Effective Human Resource Management: A Global Analysis

By Edward E. Lawler III; John W. Boudreau | Go to book overview

CHAPTER 6
HR Decision Science

The growing recognition that human capital decisions must become more sophisticated and strategically relevant represents a challenge for both HR professionals and managers throughout organizations. Consistent with the tenets of decision science in other fields, the key issues involve not only the overall sophistication and quality of human capital decisions, but also the quality of the principles underlying those decisions.

High-quality decisions can occur only if HR professionals and other managers understand how human capital affects sustainable organizational effectiveness and if they use that understanding to identify and make key human capital decisions. To date, there has been little research on the decision frameworks used by HR and other business leaders. In this chapter, we present results on the quality of human capital decisions and the relationship between decision quality and the strategic role of HR.


Quality of Decisions about Talent and Human Capital

Table 6.1 shows the responses of HR executives and those of managers to questions designed to tap the state of the decision science for human capital management. The first item poses the fundamental question of whether their organization excels in the competition for critical talent. Both groups rate their organization as moderately effective in competing for key talent, with managers rating this item significantly higher but still near the midpoint of the scale, a somewhat different pattern from 2007, when there was no difference.

Managers report significantly greater business leader talent decision quality than do HR executives. Table 6.1 shows this is true for the question that taps the definition of Talentship: “decisions that depend upon or impact human capital are as rigorous, logical, and strategically relevant as decisions about more tangible resources.” It is also true for business leaders’ use of sound principles when making decisions in the four areas of behavioral science (numbered 1 through 4 in Table 6.1).

For HR executives, all the ratings are at the midpoint or slightly below, suggesting only moderate decision quality where human capital is involved; while for managers the ratings are closer to 4 on a 5-point scale, suggesting they perceive their understanding and use of sound principles to be relatively good.

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