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Economic perspective AHRM

6 important questions on Economic perspective AHRM

What is the controlling idea of an economic perspective combined with HRM?

The internationalization of the world economies requires HR professionals to understand economic conditions which incl the interaction between product market competition, labor market conditions, law and the demographic landscape.

What is meant with efficicency wage theory - pay out weighs costs? (2)

1 Highly skilled employee; decentralized decision-making need high caliber employees.
2 When organization has difficulty in observing and monitoring employee behavior.

In most instances market pay and job evaluation yield (opbrengst) similar data. What are the differences/problems? (2)

1 Differ: sometimes supply and demand: supply of people outweigh demand; thus lower salary. It is hard to observe with the job evaluation technique
2 Gap in female and male salaries: females work is often undervalued and thus job evaluation rank is lower. This difference is not detectable by market pay surveys.

What does Gunderson mean with 'economic of HRM'?

Economics entered the HRM domain because of the gap in knowledge could be filled/explained by economics. People and organizations make optimizing choices subject to constraints of income, time, uncertainty, legislative and institutional requirement (eisen).

How do organizations avoid fixed hiring costs? (4)

1 Non-standard or contigent employment, e.g. limited term contracts, temporary agencies, sub-contracting (NL=consultants)
2 Work existing workforce long hours or extended periods (lange uren/langere tijd)
3 Underutilizing employees rather than laying them off
4 All are less expensive solutions than hiring additional workers

What are the 2 common elements in the economics of personnel?

1 Principal-agent issues are at the heart of many applications in that they involve designing contractual arrangements so that the principal (employer) and agent (employee) have incentives to act in their joint interest.
2 Quality dimension and work effort margins are difficult to observe, yet HR economics has a prescriptive and practical bent e.g. if organizations want to increase employee performance they may have to reward them.

The question on the page originate from the summary of the following study material:

Economics of personnel and human resource management. | Gunderson

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