HRM 6698 MIDTERM QUESTIONS WITH VERIFIED
ACCURATE ANSWERS
Employees are - Answers - Human Assets
- Increase in value to an organization when investments of appropriate policies and
programs are applied
Effective organizations recognize that employees have - Answers - Value
- Equal to organizations physical and capital assets
Employees are a valuable sources of - Answers - Sustainable Competitive Advantage
Sources of Employee Value - Answers - 1. Technical Knowledge
2. Ability to learn and grow
3. Decision Making Capabilities
4. Motivation
5. Commitment
6. Teamwork
Technical Knowledge - Answers - Markets, processes, customers, environment
Ability to Learn & Grow - Answers - Openness to new ideas, acquisition of knowledge
and skills
Decision Making - Answers - Analytical skills, problem solving, change-management
Motivation - Answers - Job satisfaction, challenging work, perceived "fit"
Commitment - Answers - Belief in mission, engagement
Team Work - Answers - Interpersonal skills, leadership ability
Adopting an Investment Perspective - Answers - - Determines how to best invest in
people
- Human assets become competitive advantage
- Required skills become less manual, more knowledge based
Failure to invest in employees causes - Answers - - Inefficiency
- Weakening of organization's competitive position
Human assets are - Answers - - Risky investment
- Require extra effort to ensure that they are not lost
Types of Organization Assets/Capital - Answers - 1. Financial
,2. Physical
3. Market
4. Operational
5. Human
Primary reason for profitability related to HR - Answers - Effective management of
human capital
The HR Value Chain - Answers - - Employee Outcomes
- Operational Outcomes
- Financial Outcomes
- Market-based Outcomes
Human Capital ROI - Answers - Allows determination of return on human investments
relative to productivity & profitability
Revenue - (operating expenses - compensation + benefit costs) / Compensation +
benefit costs)
Profit per Employee - Answers - Illustrates the value created by employees
Revenue - operating expenses / number of full-time equivalent (FTE) employees
HR Expense Factor - Answers - Illustrated the degree of leverage of human capital;
provides benchmark for overall expense analysis relative to targets
Total HR expense / total operating expense
Human Capital Value Added - Answers - Shows the value of employee knowledge,
skills, and performance and how human capital adds value to an organization
Revenue - (operating expenses - compensation + benefits costs_ / totaly number for
FTE employees
Turnover Rate - Answers - Provides measure of workplace retention efforts, which can
impact direct costs, stability, profitability, morale
Number of employee separations (during a given time period) / number of employees
90% of Fortune 500 organizations evaluate HR operations on basis of 3 metrics -
Answers - - Employee retention & turnover
- Corporate morale
- Employee satisfaction
These 3 metrics do not illustrate how HR impacts - Answers - - Profits
- Shareholder value
, Mercer Model of Measuring HR Impact - Answers - 1. Identify problem HR can impact
2. Calculate actual cost of problem
3. Choose HR solution that addresses problem
4. Calculate cost of solution
5. Calculate value of improvement 6 to 24 months after implementation
6. Calculate specific return on investment
7. ROI in human assets often not realized until future time
HR Analytics - Answers - The systematic collection, reporting and analysis of various
metrics which are critical to effective performance
Utilitarian Mentality - Answers - - Attempt made to quantify employee worth through
cost-benefit analysis
- "Soft" benefits of HR programs difficult to quantify
Availability of Outsourcing - Answers - - Given availability of cost-effective outsourcing,
investments in HR should produces highest returns and sustainable competitive
advantages
Factors Influencing an Organizations Investment Orientation - Answers - - Management
Values
- Utilitarianism
- Attitude Toward Risk
- Availability of Outsourcing
- Nature of Employee Skills
Societal Factors Affecting HRM - Answers - - Sustainability
- Demographics & Diversity
- Ethics
Baby Boomers (1945-1962) - Answers - - In excess supply in middle management
ranks
- HR challenge is to manage "plateaued" workers
Baby Busters (1963 - mid 1970s) - Answers - - Are career bottlenecked by Boomers
- Have skills in high demand and frustrated
- Also entrepreneurial opportunities
Generation "X" (mid 1970s-early 1980s) - Answers - •Have life-long exposure to
technology & constant change
•Seek self-control, independence, personal growth, creativity
•Not focused on job security or long-term employment
Generation Y (Baby boom echo; 1981-1999) - Answers - - High comfort level with tech
- Global & tolerant outlook on life
ACCURATE ANSWERS
Employees are - Answers - Human Assets
- Increase in value to an organization when investments of appropriate policies and
programs are applied
Effective organizations recognize that employees have - Answers - Value
- Equal to organizations physical and capital assets
Employees are a valuable sources of - Answers - Sustainable Competitive Advantage
Sources of Employee Value - Answers - 1. Technical Knowledge
2. Ability to learn and grow
3. Decision Making Capabilities
4. Motivation
5. Commitment
6. Teamwork
Technical Knowledge - Answers - Markets, processes, customers, environment
Ability to Learn & Grow - Answers - Openness to new ideas, acquisition of knowledge
and skills
Decision Making - Answers - Analytical skills, problem solving, change-management
Motivation - Answers - Job satisfaction, challenging work, perceived "fit"
Commitment - Answers - Belief in mission, engagement
Team Work - Answers - Interpersonal skills, leadership ability
Adopting an Investment Perspective - Answers - - Determines how to best invest in
people
- Human assets become competitive advantage
- Required skills become less manual, more knowledge based
Failure to invest in employees causes - Answers - - Inefficiency
- Weakening of organization's competitive position
Human assets are - Answers - - Risky investment
- Require extra effort to ensure that they are not lost
Types of Organization Assets/Capital - Answers - 1. Financial
,2. Physical
3. Market
4. Operational
5. Human
Primary reason for profitability related to HR - Answers - Effective management of
human capital
The HR Value Chain - Answers - - Employee Outcomes
- Operational Outcomes
- Financial Outcomes
- Market-based Outcomes
Human Capital ROI - Answers - Allows determination of return on human investments
relative to productivity & profitability
Revenue - (operating expenses - compensation + benefit costs) / Compensation +
benefit costs)
Profit per Employee - Answers - Illustrates the value created by employees
Revenue - operating expenses / number of full-time equivalent (FTE) employees
HR Expense Factor - Answers - Illustrated the degree of leverage of human capital;
provides benchmark for overall expense analysis relative to targets
Total HR expense / total operating expense
Human Capital Value Added - Answers - Shows the value of employee knowledge,
skills, and performance and how human capital adds value to an organization
Revenue - (operating expenses - compensation + benefits costs_ / totaly number for
FTE employees
Turnover Rate - Answers - Provides measure of workplace retention efforts, which can
impact direct costs, stability, profitability, morale
Number of employee separations (during a given time period) / number of employees
90% of Fortune 500 organizations evaluate HR operations on basis of 3 metrics -
Answers - - Employee retention & turnover
- Corporate morale
- Employee satisfaction
These 3 metrics do not illustrate how HR impacts - Answers - - Profits
- Shareholder value
, Mercer Model of Measuring HR Impact - Answers - 1. Identify problem HR can impact
2. Calculate actual cost of problem
3. Choose HR solution that addresses problem
4. Calculate cost of solution
5. Calculate value of improvement 6 to 24 months after implementation
6. Calculate specific return on investment
7. ROI in human assets often not realized until future time
HR Analytics - Answers - The systematic collection, reporting and analysis of various
metrics which are critical to effective performance
Utilitarian Mentality - Answers - - Attempt made to quantify employee worth through
cost-benefit analysis
- "Soft" benefits of HR programs difficult to quantify
Availability of Outsourcing - Answers - - Given availability of cost-effective outsourcing,
investments in HR should produces highest returns and sustainable competitive
advantages
Factors Influencing an Organizations Investment Orientation - Answers - - Management
Values
- Utilitarianism
- Attitude Toward Risk
- Availability of Outsourcing
- Nature of Employee Skills
Societal Factors Affecting HRM - Answers - - Sustainability
- Demographics & Diversity
- Ethics
Baby Boomers (1945-1962) - Answers - - In excess supply in middle management
ranks
- HR challenge is to manage "plateaued" workers
Baby Busters (1963 - mid 1970s) - Answers - - Are career bottlenecked by Boomers
- Have skills in high demand and frustrated
- Also entrepreneurial opportunities
Generation "X" (mid 1970s-early 1980s) - Answers - •Have life-long exposure to
technology & constant change
•Seek self-control, independence, personal growth, creativity
•Not focused on job security or long-term employment
Generation Y (Baby boom echo; 1981-1999) - Answers - - High comfort level with tech
- Global & tolerant outlook on life
