Strategic Human Resource Management by Unknown

Author:Unknown
Language: eng
Format: epub
Published: 2007-09-23T17:33:00+00:00

Human capital theory

Grounded in economics, human capital theory provides an alternative logic for understanding the choices firms make in managing human resources. The crux of this theory is that people are of value to the organization to the extent they make it productive (Becker 1964; Becker/Huselid 1998; Lepak/Snell 1999). Thus, organizations make decisions about investments in people just as they make decisions about investing in machinery, viewing them as a form of capital. Costs related to training, retraining, motivating, and monitoring the organization are viewed as investments in the human capital of the firm, just as maintenance of machinery would constitute an investment in the capital of the firm (Flamholtz/Lacey 1981; Cascio 1991, 2000; Wright et al., 1994; Wright/Dunford/Snell 2001). Efforts to develop HRmetrics that establish the value of investments in HR practices are firmly grounded in the logic of human capital theory.

Human capital theory has also been used to gain insights into the decisions firms make about how to staff their operations. Human capital can be attained by either hiring from outside the organization or by training and developing human capital already within the organization (Wright et al., 2001). The decision to "buy or make" depends on a comparison between the projected value to the organization, which will be realized when the capital is deployed and the costs to the organization of each option, given the current environmental context.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.