Utility Analysis: A New Perspective on Human Resource Management Decision Making

Abstract

[Excerpt] What do Human Resource Management (HRM) decisions contribute to organizational objectives? Are the organizational investments in HRM programs (such as pay for knowledge, enhanced employee benefits, training, staffing, and employee involvement) justified by their returns? Since labor costs can exceed fifty percent of total operating expenses (Milkovich & Boudreau, 1988), are the human resources being managed with the same accountability, rationality and care as the plant, equipment and marketing resources? Is such management even possible with human resources, or are the "people issues" facing organizations simply too ill-defined and unpredictable to be managed systematically?