Chapter 2
The Financial Impact of
Human Resource Management Activities
CHAPTER LEARNING OBJECTIVES
Questions this chapter will help managers answer:
1. Can behavior costing help improve our business?
2. If I want to know how much money employee turnover is costing us each year, what factors should I consider?
3. How do employees’ attitudes relate to customer satisfaction and revenue growth?
4. What’s the business case for work-life programs?
5. Is there evidence that high-performance work policies are associated with improved financial performance?
KEY TERMS
Human capital metrics
High-performance work practices
Behavior costing
Direct measures
Indirect measures
Controllable costs
Uncontrollable costs
Attitudes
Job satisfaction
Organizational commitment
Absenteeism
Turnover
Work-life program
Return on investment
Indirect measures of training outcomes
Criteria
Transfer of trained skills
Break-even values
Control group design
Pretest-posttest only design
Direct measures of training outcome s Linking Worker Beliefs To
Increased Productivity and Profitability
A study by The Gallup Organization identified 12 worker beliefs that play the biggest role in triggering a profitable, productive workplace.
Here are the 12 basic belief statements that underlie the most important worker attitudes:
I know what is expected of me at work.
I have the materials and equipment I need to do my work right.
At work I have the opportunity to do what I do best every day.
In the last seven days I have received recognition or praise for doing good work.
My supervisor, or someone at work, seems to care about me as a person.
There is someone at work who encourages my development.
In the last six months, someone at work has talked to me about my progress.
At work, my opinions seem to count.
The mission/purpose of my company makes me feel my job is important.
My fellow employees are committed to doing quality work.
I have a best friend at work.
This last year, I have had opportunities at work to learn and grow.
Work groups that have these positive attitudes are 50 percent more likely to achieve customer loyalty and 44 percent more likely to produce above-average profitability.
Challenge Questions
1. What kinds of organizational policies might help to support these beliefs?
Organization policies that sponsor employee commitment should be a primary consideration. Such policies as employee job satisfaction, quality work-life programs, employee empowerment, and affirmative action programs should be of primary consideration by management.
2. What can a manager do in his or her everyday behavior to encourage these beliefs?
To encourage these beliefs, managers must translate as many of them as possible into action items. For instance:
Making sure that employees know what is expected of them at work.
Making sure that everyone has the materials and equipment they need to do their work right.
Giving every employee the chance to do what they do best, every day.
Praising or recognizing employees for doing good work at least once a week.
Striving to care about each employee as a person.
Encouraging employee development.
Discussing their progress with each employee at least every six months.
Encouraging and valuing employee opinions.
Making sure that each employee feels that his or her job is important.
Showing a commitment to quality work.
Encouraging camaraderie at work.
Finding ways to help employees learn and grow.
3. Why is it that work groups that hold these beliefs are 50% more likely to achieve customer loyalty? What might be the link?
Employees who hold these beliefs are likely to be happier with their jobs and therefore more likely to produce quality products and to provide excellent customer service. The link is the high quality of work life and the feeling that they are an important part of the overall organization, not just a robot hired to fill a specific task.
CHAPTER 2 OUTLINE
Orientation
Line managers must, by the very nature of
