With the rapidly changing economic environment and recent trends in internationalization, liberalization, and globalization, the structure of traditional industries has quickly transformed from being labor-intensive and low technology-based to being knowledge-intensive and high technology based. In the globalized economy, companies realize that they can no longer use labor cost reduction methods to enhance the competitiveness of their products in the international market. Instead, competitiveness is enhanced through innovations related to products, production processes, customers and the market. All of these innovations originate from people. Therefore, in addition to the pursuit of market share, global enterprises must enhance their share of human talent. Thus, companies must broaden their focus from the simple pursuit of capital productivity to the accumulation and training of human resources, which can improve enterprises and create competitive advantage.
Human resources must be based on the needs of the enterprise and should be seen as highly valuable assets. Human resource departments should cooperate fully with other departments to maximize the efficiency of their resource utilization and management, thus achieving the goal of their business organizations. Human resource management is one of the most important features of business. Its importance for future organizational development has gradually received recognition. Because the current business environment faced by enterprises is rapidly changing, human resources are important assets, and human resources management plays an important role in the organization because of this. Human resources management involves using manpower planning, education and training systems, performance evaluation and other personnel activities, and makes effective use of human resources within the organization to improve the performance and development potential of the organizations’ members. Through these activities, it can effectively achieve organizational goals and increase the core competitiveness of the organization. After an organization commits to human resource management, its performance is measured in terms of the achievement of targeted goals at various levels.
For a business to develop successfully, it must have a strong talent pool in addition to having adequate funding, equipment and technology. Manpower is the basis of competitive advantage. The biggest challenge facing business managers today lies in developing an effective assessment system to evaluate their ability to cultivate high quality manpower to improve organizational power and their ability to manage human resources as effectively as possible. Human resources managers should not ignore these important issues. Along with the development of human resources management, organizations increasingly require a comprehensive assessment of the contribution of human resources. Return on investment (ROI) is a powerful, comprehensive assessment tool that can evaluate the value and contributions of human resources activities, providing compelling data.
Incorporating training that develops employee toward long-term career goals can also promote greater satisfaction. Training promotes job satisfaction so, more training more satisfaction, higher productivity, less turnover and more dedication to toward the targeted performance and organizational goals.
If we don’t go for investing in Human Resources and consider the cost of turnover then with one fewer worker, the company’s productivity slips, sales decline, current workers need to pay more hours toward the situation, need to find a replacement, spend time screening and interviewing applicants, then train up cost for the new employee. So, the company needs to bear high cost for this situation. And here not only that a company need to bear 1.5-2.5 times yearly loss if an experienced or asset employee leaver the organization.
Ex: A talent employee whose basic salary 1, 00,000 taka per month.
Then 1,00,000 * 12 = 12,00,000 * 2.5 = 30,00,000 Direct Financial loss.
Indirect Loss is the expertise, experience which belongs to that particular employee. There is also loss of 1-2 years for that reason because the new employee cannot perform day to day.
So, for the employee development and make them as an asset for the company, to increase their productivity and to reach the organizational goal more efficiently the company needs to invest in Human Resources as the form of training and others motivational tools.
With the huge investment in developing training strategies and programmers, the question is no longer whether organizations should train or not, but rather it is about whether or not training is worthwhile and effective (Mann 1996).
T&D is the most important subsystem or element of human resource development. It concerns increasing, improving, enhancing and modifying employees’, and managers’ skills, abilities, capabilities and knowledge to enable current and future jobs to be more effectively conducted. These desirable achievements are likely to increase an individual’s as well as an organist’s growth and performance.
Generally, there are two main ways for conducting T&D programs.
First, in house T&D designed initiatives that are conducted within the organization, which could be directly on the job experience.
A second way for conducting T&D programs is off the job or out of house T&D designed that is conducted outside the organizations through external providers who will be responsible for evaluating T&D effectiveness through many objectives.
Sample size: The research has proposed to respondents who are working in banking sector and they were selected as the sample for the study.
Source of data: The study based on bothprimary and secondary data.
Primary data: The primary data were collected through structured questionnaire.
Secondary data: The required secondary was collected from books, news paper and website.
We have to show in our research paper Investment in Human Resource in Telecommunication sector in Bangladesh. In here, we are surveyed Six companies. Six of them are employee or officer of the telecom sector. When we are surveyed we learn so many things like the culture, environment of the organization. We notice training and development practice level is vary from organization to organization. It’s also important to mention that some responder is not frank. But beside all of this we finding the level of investment on training and development practice on telecom sector in Bangladesh and showing it graphically
Evaluation, Training and Development Handbook approached its, evaluation process in a more logical way. The author emphasized that while evaluating training, instead of just studying the reactions of the trainees, the study could be carried out in four different levels viz., i.e., reaction, learning, behavior and results. The author’s guidelines and discussions on each level of evaluation of training are worth mentioning (Donald L. Kirkpatrick (1997)).
Management Training-the Real Objectives views that while embarking upon a management program, the real objective must be to focus on the individual manager, not the position in the company. The author’s discussion on training needs analysis i.e., about core competencies, job profiling and identification of competencies gaps-either against core competencies for individuals or against job profiles for generic roles is worth mentioning (Jane Richards (1997)).
Role of investing on Training &Development in Human Resources is another work of relevance. In this, the authors concluded that an organization should have well-defined training policy as well as training manual and training should be made an ongoing process. Regarding the executive development programs the authors have concluded that, these programs have been found to be useful in improving the productivity, efficiency and effectiveness of managers. The authors have suggested that these programmes should be included as an integral part of the training program (Shishupal Singh Badhu and Karunesh Saxena (1999). More than ever, business is investing in training and development. He contends that companies seem to realize that a well-trained workforce is the key to competitiveness (ASTD, 1996). The more organizations seek excellence, the more employees’ training and development becomes imminent.
In contemporary organizations, information dissemination by itself leads to little or no results. Investing in Human Resource is usually aimed at solving significant problems as we are suppose to use it as a key requirement for ensuring that any training which takes place is based on proper analysis of its contribution to the effectiveness and efficiency of an organization. Training has been seen by scholars as an aid in adjusting to work environment which is designed to increase the capacity of individual or group in contributing to the attainment of the organizational goals (American Society for Training and Development (ASTD) president and Chief Executive Officer).
Human Resource Management
Human resource management (HRM or simply HR) is the management of an organization‘s workforce, or human resources. It is responsible for the attraction, selection, training, assessment, and rewarding of employees, while also overseeing organizational leadership and culture, and ensuring compliance with employment and labor laws. In circumstances where employees desire and are legally authorized to hold a collective bargaining agreement, HR will typically also serve as the company’s primary liaison with the employees’ representatives (usually a labor union).
HR is a product of the human relations movement of the early 20th century, when researchers began documenting ways of creating business value through the strategic management of the workforce. The function was initially dominated by transactional work such as payroll and benefits administration, but due to globalization, company consolidation, technological advancement, and further research, HR now focuses on strategic initiatives like mergers and acquisitions, talent management, succession planning, industrial and labor relations, and diversity and inclusion.
Definition of Human Resource
|We often hear the term Human Resource Management, Employee Relations and Personnel Management used in the popular press as well as by Industry experts. Whenever we hear these terms, we conjure images of efficient managers busily going about their work in glitzy offices. In this article, we look at the question “what is HRM?” by giving a broad overview of the topic and introducing the readers to the practice of HRM in contemporary organizations. Though as with all popular perceptions, the above imagery has some validity, the fact remains that there is much more to the field of HRM and despite popular depictions of the same, the “art and science” of HRM is indeed complex. We have chosen the term “art and science” as HRM is both the art of managing people by recourse to creative and innovative approaches; it is a science as well because of the precision and rigorous application of theory that is required.
As outlined above, the process of defining HRM leads us to two different definitions. The first definition of HRM is that it is the process of managing people in organizations in a structured and thorough manner. This covers the fields of staffing (hiring people), retention of people, pay and perks setting
|Management, performance management, change management and taking care of exits from the company to round off the activities. This is the traditional definition of HRM which leads some experts to define it as a modern version of the Personnel Management function that was used earlier.|
The second definition of HRM encompasses the management of people in organizations from a macro perspective i.e. managing people in the form of a collective relationship between management and employees. This approach focuses on the objectives and outcomes of the HRM function. What this means is that the HR function in contemporary organizations is concerned with the notions of people enabling, people development and a focus on making the “employment relationship” fulfilling for both the management and employees.
These definitions emphasize the difference between Personnel Management as defined in the second paragraph and human resource management as described in the third paragraph. To put it in one sentence, personnel management is essentially “workforce” centered whereas human resource management is “resource” centered. The key difference is HRM in recent times is about fulfilling management objectives of providing and deploying people and a greater emphasis on planning, monitoring and control.
Whatever the definition we use the answer to the question as to “what is HRM?” is that it is all about people in organizations. No wonder that some MNC’s (Multinationals) call the HR managers as People Managers, People Enablers and the practice as people management. In the 21st century organizations, the HR manager or the people manager is no longer seen as someone who takes care of the activities described in the traditional way. In fact, most organizations have different departments dealing with Staffing, Payroll, and Retention etc. Instead, the HR manager is responsible for managing employee expectations vis-à-vis the management objectives and reconciling both to ensure employee fulfillment and realization of management objectives.
In conclusion, this article has briefly touched upon the topic of HRM and served as an introduction to HRM. We shall touch upon the other topics that this field covers in other articles.
Duty of Human Resource
In startup companies, HR’s duties may be performed by a handful of trained professionals or even by non-HR personnel. In larger companies, an entire functional group is typically dedicated to the discipline, with staff specializing in various HR tasks and functional leadership engaging in strategic decision making across the business. To train practitioners for the profession, institutions of higher education, professional associations, and companies themselves have created programs of study dedicated explicitly to the duties of the function. Academic and practitioner organizations likewise seek to engage and further the field of HR, as evidenced by several field-specific publications.
Role of HRM
Before investing in Human Resource at first one has to understand the importance of HR in the organization.
The main goals / responsibilities of HRM are:
• To retain low employee turnover rate by inspiring people to work for the company
• To attract new employees
• To contribute to employee development
To achieve these goals, Human Resources Management trains and motivates the employees by communicating ethical policies and socially responsible behavior to them. In doing so, it plays a significant role in clarifying the organization’s problems and providing solutions, while making employees working more efficiently.
On the other hand, challenges do not cease for the HRM. Modern organizations can survive in the dynamic, competitive environment of today only if they capitalize on the full potential of each employee. Unfortunately, many companies have not understood the importance of the human capital in successful operations. The recruitment and selection of the best employees is a very difficult obligation. Even companies that are voted in the top-ten places to work at, often endure long periods of hard work to realize that human element is all an organization should care about.
New challenges arise even now for the organization, and it is certain that new challenges will never cease to emerge. Therefore, the use of proper Human Resources techniques is a really powerful way for organizations to overcome these challenges, and to improve not only their quantitative goals but also their organizational culture, and their qualitative, cognitive aspects.
Importance of HRM
We have discussed the basic concept of HRM and the ways in which it helps the organization meet its goals. In this article, we discuss the reasons for organizations to have a HRM strategy as well as the business drivers that make the strategy imperative for organizational success. It is a fact that to thrive in the chaotic and turbulent business environment, firms need to constantly innovate and be “ahead of the curve” in terms of business practices and strategies. It is from this motivation to be at the top of the pack that HRM becomes a valuable tool for management to ensure success.
Strategic Management and HRM
As discussed in the articles on modern day HRM practices, there is a need to align organizational goals with that of the HR strategy to ensure that there is alignment of the people policies with that of the management objectives. This means that the HR department can no longer be viewed as an appendage of the firm but instead is a vital organ in ensuring organizational success. The aims of strategic management are to provide the organization with a sense of direction and a feeling of purpose. The day when the HR manager was concerned with administrative duties is over and the current HRM practices in many industries are taken as seriously as say, the marketing and production functions.
Importance of HRM for Organizational Success
The practice of HRM must be viewed through the prism of overall strategic goals for the organization instead of a standalone tint that takes a unit based or a micro approach. The idea here is to adopt a holistic perspective towards HRM that ensures that there are no piecemeal strategies and the HRM policy enmeshes itself fully with those of the organizational goals. For instance, if the training needs of the employees are simply met with perfunctory trainings on omnibus topics, the firm stands to lose not only from the time that the employees spend in training but also a loss of direction. Hence, the organization that takes its HRM policies seriously will ensure that training is based on focused and topical methods.
In conclusion, the practice of HRM needs to be integrated with the overall strategy to ensure effective use of people and provide better returns to the organizations in terms of ROI (Return on Investment) for every rupee or dollar spent on them. Unless the HRM practice is designed in this way, the firms stand to lose from not utilizing people fully. And this does not bode well for the success of the organization.
Scope of Human Resource Management
Human resources are undoubtedly the key resources in an organization, the easiest and the most difficult to manage! The objectives of the HRM span right from the manpower needs assessment to management and retention of the same. To this effect Human resource management is responsible for effective designing and implementation of various policies, procedures and programs. It is all about developing and managing knowledge, skills, creativity, aptitude and talent and using them optimally.
Human Resource Management is not just limited to manage and optimally exploit human intellect. It also focuses on managing physical and emotional capital of employees. Considering the intricacies involved, the scope of HRM is widening with every passing day. It covers but is not limited to HR planning, hiring (recruitment and selection), training and development, payroll management, rewards and recognitions, Industrial relations, grievance handling, legal procedures etc. In other words, we can say that it’s about developing and managing harmonious relationships at workplace and striking a balance between organizational goals and individual goals.The scope of HRM is extensive and far-reaching. Therefore, it is very difficult to define it concisely. However, we may classify the same under following heads:
HRM in Personnel Management: This is typically direct manpower management that involves manpower planning, hiring (recruitment and selection), training and development, induction and orientation, transfer, promotion, compensation, layoff and retrenchment, employee productivity. The overall objective here is to ascertain individual growth, development and effectiveness which indirectly contribute to organizational development.
It also includes performance appraisal, developing new skills, disbursement of wages, incentives, allowances, traveling policies and procedures and other related courses of actions.
HRM in Employee Welfare: This particular aspect of HRM deals with working conditions and amenities at workplace. This includes a wide array of responsibilities and services such as safety services, health services, welfare funds, social security and medical services. It also covers appointment of safety officers, making the environment worth working, eliminating workplace hazards, support by top management, job safety, safeguarding machinery, cleanliness, proper ventilation and lighting, sanitation, medical care, sickness benefits, employment injury benefits, personal injury benefits, maternity benefits, unemployment benefits and family benefits.
It also relates to supervision, employee counseling, establishing harmonious relationships with employees, education and training. Employee welfare is about determining employees’ real needs and fulfilling them with active participation of both management and employees. In addition to this, it also takes care of canteen facilities, crèches, rest and lunch rooms, housing, transport, medical assistance, education, health and safety, recreation facilities, etc.
HRM in Industrial Relations: Since it is a highly sensitive area, it needs careful interactions with labor or employee unions, addressing their grievances and settling the disputes effectively in order to maintain peace and harmony in the organization. It is the art and science of understanding the employment (union-
management) relations, joint consultation, disciplinary procedures, solving problems with mutual efforts, understanding human behavior and maintaining work relations, collective bargaining and settlement of disputes.
The main aim is to safeguarding the interest of employees by securing the highest level of understanding to the extent that does not leave a negative impact on organization. It is about establishing, growing and promoting industrial democracy to safeguard the interests of both employees and management.
The scope of HRM is extremely wide, thus, cannot be written concisely. However, for the sake of convenience and developing understanding about the subject, we divide it in three categories mentioned above.
Processes in Human Resource Management
The efficient designing of these processes apart from other things depends upon the degree of correspondence of each of these. This means that each process is subservient to other. You start from Human resource Planning and there is a continual value addition at each step. To exemplify, the PMS (performance Management System) of an organization like Infosys would different from an organization like Walmart. Lets study each process separately.
Human Resource Planning: Generally, we consider Human Resource Planning as the process of people forecasting. Right but incomplete! It also involves the processes of Evaluation Promotion and Layoff.
Recruitment: It aims at attracting applicants that match a certain Job criteria.
Selection: The next level of filtration. Aims at short listing candidates who are the nearest match in terms qualifications, expertise and potential for a certain job.
Hiring: Deciding upon the final candidate who gets the job.
Training and Development: Those processes that work on an employee onboard for his skills and abilities upgradation.
Employee Remuneration and Benefits Administration: The process involves deciding upon salaries and wages, Incentives, Fringe Benefits and Perquisites etc. Money is the prime motivator in any job and therefore the importance of this process. Performing employees seek raises, better salaries and bonuses.
Performance Management: It is meant to help the organization train, motivate and reward workers. It is also meant to ensure that the organizational goals are met with efficiency. The process not only includes the employees but can also be for a department, product, service or customer process; all towards enhancing or adding value to them.
Nowadays there is an automated performance management system (PMS) that carries all the information to help managers evaluate the performance of the employees and assess them accordingly on their training and development needs.
Employee Relations: Employee retention is a nuisance with organizations especially in industries that are hugely competitive in nature. Though there are myriad factors that motivate an individual to stick to or leave an organization, but certainly few are under our control.
Employee relations include Labor Law and Relations, Working Environment, Employee health and safety, Employee- Employee conflict management, Employee- Employee Conflict Management, Quality of Work Life, Workers Compensation, Employee Wellness and assistance programs, Counseling for occupational stress. All these are critical to employee retention apart from the money which is only a hygiene factor.
All processes are integral to the survival and success of HR strategies and no single process can work in isolation; there has to be a high level of conformity and cohesiveness between the same.
What Role Does Human Resource Management Play In a Business
The human resource function has gone from the traditional hire and fire role to a strategic partner at the table with finance, operations and other business centers that are not centers of profit for the organization. The job of HR, as is the job of all such departments, is to ensure that the business gets the most out of its employees. Another way to put this is that the human resource management needs to provide a high return on the business’s investment in its people. This makes it a highly complex function – because it deals with not just management issues but human ones as well.
These 2 polarities are not always easy to balance and the human resource managers specifically try to maximize output from employees by instituting various schemes and policies. The following are some of the functions handled by the human resources team.
Handle compensation and rewards:-
Human resources are responsible for tying incentives and rewards to certain positions and roles in order to maximize performance levels. This is a strategic thinking task because it affects every single person in the organization and has to be planned separately for each position, depending on level, department and goals. Some jobs need to be more goal driven, such as sales so salary can be basic but commission can form the bulk of the remuneration, leading to more incentive to work effectively and close sales. Some firms tie top management’s salary to stock price but this can be risky. It is up to human resources to structure this important aspect to everyone’s satisfaction.
Another important task handled by the human resource function is the selection and retention of employees. If the right type of employees does not enter the organization, its days are numbered, because people drive almost any type of organization towards success.
Regular, balanced and systematic appraisals must be administered consistently in order to evaluate the performance of each individual in the organization. This allows human resources to pinpoint the weaknesses of an individual’s work style and the strengths. They can then share this information with the employee in order to affect a change in performance. This in turn will lead to more productivity and potentially better returns on human investment.
Point of contact:-
The human resource personnel form the point of contact for an employee with any type of difficulty or query about their remuneration or other aspects of employment with the business. It is essential for someone to be available to answer questions and provide guidance. This communicates to the employee that the business cares about his or her concerns and is available to address them.
The human resources function fulfills a very important ‘soft skill’, unspoken task – that of balancing employee expectations and the organization’s expectations. Both need to be addressed and aligned for a business to be successful and one with satisfied employees. Only a content and motivated employee will deliver good work, so it is the job of human resources to keep track of the expectations of the employee and those of the organization to ensure both are met simultaneously.
Why Invest in Human Resource
Investing in human resources is one of the greatest investments a firm can make. It has long been advocated that human resources should be viewed from an investment perspective. With this in mind the basic principle that all investments are made to provide a return on investment (ROI) must be utilized throughout all human resources management (HRM) decisions. Employees are at the heart of all firms regardless of the firm’s technological level. As a result, HRM and senior managers must develop functional systems that promote employee performance. While the fundamentals might seem as obvious as offering higher wages or some other tangible factor, the solutions are not always so simplistic. The direction that HRM investments should take must focus on developing fundamental management and corporate values. In order to develop the desired corporate culture benefit programs can be utilized. For example; adoption assistance, paid training, stock options, tuitions reimbursement plans, and job enrichment and job satisfaction programs, can all work to define a company and its values. Furthermore, these programs can help to both attract and detract employees from the firm itself. Thus, the HRM programs are capable of working to not only develop a corporate culture, but to retain it as well. The financial impacts of any human resources investment program must be considered in order to determine if the program will provide a ROI. One method to determine the potential ROI of a human resource investment is the utility theory. The utility theory provides a means to determine an economic value of human resources programs and procedures. Thus it can be used to help identify specific programs and benefits that might provide greater returns through employee behavior prior to the actual implementation of the program in the workforce. While ROI is generally thought of as the primary calculator for returns; the not-for-profit think tank Human Capital Institute reports that firms should not be as focused on calculating precise ROI. Rather, they should focus on determining which investments will have the greatest impact on creating the organization’s strategy. With the development of an organization’s strategy also comes an opportunity to define, or re-define an organization’s culture.
Perhaps the greatest accomplishment obtainable from HRM investments is the definition of an organizations culture. It is the corporate culture that defines both employee and employer expectations. Furthermore, if a firm successfully develops a strong culture they become more likely to achieve high levels of loyalty, comradely, cohesiveness, and organizational commitment from the employees. It is this strong culture of dedicated employees that provide one firms’ competitive advantage over another. Employee loyalty, dedication, and job satisfaction provide primary factors that drive overall productivity, quality, innovation, design, and all other facets of business operations. However, to develop such dedication the culture must be developed. To do so the seven primary factors must be approached. These being; innovation and risk taking, attention to detail, outcome orientation, people orientation, team orientation, aggressiveness, and stability. By utilizing HRM investments in a strategic way corporations are able to manipulate its cultural definition to fit its desired needs. For example, if a high emphasis is desired for aggressiveness and innovation, rewards and promotion program can be developed for those that develop an exemplary item. In contrast, if a team oriented culture is desired a rewards program would be implemented for the most productive team. In either case, a rewards program exists to compensate the most successful people(s). However, both cases produce significantly different corporate cultures. The ability for such investments goes far beyond rewarding performance and is well utilized in developing a culture of stability. The perception of stability within the workforce is especially beneficial during periods of economic decline and or organizational restructuring. The perceptions of stability as offered by organizational culture will often help retain employees during recessionary periods. The fact that their employment is steady and secure will often overshadow the realities of voids in compensation adjustments and bonuses. Another notable aspect in corporate culture is its approach to acclimating new employees. The utilization of either investiture, the support of a newcomer’s qualification, or divestiture, modification of existing characteristics to make a fit occur, varies from organization to organization. The utilization of investiture supports the hiring of candidates assumed to be good fits into the current culture and who already posses certain traits needed by the organization. Thus, they are hired and heavily supported by the existing culture. In comparison, the utilization of divestiture allows for minimal skills to be retained and focuses on “molding” an employee into the assumed role.7Utilization of the former seems to offer the obvious benefit of obtaining an employee who is able to fill the necessary function almost immediately upon hire. While the latter requires an extensive investment in the acclimation of the new individual; it would seem that the organization would be more likely to develop an employee who is a direct fit into the organizations culture.
Investing in HR in Bangladesh
HR practice in Bangladesh is better than the past. In the past, HR role was concentrated to hiring firing and letter issuance-dispatching-filing stage. Now it has started to perform more than that. Such as Employee motivation, Employee development, employee retention, facilitating organizational development initiatives etc. and thus contributes to the achievement of organizational goals. These value added job has just begun in BD. For a good tomorrow, this is a starting point.
Employers have started to understand that the more they invest in human resources they more output is likely which lead them to emphasize on employee capability development. As such in many organizations, employee development is viewed as part of business plan. In these organizations, training budget is calculated as a percentage of total budgets of the organization. Bangladesh should pursue strategies followed by other countries in utilizing human resources to become a mid-income country by 2016, says the president of Swiss contact. In a recent interview with The Daily Star, Peter Grüschow says government policy support to the private sector, along with human resource development, is key to reaching the goal.“Bangladeshis are resilient and receptive to business opportunities. But a lack of proper information among entrepreneurs remains a hurdle.”
In future the overall HR practice is expected to be brighter in Bangladesh because more are feeling the necessity of an established HR department in the organizational structure. Employer-employee relationship is expected to improve. IT will be part of HR practices which will make HR actions, decision making process faster and accurate.
Determining Return on Investment for Human Resource Interventions
The ROI framework can be used to help companies begin to determine their organizations’ workforce training needs and opportunities, evaluate how to address them, and begin tome sure the results of these programs. Investing in human resources is one of the greatest investments a firm can make. Strategically placed investments in human resources will develop a more skilled, innovative, productive and loyal workforce thus providing an organization with a competitive advantage over a less progressive competitor. Investment in human capital offers both short and long term gains that help produce not only skilled, productive employees, but those that are both loyal and ethical. By investing in its human resources an organization can gain a competitive advantage within the market place. It has long been advocated that human resources should be viewed from an investment perspective. With this in mind the basic principle that all investments are made to provide a return on investment (ROI) must be utilized throughout all human resources management (HRM) decisions. The direction that HRM investments should take must focus on developing fundamental management and corporate values. For example; adoption assistance, paid training, stock options, tuitions reimbursement plans, and job enrichment and job satisfaction programs, can all work to define a company and its values. Furthermore, these programs can help to both attract and detract employees from the firm itself. Thus, the HRM programs are capable of working to not only develop a corporate culture, but to retain it as well.
The financial impacts of any human resources investment program must be considered in order to determine if the program will provide a ROI. One method to determine the potential ROI of a human resource investment is the utility theory. The utility theory provides a means to determine an economic value of human resources programs and procedures. Thus it can be used to help identify specific programs and benefits that might provide greater returns through employee behavior prior to the actual implementation of the program in the workforce.
Perhaps the greatest accomplishment obtainable from HRM investments is the definition of an organizations culture. Furthermore, if a firm successfully develops a strong culture they become more likely to achieve high levels of loyalty, comradely, cohesiveness, and organizational commitment from the employees. It is the corporate culture that defines both employee and employer expectations. It is this strong culture of dedicated employees that provide one firms’ competitive advantage over another. Employee loyalty, dedication, and job satisfaction provide primary factors that drive overall productivity, quality, innovation, design, and all other facets of business operations. However, to develop such dedication the culture must be developed. To do so the seven primary factors must be approached. These being; innovation and risk taking, attention to detail, outcome orientation, people orientation, team orientation, aggressiveness, and stability. By utilizing HRM investments in strategic way corporations are able to manipulate its cultural definition to fit its desired needs.
Companies can obtain a competitive advantage if they utilize strategic human resources investment practices. If the operation is a primary manufacturing facility investments such as group bonus pay-outs based on overall group performance, attendance, etc could provide an initial increase in output.
Ex: Basically office equipment’s are operated by Human in an organization. Here we can’t increase the productivity of the machine rather than change it. So, for increasing productivity we need to invest to buy new equipment. But we can increase the productivity of the employees by providing well training and other satisfactory events that is worth to them and that will make them dedicated to toward the organizational goal.
The importance of assessing the return on investment for HR activities and interventions in this article in a way that keeps the reader from hyperventilating.
Because of our experience and expertise in the field of managing people, there are some “givens” that we understand and take for granted, such as:
Treat people with respect to get respect in return
Provide education for newly promoted supervisors on management issues
Job satisfaction is highly correlated with organizational commitment
Unfortunately, some of our “givens” aren’t as readily apparent to other leaders within our organization, and an intervention that to us seems intuitive isn’t readily accepted by others. I’ve found a straightforward approach that resonates with CEO’s, CFO’s, and line managers that I’d like to share. The approach simply the R.O.I. approach, for Return on Investment.
Step 1: Clearly state the business problem. For example, our organization has a turnover rate of 32% for computer programmers.
Step 2: Calculate the cost of the business problem. For example, calculate the turnover costs for separation, replacement, and training for each computer programmer that left the organization last year.
Step 3: Identify a potential solution to the business problem based on historical data or benchmarking. For example, a study of exit interviews may reveal that key first-line supervisors aren’t effective managers. A combination of training and one-on-one coaching may be a viable solution.
Step 4: Calculate the cost of the solution. For example, you could price having a consultant conduct a series of supervisory training workshops and the time for an HR staff person to develop and conduct a series of coaching sessions with individual supervisors.
Step 5: Implement the solution and monitor results. The planned for result, of course, would be lower turnover of computer programmers after three months, six months, and a year as a result of more effective supervision.
Step 6: Calculate the improvement benefit with this formula:
Cost of business problem before implementing solution (Step 2)
Cost of business problem after implementing solution, less cost of solution
$585,000 Annual t/o cost in 2000 for programmers
$300,000 – 50,000 Annual t/o cost in 2001, less solution cost
$235,000 Net Improvement Benefit
Step 7: Calculate the cost-benefit ratio as follows:
Net Improvement Benefit (Step 6) ¸ Cost of the Solution (Step 4)
$235,000/$50,000 = 4.7 to 1
For every $1 spent for a solution, $4.70 was saved.
If $50,000 sounds like a lot of money for an intervention, you can point out that for each dollar spent $4.70 in expenses was saved over the prior year. In other words, we are getting a return on our investment.
This approach can be used for any HR activity, as long as we documented (or can benchmark) the cost of a business problem.
Return on Investment Model
|Data collectionafter theimplementation|
|Determine the objectives of human resource activities|
Training Need Analysis (TNA)\\
An analysis of training need is an essential requirement to the design of effective training. The purpose of training need analysis is to determine whether there is a gap between what is required foreffective performance and present level of performance.
Training need analysis is conducted to determine whether resources required are available or not. It helps to plan the budget of the company, areas where training is required, and also highlights the occasions where training might not be appropriate but requires alternate action.
Training need arises at three levels:
Organizational Level – Training need analysis at organizational level focuses on strategic planning, business need, and goals. It starts with the assessment of internal environment of the organization such as, procedures, structures, policies, strengths, and weaknesses and external environment such as opportunities and threats.
After doing the SWOT analysis, weaknesses can be dealt with the training interventions, while strengths can further be strengthened with continued training. Threats can be reduced by identifying the areas where training is required. And, opportunities can be exploited by balancing
For this approach to be successful, the HR department of the company requires to be involved in strategic planning. In this planning, HR develops strategies to be sure that the employees in the organization have the required Knowledge, Skills, and Attributes (KSAs) based on the future.
Individual Level – Training need analysis at individual level focuses on each and every individual in the organization. At this level, the organization checks whether an employee is performing at desired level or the performance is below expectation.
However, individual competence can also be linked to individual need. The methods that are used to analyze the individual need are:
Appraisal and performance review
Self-assessment or self-appraisal
Operational Level – Training Need analysis at operational level focuses on the work that is being assigned to the employees. The job analyst gathers the information on whether the job is clearly understood by an employee or not. He gathers this information through technical interview, observation, psychological test; questionnaires asking the closed ended as well as open ended questions, etc. Today, jobs are dynamic and keep changing over the time. Employees need to prepare for these changes.
The Training Needs Assessment Process
Determine Agency Benefits of Needs Assessment – this part of the process will sell and help the decision makers and stakeholders understand the concept of the needs assessment. Needs assessment based on the alignment of critical behaviors with a clear agency mission will account for critical occupational and performance requirements to help your agency: a) eliminate redundant training efforts, b) substantially reduce the unnecessary expenditure of training dollars, and c) assist managers in identifying performance requirements that can best be satisfied by training and other developmental strategies. To go beyond learning and actually achieve critical behaviors the agency will also need to consider how required drivers will sustain desired outcomes.
Key steps include:
Identify key stakeholders
Describe desired outcomes that will contribute to mission objectives
Clarify critical behaviors needed to achieve desired outcomes
Define required drivers essential to sustain the critical behaviors
Plan – The needs assessment is likely to be only as successful as the planning.
Set goals/objectives for the needs assessment
Evaluate organizational (agency) readiness and identify key roles
Evaluate prior/other needs assessments
Prepare project plan
Inventory the capacity of staff and technology to conduct a meaningful training skills assessment and analysis
Clarify success measures and program milestones
Conduct Needs Assessment
Obtain needs assessment data (e.g., review strategic plans, assess HR metrics, review job descriptions, conduct surveys, and review performance appraisals)
Define performance problems/issues: occupational group/individuals
Training climate – A good training climate comprises of ambience, tone, feelings, positive perception for training program, etc. Therefore, when the climate is favorable, nothing goes wrong but when the climate is unfavorable, almost everything goes wrong.
Trainees’ learning style – the learning style, age, experience, educational background of trainees must be kept in mind in order to get the right pitch to the design of the program.
Training strategies – Once the training objective has been identified, the trainer translates it into specific training areas and modules. The trainer prepares the priority list of about what must be included, what could be included.
Training topics – After formulating a strategy, trainer decides upon the content to be delivered. Trainers break the content into headings, topics, ad modules. These topics and modules are then classified into information, knowledge, skills, and attitudes.
Sequence the contents – Contents are then sequenced in a following manner:
From simple to complex
Topics are arranged in terms of their relative importance
From known to unknown
From specific to general
Training tactics – Once the objectives and the strategy of the training program becomes clear, trainer comes in the position to select most appropriate tactics or methods or techniques. The method selection depends on the following factors:
Style preference of trainer
Level of competence of trainer
Availability of facilities and resources, etc
Support facilities – It can be segregated into printed and audio visual. The various requirements in a training program are white boards, flip charts, markers, etc
Constraints – The various constraints that lay in the trainers mind are:
· Accommodation, facilities and their availability
· Furnishings and equipments
· Design of the training, etc
Training Methods – Standard procedures or approaches designed to help individuals or groups acquire the skills needed for specific activities or functions.
Methods of training - Here are various methods of training, which can be divided in to cognitive and behavioral methods. Trainers need to understand the pros and cons of each method its impact on trainees keeping their background and skills in mind before giving training.
Cognitive methods- Are more of giving theoretical training to the trainees. The various methods under Cognitive approach provide the rules for how to do something, written or verbal information, demonstrate relationships among concepts, etc. These methods are associated with changes in knowledge and attitude by stimulating learning.
The various methods that come under Cognitive approach are:
COMPUTER BASED TRAINING (CBT)
INTELLEGENT TUTORIAL SYSTEM(ITS)
PROGRAMMED INSTRUCTION (PI)
Behavioral methods- Are more of giving practical training to the trainees. The various methods under Behavioral approach allow the trainee to behavior in a real fashion. These methods are best used for skill development.
The various methods that come under Behavioral approach are:
· GAMES AND SIMULATIONS
· BUSINESS GAMES
· CASE STUDIES
· EQUIPMENT STIMULATORS
· IN-BASKET TECHNIQUE
· ROLE PLAYS
Both the methods can be used effectively to change attitudes, but through different means.
Each of the above methods describe below:
LECTURES-Lecturing method is one of the old and basic employee training methods used by many of the organizations. More and more training institutions are applying the lecture method for training. In this method the trainer is active whereas the trainees are passive. Though lecture method is not very much effective, some extent of informal lecture is inherent in the conduct of any training program to motivate trainees, provide explanation & analyze relevant exercises.
DEMONSTRATIONS -This method is a visual display of how something works or how to do something. As an example, trainer shows the trainees how to perform or how to do the tasks of the job. In order to be more effective, demonstration method should be should be accompanied by the discussion or lecture method. To carry out an effective demonstration, a trainer first prepares the lesson plan by breaking the task to be performed into smaller modules, easily learned parts. Then, the trainer sequentially organizes those modules and prepares an explanation for why that part is required.
DISCUSSIONS -This method uses a lecturer to provide the learners with context that is supported, elaborated, explains, or expanded on through interactions both among the trainees and between the trainer and the trainees. The interaction and the communication between these two make it much more effective and powerful than the lecture method. If the Discussion method is used with proper sequence i.e. lectures, followed by discussion and questioning, can achieve higher level knowledge objectives, such as problem solving and principle learning.