Functions of Human Resource Management
Planning
Organizing
Controlling
Question on Functions of Human Resource Management

·         Planning

·         Organizing

·         Directing

·         Controlling

A manager must plan ahead in order to get things done by his subordinates. It is also important to plan in order to give the organization its goals.

Also, planning helps establish the best procedures to reach the goals. Further, some effective managers devote a substantial part of their time to planning.

With respect to the human resource department, planning involves determining the personnel programs that can contribute to achieving the organization’s goals.

These programs include anticipating the hiring needs of the organization, planning job requirements, descriptions, and determining the sources of recruitment.

After the human resource manager establishes the objectives and develops plans and programs to achieve them, he needs to design and develop the organization’s structure to carry out the different operations. Developing the organization’s structure includes:

·         Grouping of personnel activity into functions or positions

·         Assigning different groups of activities to different individuals

·         Delegating authority according to the tasks assigned and responsibilities involved

·         Coordinating activities of different employees

Directing

The HR Manager can create plans, but implementing the plans smoothly depends on how motivated the people are. The directing functions of HRM involve encouraging people to work willingly and efficiently to achieve the goals of the organization. In simpler words, the directing functions of HRM entail guiding and motivating people to accomplish the personnel programs.

The HRM can motivate the employees through career planning and salary administration by boosting the employee’s morale, developing relationships, providing safety requirements, and looking after the welfare of employees.

In order to do this effectively, the HRM must identify the needs of the employees and the means and methods to satisfy them. Motivation is a continuous process as employees have new needs and expectations when the old ones are satisfied.

Controlling is all about regulating activities in accordance with the plans formulated based on the objectives of the organization. This is the fourth function of the HRM and completes the cycle. In this, the manager observes and subsequently compares the results with the set standards.

Further, he corrects any deviations that might occur. Controlling is one of the important functions of HRM as it helps him evaluate and control the performance of the department with respect to different operative functions. It also involves appraisals, audit, statistics, etc.

Q1. What are the four basic functions of HRM?

Answer:

The four basic functions of the HRM are similar to those of any manager – planning, organizing, directing, and controlling.

taylor scientific management

Taylor scientific management

Frederic Winslow Taylor started his career as a mechanist in 1875. He studied engineering in an evening college and rose to the position of chief engineer in his organization. He invented high-speed steel cutting tools and spent most of his life as a consulting engineer.

Frederick Winslow Taylor (1856-1915) is is called the father of Scientific Management. His experience from the bottom-most level in the organization gave him an opportunity to know at first the problems of the workers. Taylor’s principal concern was that of increasing efficiency in production, not only to lower costs and raise profits but also to make possible increased pay for workers through their higher productivity.

Taylor saw productivity as the answer to both higher wages and higher profits. He believed that the application of the scientific method, instead of customs and rule of thumb could yield this productivity without the expenditure of more human energy or effort.

Taylor published a book entitled, The Principles of Scientific Management, in 1911. But his ideas about scientific management are best expressed in his testimony that was placed before a committee of the House of Representatives in 1912. Industrial problems increased due to the advent of large scale factory systems, mass production and mechanization.

People needed some specific principles an methods for solving the problems they faced. The initial impetus in scientific management movement was Taylor. He was more concerned with the engineering aspect and the problems of workers and productivity oriented wages.

F. W. Taylor’s 4 Principles of Scientific Management

The fundamental principles that Taylor saw underlying the scientific approach to management may be summarized as follows:

. Replace rule-of-thumb work methods with methods based on a scientific study of the tasks.

2. Scientifically select, train, and develop each worker rather than passively leaving them to train themselves.

3. Cooperate with the workers to ensure that the scientifically developed methods are being followed.

4. Divide work nearly equally between managers and workers, so that the managers apply scientific management principles to planning the work and the workers actually perform the tasks.

Taylor concentrated more on productivity and productivity based wages. He stressed on time and motion study and other techniques for measuring work. Apart from this, in Taylor’s work, there also runs a strongly humanistic theme. He had an idealist’s notion that the interests of workers, managers and owners should be harmonized.

human resources Henry Fayol principles of mangement 14 principles

Principles of Management by Henri Fayol

Henri Fayol is claimed to be the real father of modern management. He was a Frenchman born in 1841 and was working as an engineer with a mining company. He improved the condition of the company from virtual bankruptcy to high success. From his practical experience, he developed some techniques. He brought out some 14 basic management principles, which he felt, could be used in all management situations, irrespective of the organizational framework.

He wrote a book entitled, General and lndustrial Management, in French that was later on translated into English. It is now considered as one of the classics of management literature. The book mainly covers the aspects of the immutable and repetitive character of the management process and the concept that management can be taught in the classroom or the workplace. He also laid down the principles of management, which he deemed important for any organization.

Division of Work: This is the principle of specialization, which is very well expressed by economists as being a necessary factor for efficiency in the utilization of labor.

Authority and Responsibility: In this principle, Fayol conceives authority as a combination of official authority deriving from a manager’s official position and personal authority, which is compounded of intelligence, experience, moral worth, past services etc.

Discipline: Holding the notion that discipline is ‘respect for agreements which are directed as achieving obedience, application, energy and the outward marks of respect’, Fayol declares that discipline requires good superiors at all levels, clear and fair agreements and judicious application of penalties.

Unit of Command: This is the principle, which states that on employee should receive orders from one superior only.

Unity of Direction: According to Fayol, the unity of direction principle implies that each group of activities having the some objectives must have one head and one plan. As distinguished from the principle of unity of command, Fayol perceives unity of direction as related to the functioning of personnel.

Subordination of Individual Interest to General Interest: In any group, the interest of the group should supersede that of the individual. When the interests differ, it is the function of the management to reconcile them.

Remuneration of Personnel: Fayol perceives that remuneration and methods of payment should be fair and also should be able to afford the maximum satisfaction to employee and employer

Order: Breaking this principle into material order and social order, Fayol thinks of it as a simple edge for everything. This organization is the principle, which refers to arrangement of things and persons in an organization.

Equity: Fayol perceives this principle as one of eliciting loyalty and devotion from personnel with a combination of kindliness and justice in managers while dealing with subordinates.

Stability of Tenure of Personnel: Finding that instability is both the cause and effect of bad management, Fayol points out the dangers and costs of unnecessary turnover.

Initiative: Initiative is conceived as the process of thinking out and executing a plan. Since it is one of the keenest satisfactions for an intelligent man to experience, Fayol exhorts managers to sacrifice personal vanity in order to permit subordinates to exercise it.

Esprit de corps: This principle implies that union is strength and an extension of the principle of unity of command. Fayol here emphasizes on the need for teamwork and the importance of communication in obtaining it.

forms of market structure

Main differences between Microeconomics and Macroeconomics are as under:
Microeconomics:
1. It is the study of individual economic units of an economy.
2. It deals with Individual Income, Individual prices, Individual output, etc.
3. Its central problem is price determination and allocation of resources.
4. Its main tools are demand and supply of a particular commodity/factor.
5. It helps to solve the central problem of ‘what, how and for whom’ to produce. In the economy
6. It discusses how equilibrium of a consumer, a producer or an Industry Is attained.

. Price is the main determinant of micro- economic problems.

8. Examples are: Individual Income, Individual savings, price determination of a commodity, individual firm’s output, consumer’s equilibrium.

Macroeconomics:
1. It is the study of economy as a whole and its aggregates.

2. It deals with aggregates like national Income, general price level, national output, etc.
3. Its central problem is determination of level of Income and employment.

4. Its main tools are aggregate demand and aggregate supply of the economy as a whole.

5. It helps to solve the central problem of full employment of resources in the economy.

6. It is concerned with the determination of equilibrium level of Income and employment of the economy.

7. Income is the major determinant of macroeconomic problems.

8. Examples are: National Income, national savings, general price level, aggregate demand, aggregate supply, poverty, unemployment, etc.

 
Whats does demand mean?
Demand is an economic principle referring to a consumer's desire to purchase goods and services and willingness to pay a price for a specific good or service. Holding all other factors constant, an increase in the price of a good or service will decrease the quantity demanded, and vice versa.

What is the basic law of demand?
In microeconomics, the law of demand states that, "conditional on all else being equal, as the price of a good increases (↑), quantity demanded decreases (↓); conversely, as the price of a good decreases (↓), quantity demanded increases (↑)".

What is meant by elasticity of demand?
In economics, the demand elasticity (elasticity of demand) refers to how sensitive the demand for a good is to changes in other economic variables, such as prices and consumer income. Demand elasticity is calculated as the percent change in the quantity demanded divided by a percent change in another economic variable

What is price elasticity of demand in economics?
Price elasticity of demand is an economic measure of the change in the quantity demanded or purchased of a product in relation to its price change. Expressed mathematically, it is: Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price.

The law of diminishing marginal utility explains that as a person consumes an item or a product, the satisfaction or utility that they derive from the product wanes as they consume more and more of that product. For example, an individual might buy a certain type of chocolate for a while. Soon, they may buy less and choose another type of chocolate or buy cookies instead because the satisfaction they were initially getting from the chocolate is diminishing.


In economics, the law of diminishing marginal utility states that the marginal utility of a good or service declines as its available supply increases. Economic actors devote each successive unit of the good or service towards less and less valued ends. The law of diminishing marginal utility is used to explain other economic phenomena, such as time preference.

The Law of Diminishing Marginal Utility Explained
Whenever an individual interacts with an economic good, that individual acts in a way that demonstrates the order in which they value the use of that good. Thus, the first unit that is consumed is dedicated to the individual's most valued end. The second unit is devoted to the second most valued end, and so on. In other words, the law of diminishing marginal utility postulates that when consumers go to market to purchase a commodity, they do not attach equal importance to all the commodities they buy. They will pay more for some commodities and less for others.

As another example, consider an individual on a deserted island who finds a case of bottled water that washes ashore. That person might drink the first bottle indicating that satisfying their thirst was the most important use of the water. The individual might bathe themselves with the second bottle, or they might decide to save it for later. If they save it for later, this indicates that the person values the future use of the water more than bathing today, but still less than the immediate quenching of their thirst. This is called ordinal time preference. This concept helps explain savings and investing versus current consumption and spending.

ENG ECONOMICS NOTES FOR BTECH EE BRANCH

Working capital definition and example

  Working capital is defined as current assets minus current liabilities. For example, if a company has current assets of $90,000 and its current liabilities are $80,000, the company has working capital of $10,000. Note that working capital is an amount. Some of the factors that determine the amount of working capital needed include:

• Whether or not a company needs to have an inventory of goods
• How fast customers pay for goods or services
• How fast the company must pay its suppliers
• The company's growth rate
• The company's profitability
• The company's ability to get financing

Working capital can be increased by:

• Profitable business operations
• Sale of long-term assets
• Long-term borrowings
• Investment by owners

Working capital can decrease from:

• Unprofitable business operations
• Purchasing long-term assets (without long-term financing)
• Repaying long-term debt
• Distributing cash to owners

Liquidity definition

Liquidity is having the money to pay the company's obligations when they are due. In other words, it is the company's ability to convert its current assets to cash so that the current liabilities can be paid when they come due. Liquidity is necessary for a company to continue its business operations. Liquidity could increase by:

• Increasing working capital (see the above list for increasing working capital)
• Increasing the speed at which current assets are converted to cash
• Delaying the payment of current liabilities
• Delaying the payment of long-term liabilities
• Omitting the distribution of cash to owners

Liquidity could decrease from:

• A decrease in working capital (see the above list for decreasing working capital)
• Purchasing and/or producing too many items for inventory
• A slowdown in the speed at which current assets are converted to cash
• Paying current liabilities too soon

Working capital vs. liquidity

A retailer, distributor or manufacturer may have a large amount of working capital. However, if most of its current assets are in slow-moving inventory, the company may not have the liquidity to pay its obligations on the agreed upon due dates. Similarly, if a company is unable to collect its accounts receivable, it may not have the liquidity to pay its obligations. In contrast, consider a company that sells popular products online and customers pay with bank credit cards or debit cards when they order. Further, the company's suppliers allow the company to pay 60 days after it purchases the products. This company may have very little in working capital, but it may have the liquidity it needs.

Financial ratios and other metrics

There are some financial ratios and metrics that are closely related to working capital and liquidity, such as:

• Amount of working capital
• Current ratio
• Quick ratio
• Accounts receivable turnover ratio
• Average collection period
• Inventory turnover ratio
• Days' sales in inventory
• Cash from operating activities
• Operating cash flow ratio

We will discuss and calculate each of these. We will also point out that if these metrics are calculated by using the amounts from a company's financial statements, the amounts are likely from the prior year. Further, the amounts reported on the financial statements are highly-summarized. Hence, some unusual transactions and amounts will likely be hidden or buried by the enormous number of normal transactions. People within a company will have access to more current amounts and more detailed information that can be sorted, reviewed and analyzed. Therefore, people within a company will gain more insights from the detailed internal information than someone calculating financial ratios by using the amounts reported on the prior year's published financial statements.

Finding the root cause

It is also important to understand the root cause for a change in working capital and/or liquidity. In the case of a liquidity problem, you should "drill down" by asking "Why has liquidity decreased?" You may discover a decrease in the company's accounts receivable turnover rate and an increase in its average collection period. Next ask "Why is there a decrease in the turnover rate and the increase in the average collection period?" You may find that two large customers have slowed their remittances of the amounts they owe. That should lead to another question: "Why is Customer X not paying according to the agreed-upon terms?" The answers could range from the customer is having financial difficulty to the customer is not pleased with the company's products or service. That should lead to yet another "Why?" question. The goal is to get past the symptoms and get to the root cause. Similarly, if the decreases in working capital and/or liquidity are due to unprofitable business operations, a person should also begin a series of "Why?" questions. The answers may lead to an urgent need for an immediate reduction in expenses lest the company is forced to stop operating. Eliminating operating losses is also important for ongoing relationships with lenders, suppliers, customers, employees, owners and more.

Cash is king

"Cash is king" is a popular phrase for several reasons. One reason involves liquidity: cash is necessary to meet Friday's payroll, to make a loan payment, to pay suppliers, to remit payroll taxes, etc. Another reason for "cash is king" pertains to the accrual method of accounting. Under this generally required method of accounting, a company's financial statements will report revenues and the related receivables when they are earned (not when the customers' cash is received). Further, expenses and liabilities are reported when they are incurred (not when the cash is paid out). Because of the judgements used in determining when the revenues and expenses are reported on the income statement, there is a concern with this perceived "flexibility". With cash there are no judgments or estimates involved. The company either has the cash or it doesn't. Fortunately, companies are required to include the statement of cash flows (SCF) whenever its financial statements are distributed. The SCF will report the major cash inflows and cash outflows during the same period as the income statement. The SCF also reconciles the change in a company's cash during the past year. Since liquidity involves cash, you will gain valuable insights by understanding the SCF.

Components of Working Capital

Working capital (also known as net working capital) is defined as current assets minus current liabilities. Therefore, a company with $120,000 of current assets and $90,000 of current liabilities will have $30,000 of working capital. A company with $100,000 of current assets and $100,000 of current liabilities has no working capital. As you can see, working capital is an amount even though it is usually discussed as part of financial ratios.

Current assets

A major component of working capital is current assets. A shortened definition of current assets is: a company's cash plus its other resources that are expected to turn to cash within one year. However, the following is a more complete definition: Current assets include cash (which is not restricted for a long-term purpose) plus the company's other resources that will turn to cash or will be used up within one year (of the date shown in the heading of the balance sheet). However, in the rare situations when a company's normal operating cycle is longer than one year, the length of the operating cycle is used in place of one year for determining a current asset. Examples of current assets (listed in the order they are expected to turn into cash) include:

• cash and cash equivalents
• temporary investments
• accounts receivable
• inventory
• supplies
• prepaid expenses

Current liabilities

The other major component of working capital is current liabilities. A shortened definition of current liabilities is: a company's obligations that will be due within one year. However, a more complete definition is: Current liabilities are a company's obligations (that are the result of a past event) that will be due within one year of the balance sheet's date. However, in the rare situations when a company's normal operating cycle is longer than one year, the length of the operating cycle is used in place of one year for determining a current liability. Examples of current liabilities include:

• loan principal amounts that will be due within one year
• accounts payable
• wages payable
• payroll taxes withheld from employees
• accrued expenses/liabilities (utilities, repairs, interest, etc.)
• customer deposits and deferred revenues

If there is assurance that a current liability will be replaced by a long-term liability, it should be reported as a long-term liability. (The reason is the liability will not be requiring the use of the company's working capital.)

Operating cycle

For a complete understanding of working capital, current assets, and current liabilities, it is necessary to understand the term operating cycle. A company's operating cycle is the average amount of time it takes for the company's cash to be put into the business operations and then make its way back into the company's cash account. To illustrate, let's assume that a distributor of products experiences the following:

1. It uses its cash to purchase inventory items
2. It takes on average 120 days to get the items sold by offering credit terms of 30 days
3. On average, the company receives the money from these customers 45 days after the sales occurred (even though the credit terms were 30 days)

With these conditions, the distributor's operating cycle is on average 165 days, as illustrated here:

hroughout this topic you should assume that the companies we are discussing have:

• operating cycles of less than one year
• insignificant amounts of supplies and prepaid expenses

Reporting Working Capital, Current Assets, Current Liabilities

Working capital

Typically, a company issues a classified balance sheet, which means it has several classifications (or categories) of assets and liabilities. The typical classifications are shown in this condensed balance sheet:

he classified balance sheet allows users to quickly determine the amount of the company's working capital. Using the amounts from the above balance sheet, we have:

  Current Assets = 170,000

Current liability(-)100,000

 Working Capital = 70,000

A company's working capital must be managed so that cash will be available to pay the company's obligations when they come due. This is important for:

• having a positive relationship with creditors, employees, and others
• complying with the terms and conditions in a loan agreement
• maintaining an excellent credit rating

What is fixed capital? Definition and examples

Fixed capital is capital or money that we invest in fixed assets. In other words, money that we invest in assets of a durable nature. These are assets that we repeatedly use over a long period. We can also use the term ‘fixed investment‘ with the same meaning.

Fixed assets are tangible assets that we cannot convert into cash easily. Property is an example of a fixed asset. So are plant and equipment.

We do not resell fixed assets as part of our everyday business operations. We use fixed assets in the production of our company’s income or for administrative purposes.

Some people use the terms fixed assets/capital interchangeably. However, technically, when we use the term ‘capital,’ we refer to the money we invest in fixed assets.

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Fixed capital for businesses

The term includes all the capital investments and assets that we need to start up a business. It also includes all the capital investments and assets we need to conduct business at any stage.

We invest the money in assets that we cannot consume or destroy during the production of a product. We cannot consume or destroy them in the delivery of a service either. Hence, they are ‘fixed assets.’ However, they have a reusable value.

Fixed assets include tangible items we need for business operations. It does not include items we use in the production of something.

For example, equipment and facilities form part of fixed assets. Wood, however, in a furniture factory, is not. We use wood in the production of furniture, i.e., it is a component of an item of furniture.

The term contrasts with circulating capital. Circulating capital includes, for example, raw materials.

Therefore, in furniture a factory, we refer to the building and machinery as fixed assets and the wood as circulating capital.

METHODS OF RAISING CAPITAL or FINANCE

 You have learnt that there are different purposes for which funds have to be raised for periods ranging from very short to fairly long duration. The size and nature of business determine the total amount of financial needs. The scope of raising funds depends on the sources from which flnds may be available. For a sole proprietor, there are limited opportunities for raising funds. He can finance his business by any of the following means:

1 Investment of own savings

2 Raising loans from friends and relatives

3 Arranging advances from commercial banks

 4 Borrowing from finance companie

s The same methods of financing are available to partnership firms also. In both these forms of business organisations, long-term capital is generally provided by the owners, i.e., sole proprietor or the partners. Fixed capital can be raised by way of loans from friends and relatives on the personal security of owners. Generally short-term working capital needs are met partly by trade creditors (suppliers of materials and goods) and loans from finance companies. Another method of securing both long and short-term finance is the reinvestment of profits earned from time to time.

 In the case of companies, there are a number of methods of raising finance. To rais.e long-term and medium-term capital, companies have the following options:

 1 Issue of shares

2 Issue of debentures

3 Loans from financial institutions

4 Loans from commercial banks

5 Public deposits

6 Retention of profits

 The following methods may be used to finance short-term capital:

I Trade credit

 2 Factoring

3 Discounting bills of exchange

4 Bank overdraft and cash credit

 5 Public deposits

MOCKING BIRD - ECONOMICS

                                                 

Recently a mocking bird in an ‘economist clothing’ was making right noise to break the silence of the government on the failure on the economic front. All the con artists disguised themselves as Economic Advisors, Ministers and self-proclaimed well-wishers at social media aim verbal barrels at mocking bird to make it silent. But what about the those birds from the friendly feather, one of them like Rajiv Kumar, the head of the government's think tank Nitti Analog, recently claimed that the current slowdown was unprecedented in 70 years of independent India and called for immediate policy intervention. Another Chief Economic Advisor to the Prime Minister Mr. Krishnamurthy Subramanian preached the industries not are behaving like immature adults who always seek help from his father whenever he is in trouble. He was essentially saying that more than 30 years since economic liberalization in the country and the Indian Industries have been simply unable to face the economic downturn. There is no need to bail them out.

The contradictory statements among the members of the economic team of Mr Modi and his government are not about whether India is facing an economic slowdown or not, but about how grave the current economic crisis is.
This is a remarkable reversal in the stance of the same group of economists who, until a few months ago, were poetic about how India was the fastest growing economy in the world, generating seven million jobs a year.
It was less than just two years ago, in November 2017, that the global rating agency Moody's upgraded India's sovereign ratings for the first time in 14 years.
,Moody's had then justified the rating upgrade, it argued that the economy was undergoing dramatic "structural" reforms under Mr. Modi. The current govt is in confusion whether to call this a slowdown as structural or cyclical one. In the two years since, Moody's has downgraded its 2019 GDP growth forecast for India frequently - from 7.5% to 7.4% to 6.8% to 6.2% Now the government has admitted  that the GDP growth down at 5%.
The immediate question whether India's economic condition really is that grim and, if yes, how did it deteriorate so rapidly?
The Emperor should know that economy has no clothes it was actually wrapped up with fancy dress to look attractive now the economy has become an ‘angry bird ‘and it forces the emperor run for cover too.