Enhancing Return on HR Investment

[We’re pleased to welcome back Pankaj M. Madhani, Associate Dean and Professor of ICFAI Business School (IBS). Dr. Madhani is the author of “Enhancing Return on HR Investment: Risk Management With Real Options Approach” which has been published in Compensation and Benefits Review and is currently free to read for a limited time. From Dr. Madhani:]

CBR_42_1_72ppiRGB_powerpointWhat motivated you to pursue this research?

For any organization, human resources (HR) are assets that can provide value and competitive advantage; however, such assets have associated uncertainties and risks. There is growing recognition that one of the key risks in a business is related to management of HR. As HR inherently involves a level of uncertainty, and as risk management’s main focus is uncertainty, forging the two fields of risk management and HR is important. Returns on HR investment may not remain stable over time for organizations due to changes in business conditions. The ability of the organizations to operate flexibly in dynamically changing business conditions is crucial on the long run. The “real options” approach enables organizations to evaluate investment opportunities of HR in uncertain environments and highlights how these investments create value through future choices (i.e., options). Research applies this logic to analyze the uncertainties associated with HR assets in organizations and discuss how organizations manage these uncertainties through HR “options,” which are capabilities generated by some HRM practices and their combinations.

In what ways is your research innovative, and how do you think it will impact the field?

The research emphasizes role of HR options in hedging HR related risks and uncertainties and provides risk management guidelines to practicing managers for enhancing return on HR investment. Extending the concept of real options, the research underlines certain HRM practices as creating HR options in terms of reducing uncertainties related to returns, volume and combinations and costs. The value of HR options lies in allowing the organizations to respond proactively to the uncertainties of human assets. HR options enable the organizations to develop and deploy human capital in order to limit downside risk caused by environmental uncertainty and create opportunities for greater returns in the future. In this research, various types of options, such as switching options, growth options, learning options, timing options, scaling options and turnover and productivity HR options are developed. Deployment of such HR options creates a strategic organizational capability to adapt to future contingent events and flexibly manage risks and uncertainties associated with investments in HR. Research also provides various real-life illustrations of such successful deployment of HR options in organizations.

What advice would you give to new scholars and incoming researchers in this particular field of study?

HR options may manage more than one type of risks and have synergistic effects when they act in “bundles” of multiple interacting options. However, when there is no synergy among various HR options related to different types of uncertainty, such as uncertainty of returns, volume and combinations and costs, it results in suboptimal performance. In this scenario, hedging one type of uncertainty will increase other related uncertainties (e.g., managing uncertainty of volume and combinations may lead to increased uncertainty of costs). Thus, there is need to study interactions and interdependency of various HR options to mitigate overall risks, quantify numerically each of the investment options and  investigate the linkage between deployment of HR options and the organization’s operational and financial performance.


Pankaj M. Madhani earned bachelor’s degrees in chemical engineering and law, a master’s degree in business administration from Northern Illinois University, a master’s degree in computer science from Illinois Institute of Technology in Chicago, and a PhD in strategic management from CEPT University. He has more than 30 years of corporate and academic experience in India and the United States. During his tenure in the corporate sector, he was recognized with the Outstanding Young Managers Award. He is now working as an associate dean and professor at ICFAI Business School (IBS) where he received the Best Teacher Award from the IBS Alumni Federation. He is also the recipient of the Best Mentor Award. He has published various management books and more than 300 book chapters and research articles in several refereed journals. He has received the Best Research Paper Award at the IMCON-2016 International Management Convention. He is a frequent contributor to Compensation & Benefits Review and has published more than 20 articles on sales compensation. His main research interests include salesforce compensation, corporate governance and business strategy. He is also editor of The IUP Journal of Corporate Governance.


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Argument Complexity and Discussions of Political/Religious Issues

[We’re pleased to welcome authors, Dr. Lyn M. Van Swol of the University of Wisconsin–Madison, Dr. Cassandra L. Carlson-Hill Carolina of Coastal Universit, and Dr. Emily Elizabeth Acosta Lewis of Sonoma State University. They recently published an article in Small Group Research entitled “Integrative Complexity, Participation, and Agreement in Group Discussions,” which is currently free to read for a limited time. Below, Dr. Van Swol discusses some of the findings of this research:]

SGR_72ppiRGB_powerpointPolitical and religious issues can be difficult to discuss in a group, and it can be especially difficult to convince others who disagree with your viewpoint. This paper examined the role of complexity of arguments in a group discussion of a political/religious issue. Groups discussed whether or not the words “under God” should be in the United States Pledge of Allegiance. We had hypothesized that group members whose opinion were more similar to their fellow group members would increase the complexity of their contributions to the group when they were exposed to group members with more fringe opinions, but this was not supported. However, members with more fringe opinions in the group were more successful in influencing the group towards their opinion when they used more complex arguments. Argument complexity did not matter for group members with more mainstream views in terms of how much they influenced the group decision. Because group members with more fringe and discrepant opinions cannot appeal to their opinion being normative and aligned with the majority in the group, it may be important for them to have complex arguments to be persuasive. Complex arguments tend to be more nuanced and less dogmatic, which may make someone with an opinion more different from others in the group seem more flexible and informed. Finally, arguments used by members in the group discussion were more complex when the group had a longer discussion. This highlights the benefits of extending group discussion to let more nuances of the topic of discussion get expressed.

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Strategic Value Contribution Role of HR

VisionIn the face of climate change and unaccountable corporations, consumers are increasingly vocal about their desire to support transparent companies that actively fight for social justice and offer eco-friendly products and alternatives to conventional items. In response, more brands are demonstrating accountability. Some of the fastest growing businesses are those in the natural product category, those with recycled and recyclable packaging, sweatshop-free and fair trade sourcing, and brands with affiliations with charitable organizations. All else equal, people are investing in brands they feel align with their values.

But, unfortunately it has been found that in spite of showing concern for the environment and advocating environmentally safe activities, the Indian consumer is still not ready to accept the hard truth that it the responsibility of one and all to minimize their contribution to the overall environmental pollution. This article from the journal ‘Vision’ aims at studying socio-psychological factors which contribute in the formation of environmental attitude of consumers. It further aims at establishing the connection between environmental attitude of the consumer and his/her willingness to buy environmentally friendly products.

The socio-cultural, psychological and demographic factors have manifested divergent relationship between attitude and behaviour. There is inadequate understanding of antecedents of consumer’s environmentally friendly attitude and willingness to buy environmentally friendly product. Some authors argue that many consumers claim that they care about the environment; their buying behaviour does not always reflect this concern.

It has been found that the dimensions, such as environmental knowledge (EK), perceived seriousness of environmental (PSE) problem, interpersonal influence (IPI), collectivism and long-term orientation (LTO), have positive relationship with consumer environmental attitude (CEA)

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Click here to read Consumer Environmental Attitude and Willingness to Purchase Environmentally Friendly Products: An SEM Approach for free from the journal Vision.

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Undergraduate Internships: Do They Contribute to Career Success?

Internships help equip the student with skills to apply in classroom courses, as well as provide knowledge of how a business functions and if there is an interest sparked in his or her chosen field of study. The experience of internships, however, is under investigation of whether or not they help contribute to a student’s long-term professional development, since the duration of internships is usually limited, therefore offering a limited exposure to the field or business.

Author Katina Sawyer of Villanova University recently published an article in Advances in Developing Human Resources entitled, “Keeping It Real: The Impact of HRD Internships on the Development of HRD Professionals.” In the study, Sawyer analyzes data collected from students who participated in a human resource related internship, which helps to shed light on whether these internships are a valuable tool in retaining the student’s interest in the field. The abstract for her article is below;

Participation in inADHR_72ppiRGB_powerpoint.jpgternships may provide undergraduate human resource development (HRD) students with practical experience necessary to be successful in the field. However, research is lacking which examines the impact of HRD internship experiences on professional development and career trajectories. Research is also limited which provides guidance on how to distinguish which undergraduate internships may be most valuable. The features which make internships most effective in preparing students for their chosen careers warrant further examination, specifically within HRD. Relatedly, it is important to understand which internship experiences are most likely to develop HRD competencies for undergraduate students.

The article is currently free to read for a limited time.

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Call for Papers! Compensation and Benefits Review

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Compensation & Benefits Review is the premiere journal for compensation and benefits strategy and management. Written by compensation and benefits professionals at top companies and leading academic experts, CBR articles provide detailed analyses and comprehensive information on all aspects of compensation and benefits design and implementation. CBR provides practitioners and university faculty and students with a complete source for compensation and benefits solutions that produce real business results and advancement in the field.

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Who Does Referral-Based Hiring Help Most, and How?

9323706832_efbf0759ba_zReferral-based hiring is a commonplace practice for modern organizations, which holds considerable benefits for employees hired based upon a referral, including greater chances for upward mobility within the company. A recent paper published in ILR Review entitled “Lasting Effects? Referrals and Career Mobility of Demographic Groups in Organizations,” further studies the benefits of referral based hiring, and finds that the positive impact does not effect different demographic groups equally. Rather, authors Jennifer Merluzzi and Adina Sterling find that referral-based hiring provides the biggest increase in promotional opportunities for racial minorities. The abstract for the paper:

While prior research has suggested that network-based hiring in the form of referrals can lead to better career outcomes, few studies have tested whether such career advantages differ across demographic groups. Using archival data from a single organization for nearly 16,000 employees over an 11-year period, the authors examine the effect of hiring by referrals on the number of promotions employees receive and Current Issue Coverthe differences in this effect across demographic groups. Drawing on theories of referral-based hiring, inequality, and career mobility, they argue that referral-based hiring provides unique promotion advantages for minorities compared to those hired without a referral. Consistent with this argument, they find that referrals are positively associated with promotions for one minority group, blacks, even after controlling for individual and regional labor market differences. The authors explore the possible mechanism for this finding, with initial evidence pointing to referrals providing a signal of quality for black employees. These results suggest refinement to prior research that attests that referral-based hiring disadvantages racial minorities.

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Beyond Developmental: The Decision-Making Applications of Personality Tests

5529311561_4ba9be7419_zThe use of personality assessments in organizations has often been limited to developmental applications. However, growing support for data-driven decision-making in recent years has made it apparent that personality assessments could also become a resource for talent management decisions. In a recent paper from Journal of Applied Behavioral Science entitled “Does Purpose Matter? The Stability of Personality Assessments in Organization Development and Talent Management Applications Over Time”, authors Allan H. Church, Christina R. Fleck, Garett C. Foster, Rebecca C. Levine, Felix J. Lopez, and Christopher T. Rotolo investigate the consistency of personality data over time and whether the changing application of personality assessments changes their validity. The abstract for the paper:

Personality assessment has a long history of application in the workplace. While the field of organization development has historically focused on developmental aspects of personality tools, other disciplines such as industrial-organizational psychology have emphasized its psychometric properties. The importance of data-driven insights for talent management (e.g., the identification of high potentials, succession Current Issue Coverplanning, coaching), however, is placing increasing pressure on all types of applied behavioral scientists to better understand the stability of personality tools for decision-making purposes. The current study presents research conducted with 207 senior leaders in a global consumer products organization on the use of personality assessment data over time and across two different conditions: development only and development to decision making. Results using three different tools (based on the Hogan Assessment Suite) indicate that core personality and personality derailers are generally not affected by the purpose of the assessment, though derailers do tend to moderate over time. The manifestation of values, motives, and preferences were found to change across administrations. Implications for organizational development and talent management applications are discussed.

You can read the paper, “Does Purpose Matter? The Stability of Personality Assessments in Organization Development and Talent Management Applications Over Time,” from Journal of Applied Behavioral Science free for the next two weeks by clicking here. Want to stay current on all of the latest research published by Journal of Applied Behavioral ScienceClick here to sign up for e-alerts!

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