Tag: Procedure

  • What are the Human Resource Policies and Procedures?

    What are the Human Resource Policies and Procedures?

    Human Resource Policies and Procedures; They can define as “continuing guidelines on the approach the organization intends to adopt in managing its people”. They exist formal rules adopted by a business that defines how to employ, train, assess, and reward the personnel, forming the philosophies of the organization; which lead to the principles that managers exist supposed to practice when coping with HR matters.

    Here is the article to explain, How to define the Human Resource Policies and Procedures?

    Consequently, human resource policies and procedures help in the decision-making process concerning staff when HR practices unfold. The assignment looks at an HR policies concept that promises to help organizations to manage various situations in the working environment. The central statement that this part attempted to discuss and debate is:

    Introduction;

    According to Salinas O. in his Article “Other concepts and tools in Human Resources”. Policies of recruitment, implementation, maintenance, development, and control of Human resources are vital for the proper performance of the workforce in the company.

    “In our opinion, the policies set by the company will never be unnecessary, just poorly developed or they have not been designed”.

    Advantages and Disadvantages of Human Resource Policies and Procedures;

    The main claim made for human resource policies and procedures is that when they exist well-organized; it can eliminate potential misinterpretations between employees and employers defining their rights and obligations within the firm.

    Ramey & Sniffen claim that;

    “Sound human resource policy is a necessity in the growth of any business or company”.

    Authors believe that recognition of this necessity usually appears after the increase in time and money wasted on resolving human resource issues. These resources could exist well spent on production, marketing, and planning for growth.

    Effective, consistent, and fair human resource decisions exist often made more time-consuming by a lack of written, standardized policies and procedures. The advantages of written HR policies may sound obvious, but there are also disadvantages.

    According to Armstrong, formal policies can be inflexible, constrictive, and platitudinous. Moreover, policies exist often expressed in abstract terms that may lead managers to get confused over abstractions.

    It appeared that even though HR experts tend to believe that written policies are a necessity, employees are usually against them; it as written records may become dangerous and can be used against them in a lawsuit and vice versa; the organization can become a subject to similar attacks.

    Organizational Analysis;

    We can notice examples that show us the relationship between cause and effect of the poorly developed policies; which further lead to organizational problems and low productivity. This can reflect in the following organizational examples analyzed below; however, some of the organizations mentioned have adopted some human resource policies and procedures which brought a positive impact on the organization.

    Organizational Examples;

    Wright et al. argue that companies start treating people as a human capital of competitive advantage; which can take through the human resource policies and procedures that best leverage HR practices and its performance. Hilton International’s UK hotels perceive this idea as being fundamentally concerned with the deployment of a service culture; throughout the organization by paying special attention to line manager involvement in human resource practice.

    HR policy stands also designed to address gender issues with an emphasis on equal opportunities and efficiency concerns. Not taking these issues seriously usually leads to sexual discrimination, particularly among the woman’s workforce sector.

    Examples of Human Resource Policies and Procedures Company;

    A study conducted by Standing describes the lack of reference to gender issues mostly in developing countries. It is exemplified that in Zimbabwe women’s formal sector employment is mainly in the service sector and women stand at the lower end of the hierarchy and salary grades. It exists also noted that in Uganda, only 3.7% of women are employed in professional, technical, clerical, and managerial occupations.

    LG Electronics India Company;

    LG Electronics India had come up with a new and improved HR Policy by introducing the Joyful Working 5 (JW5) program. To accelerate and strengthen the Culture at LGEIL as the survey stood conducted within the company; which mainly focused on the monotony employees are facing at work and the boredom they are undergoing. Such policy created the platform for both the employees and employers in a better understanding and pleasant work environment; which not only helped the company create a compelling future; but also build the culture of striving for the number one position in the industry.

    NHS Direct or UNISON Company;

    NHS Direct was planning to redundant some of their employees in the next few months. With the formal company policies in place; the UNISON union committee had fought back with the statement that NHS Direct has breached policy for reasons; which include failing to consult with UNISON’s collective committee that there were plans to issue an advance notice of redundancies.

    As a result, NHS Direct’s director of human resources said;

    “If the proposal is accepted, we would, wherever possible, offer staff alternative employment at nearby NHS Direct sites, and redundancies would only take effect as a last resort”.

    Blue Cross Company;

    This is a case about Blue Cross Company; according to Larson, Susan Baldwin working for Blue Cross Company claimed she existed subjected to various profanities and sexual innuendo from her boss. Blue Cross immediately interviewed Scott Head, the alleged harasser, and three other employees, but no one substantiated Baldwin’s claims. Rather than terminating or disciplining the supervisor, Blue Cross gave him a warning and offered to hire an industrial psychologist to counsel both him and Baldwin. She refused. When Baldwin refused Blue Cross’s subsequent offer to transfer her to another location, she stood terminated. Her lawsuit followed quickly.

    The court found that Blue Cross was not liable for discrimination for terminating Baldwin because, “Firing an employee because she will not cooperate with the employer’s reasonable efforts to resolving her complaints is not discrimination based on sex, even if the complaints are about sexual harassment”. The court also found that Blue Cross was not liable for the alleged acts of its supervisor; because it exercised reasonable care to promptly correct harassing behavior; as soon as it existed reported, and Baldwin unreasonably failed to take advantage of the remedial actions Blue Cross offered.

    Sharon Coleman a former legal secretary;

    A case about Sharon Coleman a former legal secretary in July 2008, won a legal battle in the European Court of Justice against her employers Attridge Law (now called EBR Attridge LLP); whom she accused of discriminating against her at the workplace and of having forced her into accepting voluntary redundancy.

    As Coleman had a 4-year-old son who existed disabled, born with a medical condition that led to his having difficulties in breathing and hearing. According to Coleman, she existed treated differently at work from other employees, who had normal children. By the law of Flexibility in the Workplace & Discrimination by Association, Coleman sued the company and won her legal battle.

    Eli Lilly & Company;

    Eli Lilly & Company (Lilly) world’s leading Pharmaceuticals Company; which claims to have a very good diversity program running at the company and existed also widely regarded as a very good employer, faced a federal lawsuit regarding the company’s human rights policies and practices. On April 20, 2006, a class-action lawsuit stood filed with the US District Court, Southern District of Indiana, by four black employees who had worked at Lilly. The lawsuit charged the company with being hostile and biased against them because of their race. Lilly stood accused of discriminating against the black employees based on race and denying them fair wages, promotions, performance evaluations, and discipline.

    General Electric Company;

    In terms of renovation, reinvention, transformation, or redesign; General Electric has done emphasis on having a good working relationship and keeping the best atmosphere for their employees. According to Immelt J, people are the most important value in General Electric. Therefore, the ability to recruit the best people in the world is a competitive advantage without comparison. A strategic point in the management of RH is the communication chain, at the same time; the leaders must be able to represent employers and employees. Clear human resource policies and procedures are essential so employees could understand their company and gain a sense of belonging.

    Harley Davison Company;

    Harley Davison has a human resources system based on formal training and learning management. The result of this is that their employees share a positive attitude that exists associated with the development and competitiveness of this Company.

    Harley Davison institutionalizes its commitment to learning and created the University of Harley to develop leaders, translating values into action with an emotional performance in which the value attached to learning applies and, the evaluation of individual performance shapes a new organization in which the learning share and it is the ingredient that binds employees.

    IKEA Company;

    For the Swede Ingvar Kamprad Founder of IKEA company, who started his idea in 1943, thinking about the necessities of the common people and nowadays his company has branches in 36 countries of Europe, Asia, North America and Oceania with more than 200 stores, the protection, and care of his employees is and will be one of the most important policy, doing of them, a company with high social responsibility.

    Currently, IKEA has more than 105.000 employees, for this reason; their greatest concern for them give their employees a good balance between work and personal life; therefore, they have kept flexibility in their tasks and activities, suitable schedules, plans of professional development, support in different studies as college or universities and medical coverage; consequently of their policies in RH and programs for employees, IKEA has received several awards.

    Walmart Company;

    WALMART is a company that is in the top 5 of the greatest companies in the world. Its success is based mainly on “customers and employees” the policies created around the employees were essential in his goals; Sam Walson founder offered their employees, benefits, and gains, they were part of the excellent results.

    In other words, Sam Walson wanted his employees to be members, encouraging cashiers to managers to think about how owners, ideas very successful likewise, for him, was fundamental to have employees with new ideas, clear thoughts, and a positive minds without bad habits from their previous jobs.

    Nestlé Company;

    Nestlé was a result of the merger in 1905 of the Anglo-Swiss Condensed Milk, founded in 1866, with (Farine Lactea) Nestlé SA.; Founded in 1867 by Henri Nestlé; who invented a product that continues to save the lives of children and newborn – infant formula for babies whose mothers cannot breastfeed; its success is the sum of a long and distinguished history, part of its success is based on the thought; that their partners should achieve a good balance between their careers and their privacy. Not only because it reinforces loyalty, satisfaction and it improves productivity; also it has a positive impact on the reputation of the Company and attracts and motivates employees.

    Microsoft Company;

    According to the list of Best Workplaces 2007, Microsoft has existed designated; as the company with a better working environment, the study includes credibility, respect, fairness, pride, and camaraderie. According to it, the Microsoft executives are fulfilling their promises in creating career and training opportunities and properly assigning functions (promotions to worthy people); the company involves employees in decision-making takes into account their suggestions, recognizes his work, and allows flexibility.

    American Express Company;

    Employee networks are a key element of American Express’ success in supporting diversity in the workplace. Currently, American Express has 10 networks open to all employees organized around topics of interest to African-American, Asian, Christian, Gay & Lesbian, Hispanic, Jewish, and Native American employees, as well as for People over 40, People with Disabilities, and Women. These networks provide support to American Express’ business objectives, including enhancing marketing efforts in targeted communities, supporting employee recruitment and retention initiatives, and participating in outreach and volunteer programs.

    These networks have also been instrumental in helping to introduce new policies and benefits to employees. For example, GLOBE, the company’s gay and lesbian network, was instrumental in having domestic partner benefits introduced back in 1997. And WIN, the women’s network, worked with management to introduce a customized companywide alternative work arrangements policy; as well as a free backup childcare center in several locations throughout the United States.

    ENRON Company;

    Mishandling of the resources human policies can lead to failure. Such as is the case of ENRON one of the seven biggest companies in the United States; the problem existed focused on a poor policy of recruitment and selection, due to, the chosen people with high qualifications; but they were not suitable for the position, besides people hired by just friendship, taking wrong decisions in critical situations.

    This is the case of Cindy Olson who was HR Vice-President of ENRON. She did not have enough knowledge about United States laws regarding employee benefits, giving wrong advice on investment over stock options. The previous point represents a serious violation of the financial legislation in the United State of America.

    Conclusions;

    Looking at the evidence provided, it seems that the production and maintenance of formal human resource policies and procedures records exist applied in ways that assure that personnel management policies are in use. Companies typically have to make revisions to established HR policies regularly; otherwise, there is a danger of those policies becoming outdated as the company grows; and as the regulatory and business environments in which it operates evolve.

    On the other side, Policies can make today and changed tomorrow who can stop the management from doing that? Most research on human resource (HR) policies in the workplace suggests that formal policies can contribute to variation in discrimination by altering employers’ behaviors. We consider an alternative manner by which HR policies influence formal discrimination complaints; human resource policies and procedures, especially those targeting employees, can raise employees’ rights awareness and encourage them to seek remedies for discrimination at work.

    What are the Human Resource Policies and Procedures Image
    What are the Human Resource Policies and Procedures?
  • Lending procedures and Role of development banks

    Lending procedures and Role of development banks

    A development bank is a “bank” established for “financing development”. They provide medium and long-term finance to the industrial and agricultural sectors. This article explains the Lending procedures and Role of development banks, and some points also highlight. They provide finance to both the private and public sectors. Also, Development banks are multipurpose financial institutions. They do term lending, investment in securities and other activities. They even promote saving and investment habit in the public.

    Here are the explain the Lending procedures and Role of development banks.

    As per banking subject, “Development banks are financial institutions established to lend (loan) finance (money) on the subsidized interest rate. Such lending is sanctioned to promote and develop important sectors like agriculture, industry, import-export, housing, and allied activities”.

    Features of development banks:

    A development bank has the following features or characteristics:

    • A development bank does not accept deposits from the public like commercial banks and other financial institutions who entirely depend upon saving mobilization.
    • It is a specialized financial institution that provides medium-term and long- term lending facilities.
    • It is a multipurpose financial institution. Besides providing financial help it undertakes promotional activities also. It helps enterprises from planning to the operational level.
    • The objective of these banks is to serve the public interest rather than earning profits.
    • Development banks react to the socio-economic needs of development.
    • It provides financial assistance to both private as well as public sector institutions.
    • The role of a development bank is of gap filler. When assistance from other sources is not sufficient then this channel helps. It does not compete with normal channels of finance.

    Objectives of Development Banks:

    A development bank has the following objectives;

    • Lay Foundations for Industrialization.
    • Meet Capital Needs.
    • Need for Promotional Activities, and.
    • Help Small and Medium Sectors.

    Functions of Development Banks:

    A development bank has the following functions;

    • Financial Gap Fillers.
    • Undertake Entrepreneurial Role.
    • Commercial Banking Business.
    • Joint Finance.
    • Refinance Facility.
    • Credit Guarantee, and.
    • Underwriting of Securities.

    Lending Procedures of Development Banks:

    Development banks follow a procedure for evaluating a proposal for a project. The basic objective is to check whether the applicant fulfills various conditions prescribed by the lending institution and the project is viable. The acceptance of a wrong proposal will result in the wastage of scarce resources.

    We also study their Role, but first Development banks have the following Lending Procedures;

    1. Project Appraisal and Eligibility of the Applicant.
    2. Technical Appraisal.
    3. Economic Viability.
    4. Assessing Commercial Aspects.
    5. Financial Feasibility.
    6. Managerial Competence.
    7. National Contribution.
    8. Balancing of Various Factors.
    9. Loan Sanction.
    10. Loan Disbursement, and.
    11. Follow up.

    Now, explain each one;

    Project Appraisal and Eligibility of Applicant:

    Every financial institution serves a particular area of activity or there are certain limits prescribed beyond which they cannot go. Before processing the application, it is important to find out whether the applicant is eligible under the norms of the institution or not.

    The second aspect which is looked into is to determine whether the enterprise has fulfilled various conditions prescribed by the government. In case some license is required from the government. It should have been taken or assurance is received from the licensing authority.

    After satisfying these preliminary issues the project is appraised by a team of technical financial and economic officers of the institutions from various discussions with the promoters and clarifications sought on various points.

    The bank institution considers financial assistance in the light of;

    • Guidelines for assistance to industries issued by the government or others concerned from time to time.
    • Guidelines issued by the bank, and.
    • Policy decisions of the Board of Directors of the bank.
    Technical Appraisal:

    A technical appraisal involves the study of:

    • Feasibility and suitability of technical process in Indian conditions.
    • Location, of the project about the availability of raw materials, power: water. labor, fuel, transport, communication facilities and the market for finished products.
    • The scale of operations and its suitability for the planned project.
    • The technical soundness of the projects.
    • Sources of purchasing plant and machinery and the reputation of suppliers, etc.
    • Arrangement for the disposal of factory effluent and use of bye products, if any.
    • The estimated cost of the project and probable selling price of the product, and.
    • The programmer for completing the project.
    Economic Viability:

    The economic appraisal will consider the national and industrial priorities of the project export potential of the product employment potential, the study of the market.

    Assessing Commercial Aspects:

    The examination of commercial aspects relates to the arrangements for the purchase of raw materials and the sale of finished products. If the concern has some arrangement for sale then the position of the party should assess.

    Financial Feasibility:

    The financial feasibility of a new and an existing concern will be assessed differently. The assessment for a new concern will involve;

    • The needs for fixed assets, working capital, and preliminary expenses will estimate to find out its needs.
    • The financing plans will be studied about capital structure, promoters’ contribution, debt-equity ratio.
    • Projected cash flow statements both during the construction and operation periods, and.
    • Projected profitability and the like dividend shortly.
    Managerial Competence:

    The success of concern depends upon the competence of management. Proper application of various policies will determine the success of an enterprise.

    Also, a lending institution would see the background, qualifications, business experience promoters and other persons associated with management.

    National Contribution:

    Besides commercial profitability, the national contribution .of the project is also taken into account. The role of the project in the national economy and its benefits to society in the form of good quality products, reasonable prices, employment generation, helpful in social infrastructure, etc. should be assessed. Development banks aim at the overall welfare of society.

    Balancing of Various Factors:

    Various factors should be balanced against each other. The circumstances of the individual project will help in weighing various factors. Some factors may be strong as their in-depth analysis should be avoided.

    In case a project is profitable, there will be no need to assess cash flow. Weaknesses located in certain areas may be offset by the good points in the other.

    Also, experienced management and sound economic outlook may compensate for some weaknesses in financial positions. The responsibility of lending the bank lies in balancing judiciously different considerations for arriving at a consensus.

    Loan Sanction:

    After the appraisal report on the project prepares by the bank’s officers, it places before the advisory committee consisting of experts drawn from various fields of the particular industry. If the advisory committee satisfies a tile proposal then it recommends the case to the Managing Director or Board of Directors along with its report. When the assistance sanctions hen a letter to this effect issues to the pay giving details of conditions.

    Loan Disbursement:

    The loan disburses after the execution of the loan agreement. The execution of documents of security or guarantee etc. should precede the disbursement of the loan. In case some property pledges to the bank then the title deeds of such property are properly scrutinized. The fulfillment of various conditions proceeding to disbursement will determine the time of paying the money to the party.

    Follow up:

    The job of a lending bank does note by disbursing the assistance. It has first to see whether the construction .of the project is as per schedule decided earlier. In case some delay is taking place in executing the plans then the reasons for it should be determined. Later during operations, the result should be properly followed. It should be seen whether the revenue earned by the concern will be sufficient to meet its obligations or not so a proper follow up by the bank will enable it to follow the progress of the unit.

    Lending procedures and Role of development banks
    Lending procedures and Role of development banks, Cheques administration hand #Pixabay.

    Role of development banks:

    Financial institutions provide means and mechanisms of transferring resources from those who have an excess of income over expenditure to those who can make productive use of the same.

    Also, commercial banks and investment institutions mobilize savings of people and channel them into productive uses. Financial institutions provide all types of assistant required infrastructural facilities Institutions e p economic persons who can take the development in the following ways.

    After Lending procedures the Development banks have the following role;

    1. Providing Funds.
    2. Infrastructural Facilities.
    3. Promotional Activities.
    4. Development of Backward Areas.
    5. Planned Development.
    6. Accelerating Industrialization, and.
    7. Employment Generation.

    Now, explain each one;

    Providing Funds:

    Underdeveloped countries have low levels of capital formation. Due to low incomes, people are not able to save sufficient funds which are needed for sensing up new units and also for expansion diversification and modernization of existing units.

    The persons who have the capability of starting a business but does not have requisite help approach to financial institutions for help. These institutions help a large number of persons for taking up some industrial activity.

    The addition of new industrial units and increasing the activities of existing units will certainly help in accelerating the pace of economic development. Financial institutions have large inventible funds which are used for productive purposes.

    Infrastructural Facilities:

    The economic development of a country links to the availability of infrastructural facilities. There is a need for roads, water, sewage, communication facilities, electricity, etc. Financial institutions prepare their investment policies by keeping national priorities in major and the institutions invest in those aims is which can help in increasing the development of the country.

    Also, the Indian industry and agriculture are facing an acute shortage of electricity. All India institutions are giving priority to invest funds in projects generating electricity. These investments will certainly increase the availability of electricity. Small entrepreneurs cannot spare funds for creating infrastructural facilities.

    To overcome this problem, institutions at the state level are developing industrial estates and provide sheds, having all facilities at easy installments. So financial institutions are helping in the creation of all those facilities which are essential for the development of a country.

    Promotional Activities:

    An entrepreneur faces many problems while setting up a new unit. One has to undertake a feasibility report, prepare project reports, complete registration formalities, seek approval from various agencies, etc. All these things require time, money and energy.

    Some people are not able to undertake this exercise or some do not even take initiative. Financial institutions are the expense and manpower resources for undertaking the exercise of starting a new unit. So these institutions take up this work on behalf of entrepreneurs.

    Some units may be set up jointly with some financial institutions and in that case, the formalities are completed collectively. Also, some units may not have come up had they not received promotional help from financial institutions. As well as, the promotional role of financial institutions helps increase the development of a country.

    Development of Backward Areas:

    Some areas remain neglected because facilities needed for setting up new units are not available here. The entrepreneurs set up new units at those places which are already developed. It causes an imbalance in the economic development of some areas.

    Also, to help the development of backward areas, financial institutions provide special assistance to entrepreneurs for setting up new units in these areas. IDBI, IFCI, ICICI give priority in assisting units set up in backward areas and even charge lower interest rates on lending.

    Such efforts certainly encourage entrepreneurs to set up new units in backward areas. The industrial units in these areas improve basic amenities and create employment opportunities. These measures will certainly help in increasing the economic development of backward areas.

    Planned Development:

    Financial institutions help in the planned development of the economy. Different institutions earmark their spheres of activities so that every business activity helps. Some institutions like SIDBI, SFCI’s especially help small scale sector while IFCI and SIDC’s finance large scale sector or extend loans above a certain limit.

    Some institutions help different segments like foreign trade, tourism, etc. In this way, financial institutions devise their roles and help the development in their way. Financial institutions also follow the development priorities set by central and state governments.

    They give preference to those industrial activities which have been specified in industrial policy statements and five-year plans. Financial institutions help in the overall development of the country.

    Accelerating Industrialization:

    The economic development of a country links to the level of industrialization there. The setting up of more industrial units will generate direct and indirect employment, make available goods and services in the country and help in increasing the standard of living.

    Also, Financial institutions provide requisite financial, managerial, technical help for setting up new units. In some areas, private entrepreneurs do not want to risk their funds or gestation period His long but the industries are needed for the development of the area.

    Financial institutions provide sufficient funds for their development. Since 1947, financial institutions have played a key role in accelerating the pace of industrialization. The country has progressed in almost all areas of economic development.

    Employment Generation:

    Financial institutions have helped both direct and indirect employment generation. They have employed many persons to man their offices. Besides office staff, institutions need the services of experts which help them in finalizing lending proposals. These institutions help in creating employment by financing new and existing industrial units.

    Also, they help in creating employment opportunities in backward areas by encouraging the setting up of units in those areas, Thus financial institutions have helped in creating new and better job opportunities.

    Reference:

    1. https://www.mbaknol.com/business-finance/lending-procedures-of-development-banks/
    2. https://www.mbaknol.com/business-finance/role-of-development-banks-in-financial-sector/
    3. Other information collecting from the internet.
  • What are the key principles of Training and Development?

    What are the key principles of Training and Development?

    Principles of Training and Development: Competitive advantage is referred to that ability of an organization which is not possessed by the other organizations and it is a competitive advantage which leads the organization to the top positions. The content is the study of explains – the key Principles of Training and Development, Training Principles and Techniques, and Training Procedure. There are many organizations in the world who are leading the markets by gaining competitive advantage in different fields of their business activities. Also, learn the Main Principles of Training and Development.

    Understanding and Learn, What are the key principles of Training and Development?

    One of the ways in which a firm can attain a competitive advantage over the competitors is by building a force of superior human resource. Now the question arises that how this force of superior human resource can build. The answer lies in a very important function of human resource management i.e. training and development. It has been observing that the employees or labor working in a competitive environment of the market always welcome the training and development programs which can enhance their skills and knowledge.

    Nowadays every job holder understands that to sustain and grow in the career it is very important to polish their skills. It is not that time where one degree or diploma is sufficient for the whole life. Employees actively participate in several programs which are organizing by their organization and it has been observing that in some organization employee’s demand from their human resource department to arrange such training and development programs.

    Successful organization of today has built its human resource workforce over the passage of time. There is no doubt that this workforce is a highly valuable asset for any organization and the only possible way to build this workforce is training and development. There are several theories which emphasize the importance of training and development in the organization and provides different alternative methods for training and development. A discussion of four major theories of training and development gives below.

    What is the theory of Reinforcement?

    This theory emphasizes on the learning behavior of a person and suggests that the learner will repeat that behavior which is attached with a positive outcome or result. Skinner an economist of the behaviorist school of thought proposed the theory of reinforcement and suggested that the training and development programs should align with the organizational objectives and a positive outcome should expect with such training and development programs. Further elaborating this concept suggested in reinforcement theory, it can argue that there are several techniques available in human resource practices which can associate with the training and development programs and the required suggestion by this theory can fulfill.

    Different types of rewards in the form of bonuses, salary raises, promotion and awarding of certificate after the training program can associate with the training and development activities and these rewards will definitely generate a positive outcome. If this is done by an organization then according to the Skinner’s theory of reinforcement the trainer i.e. the employee will show more interest in the training and development programs held by the organization.

    Learning Types:

    The theory presented by Gagne emphasized on learning of intellectual skills. These are such skills which are found rare among the persons. He suggested by different learning types in his theory and each learning type contains some external and internal conditions. The five categories of learning which Gagne defined in his theory include intellectual skills, verbal information, attitudes, cognitive strategies, and motor skills.

    Experiential Learning:

    Experiential and cognitive types of learning are differentiated by the experiential theory of learning presented by C. Rogers. According to Rogers, the wants and needs of the learner are addressed by this type of learning. Experience gives the personal maturity and increases the learning power along with the knowledge. Due to personal involvement, the learner is able to conduct a self-evaluation test. Which allows him to understand the effect of learning on his/her attitude.

    Social Learning:

    The social theory presents a new view of learning i.e. social. According to the presenter of this theory, Albert Bandura, direct reinforcement cannot address all types of learning. Hereby direct enforcement means the training and development programs that are organizing to enhance the skills. According to this theory, such programs do not address all learning types. As there are some social elements which cannot teach. Those elements are learning by the learner from his/her surroundings.

    Such type of learning calls observational learning and this learning associate with the understanding of different human behaviors. The first type of learning defined in this theory is through observation. In an organization, the environment and the surroundings play a very important role. The environment should be very professional and the surroundings should be in such a way that the people (employees) learn from them.

    Extra knowledge:

    This theory also suggests that it is not necessary that the behavior change after learning something.

    It expects that a person’s behavior changes after learning something, but it is not in all cases. Furthermore, the theory also explains the mental states which play a vital role in the learning process. If the mental status of the person is negative regarding any learning activity then. He will not take part in that learning process and even. If he forces to do so, he will not gain any positivity from that process.

    In organizational training programs, the mental state can make positive regarding the training and development programs by associating the rewards and benefits with such programs. Which will motivate the employees and help to build a positive mental state? The case company also follow this theory. As it allows the employees to learn from the surrounding and provides an environment where they can learn from their supervisors/managers and coworkers.

    Training Principles and Techniques:

    According to Pigors and Myres, training principles and techniques include:

    • The trainee must want to learn. His motivation to improve his job performance or to learn a new skill must be high.
    • There should be some reward at the conclusion of training viz., promotion or a better job.
    • The trainer should ask the trainee as to whether he is learning the job correctly. This knows as feedback.
    • Training is best to accomplish through learning by doing rather than by listening.
    • The material to learn should develop in stages.
    • When the trainee gives the correct response, he learns the job.
    Training Procedure:
    • First of all the instructor must prepare. He should know both his job and how to teach it. On the basis of job analysis and job description, various operations should plan. In order to avoid delays, everything must be ready before training starts.
    • The next step is the preparation of the trainee. The fact that the employee is learning the job for the first time should keep in mind. The importance of the job, its relationship with the other jobs and the importance of rapid and effective learning should explain.
    • The operations should then present carefully and patiently. The sequence of the entire job explains by taking one point at a time.
    • The performance of the trainee should then try by asking him to explain each step and do the practical.
    • The employee is then put on the job. In the follow-up action, his performance should frequently check and questions should encourage.

    What are the key Principles of Training and Development - ilearnlot
    What are the key principles of Training and Development? Image Credit to ilearnlot.com.

  • Capital Budgeting: Meaning, Definition, Nature, and Procedure

    Capital Budgeting: Meaning, Definition, Nature, and Procedure

    Capital expenditure budget or Capital budgeting is a process of making decisions regarding investments in fixed assets which are not meant for sales such as land, building, machinery, or furniture. Meaning of Capital Budgeting: Capital Budgeting is the process of making the investment decision in fixed assets or capital expenditure. Capital Budgeting also knows as an investment, decision making, planning of capital acquisition, planning and analysis of capital expenditure, etc. Also, learn about EVA and MVA.

    Learn, Explain Capital Budgeting and its Meaning, Definition, Concept, Nature, and Procedure. 

    The word investment refers to the expenditure which requires making in connection with the acquisition and the development of long-term facilities including fixed assets. It refers to the process by which management selects those investment proposals which are worthwhile for investing available funds. For this purpose, management is to decide whether or not to acquire, or add to or replace fixed assets in the light of the overall objectives of the firm.

    What is a capital expenditure? It is a very difficult question to answer. The terms capital expenditure associate with accounting. Normally capital expenditure is one which intends to benefit future periods i.e., in more than one year as opposed to revenue expenditure, the benefit of which suppose to exhaust within the year concern.

    Definition of Capital Budgeting:

    It is the process by which a company determines whether projects (such as investing in R&D, opening a new branch, replacing a machine) are worth pursuing. A scheme or plan or project is worth pursuing if it increases the value of the company.

    A project and scheme typically add value to the company if it earns a rate of return that exceeds the cost of capital. The opportunity cost of capital expects to return that is foregone by investing in the scheme rather than in comparable financial securities, such as shares, with the same risk as to the project under consideration.

    While capital budgeting is a fairly straightforward or easy process from a conceptual viewpoint, it can be very challenging in practice or training. Not only is it difficult to determine the group’s appropriate cost of capital, but it is also often even trickier to accurately forecast the incremental cash flows that result from taking on the project.

    Concept of Capital Budgeting:

    Capital budgeting may define as the decision-making process by which, firms evaluate the purchase of major fixed assets, including buildings, machinery, and equipment; It also covers decisions to acquire other firms, either through the purchase of their common stock; or, groups of assets that can use to conduct ongoing business.

    They scribes the firm’s formal planning process for the acquisition and investment of capital; and, results in capital budgets that is the firm’s formal plan for the expenditure of money to purchasing assets. A capital-budgeting decision is a two-sided process. First, the analyst must evaluate a proposed project to calculate the likely or expected return from the project.

    This calculation generally begins with the expenditure of the project’s service life; and, a stream of cash flowing into the firm over the life of the project. The calculation of expected, the turn may be done by two methods: 1) internal rate of return or 2) net present value, These two methods discuss later in this.

    Explanation;

    The second side of a capital-budgeting decision is to determine the required return from a project. We may calculate the likely return to being 12 percent but the question is whether this is good enough for the proposal to accept. To determine whether the return is adequate; the analysts must evaluate the degree of risk in the project and then must calculate the required return for the given risk level. Two techniques may use to perform this analysis.

    The weighted-average cost of capital uses when the new proposal assumes to have the same degree of risk as the firm’s existing activities. The capital asset pricing model uses if the risk in the project views as different from the firm’s current risk level. It is important for the future well-being of the firm; it is also a complex, conceptually difficult topic.

    A, we shall see later in this article, the optimum capital budget-the the level of investment that maximizes the present value of the firm simultaneously determined by the interaction of supply and demand forces under conditions of uncertainty. Supply forces refer to the supply of capital, the firm, or its cost of capital schedule or panel.

    Demand forces related to the investment opportunities or chance open to the firm; as measured by the stream of revenues that will result from an investment decision Uncertainty or non-calculability enters the decision; because, it is impossible to know exactly either the cost of capital; or, the stream of revenues that will derive from a project.

    Nature of Capital Budgeting:

    Nature of capital budgeting can explain in brief as under:

    • Capital expenditure plans involve a huge investment in fixed assets.
    • Capital expenditure once approved represents the long-term investment that cannot reserve or withdrawn without sustaining a loss.
    • Preparation of coital budget plans involves forecasting of several years profits in advance to judge the profitability of projects.

    It may assert here that the decision regarding capital investment should take very carefully; so that the plans of the company do not affect adversely.

    Capital Budgeting Meaning Definition Concept Nature and Procedure Image
    Capital Budgeting: Meaning, Definition, Concept, Nature, and Procedure, Image from Pixabay.

    The procedure of Capital Budgeting:

    Capital investment decisions of the firm have a pervasive influence on the entire spectrum of entrepreneurial activities; so careful consideration should regard in all aspects of financial management.

    In the capital budgeting process, the main points to be borne in mind how much money will need of implementing immediate plans; how much money is available for its completion, and how are the available funds going to assign tote various capital schemes or projects under consideration. The financial and risk policy of the management should be clear in mind before proceeding with their process.

    The following procedure may adopt in preparing capital budgeting:

    1] The organization of Investment Proposal.

    The first step in the capital budgeting process is the conception of a profit-making idea. The proposals may come from rank and file worker of any department or any line officer. The department head collects all the investment proposals and reviews them in light of the financial; and, risk policies of the organization to send them to the capital expenditure planning committee for consideration.

    2] Screening the Proposals.

    In large organizations, a capital expenditure planning board or committee establishes and sets up for the screening of various offers with the best proposals received by it from the heads of various departments and the line officers of the company. The committee screens the various proposals within the long-range policy-framework of the organization. It is to ascertain by the committee whether the proposals are within the selection criterion of the firm; or, they do no lead to department imbalances or they are profitable.

    3] Evaluation of Projects. 

    The next step in the capital budgeting process is to evaluate the different proposals in term of the cost of capital; the expected returns from alternative investment opportunities and the life of the assets with any of the following evaluation technology;

    • The degree of Urgency Method (Accounting Rate of return Method).
    • Pay-back Method.
    • Return on Investment Method, and.
    • Discounted Cash Flow Method.
    4] Establishing Priorities.

    After the proper screening of the proposals, uneconomic or unprofitable proposals drop. The profitable projects or in other words accepted projects than put in priority. It facilitates their acquisition or production according to the sources available and avoids Immaterial or unnecessary and costly delays and serious cot-overruns. Generally, priority is fixed in the following order.

    • Current and incomplete projects give priority.
    • Plans and schemes for maintaining the present efficiency of the firm.
    • Projects for supplementing income.
    • Safety projects and projects are necessary to carry on the legislative requirements.
    • Projects for the expansion of a new product.
    5] Final Approval.

    Proposals finally recommended by the committee are sent to the top management along with the detailed report; both of the capital expenditures and sources of funds to meet them. The management affirms its final seal to proposals with offers taking in view the urgency, beneficial or profitability of the projects, schemes, and the available financial resources. Projects are then sent to the budget committee for incorporating them into the capital budget.

    6] Evaluation. 

    Last but not the least important step in the capital budgeting process is an evaluation of the program after it has been fully implemented. Budget proposals and the net investment in the projects compare periodically and based on such evaluation; the budget figures may review and present more realistically.