CHAPTER1

An Investment Perspective of Human Resource Management

● Associates - Sales employees; considered the organization’s most valuable asset.

● The human element - the most critical; success is determined by the decisions its
employees make and the behaviors in which they engage
● strategic view of HR - involves considering employees as human “assets” and
developing appropriate policies and programs as investments in these assets to increase
their value to the organization and the marketplace.
● Sources of Employee Value
○ Technical Knowledge
■ Markets
■ Processes
■ Environment
■ Customers
○ Ability to Learn and Grow
○ Decision-Making Capabilities
○ Motivation
○ Commitment
○ Teamwork
■ Interpersonal skills
■ Leadership ability
● Physical and capital assets in organizations, such as plant, property, machinery, and
technology, are acquired and subsequently managed most effectively by treating them
as investments
● Viewing HR from an investment perspective, much as physical assets are viewed,
rather than as variable costs of production, allows an organization to determine how to
best invest in its people.
● considering the risk and return on possible expenditures related to acquiring or
developing human assets allows an organization to consider how current
expenditures can be best allocated to meet long-term performance goals
● In considering whether to undertake the expense of a new training program, an
organization needs to consider
○ out-of-pocket costs for the training
○ related opportunity costs
■ lost time on the job
● weigh these costs against the potential benefits of the training
○ enhanced performance
○ potential increased loyalty
 ○ motivation.
● The training also needs to be assessed relative to risk because the enhanced
marketability of employees makes them more desirable to competitors.
● In considering compensation programs as an investment, an organization needs to
consider what it is “investing” in when it pays someone
○ Knowledge
○ Commitment
○ new ideas
○ retention of employees from competitors

● Human assets cannot be duplicated and become the competitive advantage that an
organization enjoys in its market(s).
● An organization’s “technology” is becoming more invested in people than in capital.
○ Thought and decision-making processes and skills in analyzing complex
data are not “owned” by an organization but by individual employees.
○ stark contrast to traditional manufacturing organizations where the employer
usually owns or leases the machinery and production processes, and duplication
of the organization’s “capital” is restricted primarily by cost considerations.
● An organization that does not invest in its employees:
○ may be less attractive to prospective employees
○ may have a more difficult time retaining current employees
○ causes inefficiency (downtime to recruit, hire, and train new employees)
○ weakening of the organization’s competitive position.
● An organization that invests in its people needs to ensure that these investments are not
lost.
○ Well-trained employees, become more attractive in the marketplace, particularly
to competitors who may be able to pay the employee more because they have
not had to invest in the training that the employee has already received.
○ Although an organization’s physical assets cannot “walk,” its human assets can,
making it a much more risky investment.

Valuation of Assets
● Five major kinds of assets or capital that organizations can leverage to aid in
performance and add value to operations
■ financial assets/capital - include equity, securities, and investments, and
accounts receivable
■ Physical assets/capital - include plant, land, equipment, and raw materials
■ market assets/capital - include goodwill, branding, customer loyalty, distribution
networks, product lines, and patents, trademarks, and copyrights
■ Operational assets/capital - include management practices, the structure of
work, and the use of technology
■ human assets/capital - include employee education levels, knowledge, skills,
competencies, work habits, and motivation, and relationships with coworkers,
customers, suppliers, regulators, and lenders
 ● Financial and physical assets/capital are relatively easy to measure via accounting
practices.
○ Most of these assets are tangible and have some clear market value.
● Market and operational assets/capital are a bit more challenging to measure, but
accounting practices have been developed that can place a general subjective value on
such assets.
● Human assets/capital are very difficult to measure; attempts to do so are at the
forefront of current research being conducted in HR management.

Understanding and Measuring Human Capital

● Huselid (mid-1990s) identified what were called “high-performance work systems”

(HPWS) and demonstrated that integrated strategically focused HR practices were
directly related to profitability and market value
● Watson Wyatt Worldwide found that the primary reason for organizational profitability is
the effective management of human capital.
● Another study found that effective, integrated management of human capital can result in
up to a 47 percent increase in market value.
● Becker, Huselid, and Ulrich examined a variety of HR management quality indices and
found that the top 10 percent of organizations studied enjoyed a 391 percent return on
investment (ROI) in the management of their human capital.
● Dyer and Reeves attempted to define what can be called the HR “value chain.” They
argued that performance could be measured via four different sets of outcomes:
○ employee, organizational, financial and accounting, and market-based.
○ they proposed that these sets of outcomes had a sequential cause-and-effect
relationship

● Much of the value of human assets/capital rests with the value of an organization
and its ability to proactively meet challenges that lie ahead, relative to
responsiveness to changing economic, political, and market conditions.
 ● As a result, valuation of human assets/capital and analysis of human capital
investments can be value-laden, subjective, expensive—and, hence, ignored.
● Mercer developed a model which can allow measuring HR performance and
documenting the value added by specific initiatives to demonstrate to senior
management the value-added and bottom-line impact.
● This model involves six steps:
○ Identify a specific business problem that HR can impact
○ calculate the actual cost of the problem to the organization;
○ choose an HR solution that addresses all or part of the problem
○ calculate the cost of the solution;
○ 6 to 24 months after implementation, calculate the value of the
improvement for the organization;
○ calculate the specific ROI metric.
● Unlike the returns on other types of assets/capital, the ROI in human
assets/capital are often not realized until some point in the future

HR Metrics

● Perhaps one reason for the lack of reporting of and respect for metrics related to human
capital rests with the fact that there are no universally accepted metrics for the
valuation of human capital or a standard format for measuring and reporting such
data.
● Society for Human Resource Management - identified a number of common metrics
for measuring the performance and value of human capital
○ can easily be translated into bottom-line measures of performance as well as
compared to industry benchmarks

● Common HR Metrics
○ Absence Rate
○ Cost per Hire
○ Health Care Costs per Employee
○ HR Expense Factor
○ Human Capital Return on Investment (ROI)
○ Human Capital Value Added
○ Labor Costs as a Percentage of Sales or Revenues
○ Profit per Employee
○ Revenue per Employee
○ Time to Fill
○ Training Investment Factor
○ Training Return on Investment (ROI)
○ Turnover Costs
○ Turnover Rate (Monthly/Annually)
○ Vacancy Costs
○ Vacancy Rate
 ○ Workers’ Compensation Cost per Employee
○ Workers’ Compensation Incident Rate
○ Workers’ Compensation Severity Rate
○ Yield Ratio

● There are no “perfect” metrics, however, as the appropriate human capital metrics would
depend on the organization or business unit’s strategy.

Factors Influencing How “Investment Oriented” an Organization Is

● Not all organizations realize that human assets can be strategically managed
from an investment perspective.

● Five major factors affect how “investment-oriented” a company is in its

management of HR.

1. Management Values - Management may or may not have an appreciation of the

value of its human assets relative to other capital assets, such as brand names,
distribution channels, real estate, facilities and equipment, and information
systems
○ The extent to which an organization can be characterized as
investment-oriented may be revealed through answers to the following
questions:
i. Does the organization see its people as being central to its
mission/strategy?
ii. Do the company’s mission statement and strategic objectives,
both company-wide and within
 iii. individual business units, espouse the value of or even mention
human assets and their roles in achieving goals?
iv. More importantly, does the management philosophy of the
organization encourage the development of any strategy to
prevent the depreciation of its human assets, or are they
considered replicable and amortizable, like physical assets?
○ Whether management values its people is a critical factor in its
willingness to invest in them.

2. Attitude toward Risk - the most fundamental lesson in financial management is

that a trade-off exists between risk and return.
○ Higher-risk investments are generally expected to have a greater potential
return; lower-risk, safer investments are generally expected to have a
more modest return.
○ Investments in human assets are generally far more risky for an
organization than investments in physical assets: Unlike physical assets,
human assets are not owned by the organization.
i. An organization with risk-averse management philosophies is far
less likely to make significant investments in people.
ii. Other organizations see investments in employees as necessary
for their success and develop strategies to minimize the potential
risk of losing their investments.
iii. An organization can attempt to gain some “ownership” of
employee services through long-term employment contracts or by
offering employees financial incentives, such as stock-ownership
programs, as well as additional professional development
opportunities.

3. Nature of Employee Skills - Certain organizations require employees to develop

and utilize very specialized skills that might not be applicable in another
organization; another employer might have employees utilize and develop skills
that are highly marketable.
○ an organization that decides to provide its employees with specialized
training in skills that can be utilized by others in the marketplace has a
much stronger need to develop a strong retention strategy than an
organization that teaches employees skills that are less marketable.
○ Employees with skills demanded in the marketplace become more
valuable and sought-after assets by companies that choose not to make
expenditures or invest in training and skill development.

4. Utilitarianism - Organizations that take a utilitarian, or “bottom line,” perspective

evaluate investments by using utility analysis, also known as cost-benefit
analysis.
 ○ costs of any investment are weighted against its benefits to determine
whether the prospective investment is either profitable or achieves the
target rate of return the organization has set for its investments.
○ A highly utilitarian approach attempts to quantify all costs and benefits.
○ The distinct problem many utilitarian organizations run into regarding
investments in people involves the fact that many benefits of HR
programs and policies are extremely difficult to quantify; additional
investments in service may not have any direct financial benefit.
○ A utilitarian organization is likely to reject such “soft” programs that
have no quantifiable return.
○ Hence, the more utilitarian an organization is, the more likely it is to see
HR programs as investments, creating a challenge for those advocating
for such HR programs to find a means to show their impact on the bottom
line.

5. Availability of Outsourcing - An investment-oriented approach to managing an

organization will attempt to determine whether its investments produce a
sustainable competitive advantage over time.
○ When specialists who may perform certain functions much more
efficiently exist outside an organization, any internal programs will be
challenged and have to be evaluated relative to such a standard.
○ The organization is further likely to invest its resources where key
decision-makers perceive they will have the greatest potential
return.
○ This may result in few investments in people at the expense of investment
in market and product development, physical expansion, or acquisition of
new technology.

CHAPTER2

Social Responsibility and Human Resource Management

Workforce Demographic Changes and Diversity

● Demographic changes in society and the composition of the workforce are also creating
a number of challenges for the management of HR.
● Diversity has become and continues to be one of the principal buzzwords for both public
and private organizations, as recognizing and promoting diversity is seen as critical
for organizational success.
 ● The motivation behind diversity initiatives can vary from organization to organization.
○ Some employers have a commitment to understanding and appreciating
diversity, whereas others implement diversity initiatives simply to ensure
compliance with federal, state, and local employment laws.
■ Title VII of the Civil Rights Act of 1964 - prohibits discrimination based
on race, color, religion, gender, and national origin.
■ Pregnancy Discrimination Act, the Age Discrimination in
Employment Act, and the Americans with Disabilities Act - passed to
protect employees
● One of the biggest challenges organizations face in managing diversity is overcoming
some of the deep-set stereotypes that individual employees hold about certain groups
in society.

● Timeline (Diversity)

○ Mid-1960s - Organizations first started paying attention to diversity, largely as a

result of civil rights unrest, and the resultant legislation that was passed
prohibited discrimination in employment against a variety of groups.
○ Early 1980s - diversity was largely focused on compliance with the law and
maintained that focus.
○ Mid-1980s - the focus of diversity training had shifted to improving working
conditions by minimizing conflict between and among workers
○ Mid-1990s - the focus evolved to understanding, accepting, and leveraging
diversity as a means of enhancing organizational performance and remains as
such to this day

● Society for Human Resource Management study among HR executives revealed

eight distinct definitions of diversity, with 71 percent of respondents indicating that
their organizations did not have a formal definition of diversity.

Generational Diversity

Baby Boomers (1945-1962)

● These “working retirements” suggest a very different type of employment relationship

and a very different kind of lifestyle than that chosen by previous generations.
● A benefit to society is that these individuals’ continued self-sufficiency may result in their
being far less dependent on cash-strapped government pensions and healthcare
programs.
● Organizations benefit through the knowledge and contacts these individuals have
developed through their years of professional experience.
● This “graying of the workforce” can create a number of challenges, both real and
perceived.
 ○ Older workers are often perceived to be more resistant to change, particularly in
implementing radically new programs and utilizing new technology that breaks
from long-established ways of doing things.
○ They may also have increased healthcare costs relative to their younger
counterparts.
○ As older workers remain in the workplace longer, fewer advancement
opportunities are made available for younger workers
○ Older workers command higher salaries despite the fact that they may have skills
and training that are less current than those of younger workers, particularly
relative to technology.
○ now in their mid-career years, the supply of workers in this age bracket exceeds
the demand for them in the middle- and senior-management-level ranks.
○ technology often plays a role as many middles- and senior-level-management
positions have been eliminated because of flatter organizational structures and
the increased use of information technology to perform functions previously done
by middle managers. Many of these individuals will never progress beyond
middle management.
○ this creates a new HR challenge in managing these “plateaued” workers.
Organizations need to find ways to retain them and keep them motivated despite
the fact that they may have mastered their current responsibilities and aspire to
advance in their careers.
○ Slower and alternative career paths have become the norm for many of these
workers.

Baby Busters (1963 to the mid-1970s)

● need to have lower expectations relative to the pace of their careers.

● The baby boomers of the previous generation have essentially created a bottleneck in
the management hierarchy that baby busters find themselves behind. Until the baby
boom generation has retired, there may be fewer opportunities in larger organizations for
baby busters.
● assumes low- and some mid-level- management positions—often receive higher wages
than some of the baby boomers because of the forces of supply and demand.
● Far fewer individuals are in this lower age bracket, and in many industries, particularly
rapidly growing ones—such as multimedia and the Internet—these workers have skills
and training that the previous generation lacks, and they, therefore, command significant
incomes in their early career years.
● The combination of a limited supply of younger workers, high illiteracy among many new
workforce entrants, and demand for skills fueled by technological change has resulted in
a whole new workplace dynamic for this generation.
Generation X (mid-1960s to the late 1970s)

● Many of these individuals were raised in families of divorce and may have developed a
tolerance for upheaval and readjustment.
● They witnessed firings and layoffs of family members, which may greatly influence their
limited loyalty to an employer.
● They have also been using computers and other advanced technologies all their lives
and have been exposed since birth to near-constant change in their everyday lives.
● They bring attitudes and perceptions about work that differ significantly from those of
preceding generations.
● These include an expectation of increased employee self-control; perceptions of
themselves as independent contractors or consultants rather than as employees; less
interest in job security; no expectations of long-term employment; and a demand for
opportunities for personal growth and creativity

Generation Y aka Baby Boom Echo (born after 1979)

● They are just beginning to enter the workforce and represent a cohort that is as large as
the baby-boom generation.
● Like the Generation X cohort, they have high comfort levels with technology but also
tend to bring a more global and tolerant outlook on life to the workplace, having been
raised in more culturally diverse environments and been exposed to cultural differences
through the media.
● Twenty-five percent live in a single-parent household.
● They are often very entrepreneurial in nature and, on average, have shorter attention
spans. They also may fail to see the need to work from an office or for a particular
employer, opting for more transient and variable project work.
● Generation Y employees are much more social and value collective action and
teamwork.
● They tend to have a stronger sense of social responsibility than other generations and
value authenticity and transparency.
● They eschew dictatorial leaders, rigid hierarchies, and control systems and favor work
environments in which their input is sought and they can make an active contribution.
● Challenging work and the opportunity to grow and develop professionally are the main
outcomes they seek from their employment with both being more important than salary
● Generation Y, or millennials, have received a great deal of attention recently because of
the fact that they are the current new entrants to the workforce, represent its growth and
evolution, and have different needs than their predecessors.

Society for Human Resource Management found that 25 percent of organizations reported
substantial levels of intergenerational conflict in their workplaces.
Sexual Orientation

● Sexual orientation has been an area of diversity that increasingly has been embraced by
both large and small and public and private employers.
● Sexual orientation has also provided some challenges to employers from a legal
perspective beyond compliance with nondiscrimination statutes.
● The provision of employee benefits for same-sex couples can create tremendous
complexities for employers.
● Despite laws that prohibit discrimination based on sexual orientation and increasing
social acceptance of sexual minorities, many gay and lesbian professional employees
still fear disclosure of their sexual orientation in the workplace.
● A recent Harvard Business Review article noted that 48 percent of LGBT (lesbian, gay,
bisexual, and transgendered) employees did not feel comfortable being public about
their sexual orientation at work, and LGBT employees who remained “closeted” at work
were 73 percent more likely to leave their companies within a three-year period

Individuals with Disabilities

● Individuals with disabilities are protected from discrimination in employment under the
Americans with Disabilities Act of 1990
● individuals with disabilities are often not included in diversity initiatives nor have they
experienced full eradication of employment discrimination.
● Many technological innovations are increasing the ability for individuals with severe
disabilities to be employed, closing the gap between physical limitations and productivity.
● However, the lack of employment opportunities for individuals with disabilities has less to
do with ability than with the fact that many supervisors do not understand the needs
of employees with disabilities, and stereotypes about disabilities believed by
supervisors and coworkers prevent individuals with disabilities from being fully
integrated into the workplace.
● Hence, diversity initiatives need to pay particular attention to misperceptions surrounding
individuals with disabilities.
● Employees with disabilities present organizations with a challenge uncommon to other
dimensions of diversity. The disabled is one minority group that any individual can
join at any time in the future and often sometimes unexpectedly.
● Because the physical and mental ability of any employee is a variable dimension of
diversity, employers need to pay special attention to disability issues.
● As the average age of the workforce increases, and employees opt to stay employed for
longer periods of time, disability issues will clearly escalate for most employers,
particularly given the fact that many disabilities can develop later in life.

Other Dimensions of Diversity

● One of the most notable consequences of these new workplace dynamics is that there is
now an increased emphasis on the management of professionals.
● With fewer and fewer nonprofessional employees in organizations, situations often arise
where a highly skilled or trained employee reports to a direct supervisor who is not
familiar with the nature of the work being performed by subordinates.
● These technical workers need and want more autonomy in their responsibilities and seek
greater input and participation in their work activities.
○ In response to this, some organizations have established two separate career
tracks:
■ Technical–professional
■ Managerial–administrative
○ However, managers who have oversight of technical areas in which their skills
are not as well developed as those of their subordinates require us to re-evaluate
the nature of supervision and develop alternative strategies for managing
employees.
○ The use of project teams helps to address this issue. Here, a technical employee
often reporting to a technical supervisor is also assigned to a project team
overseen by a project or engagement manager.
○ This model, which has been used for many years in accounting, management
consulting, and advertising, often involves technical workers being responsible to
both the technical and project managers and can provide enhanced opportunities
for employee skill and career development.
○ However, this dual reporting relationship can be extremely frustrating for the
technical employee who may receive conflicting requests from technical and
project supervisors as well as for those supervisors who do not have full authority
over their subordinates.
● both younger workers and their older peers have values and attitudes that stress less
loyalty to the company and more loyalty to one’s self and one’s career than those
exhibited by employees in the past
○ Employees with higher levels of training, education, and skills demand more
meaningful work and more involvement in organizational decisions that affect
them.
○ Employees are becoming much more proactive and taking their career
management into their own hands rather than leaving this responsibility with their
employer.
● Personal and family life dynamics also continue to evolve and create challenges for
organizations.
○ The need for greater balance between employees’ work and home lives has
resulted in employee preferences and demands for policies that provide for a
more optimal balance.
○ Work-life balance issues tend to affect women more disproportionately than
men, given that women are often the primary caretakers for family members.
○ One model of career development for women called the kaleidoscope, suggests
that women be allowed to shift the patterns of their careers, rotating through
stages where career and life issues take on different relative emphasis
 ○ Fathers also have particular challenges in balancing work and family, as an
increasing number of men desire to become more involved in the lives and
upbringing of their children
● An increasing number of employees are opting for nontraditional work relationships,
often in the form of part-time work, independent consulting, or contingent or temporary
employment.
○ Workers opting for such arrangements often seek to enjoy more flexibility in their
lives as well as the opportunity to have time to pursue other endeavors.
○ Organizations encourage these arrangements, which allow them to enjoy lower
costs in employing these workers and the added ease of being able to expand or
contract their workforce as necessary.
○ These workers, however, generally receive few or no benefits and
obviously have little job security. Consequently, they tend to be less loyal to
their employers than permanent, full-time employees.
● To understand and market to these groups, have them represented as employees at
all levels of the organization. Diversity initiatives help to ensure that personal
differences that have nothing to do with job performance are less likely to impact
hiring, promotion, and retention decisions.
● One popular strategy organizations are using for recruiting and retaining diverse talent is
the support of employee networks or affinity groups.
○ Affinity groups - can be formed around any commonality shared by employees,
including ethnicity, age, disability, family status, religion, sexual orientation, and
usually, have some association with a culture or perspective that has faced
challenges in either the society or the organization.
○ Employee networks or affinity groups can provide the organization with a number
of benefits, including:
■ aiding in the recruiting and retention of employees from the affinity group;
■ gaining broader perspectives on the organization’s employment practices
and business strategy;
■ assisting an organization with its consumer awareness and reach in the
marketplace.
○ Affinity groups can provide the organizations with heightened insights into
the culture, perceptions, and needs and wants of various consumer groups
and bridge gaps between the organizations and various potential consumer
groups worldwide.
○ affinity groups can benefit both the organization and individual employees
through the opportunities for leadership development they offer.

Ethical Behavior

● Many areas of operations and aspects of how employees are treated leave a
tremendous amount of discretion for employers relative to their practices and policies.
● An organization’s reputation is a paramount concern in deciding whether to
accept an offer of employment.
● Federal Sentencing Guidelines for Organizations (FSGO) of 1991 - first federal
government action related to ethics in organizations; set minimum voluntary standards
for employers in the areas of implementation of a code of ethical conduct, ethics training
for officers and employees, high-level internal oversight of ethics and periodic
measurement of the effectiveness of ethics initiatives.
● One area of ethical concern for HR is employee off-duty behavior.
● Another increasingly important area of ethical consideration for employers is ownership
of work.
○ Given that a good deal of employee work in a knowledge economy involves the
application of knowledge and skills in the development of new and improved
products, services, and processes, conflicts have arisen concerning intellectual
property rights.
○ Employers have used nondisclosure and non-compete agreements to ensure
that the work developed by their employees stays with the employer when
employees leave.
● A related ethical dilemma is the “fairness” of noncompete clauses, which may
address the employee going to work for a competitor or starting her or his own business.
○ The ethical concern involves balancing the rights of employers to “own” work that
was done for compensation by employees versus the rights of individuals to work
for whom they chose, including themselves.
● Sarbanes-Oxley Act of 2002 - was passed to eliminate both deceptions in accounting
and management practices by increasing government oversight of financial reporting
and holding senior executives more directly responsible for violations.
○ An important provision of Sarbanes-Oxley is the protection it provides to
“whistle-blowers,” employees who provide information and/or assistance to
investigators, who assist in the review of potential violations of federal laws
related to fraud against shareholders.
● Given the increased concern for ethical behavior and accountability, it is clearly in an
organization’s best interest to establish some kind of code of ethics.
● majority of organizations that undertake ethic awareness and training initiatives do so as
a means of complying with legal mandates in attempting to minimize potential liability.
● However, there is increasing evidence that ethics training and the creation and
maintenance of a culture that stresses ethics has a positive impact on employee
recruitment, morale, and retention.
● Ethics training programs should not be developed in a piecemeal manner but rather tied
in to, if not fully integrated with, the organization’s mission and strategy.
● The ideal components of an ethics training program include:
○ mandatory attendance for all employees, including senior managers and officers;
○ a strict code of ethics that sets standards for behavior in areas such as
responsibility, respect, fairness, and honesty—at a minimum;
○ presentations of relevant laws related to the organization’s business and
operations;
 ○ decision-making models that present questions employees can ask themselves
when faced with ethical dilemmas (such as the possible repercussions of the
decision);
○ In-house resources for questions related to ethics or for reporting perceived
violations;
○ Role-playing scenarios that present possible ethical dilemmas an employee in an
organization might face or a re-enactment of situations that have already taken
place
● HR and its staff face their own ethical dilemmas on a regular basis in the conduct of their
own work.
○ Ensuring that immigrant workers have proper documentation;
○ classifying employees appropriately under the Fair Labor Standards Act;
○ ensuring that hiring, performance management, and compensation
systems are free from bias; and
○ investigating charges of discrimination and harassment are just a few of the
areas in which HR functions as the organization’s ethical “compass.”

Corporate Social Responsibility/Sustainability

● Corporate social responsibility (CSR) is more macro-focused and looks at how the
organization’s operations interface with and affect the larger society and world.
● World Business Council for Sustainable Development - defines CSR as “contributing
to sustainable development by working to improve quality of life with employees, their
families, the local community and stakeholders up and down the supply chain.”
● CSR is often operationalized relative to what has been called the “triple bottom line,”
where considerations are paid simultaneously to:
○ profits (economic bottom line)
○ people (social bottom line)
○ planet (environmental bottom line)
● There is considerable debate as to whether the costs of being a socially responsible
organization and employer exceed the benefits.
● The conventional wisdom surrounding environmental protection and responsibility is that
it comes at a significant additional cost to an organization, which may erode
efficiency and competitiveness.
● However, evidence suggests that improving an organization’s environmental
performance can actually lead to improved financial performance rather than an
escalation of costs and erosion of profits.
● Such enhanced financial performance can be the result of:
○ better access to certain markets
○ differentiated products,
○ sale of pollution-control devices
○ enhanced risk management and relations with external stakeholders,
○ decreased costs of material, energy, and services
○ decreased costs of capital
 ○ decreased cost of labor.
● It is critical to remember that environmental stewardship is not always associated with
improved financial performance but is realistically possible in a variety of organizational
scenarios, contrary to much popular belief.
● A challenge many organizations face relative to the implementation of sustainability
initiatives is embedding a sustainability mindset at the organization level.
● From an HR perspective, CSR initiatives have been found to have a direct positive
impact on enhanced recruitment, retention of top performers, and increased
productivity.
● Organizational benefits of sustainability initiatives include improved public opinion and
enhanced customer and government relations
● HR usually plays a central role in any sustainability initiatives. While often strategic
and operational in nature, they involve the need to communicate with and train
employees as well as shape the organization’s culture around issues of sustainability
and CSR.
● Given the desire of many members of the workforce to be employed in socially
responsible organizations, such initiatives may also form the basis for the
employment branding of an organization.
● Much as many employers are designating chief ethics officers, many are similarly
designating chief sustainability officers. This trend reflects the fact that sustainability has
become a key business issue and a strategic focus for many organizations.
● It has been argued that we are fast approaching the day when an organization’s
“carbon statement” will be as prominent as its financial statements

Global Reporting Initiatives That Pertain to Human Resource Management

Labor and Decent Work

1. Total workforce by employment type, employment contract, and region.

2. Total number and rate of employee turnover by age group, gender, and region.
3. Benefits provided to full-time employees not provided to temporary or part-time employees.
4. Percentage of employees covered by collective bargaining agreements.
5. Minimum notice periods regarding significant operational changes, including whether
specified in collective agreements.
6. Percentage of total workforce represented in joint management/worker/health and safety
committees that help monitor and advise on occupational health and safety programs.
7. Rates of injury, lost days, and absenteeism and the total number of work-related fatalities by
region.
8. Education, training, counseling, prevention, and risk-control programs in place to assist
workforce members, their families, or community members regarding serious diseases.
9. Health and safety topics covered in formal agreements with trade unions.
10. Average hours of training per year per employee.
11. Programs for skill management and lifelong learning that support the continued employability
of employees and assist them in managing career endings.
12. Percentage of employees receiving regular performance and career development reviews.
13. Composition of governance bodies and breakdown of employees per category according to
gender, age group, minority group membership, and other indicators of diversity.
14. Ratio of basic salary of men to women by employee category.

Human Rights

15. Total hours of employee training on policies and procedures concerning aspects of human
rights relevant to operations.
16. A Total number of incidents of discrimination and actions are taken.
17. Operations identified in which the right to exercise freedom of association and collective
bargaining may be at significant risk and actions taken to support these rights.
18. Operations identified as having significant risk for incidents of child labor and measures
taken to contribute to the elimination of child labor.
19. Operations identified as having significant risk for incidents of forced or compulsory labor
and measures to contribute to the elimination of forced or compulsory labor.
20. A Total number of incidents of violations involving the rights of indigenous people and
actions taken.

Social

21. Nature, scope, and effectiveness of any programs and practices that assess and manage
the impacts of operations on communities, including entering, operating, and exiting.

Economic

22. Coverage of the organization’s defined benefit plan obligations.

23. Range of ratios of standard entry-level wage compared to local minimum wage at significant
locations of operation.
24. Procedures for local hiring and proportion of senior management hired from the local
community at significant locations of operation