiency

#eakening of organizations competitive#eakening of organizations competitivepositionposition

#uman assets are ris!y investment#uman assets are ris!y investment

$e%uire e)tra effort to ensure that they$e%uire e)tra effort to ensure that theyare not lostare not lost

(ailure to invest in employees causes(ailure to invest in employees causes

InefficiencyInefficiency

#eakening of organizations competitive#eakening of organizations competitivepositionposition

#uman assets are ris!y investment#uman assets are ris!y investment

$e%uire e)tra effort to ensure that they$e%uire e)tra effort to ensure that theyare not lostare not lost


7/28

Exhibit 1.$Exhibit 1.$

Types of %rgani&ationalTypes of %rgani&ational

Assets'(apitalAssets'(apital

Exhibit 1.$Exhibit 1.$

Types of %rgani&ationalTypes of %rgani&ational

Assets'(apitalAssets'(apital


8/28

Research )indingsResearch )indingsResearch )indingsResearch )indings

#$ practices directly related to profitability *#$ practices directly related to profitability *

mar!et valuemar!et value

+rimary reason for profitability,+rimary reason for profitability,

$ffective management of human capital$ffective management of human capital

-ntegrated management of human capital can-ntegrated management of human capital can

result in ./0 increase in mar!et valueresult in ./0 increase in mar!et value

Top 120 of organizations studied e)periencedTop 120 of organizations studied e)perienced3410 return on investment in management of3410 return on investment in management of

human capitalhuman capital

#$ practices directly related to profitability *#$ practices directly related to profitability *

mar!et valuemar!et value

+rimary reason for profitability,+rimary reason for profitability,

$ffective management of human capital$ffective management of human capital -ntegrated management of human capital can-ntegrated management of human capital can

result in ./0 increase in mar!et valueresult in ./0 increase in mar!et value

Top 120 of organizations studied e)periencedTop 120 of organizations studied e)perienced

3410 return on investment in management of3410 return on investment in management of

human capitalhuman capital


9/28

Exhibit 1.*Exhibit 1.*

HR Value (hainHR Value (hain

Exhibit 1.*Exhibit 1.*

HR Value (hainHR Value (hain


10/28

H+,A- RES%+R(E ,ETR(SH+,A- RES%+R(E ,ETR(SH+,A- RES%+R(E ,ETR(SH+,A- RES%+R(E ,ETR(S

5all 6treet analysts still generally fail to ac!nowledge5all 6treet analysts still generally fail to ac!nowledge

human capital in assessing the value of an organizationhuman capital in assessing the value of an organization

and the effect that human resources can have on stoc!and the effect that human resources can have on stoc!

priceprice

This is rooted in the fact that there are no 7standard8This is rooted in the fact that there are no 7standard8

metrics or measures of human capital& much as there aremetrics or measures of human capital& much as there are

for other organizational assetsfor other organizational assets

E)hibit 19. lists some "ommon #$ etrics while E)hibitE)hibit 19. lists some "ommon #$ etrics while E)hibit

19: displays the means of calculating five common19: displays the means of calculating five commonmetrics9 #owever& the appropriate metrics for any givenmetrics9 #owever& the appropriate metrics for any given

organization will be dependant on that organization;sorganization will be dependant on that organization;s

strategy9strategy9

5all 6treet analysts still generally fail to ac!nowledge5all 6treet analysts still generally fail to ac!nowledge

human capital in assessing the value of an organizationhuman capital in assessing the value of an organization

and the effect that human resources can have on stoc!and the effect that human resources can have on stoc!

priceprice

This is rooted in the fact that there are no 7standard8This is rooted in the fact that there are no 7standard8metrics or measures of human capital& much as there aremetrics or measures of human capital& much as there are

for other organizational assetsfor other organizational assets

E)hibit 19. lists some "ommon #$ etrics while E)hibitE)hibit 19. lists some "ommon #$ etrics while E)hibit

19: displays the means of calculating five common19: displays the means of calculating five commonmetrics9 #owever& the appropriate metrics for any givenmetrics9 #owever& the appropriate metrics for any given

organization will be dependant on that organization;sorganization will be dependant on that organization;s

strategy9strategy9


11/28

Exhibit 1.Exhibit 1.

(ommon HR ,etrics(ommon HR ,etrics

Exhibit 1.Exhibit 1.

(ommon HR ,etrics(ommon HR ,etrics

Absence $ateAbsence $ate

"ost per #ire"ost per #ire

#ealth "are "osts per Employee#ealth "are "osts per Employee

#$ E)pense (actor#$ E)pense (actor

#uman "apital $eturn on#uman "apital $eturn on

-nvestment -nvestment

#uman "apital ?alue Added#uman "apital ?alue Added

Labor "osts as a +ercentage ofLabor "osts as a +ercentage of

6ales or $evenues6ales or $evenues

+rofit per Employee+rofit per Employee

$evenue per Employee$evenue per Employee

Time to fillTime to fill

Absence $ateAbsence $ate "ost per #ire"ost per #ire

#ealth "are "osts per Employee#ealth "are "osts per Employee

#$ E)pense (actor#$ E)pense (actor

#uman "apital $eturn on#uman "apital $eturn on

-nvestment -nvestment #uman "apital ?alue Added#uman "apital ?alue Added

Labor "osts as a +ercentage ofLabor "osts as a +ercentage of

6ales or $evenues6ales or $evenues

+rofit per Employee+rofit per Employee

$evenue per Employee$evenue per Employee

Time to fillTime to fill

Training -nvestment (actorTraining -nvestment (actor

Training $eturn on -nvestmentTraining $eturn on -nvestment

Turnover "ostsTurnover "osts

Turnover $ate Turnover $ate

?acancy "osts?acancy "osts

?acancy $ate?acancy $ate

5or!ers; "ompensation "ost per5or!ers; "ompensation "ost per

EmployeeEmployee

5or!ers; "ompensation -ncident5or!ers; "ompensation -ncident

raterate

5or!ers; "ompensation 6everity5or!ers; "ompensation 6everity

raterate

ield $atioield $atio

Training -nvestment (actorTraining -nvestment (actor Training $eturn on -nvestmentTraining $eturn on -nvestment

Turnover "ostsTurnover "osts

Turnover $ate Turnover $ate

?acancy "osts?acancy "osts ?acancy $ate?acancy $ate

5or!ers; "ompensation "ost per5or!ers; "ompensation "ost per

EmployeeEmployee

5or!ers; "ompensation -ncident5or!ers; "ompensation -ncident

raterate 5or!ers; "ompensation 6everity5or!ers; "ompensation 6everity

raterate

ield $atioield $atio


12/28

Exhibit 1./Exhibit 1./

(alculation of Human (apital ,etrics(alculation of Human (apital ,etrics

Exhibit 1./Exhibit 1./


easureeasure (ormula(ormula ?alue@Bse?alue@Bse

#uman "apital $=-#uman "apital $=- $evenue ' > @'"ompensation enefits "osts>> @ on human investments relativeon human investments relative

"ompensation enefits "osts"ompensation enefits "osts to productivity and profitabilityFto productivity and profitabilityF

represents pre'ta) profit forrepresents pre'ta) profit for

amounts invested in employeeamounts invested in employee

pay and benefits after removal ofpay and benefits after removal of

capital e)pensescapital e)penses

+rofit per employee+rofit per employee $evenue ' =perating E)penses@$evenue ' =perating E)penses@ -llustrates the value created by-llustrates the value created by

umber of (ull'time e%uivalent umber of (ull'time e%uivalent employeesF provides a means ofemployeesF provides a means of

employeesemployees productivity and e)penseproductivity and e)pense

analysisanalysis

#$ e)pense factor#$ e)pense factor Total #$ e)pense@total operatingTotal #$ e)pense@total operating -llustrates the degree of-llustrates the degree of

e)pensese)penses leverage of human capitalFleverage of human capitalF

provides a benchmar! forprovides a benchmar! for

overall e)pense analysisoverall e)pense analysis

relative to targets or budgetsrelative to targets or budgets


#uman "apital $=-#uman "apital $=- $evenue ' > @'"ompensation enefits "osts>> @ on human investments relativeon human investments relative

"ompensation enefits "osts"ompensation enefits "osts to productivity and profitabilityFto productivity and profitabilityF

represents pre'ta) profit forrepresents pre'ta) profit for

amounts invested in employeeamounts invested in employee

pay and benefits after removal ofpay and benefits after removal of

capital e)pensescapital e)penses

+rofit per employee+rofit per employee $evenue ' =perating E)penses@$evenue ' =perating E)penses@ -llustrates the value created by-llustrates the value created by

umber of (ull'time e%uivalent umber of (ull'time e%uivalent employeesF provides a means ofemployeesF provides a means of

employeesemployees productivity and e)penseproductivity and e)pense

analysisanalysis

#$ e)pense factor#$ e)pense factor Total #$ e)pense@total operatingTotal #$ e)pense@total operating -llustrates the degree of-llustrates the degree of

e)pensese)penses leverage of human capitalFleverage of human capitalF

provides a benchmar! forprovides a benchmar! for

overall e)pense analysisoverall e)pense analysis

relative to targets or budgetsrelative to targets or budgets


13/28

Exhibit 1./ 0cont.Exhibit 1./ 0cont.


Exhibit 1./ 0cont.Exhibit 1./ 0cont.



#uman "apital ?alue Added#uman "apital ?alue Added $evenue ' > @'"ompensation enefits "osts>> @ !nowledge& s!ills and!nowledge& s!ills and

Total number of (TE employeesTotal number of (TE employees performance and how humanperformance and how human

capital adds value to ancapital adds value to an

organizationorganization

Turnover $ateTurnover $ate number of employee separationsnumber of employee separations +rovides a measure of+rovides a measure of

@@ wor!place retention effortswor!place retention efforts

number of employeesnumber of employees which can impact direct costs&which can impact direct costs&

stability& profitability morale&stability& profitability morale&

and productivityF can be usedand productivityF can be used

as a measure of success foras a measure of success for

retention and reward programsretention and reward programs


#uman "apital ?alue Added#uman "apital ?alue Added $evenue ' > @'"ompensation enefits "osts>> @ !nowledge& s!ills and!nowledge& s!ills and

Total number of (TE employeesTotal number of (TE employees performance and how humanperformance and how human

capital adds value to ancapital adds value to an

organizationorganization

Turnover $ateTurnover $ate number of employee separationsnumber of employee separations +rovides a measure of+rovides a measure of

@@ wor!place retention effortswor!place retention efforts

number of employeesnumber of employees which can impact direct costs&which can impact direct costs&

stability& profitability morale&stability& profitability morale&

and productivityF can be usedand productivityF can be used

as a measure of success foras a measure of success for

retention and reward programsretention and reward programs


14/28

HR ,etrics Are (omplexHR ,etrics Are (omplexHR ,etrics Are (omplexHR ,etrics Are (omplex

420 of (ortune :22 organizations evaluate420 of (ortune :22 organizations evaluate

#$ operations on basis of three metrics,#$ operations on basis of three metrics,

$mployee retention and turnover$mployee retention and turnover

%orporate morale%orporate morale

$mployee satisfaction$mployee satisfaction

These metrics do not necessarily illustrateThese metrics do not necessarily illustrate

how #$ impactshow #$ impacts

rofitsrofits

'hareholder value'hareholder value

420 of (ortune :22 organizations evaluate420 of (ortune :22 organizations evaluate

#$ operations on basis of three metrics,#$ operations on basis of three metrics,

$mployee retention and turnover$mployee retention and turnover

%orporate morale%orporate morale

$mployee satisfaction$mployee satisfaction

These metrics do not necessarily illustrateThese metrics do not necessarily illustrate

how #$ impactshow #$ impacts rofitsrofits

'hareholder value'hareholder value


15/28

,ercer ,odel of ,easuring HR,ercer ,odel of ,easuring HR

mpactmpact

,ercer ,odel of ,easuring HR,ercer ,odel of ,easuring HR

mpactmpact

-dentify problem #$ can impact-dentify problem #$ can impact

"alculate actual cost of problem"alculate actual cost of problem

"hoose #$ solution that addresses problem"hoose #$ solution that addresses problem

"alculate cost of solution"alculate cost of solution

"alculate value of improvement H to I. months"alculate value of improvement H to I. months

after implementationafter implementation

"alculate specific return on investment"alculate specific return on investment $=- in human assets often not realized until some$=- in human assets often not realized until some

time in futuretime in future

-dentify problem #$ can impact-dentify problem #$ can impact

"alculate actual cost of problem"alculate actual cost of problem

"hoose #$ solution that addresses problem"hoose #$ solution that addresses problem

"alculate cost of solution"alculate cost of solution

"alculate value of improvement H to I. months"alculate value of improvement H to I. months

after implementationafter implementation

"alculate specific return on investment"alculate specific return on investment $=- in human assets often not realized until some$=- in human assets often not realized until some

time in futuretime in future


16/28


)actors n3uencing n!estment)actors n3uencing n!estment

%rientation%rientation


)actors n3uencing n!estment)actors n3uencing n!estment

%rientation%rientation


17/28

n!estment4%riented %rgani&ationn!estment4%riented %rgani&ationn!estment4%riented %rgani&ationn!estment4%riented %rgani&ation

6ees people as central to mission * strategy6ees people as central to mission * strategy

ission statement * strategic obJectivesission statement * strategic obJectives

espouse value of human assets in achievingespouse value of human assets in achieving

goalsgoals

anagement philosophy encouraginganagement philosophy encouraging

development * retention of human assetsdevelopment * retention of human assets

Does not treat human assets in same waysDoes not treat human assets in same ways

as physical assetsas physical assets

6ees people as central to mission * strategy6ees people as central to mission * strategy

ission statement * strategic obJectivesission statement * strategic obJectives

espouse value of human assets in achievingespouse value of human assets in achieving

goalsgoals

anagement philosophy encouraginganagement philosophy encouraging

development * retention of human assetsdevelopment * retention of human assets

Does not treat human assets in same waysDoes not treat human assets in same ways

as physical assetsas physical assets


18/28

n!estment %rientation )actorsn!estment %rientation )actorsn!estment %rientation )actorsn!estment %rientation )actors

6enior anagement ?alues * Actions6enior anagement ?alues * Actions

Managers need (investment orientation) towardManagers need (investment orientation) toward

peoplepeople

Attitude Toward $is!Attitude Toward $is!

Investment in human resources inherently riskierInvestment in human resources inherently riskier

*uman assets never a!solutely (owned)*uman assets never a!solutely (owned)

ature of 6!ills eeded by Employeesature of 6!ills eeded by Employees

+he more marketa!le employee skills, the riskier the+he more marketa!le employee skills, the riskier the

firms investment in skill developmentfirms investment in skill development

6enior anagement ?alues * Actions6enior anagement ?alues * Actions

Managers need (investment orientation) towardManagers need (investment orientation) toward

peoplepeople

Attitude Toward $is!Attitude Toward $is! Investment in human resources inherently riskierInvestment in human resources inherently riskier

*uman assets never a!solutely (owned)*uman assets never a!solutely (owned)

ature of 6!ills eeded by Employeesature of 6!ills eeded by Employees +he more marketa!le employee skills, the riskier the+he more marketa!le employee skills, the riskier the

firms investment in skill developmentfirms investment in skill development


19/28

n!estment %rientation )actorsn!estment %rientation )actorsn!estment %rientation )actorsn!estment %rientation )actors

Btilitarian entalityBtilitarian entality

Attempt made to uantify employee worth throughAttempt made to uantify employee worth through

cost"!enefit analysiscost"!enefit analysis

(('oft) !enefits of * programs difficult to o!-ectively'oft) !enefits of * programs difficult to o!-ectivelyuantifyuantify

Availability of =utsourcingAvailability of =utsourcing

.iven availa!ility of cost"effective outsourcing,.iven availa!ility of cost"effective outsourcing,investments in * should produceinvestments in * should produce highest returnshighest returns&&

sustainable competitive advantagessustainable competitive advantages//

Btilitarian entalityBtilitarian entality

Attempt made to uantify employee worth throughAttempt made to uantify employee worth through

cost"!enefit analysiscost"!enefit analysis

(('oft) !enefits of * programs difficult to o!-ectively'oft) !enefits of * programs difficult to o!-ectivelyuantifyuantify

Availability of =utsourcingAvailability of =utsourcing

.iven availa!ility of cost"effective outsourcing,.iven availa!ility of cost"effective outsourcing,investments in * should produceinvestments in * should produce highest returnshighest returns&&

sustainable competitive advantagessustainable competitive advantages//


20/28

Reading 1.15 The Hidden 6e!erage of Human (apitalReading 1.15 The Hidden 6e!erage of Human (apital

,odel for ,anagement Success,odel for ,anagement Success

Reading 1.15 The Hidden 6e!erage of Human (apitalReading 1.15 The Hidden 6e!erage of Human (apital


6trengthen !ey6trengthen !ey

relationshipsrelationships

%ustomers%ustomers $mployees$mployees

'hareholders'hareholders

6trengthen !ey6trengthen !ey

relationshipsrelationships

%ustomers%ustomers

$mployees$mployees

'hareholders'hareholders

LeverageLeverage

downtimedowntime

0se varia!le"pay0se varia!le"pay

Address neglectedAddress neglected

areas1areas1

-nfrastructure-nfrastructure

ar!etingar!eting =perations=perations

LeverageLeverage

downtimedowntime 0se varia!le"pay0se varia!le"pay

Address neglectedAddress neglected

areas1areas1

-nfrastructure-nfrastructure

ar!etingar!eting =perations=perations


21/28

Reading 1.1Reading 1.1


Reading 1.1Reading 1.1


$efocusing staff on$efocusing staff on

what;s importantwhat;s important erformanceerformance

management asmanagement asdisciplined, strategic,disciplined, strategic,

value"added processvalue"added process

%learly define,%learly define,

differentiate & !alancedifferentiate & !alance!etween core!etween core

competencies & resultscompetencies & results

$efocusing staff on$efocusing staff on

what;s importantwhat;s important erformanceerformance

management asmanagement asdisciplined, strategic,disciplined, strategic,

value"added processvalue"added process

%learly define,%learly define,

differentiate & !alancedifferentiate & !alance

!etween core!etween core

competencies & resultscompetencies & results

uilding return onuilding return on

compensationcompensation 2ink !ase"pay2ink !ase"pay

progression toprogression tocompetencycompetency

achievementachievement

2ink incentive pay to2ink incentive pay to

annual, semiannual, orannual, semiannual, oruarterly resultsuarterly results

uilding return onuilding return on

compensationcompensation 2ink !ase"pay2ink !ase"pay

progression toprogression tocompetencycompetency

achievementachievement

2ink incentive pay to2ink incentive pay to

annual, semiannual, orannual, semiannual, or

uarterly resultsuarterly results


22/28

Reading 1.$Reading 1.$

Se!en (ommon ,isconceptionsSe!en (ommon ,isconceptions



1919 "onscientiousness is a better predictor of"onscientiousness is a better predictor of

performance than intelligence9performance than intelligence9

I9I9 "ompanies that screen Job applicants for values"ompanies that screen Job applicants for values

have higher performance than those that screenhave higher performance than those that screenfor intelligence9for intelligence9

3939 -ntegrity tests don;t wor! well in practice-ntegrity tests don;t wor! well in practice

because so many people lie on them9because so many people lie on them9

.9.9 -ntegrity tests have adverse impact on racial-ntegrity tests have adverse impact on racial

minorities9minorities9

1919 "onscientiousness is a better predictor of"onscientiousness is a better predictor ofperformance than intelligence9performance than intelligence9

I9I9 "ompanies that screen Job applicants for values"ompanies that screen Job applicants for values

have higher performance than those that screenhave higher performance than those that screenfor intelligence9for intelligence9

3939 -ntegrity tests don;t wor! well in practice-ntegrity tests don;t wor! well in practice

because so many people lie on them9because so many people lie on them9

.9.9 -ntegrity tests have adverse impact on racial-ntegrity tests have adverse impact on racial

minorities9minorities9


23/28





:9:9 Encouraging employee participation is moreEncouraging employee participation is more

effective for improving organizationaleffective for improving organizational

performance than setting performance goals9performance than setting performance goals9

H9H9 ost errors in performance appraisal can beost errors in performance appraisal can beeliminated by providing training to managers oneliminated by providing training to managers on

how to avoid them9how to avoid them9

/9/9 -f employees are as!ed how important pay is to-f employees are as!ed how important pay is to

them& they are li!ely to overestimate its truethem& they are li!ely to overestimate its true

importance9importance9

:9:9 Encouraging employee participation is moreEncouraging employee participation is moreeffective for improving organizationaleffective for improving organizational

performance than setting performance goals9performance than setting performance goals9

H9H9 ost errors in performance appraisal can beost errors in performance appraisal can beeliminated by providing training to managers oneliminated by providing training to managers on

how to avoid them9how to avoid them9

/9/9 -f employees are as!ed how important pay is to-f employees are as!ed how important pay is to

them& they are li!ely to overestimate its truethem& they are li!ely to overestimate its trueimportance9importance9


24/28


Se!en (ommon ,isconceptions5Se!en (ommon ,isconceptions5

mplicationsmplications




1919 6elect new employees on both intelligence and6elect new employees on both intelligence and

conscientiousness9conscientiousness9

I9I9 Assess intelligence and conscientiousness beforeAssess intelligence and conscientiousness before

values9values93939 Define the values that are important and assessDefine the values that are important and assess

them through carefully developed& validthem through carefully developed& valid

procedures9procedures9

.9.9 Bse integrity tests with ability tests for highBse integrity tests with ability tests for high

predictability9predictability9

1919 6elect new employees on both intelligence and6elect new employees on both intelligence andconscientiousness9conscientiousness9

I9I9 Assess intelligence and conscientiousness beforeAssess intelligence and conscientiousness before

values9values93939 Define the values that are important and assessDefine the values that are important and assess

them through carefully developed& validthem through carefully developed& valid

procedures9procedures9

.9.9 Bse integrity tests with ability tests for highBse integrity tests with ability tests for high

predictability9predictability9


25/28







:9:9 Develop compelling goalsF enlist participationDevelop compelling goalsF enlist participation

and support it through rewards9and support it through rewards9

H9H9 Training and feedbac! are important& but errorsTraining and feedbac! are important& but errors

are difficult to eliminate9 Top managers shouldare difficult to eliminate9 Top managers shouldserve as role models in %uality of performanceserve as role models in %uality of performance

reviews9reviews9

/9/9 Attitude surveys are subJect to biasesF studyAttitude surveys are subJect to biasesF study

behaviors as well as attitudes9behaviors as well as attitudes9

:9:9 Develop compelling goalsF enlist participationDevelop compelling goalsF enlist participationand support it through rewards9and support it through rewards9

H9H9 Training and feedbac! are important& but errorsTraining and feedbac! are important& but errors

are difficult to eliminate9 Top managers shouldare difficult to eliminate9 Top managers shouldserve as role models in %uality of performanceserve as role models in %uality of performance

reviews9reviews9

/9/9 Attitude surveys are subJect to biasesF studyAttitude surveys are subJect to biasesF study

behaviors as well as attitudes9behaviors as well as attitudes9


26/28

Reading 1.*Reading 1.*

,aximi&ing Human (apital,aximi&ing Human (apital



#uman capital is defined as the collective !nowledgeuman capital is defined as the collective !nowledge&

s!ills and abilities of people that contribute tos!ills and abilities of people that contribute to

organizational successorganizational success

#uman capital is influenced by corporate cultureuman capital is influenced by corporate culture&

organizational values and strategic business goals andorganizational values and strategic business goals andobJectives and indicates the health of an organizationobJectives and indicates the health of an organization

#uman capital can be assessed via !ey performance#uman capital can be assessed via !ey performance

indicators which are %uantifiable& specific measuresindicators which are %uantifiable& specific measures

of an organization;s performance in critical areas of itsof an organization;s performance in critical areas of itsbusinessbusiness

#uman capital is defined as the collective !nowledgeuman capital is defined as the collective !nowledge&s!ills and abilities of people that contribute tos!ills and abilities of people that contribute to

organizational successorganizational success

#uman capital is influenced by corporate cultureuman capital is influenced by corporate culture&

organizational values and strategic business goals andorganizational values and strategic business goals andobJectives and indicates the health of an organizationobJectives and indicates the health of an organization

#uman capital can be assessed via !ey performance#uman capital can be assessed via !ey performance

indicators which are %uantifiable& specific measuresindicators which are %uantifiable& specific measures

of an organization;s performance in critical areas of itsof an organization;s performance in critical areas of itsbusinessbusiness


27/28





The #$ scorecard is a !ey management tool which can strengthen #$;s strategicThe #$ scorecard is a !ey management tool which can strengthen #$;s strategic

influence in an organization9 The scorecard has four perspectives, strategic&influence in an organization9 The scorecard has four perspectives, strategic&

operational& financial and customer9 These four perspectives organize andoperational& financial and customer9 These four perspectives organize and

trac! areas in which #$ adds value9trac! areas in which #$ adds value9

The strategic perspective focuses on measurements of effectiveness or maJorThe strategic perspective focuses on measurements of effectiveness or maJor

strategy'lined people goals9strategy'lined people goals9 The operational perspective e reflects the effectiveness of #$ processes9The operational perspective e reflects the effectiveness of #$ processes9

The financial perspective e relates to financial measures of #$ value to theThe financial perspective e relates to financial measures of #$ value to the

organization9organization9

The customer perspective focuses on the effectiveness of #$ from the internalThe customer perspective focuses on the effectiveness of #$ from the internal

customer viewpoint9 6pecific measures for each of these perspectives arecustomer viewpoint9 6pecific measures for each of these perspectives are

provided in (igure 39 K+-s can also be effectively utilized in the global #$provided in (igure 39 K+-s can also be effectively utilized in the global #$

function as indicated in (igure .9function as indicated in (igure .9

The #$ scorecard is a !ey management tool which can strengthen #$;s strategicThe #$ scorecard is a !ey management tool which can strengthen #$;s strategicinfluence in an organization9 The scorecard has four perspectives, strategic&influence in an organization9 The scorecard has four perspectives, strategic&

operational& financial and customer9 These four perspectives organize andoperational& financial and customer9 These four perspectives organize and

trac! areas in which #$ adds value9trac! areas in which #$ adds value9

The strategic perspective focuses on measurements of effectiveness or maJorThe strategic perspective focuses on measurements of effectiveness or maJor

strategy'lined people goals9strategy'lined people goals9

The operational perspective e reflects the effectiveness of #$ processes9The operational perspective e reflects the effectiveness of #$ processes9

The financial perspective e relates to financial measures of #$ value to theThe financial perspective e relates to financial measures of #$ value to the

organization9organization9

The customer perspective focuses on the effectiveness of #$ from the internalThe customer perspective focuses on the effectiveness of #$ from the internal

customer viewpoint9 6pecific measures for each of these perspectives arecustomer viewpoint9 6pecific measures for each of these perspectives are

provided in (igure 39 K+-s can also be effectively utilized in the global #$provided in (igure 39 K+-s can also be effectively utilized in the global #$function as indicated in (igure .9function as indicated in (igure .9


28/28





(our recommendations are provided for developing specific(our recommendations are provided for developing specific

K+-s tailored to a given organization;s strategyK+-s tailored to a given organization;s strategy

1>1> %ualitative measurement is one path to assess %ualitative%ualitative measurement is one path to assess %ualitative

characteristics of the wor!force& such as engagementcharacteristics of the wor!force& such as engagement

I>I> employee feedbac! provides useful perspectives on #$employee feedbac! provides useful perspectives on #$

efficiencyefficiency

3>3> whenever possible& the impact of recruiting is bestwhenever possible& the impact of recruiting is best

described in terms of financial gainsdescribed in terms of financial gains

.>.> retaining older wor!ers for future leadership roles dependsretaining older wor!ers for future leadership roles depends

on what tan employer most valueson what tan employer most values

(our recommendations are provided for developing specific(our recommendations are provided for developing specificK+-s tailored to a given organization;s strategyK+-s tailored to a given organization;s strategy

1>1> %ualitative measurement is one path to assess %ualitative%ualitative measurement is one path to assess %ualitative

characteristics of the wor!force& such as engagementcharacteristics of the wor!force& such as engagement

I>I> employee feedbac! provides useful perspectives on #$employee feedbac! provides useful perspectives on #$efficiencyefficiency

3>3> whenever possible& the impact of recruiting is bestwhenever possible& the impact of recruiting is best

described in terms of financial gainsdescribed in terms of financial gains

.>.> retaining older wor!ers for future leadership roles dependsretaining older wor!ers for future leadership roles dependson what tan employer most valueson what tan employer most values

Documents

stevenson operations management 3e - Chapter 1