An Investment

Perspective of
HRM
Areeba Rauf
Natasha Batool
Areeba Marvi
Shahzain Brohi
1. Why do senior managers often fail to realize the value of
human assets vis-à-vis other assets?

• Senior managers follow the corporate policy that fails to

acknowledge human resources as a strategic asset.

• The management only values investment in physical assets.

• They perceive that the talent is dispensable and replicable.

• They feel that if the nature of work is such that can be

outsourced then no need to invest in workforce.
2. Why do line managers often fail to realize the value of
human assets vis-à-vis other assets?

• Line managers focus more on tactical process and the

success of the process.

• Believe that the employees are easily replaceable and thus

do not require any effort.

• Personal interests of the line managers.

3. Why and how might a line or an operating manager value
specific metrics related to the unit’s employees?

Valuing specific metrics related to Unit’s employee is

beneficial by measuring employee’s performance through
these metrics.
Some common HR metrics may include:
Absence Rate
Revenue per employee
Trainings cost
Turnover costs
Overtime per employee

Specific metrics related to unit employees should include job

descriptions, accurate job performance reviews and how well the
employee is meeting the company expectations and standards.
Using these specific metrics can result in improvements within the
unit line and operations.
4. What can HR do to make senior and line managers take
more of an investment approach to human assets?

HR needs to understand the significance of equipping Human

Capital with required set of skills they need to perform their jobs
effectively and efficiently. Two of the ideas that can be used to
support the investment approaches for an organization would be:

1. Training

2. Evaluation/Appraisal Methods
5. Why is a competitive advantage based on heavy investment in
human assets more sustainable than investments in other types of
assets?

Physical assets can

Human assets
quickly and easily
cannot be
be copied by
duplicated.
competitors.

Investment in
human resources
Human asset results in longer-
doesn’t depreciate term employee
as easily as other commitment, job
types of assets. satisfaction, skilled
and productive
workers.
6. Why can some organizations that fail to invest heavily in human
assets still be financially successful? Why can some organizations that
do invest heavily in human assets still be financially unsuccessful?
• Such organizations are focused towards
technology and work processes.

• Organizations have great talent and

human capital but not having systems
and processes in place.

• Inappropriate utilization of knowledge

and skills.
7. Challenges relative to valuation of human assets and human
capital
• Human capital ROI

• Profit per employee

• HR expense factor

• Human capital value added

• Turnover rate
• READING 1.2