Investment Consideration

02/09/2022 0 By indiafreenotes

Human Resources Investment Considerations

  • Management values
  • Risk and return on HR investment
  • Economic rationale for investment in training
  • Utility theory
  • Outsourcing

An Investment Prospective of Human Resource Management

  • HRM practitioners & Scholars have long advocated that HR should be viewed from investment prospective.
  • Current practices indicate employees as valuable investment but still some organizations view employees as variable cost and there is little recognition about employees training & development, recruitment & replacement cost.
  • Investment only in physical resources does not give organizations a competitive edge as systems, processes can be duplicated, cloned or reversed engineered.
  • Maintainable edge / advantage drives from the level of skills of employees, their knowledge and capabilities.
  • Management scholar Edward Lawler described investment in Human Resources as:
  • “to be competitive, organizations in many industries must have highly skilled and knowledgeable workforce. They must also have a relatively stable labour 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 services.”
  • Due to forecast of shifts in skills need from manual to cerebral (intellectual), investment for enhancing employee’s knowledge & skills become more important.