Strategic Human Capital
2 credits
BU.142.730.xx
Class Day /Time & Start/End date
Semester
Class Location
Instructor
First name, Last name
Contact Information
Office:
Phone Number:
E-mail Address:
Teaching Assistant (TA), if applicable
Full Name; E-mail Address
Office Hours
Day/s
Times
Required Text and Learning Materials
1. Readings and Cases (some required, some optional; more details below).
2. Class notes (required) and additional readings (some required, some optional; more details below) will be
posted on the course web site on Blackboard.
3. Textbook (optional): Lazear, E. and Gibbs, M., “Personnel Economics in Practice”, 2nd Edition, John Wiley
and Sons, 2009. The textbook is optional, and it is meant as a reference source to look up more detailed
discussions of material covered in class.
Blackboard Site
A Blackboard course site is set up for this course. Each student is expected to check the site throughout the
semester as Blackboard will be the primary venue for outside classroom communications between the
instructors and the students. Students can access the course site at https://blackboard.jhu.edu. Support for
Blackboard is available at 1-866-669-6138.
Course Evaluation
As a research and learning community, the Carey Business School is committed to continuous improvement.
The faculty strongly encourages students to provide complete and honest feedback for this course. Please
take this activity seriously because we depend on your feedback to help us improve so you and your
colleagues will benefit. Information on how to complete the evaluation will be provided towards the end of the
course.
Disability Services
Johns Hopkins University and the Carey Business School are committed to making all academic programs,
support services, and facilities accessible. To determine eligibility for accommodations, please contact the
Carey Disability Services Office at time of admission and allow least four weeks prior to the beginning of the
first class meeting. Students should contact Rachel Hall in the Disability Services office by phone at 410-2349243, by fax at 443-529-1552, or email: [email protected].
Important Academic Policies and Services
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 Honor Code
 Statement of Diversity and Inclusion
 Tutoring
 Carey Writing Center
 Inclement Weather Policy
Students are strongly encouraged to consult the Johns Hopkins Carey Business School Student Handbook
and Academic Catalog and the School website http://carey.jhu.edu/syllabus_policies for detailed information
regarding the above items.
Course Description
Developing and managing human capital is vital for the success of any organization. In this course, students
will examine ways in which Human Resources Management can be used to enhance organizations’
competitive capabilities. The goal will be to understand how an organization can select, train and retain the
right employees, and how it can effectively motivate them to make decisions that will allow the organization to
successfully implement its overall strategy. Students will explore and master topics such as hiring and layoff
decisions, human capital and on-the-job training, turnover, the provision of incentives, the advantages and
disadvantages of alternative compensation schemes, objective and subjective performance evaluation, relative
performance evaluation, promotions and other career-based incentive schemes, team production and team
incentives, stock options and executive compensation, intrinsic and extrinsic motivation, non-monetary
compensation and employee benefits.
Course Overview
Our goal in this course is to understand how an organization can select, train and retain the right employees,
and how it can effectively motivate them to make decisions that will allow the organization to successfully
implement its overall strategy (thus generating maximum value for the organization’s owners), while taking into
account the interests of other relevant stakeholders and the constraints posed by the outside market and
institutional forces. The tools that you will learn in this course will be broadly applicable to a wide range of
organizations.
Examples of questions that we will be able to answer by the end of the course include: How can an
organization hire and retain the “right” people? Should firms pay for their employees' MBAs? Should they offer
on-the-job training? What is the optimal level of worker turnover? How should pay and promotions be
structured across jobs to induce best effort from employees? Should incentive systems be solely based on
objective performance measures or should they include elements of subjective evaluation? Why do firms use
teams and how are teams used most effectively? Why are CEOs and other top executives so highly paid and
why does their pay take the form that it does? How do incentives interact with employees’ intrinsic motivation
to do their job? Why are effective HR systems so difficult to imitate? What role do trust and fairness play in
modern organizations, and how do they interact with formal incentive schemes?
The course consists of a blend of case discussions and lecturing. Specifically, each topic will be introduced by
a class discussion of a real-world case. Then, the challenge will be to understand what can be taken away
from the case and generalized more broadly. We will emphasize the costs and benefits associated with each
practice, tool or approach that we will analyze. Once we have identified the key goal(s) of the organization and
the trade-offs associated with the tools at the organization’s disposal, we will be in a position to explore how,
why and under what circumstances various approaches work or do not work in practice.
Outline of Topics and Readings
Note: * denotes required readings; all other readings are only optional. In all sessions, the most important
reading to prepare before class is the case for discussion (see the document “Cases Questions for
Discussion” posted on Blackboard for a list of questions meant to guide case preparation for class discussion).
Other materials can be read later.
*** Please come to the first class prepared to discuss the SG Cowen: New Recruits case ***
Preliminaries
- Lecture Notes*
BU.142.730.xx - Strategic Human Capital - Instructor’s Name - page 3 of 6
- Lazear, “Labor Economics and the Psychology of Organizations” *
- Gibbs and Lazear, Introduction
1. Hiring
- Lecture Notes*
- HBS Case: “SG Cowen: New Recruits*
- Gibbs and Lazear, Chapters 1 and 2
2. Managing Turnover
- Lecture Notes*
- HBS Case: EcoLab Inc.*
- American Experience Episode from PBS: Silicon Valley.*
(http://www.youtube.com/watch?v=VeL4t5bvTj4)
- Gibbs and Lazear, Chapter 4
3. Human Capital Investments
- Golder and Mitra, “Academic Research is Good for MBA Students”, FT
- Arcidiacono et al., “The Economic Returns to an MBA”
- Bertrand et al. “Dynamics of the Gender Gap”
- Gibbs and Lazear, Chapter 3
4. Pay and Performance: Performance Measurement
- Lecture Notes*
- HBS Case: Brainard, Bennis and Farrell*
- C. Prendergast and R. Topel, “Discretion and Bias in Performance Appraisals”
5. Pay and Performance: Incentives and Firm Strategy
- Lecture Notes*
- HBS Case: Lincoln Electric*
- Roy, D. “Quota Restrictions and Gold Bricking in a Machine Shop” * (Pages 427-431, 436-437 and
440-441 only)
- Dial, Jay and Kevin J. Murphy, “Incentives, Downsizing, and Value Creation at General Dynamics,”
Journal of Financial Economics, Vol. 37(3) (March 1995): 261-314.
- Perry, N., “Here Come Richer, Riskier Pay Plans”
- Quigley, John M. (2008) "Compensation and Incentives in the Mortgage Business", Economists’ Voice
- Gibbs, M., “Getting Staff on Your Side”, FT
- Gibbs and Lazear, Chapter 10
6. Pay and Performance: Subjective Evaluation
- HBS Case: Merck & Co.*
- HBS Case: Rudi Gassner and the Executive Committee at BMG International*
- Culbert, Samuel, “Get Rid of the Performance Review!”, WSJ
- Gibbs and Lazear, Chapter 9
7. Team Production and Incentives
- Lecture Notes*
- Stanford Case: Southwest Airlines (A)*
- INSEAD Case: Continental Airlines: The Go Forward Plan*
- Gibbs and Lazear, Chapters 8 and 12
8. Promotions & Executive Compensation
- Lecture Notes*
- Jensen, M. and Murphy, K., “CEO Incentives: It’s not How Much you Pay, but How” *
- Weisbach, Micahel, “Review of `Pay Without Performance’ ”,
- Edmans A. and X. Gabaix, “Incentive Accounts: A Solution to Executive Compensation”
- Cantrell, Amanda “More than 100 Firms Probably Backdated Options” CNNMoney
- Gibbs and Lazear, Chapter 11
BU.142.730.xx - Strategic Human Capital - Instructor’s Name - page 4 of 6
9. Non-Monetary Pay and Mandated Benefits
- Lecture Notes*
- Stanford GSB Case: SAS Institute*
- Needleman, S.E., “Burger Chain's Health-Care Recipe”, The Wall Street Journal, August 31, 2009
10.
-
Incentives and Intrinsic Motivation
Lecture Notes*
Ellingsen and Johannesson, “Paying Respect”
Heyes, A. (2005), “The economics of vocation or ‘why is a badly paid nurse a good nurse’?”,Journal of
Health Economics 24 (2005) 561–569.
- Nelson and Folbre (2006): “Why a Well-Paid Nurse is a Better Nurse”, Nurs Econ 24(3):127-30.
Student Learning Objectives for This Course
All Carey graduates are expected to demonstrate competence on four Learning Goals, operationalized
in eight Learning Objectives. These learning goals and objectives are supported by the courses Carey
offers. For a complete list of Carey learning goals and objectives, please refer to the website
http://carey.jhu.edu/LearningAtCarey/LGO/index.html.
The learning objectives for this course are:
1. Students will learn, integrate and apply core concepts in human resources management as they relate
to broader business strategy.
2. Students will become familiar with the fundamental challenges associated with the design of reward
systems in organizations.
3. Students will develop a deep understanding of the constraints that external market forces create for
the employment relationship and the internal organization of firms.
4. Students will learn to assess workplace behaviors and business decisions in terms of human values,
ethical norms, and societal impact.
5. Students will develop skills that will help them to lead in a continuously adaptive business environment
and culture.
Learning Environment
This course is a masters-level class in the Carey Business School at Johns Hopkins University. As such, I
have a number of expectations for you as managers and as students at an elite university. Among them are
the following:
1. I expect you to come to class on time and prepared — i.e., having done the assigned reading and
case preparation.
2. I do not explicitly go over all of the readings in class. Rather, I use class time to build on assigned
readings. If you have substantive questions about the reading outside of class, I am always happy to
address them in office hours, or, better yet, on Blackboard—so your fellow students can benefit from
your question, too. Please post these substantive questions to the Substantive Questions forum on
Blackboard.
3. Cell phones and smartphones should be turned off and put away. Businesspeople and other
professionals do not/should not make or accept calls nor should they send or receive text messages
during meetings. Even though I might not say anything in real-time, violations of this norm will be
reflected in your participation grade.
4. Laptop computers may be used to take notes. However, they may not be used to check e-mails or surf
the internet. As with #3 above, violations will affect your participation grade.
5. I am always open to ideas, suggestions, and criticism regarding my approach to the material. I
encourage you to communicate openly and constructively with me on these matters.
I strongly suggest that you do not take this class if you are uncomfortable with the above enumerated
expectations.
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Attendance Policy
Your success in this course hinges on your active engagement, which, at minimum, requires your regular
attendance in-class and on Blackboard. In fact, class attendance and participation will contribute to each
student’s course grade. Failure to attend class will result in an inability to achieve the objectives of the course.
I therefore expect students to attend all eight class sessions. However, if you choose to skip class you
1. need not inform me in advance, and
2. will be responsible for all information covered in class, both substantive and administrative (you are
strongly encouraged to obtain that information from a classmate).
The direct penalty for your absence will be your class absence and the lack of contribution to class.
Assignments that are due must be submitted on-time irrespective of your attendance in order to be evaluated
without penalty. Given the nature of the assignments, many of which are intended to be delivered before we
discuss the material in class, I cannot accept them late.
Assignments
1. Case summaries (6 write-ups, graded Pass/Fail, due at the beginning of the relevant class session
from sessions #2 to #7 both included). These summaries must be AT MOST one page (one side) long
and they must summarize the key human resource challenge(s) faced by the organization in the case.
Case analysis will take place during class discussion.
2. 20-minute quizzes (2 quizzes, administered in sessions #3 and #5 at the beginning of class). No
“cheat” sheet is allowed during quizzes.
3. Final Exam (last week of class). A one-side cheat sheet is allowed during the final exam.
Evaluation and Grading
Your course grade is the weighted average of your grades for (1) attendance and participation, (2) case
summaries, (3) quizzes, and (4) final exam, such that:
Assignment
Attendance and participation in class discussion
Case summaries (6 write-ups)
Reading check quizzes (2 quizzes)
Final Exam
Total
Learning Objectives
NA
1, 2, 3, 4 and 5
1, 2, 3, 4 and 5
1, 2, 3 and 5
Weight
20% (*)
12% (**)
30%(***)
38%
100%
(*) Students will receive points according to their attendance and class participation in each lecture: 0 points
for no attendance; 1 point for attendance and no class participation; 2 points for class participation; and 3
points for class participation that fosters discussion and understanding of other students.
Students will also receive participation points for their contribution to “SHC in the News”: Students are
encouraged to submit links to current or recent news articles related to topics covered in class. These articles
must relate EVENTS and therefore comments from blogs, academic papers, and opinion articles are excluded
from this category. The most relevant and interesting articles will be posted on the course web site and might
be discussed in class. Students will receive 1 point for each article submitted, provided it is actually relevant
and related to course topics. The maximum number of points that can be accumulated for article submissions
is 5. Links should be sent to the instructor’s e-mail address. The student should describe in her/his e-mail why
and how the article relates to class concepts. Inadequate explanation will result in zero points. The student will
receive his/her final attendance and participation grade relative to the student with the highest amount of
points (Note: if the highest amount of points is zero, all students will receive zero points).
BU.142.730.xx - Strategic Human Capital - Instructor’s Name - page 6 of 6
(**) 2% for each case summary handed-in on time. I will award 1% if the deliverable is not summarizing the
content of the case, and 0% if the case is handed in late or not handed in at all.
(***) 15% each quiz. Students can skip at most one quiz, in which case the weight will be shifted to the final
exam. If a student skips two quizzes, he or she will receive a zero on the second skipped quiz.
Important notes about grading policy:
The grade for good performance in a course will be a B+/B. The grade of A- will only be awarded for
excellent performance. The grade of A will be reserved for those who demonstrate extraordinarily excellent
performance. *The grades of D+, D, and D- are not awarded at the graduate level. Grade appeals will ONLY
be considered in the case of a documented clerical error.
Tentative Course Calendar*
*The instructors reserve the right to alter course content and/or adjust the pace to accommodate class
progress. Students are responsible for keeping up with all adjustments to the course calendar.
Week
Date
1
2
3
4
5
6
7
8
Content
Preliminaries
1.Hiring
2.Managing Turnover
3.Human Capital Investments
4. Pay and Performance:
Performance Measurement
5.Pay and Performance: Incentives
and Firm Strategy
6: Pay and Performance : Subjective
Evaluation
7: Team Production and Incentives
8: Promotions and CEO Pay
9: Non-Monetary Pay and Mandated
Benefits
10: Incentives and Employee
Motivation
Final Exam
Cases/Readings
SG Cowen (HBS)
Ecolab (HBS)
Shockley Labs
Brainard, Bennis and Farrell (HBS)
Lincoln Electric (HBS)
Quota restrictions and goldbricking
Merck & Co. (HBS)
BMG International (HBS)
Southwest Airlines (Stanford via HBS)
Continental Airlines (INSEAD via HBS)
SAS institute
Copyright Statement
Unless explicitly allowed by the instructor, course materials, class discussions, and examinations are created
for and expected to be used by class participants only. The recording and rebroadcasting of such material, by
any means, is forbidden. Violations are subject to sanctions under the Honor Code.