Investing in Your Company’s Human Capital: Strategies to Avoid Spending Too Little—or Too Much

Table of contents

1. Copyright
2. Acknowledgments
3. Foreword: The Fascination of Management
   1. Investing in an Unknowable
   2. Where to Start?
   3. Structuring for Investment
   4. Backwards Investing
   5. America’s Cultural Defect
   6. Commitment and How to Get It
   7. Note
4. Introduction
   1. The Expanded Role of Human Capital
   2. Struggles of the Human Resources Function
   3. The CFO’s Perspective
   4. The Last Major Source of Competitive Edge
   5. Barriers for Change
   6. Focus of the Book
   7. Who Will Profit from Reading This Book?
   8. Notes
5. One. How Much Should We Invest in Human Capital?: Five Strategies for Decision Making
   1. 1. Let Others Do It
      1. The Basic Strategy
      2. Case Studies
      3. Forces Behind this Strategy
      4. Cost of Competent Human Capital
      5. The Nature of Human Resources Development
      6. Recruiting Fully Competent Employees
         1. Sources
         2. Tactics
         3. Disadvantages
         4. Advantages
      7. Employing Temporary and Contract Workers
         1. Tactics
         2. Disadvantages
         3. Advantages
      8. Outsourcing Functions
         1. Targets for Outsourcing
         2. Tactics
         3. Disadvantages
         4. Advantages
      9. Summary
      10. Notes
   2. 2. Invest the Minimum
      1. The Basic Strategy
      2. Case Studies
      3. Forces Driving the Strategy
      4. The Cost of Turnover
         1. The Impact
         2. The Total Cost
      5. Identifying and Supporting the Minimum
         1. Wages
         2. Benefits
         3. Employee Support System
         4. Tactics
      6. Disadvantages
      7. Advantages
      8. Summary
      9. Notes
   3. 3. Invest with the Rest
      1. The Basic Strategy
      2. Case Study
      3. Forces Driving the Strategy
      4. Human Capital Benchmark Measures
      5. Benchmarking Issues
         1. The Elusive Best Practice
         2. Benchmarking Sources
         3. Global/National Data
      6. Creating a Custom Benchmarking Project
         1. Determining What to Benchmark
         2. Building the Benchmarking Team
         3. Identifying Benchmark Partners
         4. Collecting Benchmarking Data
         5. Analyzing the Data
         6. Distributing Information to Benchmarking Partners
         7. Initiating Improvement from Benchmarking
      7. Disadvantages
      8. Advantages
      9. Summary
      10. Notes
   4. 4. Invest Until It Hurts
      1. The Basic Strategy
      2. Case Studies
      3. Rationale for the Strategy
      4. Signs of Over-Investing
      5. Forces Driving this Strategy
         1. Union Demands
         2. Retention
         3. The Happy Employee Dilemma
         4. Competitive Strategy
         5. Quick Fixes
         6. Fad Chasing
         7. The Analysis Dilemma
         8. We Can Afford It
      6. Disadvantages
      7. Advantages
      8. Summary
      9. Notes
   5. 5. Invest as Long as There Is a Payoff
      1. The ROI Strategy
      2. Case Studies
      3. When to Use This Strategy
      4. Forces Driving Change
      5. Profiles of Organizations Using This Strategy
      6. The ROI Methodology
      7. The Evaluation Framework
      8. The ROI Process Model
         1. Evaluation Planning
         2. Collecting Data
         3. Isolating the Effects of the HR Program
         4. Converting Data to Monetary Values
         5. Tabulating the Cost of the HR Program
         6. Calculating ROI
         7. Identifying Intangible Benefits
         8. Reporting
      9. Operating Standards and Guiding Principles
      10. Implementation
      11. Disadvantages
      12. Advantages
      13. Summary
      14. Notes
6. Two. Why Does This Matter?: The Importance and Value of Human Capital
   1. 6. What We Know from Logic and Intuition
      1. Can We Do It Without People?
      2. The Technology Revolution
      3. Automate, Automate, Automate!
      4. Gurus and More Gurus
      5. People Are Necessary
      6. Stock Market Mystery
      7. A Brief History of Interest in Intangible Assets
      8. Increased Interest in Intangible Assets
      9. Definitions and Categories
      10. Accounting Dilemma
      11. Superstar Phenomena
          1. QUALCOMM
          2. General Electric
          3. Honda
          4. Southwest Airlines
          5. USAA
          6. SAP
      12. Some Characteristics of Superstars
          1. The Best Idea Will Fail Without Proper Talent and Execution
          2. Human Capital as the Last Major Source of Competitive Advantage
          3. Good and Great
          4. The Great Places to Work
          5. Most-Admired Companies
      13. A Need for More Research
      14. Summary
      15. Notes
   2. 7. What We Know from Macrolevel Research
      1. Index of HR Effectiveness
         1. Early Approaches
         2. Phillips/Saratoga Institute Study
      2. Profit-Center Approach
      3. The Gallup Studies
         1. Meta-Analysis
         2. Results
         3. Implications
      4. The Service-Profit Chain
         1. Sears Research
         2. Current Use
      5. Huselid-Becker Studies
      6. Watson-Wyatt Studies
      7. Deloitte & Touche Studies
      8. Knowledge Asset Management Studies
      9. Other Studies
      10. Disadvantages
      11. Advantages
      12. Summary
      13. Notes
   3. 8. What We Know from ROI Analysis
      1. ROI Progress and Status
         1. Progression of ROI Across Sectors
         2. ROI Networks
         3. Global Expansion
         4. Paradigm Shift
         5. Basis for Acceptance
         6. ROI Is Here to Stay
      2. The Challenges of Developing a Credible ROI Process
         1. HR Practitioners
         2. Senior Managers/Sponsors/Clients
         3. Researchers and Evaluators
         4. Criteria for an Effective ROI Process
      3. ROI Applications for Human Capital Areas
         1. Specific Measures
         2. Specific Case Studies
      4. ROI Standards
      5. ROI Best Practices
      6. Barriers to ROI Implementation
         1. Costs and Time
         2. Lack of Skills and Orientation for Human Resources Staff
         3. Faulty Needs Assessment
         4. Fear
         5. Planning and Discipline
         6. False Assumptions
      7. Benefits of ROI
         1. Measuring Contribution
         2. Setting Priorities
         3. Focusing on Results
         4. Earning the Respect of Senior Executives and Sponsors
         5. Altering Management Perceptions of Human Capital
      8. Summary
      9. Notes
7. Three. What Can We Measure?: The Current State of the Art
   1. 9. Current Human Capital Measures
      1. Innovation
      2. Creativity
      3. Employee Attitudes
         1. Employee Satisfaction
         2. Organizational Commitment
         3. Employee Engagement
      4. Workforce Stability
         1. Turnover and Termination
         2. Tenure and Longevity
      5. Employee Capability
         1. Experience
         2. Knowledge
         3. Learning
         4. Competencies
         5. Educational Level
      6. Human Capital Investment Levels
         1. Human Resources Department Investment
         2. Total Human Capital Investment
      7. Leadership
         1. 360° Feedback
         2. Leadership Inventories
         3. Leadership Perception
      8. Productivity
         1. Unit Productivity
         2. Gross Productivity
      9. Workforce Profile
      10. Job Creation and Recruitment
          1. Productivity Versus Job Growth
          2. Importance of Job Creation and Job Growth
          3. Recruitment Sourcing and Effectiveness
          4. Recruitment Efficiency
      11. Compensation and Benefits
          1. Compensation
          2. Employee Benefits
          3. Variable Compensation
          4. Employee Ownership
      12. Fair Employment, Compliance, and Safety
          1. Complaints and Grievances
          2. Charges and Litigation
          3. Health and Safety
      13. Employee Relations
          1. Absenteeism and Tardiness
          2. Work/Life Balance
      14. Summary
      15. Notes
8. Four. What is the Executive’s Role?: Why and How Top Management Should Be Involved
   1. 10. Creating and Using the Human Capital Scorecard
      1. Progress and Opportunity
         1. The Current Status
         2. The Mandate
      2. Metric Fundamentals
         1. Interest in Scorecards
         2. Selecting the Measures That Matter
      3. Scorecard Options
         1. Workforce Measurement Scorecard
         2. Basic IPO Scorecard
         3. The Balanced Scorecard Process
         4. The Causal Chain Scorecard
         5. The Value-Added Scorecard
         6. Human Resources Process Scorecard
         7. Human Capital Monitor
         8. Best-Practice Scorecard
         9. Transactional Benchmarking
      4. Using the Scorecard
         1. Select the Measures
         2. Set the Target
         3. Monitor the Data
         4. Conduct a Gap Analysis
         5. Identify/Select Action/Solution
         6. Implement Action/Solution
         7. Forecast the Value
         8. Monitor the Progress
         9. Show the Value
         10. Repeat the Process
      5. Summary
      6. Notes
   2. 11. Executive Commitment and Support
      1. The Management Support Dilemma
         1. Why Executives Fail to Support Human Resources
      2. Improving Commitment and Support
         1. Definitions
         2. Increasing Commitment
         3. Increasing Management Support
         4. Improving Reinforcement
         5. Improving Management Involvement
      3. Key Strategy: Developing Partnerships with Managers
         1. Steps to Develop a Partner Relationship
         2. Key Principles
      4. Key Strategy: Manager Workshop on Human Capital Management
         1. Workshop Issues
         2. Workshop Content
         3. Workshop Features
         4. Top Management Participation
         5. Impact of the Workshop
      5. Key Strategy: Tying Bonus Plans with Human Capital Measures
      6. Summary
      7. Notes
9. A. Self-Test: How Results-Based Are Your Human Resources Programs?
   1. A Survey for Managers and Executives
   2. Scoring and Interpretation
   3. Analysis of Scores
10. B. CEO Commitment Checklist
    1. CEO Commitment Checklist Interpretation of Results
11. About the Author
12.