1. The Changing Face of the
HRM Function
A Strategic Contributor to Industry
in Managing Knowledge

2. Faces
 The Welfare department
 The Personnel Department
 The Human Resource Department
 The Learning Organisation
 Managing Knowledge
 Managing Human Capital

3. An increase in a person’s self-actualisation increases the
chances of enhaning another’s self actualisation in a
virtuous circle, but this depends on providing satisfaction of
their physical, safety and social needs for the development
of the higher order needs to occur. This development will
not occur if organisations create lousy jobs and Maslow
recognised that large organisations in particular end up
with many lousy jobs (Salazar,2000)

4. Key Challenges
 Employer Branding
 CSR
 Increasing Legislation
 Equal opportunities Vs Managing Diversity
 Recruitment and Selection
 Training and Development
 Empowerment
 Motivation and Retention
 Total Reward
 Any Others?

5. Challanges in tourism & hospitality
 Complexity of the situation
 Immediate response to customers’ needs
 Avoiding lost opportunities
 Organising work hours
 Dealing with part-time and casual workers
 Controlling costs of labour and labour
turnover

6. Issues Facing Tourism and
Hospitality
 Lower Quartile Salaries
 High Labour Turnover
 Zero Contract Hours
 Poor training and development
 Discrimination
 Any Others?

7. Managing Knowledge
 What is Human Capital?
 Can it be accurately measured?

8.  Since value in today’s economy is
increasingly driven by employees as
opposed to hard assets , managing
employes and their ideas is now a
cornerstone of competative advantage
(Zimmerman,E. (2001)
 To effectively manage these value-driving
elements, organisations must be able to
accurately measure them.

9. Capital
 The term ‘capital’ is rarely defined in and of
itself, and existing definitions are vague.In the
economic view it is ‘something owned which
provides ongoing services’ and is ’normally
summed in units of money’(Econterms,2004)
 Human capital(HC) has many definitions. Some
define HC as a ‘commercially valuable
skill?(Marcus,Ippolito,& Zhang,1998.) or the
‘attributes of a person or people that are
productive in some economic context’
(Econterms, 2004).

10.  Others have defined HC as ‘the KSAs
(Knowledge, skills and abilities) required
for a particular job, which an employee
generates through education, training, and
experience’ (Sturman,2001) or the time,
personal skills, capabilities, experiences,
and knowledge of the individual’
(Sustainable Development Indicator
Group, 1996)

12.  Intellectual Capital
 Intellectual capital covers many intangible
elements related to an organisation’s ability to
create value, and has three components:
 Structual, customer, and human capital.
 Structual capital deals largely with the
technological side of the organisation, including
hardware, software, databases, patents,
trademarks, customer support systems,
everything else that supports productivity.

13.  The results of organisational learning that
has become part of a firm’s operations and
would continue to exist independent of
various employees departure.(Edvinsson
& Malone 1997)

14.  Customer capital
 The contributions that customers make to
service delivery, experience and
consumption processes, and to the bottom
line of an organisation, calculated as the
worth of a company’s relationship with its
customers (Caplan & Norton 2004)

15.  Human Capital
 Most difficult component to define, includes
company’s values, culture & philosophy which
would cease to exist without employees.
 In short human capital is the sum of all human
capabilities that support the org’s objectives &
strategies and that can respond to market
fluctuations. (Brooking 1996)

16. Human Capital
Lev & Schwartz Model 1999 March
The evaluation is based on the present value of the
future earnings of the employees and on the
following assumptions:
•Direct and indirect benefits earned both in India
and abroad.
•Incremental earnings are based on group age.
•Future earnings have been discounted at 25.32%
which is being cost of capital for Infosys.

17. Human Capital
Accounting Model
Accounting model formula:
Vr = ΣT(t=r) I(t)/(1+r)t-r
Vr=the human capital value of a person
“r” years old
l(t)= the person’s annual earnings up to retirement
r = a discount rate specific to the person
T = retirement age

18. Historical developments of human
capital
 Surfaced in the late 50s, and was described by
Theodore schultz(1960) as
 All those human capacities, developed by education, that
can be used productively –the capacity to deal with
abstractions, to recognise and adhere to rules, to use
language at a high level. Human capital, like other forms
of capital, accumulates over generations; it is a thing that
parents `give’ to their children through their upbringing,
and that children then successfuly deploy in school,
allowing them to bequeath more human capital to their
own children.(Traub,2000, p.46)

19.  This macro-level construct was first applied to
labour economies and population and family
studies.
 Then sophisticated models connected macro-
level to its micro-level counterpart.
 In this duel-level construct. ‘aggregate
accumulation of human capital is a factor in
generating aggregate economic growth, while
individual accumulation is the process that
generates individual growth’(Mincer,1997,)

20.  After establishing that macro-level human capital
affects income distribution, and micro-level
human capital affects individual’s wages,
research progressed further by exploring the
organisational level
 Though not represented on financial and
accounting statements, the effects of human
capital grew so large for publicy traded firms that
they could not be ignored.

21.  Book and Market Value of an Organisation
 Human capital’s financial importance became
evident in the widening gap between book and
market value of firms, during the technological
revolution.
 Researchers began to give more credence to
non financial, intangible sources of competative
advantage possesed by these firms that affected
what individuals were willing to pay for partial
ownership.

22. Human Capital

23. Human Capital
 One such study on hospitality compensation
compared the levels of HC found in various
economic sectors & industries.
 Using the macro level variables to calculate HC,
the study found that hospitality Orgs:-
 (1) Had the lowest level of HC of all industries
studied,&
 (2) On average, required individuals with lower
levels of HC than that found in people in other
industries.(Sturman,2001)

24. Human Capital
 Who should measure it:-
Despite its importance, many HR professionals hesitate
to deal with human capital or calculate its monetary
value.
Common reasons for evading human capital valuation
include
(1) HR professionals chose an HR career to avoid dealing
with numbers.
(2) They fear the unknown/ or discovering that their HR
programmes might be ineffective
(3) Measuring human capital is the same as placing a
dollar value on individual employees which is believed
to be distaseful

25. Human Capital
 They argue that certain employee
attributes are highly valuable to hospitality
org’s regardless of ‘intellectual’ magnitude,
and these attributes constitute hospitality-
specific human capital (HHC)
 Other attributes than intellect `customer’
service orientation’ are necessary to
deliver a high-quality hospitality product to
the customer.

27. Characteristics of service-based
organisations in tourism &
Hospitality
 Manufacturing is about things and service
is about people
 Services are provided direct to the
customer
 Services are intangible
 Quality is defined by the customers
perceptions

28. Empowerment
 Senge:- defines empowerment as
persuading employees to take total
responsibility for their own job satisfaction
 Schein:- empowerment represents an
attempt to establish moral involvement…
which means that the person intrinsically
values the mission of the org and their job,
and is personally involved and identifies
with the org

29. Facets of empowerment
 Giving employees more authority to make the
decisions about their immediate tasks can
increase org’s effectiveness, and improve
employe satisfaction.
 In service industries (e.g. tourism &
hospitality)=concern to gain competative
advantage through improved service
quality(Gardner)
 Emotional involvement=Marriot ‘It takes happy
employees to make happy customers’

30. Leadership and empowerment (1)
 HRM strategy- cascading downstream
(storey)
 Empowerment of General Managers and
staff (Novotel)
 Treating the customers as a personal
guest is an appeal to these emotions of
hospitality that a worker might use in a
private context (Novotel)

31. Leadership and empowerment (2)
 Likert: most effective leaders are those not
just concerned with production but have
complete confidence and trust in
subordinates, allow subordinates to make
decisions, motivate by matually agreed
goals and shared ideas and opinions.
 Most effective leaders appeal to emotional
response from subordinates.

32. Marriot Hotels-Training
 Empowerment = developing quality of the
service = giving staff confidence to make
decisions, large or small, that impact on
the guest’s stay
 40-60hrs per employee
 Develop sense of empathy to customer
experiences in the staff
 Benefits in two dimensions: employee &
customer

33. Harvester Restaurants –
Autonomous work groups
 Each restaurant is organised around
teams – bar, restaurant & kitchen
 Each team has its own responsibilities
 Approach required total commitment from
senior managers
 Benefits: lower turnover, quicker responce
to change, increase in sales, lower level of
guest complaints

34. Delegation Vs Empowerment
 Delegation in traditional management
model,Limitation of this approach: assigning
authority does not mean that someone has the
ability, motivation, and understanding necessary
to perform.
 Empowerment = core concept of the new
management model. Empowerment and
ownership are social aspects of organising,they
are based on efficacy and initiative, and not just
roles and requirements. They belong to people

35. Conclusion
 Empowerment makes greater use of knowledge
and abilities of the workforce, it encourages
team working and it can aid the sucessful
implementation of change programmes.
 In the service sector empowerment is often seen
as a way to gain competatative advantage but
the true potential is broader.
 In order to be successful it requires a clear
vision, a learning environment both from
management and employees and participation
and implementation techniques.

36. Corporate Culture
 “Customer-obsession is a prerequisite for
creating customer delight.”
 “In God we trust; everyone else must
come with data.”
 “We would first like to be known as decent,
honest, and trustworthy people and then
as smart people.”

37.  “One should be humble, have respect for
competitors and a healthy sense of
paranoia, else we will disappear like dew
on a sunny morning.”
 “The softest pillow is a clear conscience.”
 “When in doubt, disclose.”
Corporate Culture