Investment perspective of HRM

Investment

Spend money for future benefits

Employee are asset value and benfical as other asset have value.

If organisation achieve their goal, they must provide value to employee an organization.

Example:

UOG

Uog infrastucture have better tgan competitor

Because of:

- lot of student can study here

- Largest university in Gujrat

Value can be reason of sustainable or maintainable competitive edge.

Example:

Iphone

Iphone invested, hire people and won. They built software, that still running. It has no competitor yet
becuase of:

- Product Quailty

- Feature

- Camera

a. Employee are asset value

b. sustainable competitor edge

it also called strategic view of HRM.

View of strategic HRM, in large part, adopting human are asset value and developing appropative
policies and program that has value to these assets in an organization and the marketplace.

Effective organization believe that human resources have asset value much as physical asset have value.

Employee value in an organization

1. Techincal knowledge

- involve complete knowledge

Example
IT student

Completely aware to coding

Doctor

Complete know about treatment and medicine

A. Customer

B. Market

C. Environment

B. process

2. Ability to learn and Grow

A. Ability to openness new ideas

B. increase in knowledge or skill

3. Desion making skill

Some manager has poor decision making that can be dangours for an orgainzation. In manager, should
be decision making ability or skill. So that meet organization ability.

4. Motivation

5. Commitment

6. Teamwork

a. interpersonal skill

b. leaderskip ability

Adopting investment perspective

Determine how to best invest in people?

Cost

a. Out-of-pocket ( Money)

b. Opportunity ( Take time)

Human asset become competitive advantage.

Example: New training program

It can be costly as well as take time.

Benefit

Performance increase
Motivation

Loyalty

Cost-benfit = Decision of new training program

Risky

Skilled employee and train power employee have value in market.

Dilemma

There are two paths and you don’t know where to go.

Example:

Finance manger say to HRM manager

Finance manger (Don’t need to training employee its waste of time and can effect profit)

HR manger Say to Finance manager

HR manager ( Need training because it can improve performance, loyalty and motivations of employees
then easily achive efficiency and effectively goals)

To overcome Delimma need to strategic Thinking.

Failure to invest in employee causes

a. inffeiciency

b. organization Weak in competitive position

- human resource can be risky investment

a. HR not owned by organization

b. Can walk over to other organisation

c. Value of Hr may decline

d. Can not be duplicate

- Require more effort to ensure that they are not lost

Human asset can not be dublicates

Physical asset

Product

Service

Technology

Market
Investment prospect believe that, physcial asset such as product, production facilities, service, market,
technology and process can be immited to an organization but the human asset can not be dublicated an
organization.

-Thought process, decision making process, analysis the complex data and environment are owned by
individual employee.

- If organization main objective to innovation: must consider human resource as investment

Valuation of asset

These are five kind of asset or capital.

Types of organization asset/ capital

1. Financial asset

2. physical asset

3. market asset

4. operational asset

5. Human asset

1. Financial asset

Equity

Securities and investments

accounts receivable

2. physical asset

• plant

• land

• Building
• raw materials

3. market asset

• goodwill

• branding

• customer loyalty

• product line

• distribution networks

• patents, trademarks, copyrights

4. operational asset

• management practices

• structure of work

• technology

5. Human asset

• education

• knowledge

• skills

• competencies

• work habits and motivation

• personal relationships