Tag: Stages

  • Performance Management Meaning, Elements, Goals, Stages, Practices, and Examples

    Performance Management Meaning, Elements, Goals, Stages, Practices, and Examples

    Performance Management Meaning, Elements, Goals, Stages, Practices, and Examples: How to be Know. Performance management is a process that involves aligning an employee’s skills and performance with the goals and objectives of an organization. The primary objective of performance management is to enhance the overall effectiveness of an organization by improving the skills and abilities of its employees. It typically involves setting performance standards, providing feedback, evaluating performance, and identifying areas for development and improvement. When implemented effectively, performance management can help improve employee morale, increase productivity, and foster a more positive company culture. Also, It is an ongoing process that assists organizations in achieving their objectives.

    Define as well as Performance Management Meaning, Elements, Goals, Stages, Practices, and Examples

    What is the meaning of performance management? Performance management refers to a comprehensive process or system designed to continuously monitor, measure, evaluate, and enhance the performance of individuals, teams, or organizations. Also, It involves setting clear performance expectations, providing ongoing feedback, assessing performance against predetermined goals or standards, and implementing strategies to improve performance.

    Performance management encompasses various activities and processes, including goal setting, performance appraisals, feedback and coaching, performance measurement, training and development, recognition and rewards, and performance improvement plans. The primary purpose of performance management is to align individual and team performance with organizational goals and objectives, ultimately driving overall organizational success.

    Performance Management Meaning Elements Goals Stages Practices and Examples Image
    Performance Management Meaning, Elements, Goals, Stages, Practices, and Examples

    Elements of performance management

    The key elements of performance management typically include:

    Setting Clear Expectations:

    Defining performance expectations, objectives, and goals that are specific, measurable, attainable, relevant, and time-bound (SMART). Also, This ensures clarity and alignment with organizational priorities.

    Monitoring and Measurement:

    Continuously tracking and measuring performance through various methods, such as regular check-ins, performance metrics, key performance indicators (KPIs), or performance dashboards. Also, This allows for ongoing assessment and identification of areas for improvement.

    Feedback and Coaching:

    Providing timely and constructive feedback to individuals or teams to acknowledge strengths, address performance gaps, and offer guidance for improvement. Regular coaching and support are crucial for enhancing performance.

    Performance Evaluation:

    Conduct formal assessments or appraisals to evaluate performance against established goals, competencies, or performance standards. These evaluations provide a comprehensive overview of an individual’s performance and inform decisions related to development, rewards, or promotions.

    Development and Training:

    Identifying skill gaps and providing opportunities for learning, development, and training to enhance performance. Also, This can involve offering workshops, workload capacity, courses, mentoring programs, or job rotations to build competencies and capabilities.

    Recognition and Rewards:

    Recognizing and rewarding exceptional performance to motivate individuals and teams. This can include financial incentives, public recognition, career advancement opportunities, or non-monetary rewards to reinforce desired behaviors and outcomes.

    Performance Improvement:

    Implementing performance improvement plans (PIPs) or interventions for individuals or teams who are not meeting performance expectations. These plans outline specific improvement targets, provide support, and establish a timeframe for progress monitoring.

    Alignment with Organizational Goals:

    Ensuring that individual and team performance aligns with the broader strategic objectives of the organization. It aims to create a clear link between individual contributions and the overall success of the organization.

    By implementing a robust performance management system, organizations can foster a culture of continuous improvement, enhance employee engagement and productivity, optimize organizational performance, and drive individual and collective success in Project Management.

    What are the goals of Performance management?

    Performance management involves processes that align employee performance with organizational goals. The goal of performance management is to improve the effectiveness of an organization by developing the skills and abilities of its employees. The processes used in performance management include setting performance standards, providing feedback, evaluating performance, and addressing areas of improvement. When these processes are implemented effectively, they can help to improve the overall performance of an organization, resulting in increased productivity, higher employee morale, and a more positive company culture.

    The goals of performance management can vary depending on the organization and its specific objectives. However, some common goals include:

    Clarifying Expectations:

    Performance management aims to establish clear performance expectations and goals for employees. Also, This includes defining job roles, responsibilities, and performance standards to ensure that employees understand what is expected of them.

    Monitoring Performance:

    Performance management involves regularly monitoring and assessing employee performance. This allows organizations to track progress, identify areas for improvement, and recognize high-performing individuals.

    Providing Feedback:

    Performance management facilitates ongoing feedback and communication between managers and employees. It provides a platform for discussing performance strengths and weaknesses, providing guidance, and offering constructive feedback to enhance performance.

    Identifying Development Needs:

    Performance management helps identify individual development needs and areas where employees require additional support or training. Also, It enables organizations to create tailored development plans to enhance skills, knowledge, and capabilities.

    Recognizing and Rewarding Performance:

    Performance management systems often incorporate mechanisms to recognize and reward exceptional performance. This can include monetary incentives, promotions, recognition programs, or non-monetary rewards such as increased responsibilities or opportunities for career advancement.

    Facilitating Career Development:

    Performance management supports employees’ career development by identifying their aspirations, strengths, and areas for growth. Also, It helps create development plans and succession strategies to ensure individuals are prepared for future roles and responsibilities.

    Supporting Decision-Making:

    Performance management provides data and insights that can inform various organizational decisions. Performance metrics and evaluations help in identifying high-potential employees, making promotion decisions, allocating resources effectively, and identifying areas of improvement at the organizational level.

    Improving Organizational Performance:

    Ultimately, performance management aims to contribute to overall organizational success and effectiveness. By aligning individual and team performance with organizational goals, performance management helps improve productivity, efficiency, and the achievement of desired outcomes.

    It’s important to note that the goals of performance management should be aligned with the organization’s mission, values, and strategic objectives to ensure a cohesive and integrated approach to managing performance across the organization.

    What are the stages of performance management?

    Performance management typically contains several stages or processes. The specific stages can vary depending on the organization, but commonly include the following:

    1. Goal setting: This is the process of establishing clear and measurable performance expectations for individual employees or teams in alignment with organizational goals.

    2. Performance feedback: Providing regular constructive feedback on performance, including identifying strengths and areas requiring improvement, and discussing career development opportunities.

    3. Performance evaluation: Formal and systematic assessments of individual or team performance that may include metrics such as KPIs (key performance indicators), feedback from colleagues or customers, and more.

    4. Performance improvement: Implementing strategies to develop employees’ skills and address performance deficiencies in individuals or teams, such as coaching, mentoring, training, or reassignment.

    5. Performance monitoring: Regular tracking and analyzing of employee or team performance, including reviewing progress toward goals, identifying areas of underperformance, and adjusting goals and strategies as necessary.

    These stages are often cyclical, with performance management and improvement being an ongoing process, rather than a one-time event.

    Best practices of the Performance management process

    Performance management is an ongoing process that helps organizations achieve their goals and objectives by improving individual and team performance. Here are some best practices for a successful performance management process:

    1. Set clear expectations: Performance goals and expectations should be communicated to employees at the beginning of the performance cycle. Clear expectations will help in creating a shared understanding of what is expected of employees and help in reducing ambiguity.

    2. Regular Feedback: Regular feedback helps employees understand what they are doing well and the areas where they need to improve. Constructive feedback can also lead to better job satisfaction, motivation, and employee engagement.

    3. Training and development: Organizations should invest in their employees by providing them with the necessary training and development opportunities to help them improve their skills and career advancement goals.

    4. Fair and objective evaluation: Employees should feel that the evaluation process is fair, objective, and transparent. To achieve this, the evaluator should be impartial, and unbiased, and should evaluate employees based on clear, pre-established performance criteria.

    5. Continuous improvement: Performance management should be seen as an ongoing process, not just a once-a-year meeting. A continuous improvement approach will help employees stay motivated, engaged, and aware of their progress throughout the year.

    By following these best practices of performance management, organizations can create a culture of continuous improvement, maximize employee potential and enhance business performance.

    Examples of performance management

    Here are some examples of performance management practices commonly used in organizations:

    Goal Setting:

    Establishing specific, measurable, attainable, relevant, and time-bound (SMART) goals for individuals or teams. These goals provide clarity and direction, and they serve as a benchmark for evaluating performance.

    Performance Appraisals:

    Conduct formal evaluations of employee performance, typically on an annual or periodic basis. Performance appraisals involve assessing performance against predetermined goals or performance standards and providing feedback on strengths, areas for improvement, and development opportunities.

    Continuous Feedback:

    Encouraging ongoing feedback and communication between managers and employees. Also, This can be achieved through regular check-ins, coaching sessions, or informal conversations to discuss progress, and challenges, and provide guidance.

    Performance Metrics and KPIs:

    Establishing key performance indicators (KPIs) or metrics to measure and track performance. These metrics can include productivity measures, customer satisfaction ratings, sales targets, error rates, or other relevant indicators to assess individual or team performance.

    Performance Improvement Plans (PIPs):

    Implementing performance improvement plans for employees who are not meeting performance expectations. PIPs outline specific areas for improvement, set clear targets, and establish a timeframe for improvement, while also providing necessary support and resources.

    Training and Development:

    Identifying skill gaps and providing training and development opportunities to enhance employee performance. This can include workshops, seminars, online courses, mentoring programs, or job rotations to build competencies and improve performance.

    Performance Recognition and Rewards:

    Implementing recognition programs or performance-based rewards to acknowledge and reinforce exceptional performance. This can include bonuses, salary increases, promotions, public recognition, or other incentives to motivate and reward high-performing individuals.

    Performance Calibration:

    Conduct calibration sessions where managers or evaluation committees review and discuss performance ratings to ensure fairness and consistency in performance assessments across teams or departments.

    Succession Planning:

    Identifying high-potential employees and creating development plans to prepare them for future leadership or key roles within the organization. Succession planning ensures a pipeline of talented individuals ready to take on critical positions.

    Performance Analytics and Data Analysis:

    Using data analysis techniques to derive insights from performance data and identify trends, patterns, or areas for improvement. Also, Data-driven decision-making helps organizations assess performance at various levels and make informed strategic choices.

    These are just a few examples of performance management practices that organizations may employ. The specific practices used can vary depending on the organization’s size, industry, culture, and objectives.

    Summary

    Performance management is a crucial process that helps organizations to align their employees’ performance with the strategic goals and objectives of the organization. It involves various stages, elements, and practices that aim to improve individual and team performance. By implementing a comprehensive performance management process, organizations can create a culture of continuous improvement, enhance employee engagement and productivity, optimize organizational performance, and drive individual and collective success.

    The key elements of performance management include setting clear expectations, monitoring and measurement, feedback and coaching, performance evaluation, development and training, recognition and rewards, performance improvement, and alignment with organizational goals. By defining performance expectations and goals, continuously tracking and measuring performance, providing feedback, assessing performance, identifying development needs, recognizing and rewarding performance, implementing performance improvement plans, and aligning individual and team performance with organizational goals, organizations can enhance their overall effectiveness.

    Moreover, the goals of performance management include clarifying expectations, monitoring performance, providing feedback, identifying development needs, recognizing and rewarding performance, facilitating career development, supporting decision-making, and improving organizational performance. These goals contribute to the development of a supportive company culture, resulting in increased productivity, higher employee morale, and overall organizational success.

    To achieve a successful performance management process, organizations should follow some best practices such as setting clear expectations, providing regular feedback, integrating technology, ensuring fairness, and implementing ongoing training and development.

    In conclusion, performance management is a critical process in enhancing organizational effectiveness, promoting employee engagement, and driving individual and collective success. By implementing best practices, organizations can achieve their strategic goals by aligning individual and team performance with organizational objectives.

  • Employee Disciplinary Laws and Action: How to be Know

    Employee Disciplinary Laws and Action: How to be Know

    Disciplinary laws and actions are actions taken by an employer to address and correct an employee’s misconduct or performance issues. These actions may include a verbal or written warning, a performance improvement plan, a suspension, a demotion, or even termination of employment.

    Employee Disciplinary Laws And Action: What You Need To Know

    The HR department of your organization is responsible for initiating disciplinary action proceedings against your employees. This can be for a variety of reasons, such as poor behavior or poor performance. Understanding why organizations take corrective or punitive actions can help you understand how important they are in maintaining internal discipline and avoiding larger issues that can disrupt business operations and damage your organization’s reputation.

    In this article, we’ll answer the question, What are disciplinary laws and actions? and why your workforce needs to take them. We’ll also look at what are proper disciplinary actions, what are their goals, and when you should take them.

    Meaning of Disciplinary Laws and Action

    It may be helpful to know the answer to the question “What are Disciplinary actions?”.

    Disciplinary actions are corrective measures that an organization may take against an employee through its human resources department. These actions take when an employee’s work performance is poor. When an employee has engaged in unacceptable workplace behavior, or when an employee has violated workplace policies.

    Most organizations have a disciplinary policy in place, and they communicate these guidelines to their employees in a way that is clear and understandable. They take reasonable and consistent action that is proportional to the violation, and they may follow a particular order of progression.

    The initial action may be to issue a verbal or written warning to the employee to stop or rectify the issue.

    The HR department may then suspend the employee with/without pay, demote the employee, create a performance plan for the underperforming employee, and monitor the employer who has received a warning for aggressive or inappropriate behavior.

    If no improvement or correction is made, the employee may fire. Most organizations maintain a record of their disciplinary actions as evidence in the event of a lawsuit.

    Definition of Disciplinary Laws and Action

    According to Society for Human Resource Management (SHRM);

    It is a management tool used to ensure compliance with company policies and procedures. It is the process of enforcing the rules and measures of behavior expected of employees and dealing with the consequences of non-compliance.

    According to Gary Dessler, author of HRM;

    They refer to the process of reworking or enforcing certain behavior or actions by employees that deem improper or harmful to others in the workplace. It involves a range of corrective actions, including verbal and written warnings, suspension, demotion, or termination of employment.

    Types of Disciplinary Laws and Action

    Disciplinary action primarily see as a corrective measure to prevent future misconduct or poor performance

    Warning

    This is the least intense form of disciplinary law and action. It usually gives for a minor offense. It is very lenient and can give orally or written. Verbal warnings give when a minor offense commit. If a verbal warning does not result in the desired result, the organization will resort to a written warning for more severe action. These warnings have no impact on the employee’s status or wages within the organization.

    Written Notice

    When a warning doesn’t work and the employee continues to engage in the same misconduct, a written notice is issued, which implies a certain level of punishment.

    Suspension

    This type of disciplinary action is temporary. An employee suspends from performing their duties for a specified period, which may range from a few days to several months depending on the type of misconduct.

    Demotion

    This type of action only uses when an employee fails to meet his current job requirements and standards. If he is unable to provide good performance on the job, he demotes one rank below his current rank within the organization.

    Fines

    This type of punishment is where the amount of the fine deducts from an employee’s remuneration. If an employee repeatedly breaks any rule, a penalty imposes on the employee.

    Pay Cuts

    If an employee causes any loss or damage to the organization’s property or takes leave without permission. They will not pay their full compensation and the amount of the loss or damage will deduct from their pay.

    Holding Increments

    This is a major punishment. An employee is close to receiving their increment but because of disciplinary action, their annual increment is held for some time.

    Termination of Services

    This is the severe punishment that disqualifies an employee from their job. This is the final stage of disciplinary action where there is no other way for an employer to punish an employee.

    Stages in Disciplinary Laws and Action

    Preliminary Investigation

    The first step in the process is to conduct a preliminary investigation into the allegations of misconduct. This involves gathering information from various sources, such as witnesses to the alleged incidents, and preparing an investigation report.

    Issue of charge sheet

    If misconduct alleges, the management will then issue a written charge sheet. This charge sheet is the formal statement of accusation and is legally binding on the employee accused.

    Meet with accused

    Once the charge sheet has been issued, a meeting with the accused should schedule. The accused should allow explaining the reasons for the misconduct. There may be something else going on that does not being disclosed in the investigation.

    Notice of Inquiry

    If the employee responds to the charge sheet in the affirmative, the employer will immediately punish him without further investigation. If he denies the charges, the employer will proceed with a full-blown inquiry.

    Full-blown inquiries

    When an employee denies the charges, a full-blown investigation is conducted in which all the details examine by the investigator. Various witnesses interview and the timeline was monitored.

    Findings of the Inquiry

    The investigator should, after a thorough investigation, determine whether the allegations made against the employee are correct or not.

    The final decision of punishment

    If the investigator finds that the employee has been charged with a crime, the employer or legal authority may punish him or her. The punishment may vary depending on the seriousness of the misconduct. The punishment may be a temporary one, such as suspension or a monetary fine. Or if the misconduct warrants a severe punishment, the employee’s service may terminate.

    The punishment should be notified to the employee in the form of a letter. The letter should include the charge sheet, details of the investigation, findings of the investigation, decisions are taken, and the effective date of the punishment. However, if the employee believes that the investigation was inadequate or that the action taken was unreasonable, he may file an appeal to have his case reconsidered.

    Characteristics of Effective Disciplinary Laws and Action

    Corrective rather than punishing

    Rather than punishing employees, the primary goal of a discipline system is to correct behavior and keep employees performing at their best. Employees will feel more at home in the organization and will motivate to comply with the organization’s rules and regulations.

    A progressive disciplinary approach

    The goal of a progressive disciplinary approach is to provide employees with the opportunity to correct their behavior. This approach begins with a moderate corrective action taken at the beginning and escalates in severity as the employee’s behavior continues to be inappropriate. Employees give enough time to fix their behavior and they don’t take it lightly.

    Follow: The Red Hot Stove Rule

    The “Red hot stove rule” states that any delay in taking disciplinary action defeats the purpose of taking disciplinary action. Disciplinary action must have the same characteristics and effects as touching a hot stove

    The hot stove rule draws a connection between touching a hot stove and breaking the rules of discipline. If someone touches a hot stove, the following are the consequences that can result from disciplinary action.

    1. Disciplinary action must take immediately: Delayed disciplinary action ruins the whole purpose of taking it. It leaves the accused wondering why they are being disciplined. It also lowers the morale of other employees. Who is always following the organization’s rules and regulations?
    2. It serves as a warning: Because the person can feel the heat if they come close to the hot stove, it serves as a warning to them that if they come closer and touch the hot stove, they may burn themselves.
    3. It provides uniform discipline: The hot stove burns everyone who comes near it. So it provides uniform results without any exceptions.
    4. It burns people without bias: Disciplinary actions are impersonal, just like a hot stove burns anyone who comes near it without any bias.

    Supervisory training

    When and how disciplinary action needs to use, supervisors and managers must train. It requires a certain level of judgment and communication skills when dealing with disruptive employees.

    In addition, disciplinary decisions made by trained supervisors will see as fair by employees and managers, as they will follow fair and well-informed practices when taking disciplinary action

    Disciplinary action should be equitable

    All employees should punish equally for the same offense. There should be no bias or favoritism when deciding on disciplinary action against an offender. If there are different punishments for the same offense, it would be partiality.

    Disciplinary action must be immediate

    Effective discipline must be immediate. The longer it takes for an employee to discipline for a misconduct offense, the more likely they are to take it lightly and move on.

    Follow-up

    Employees must make aware of what constitutes good conduct and the consequences of their misconduct.

    Once disciplinary action has been taken, follow-up should conduct to see if there is any change in the employee’s behavior and if there is any improvement.

    What are the goals of Disciplinary laws and action policies?

    The main goals of disciplinary laws and action policies are to:

    • Set and maintain uniform, fair, and appropriate standards of work-related behaviors and performance.
    • Educate employees about these established standards and how they relate to the organization’s mission, values, and vision.
    • Recommend disciplinary measures and remedial actions that can take by the organization. If employees fail to comply with the established standards of behavior and performance.
    • Monitor employees with a record and determine if they are taking warnings seriously and are changing their behavior or performance to meet the standards.

    What are the conditions for taking disciplinary laws and actions?

    The organization may take disciplinary actions against its employees in the following circumstances:

    • An organization has clearly stated its expectations for workplace behavior and performance in the employee handbook
    • An organization has provided training workshops on appropriate workplace conduct
    • The organization posted posters about its workplace policies on its premises
    • An organization has created a workplace culture and environment that encourages appropriate behavior and work performance
    • An organization ensures that all employees have access to, and are aware of, workplace rules and regulations
    • The organization’s competent authority documents cases of misconduct or poor work performance, and refers these records for disciplinary action to the department head or the human resources department
    Employee Disciplinary Laws and Action How to be Know Image
    Employee Disciplinary Laws and Action: How to be Know; Photo by Andrea Piacquadio.
  • What is Good Product Design? Importance and Stages

    What is Good Product Design? Importance and Stages

    What is the Importance and Stages of Good Product Design? Every product that stands manufactured by an employer supposes to have a distinguishing bodily attribute. That will make it appealing to customers, this attribute stands regarded as a design. Product design, therefore, is all about manufacturing a product that will entice clients and additionally grant price for them. Since the graph of a product is the first influence a patron has about a precise product. There is consequently the want for agencies to graph merchandise that meet and exceed the customer’s expectations.

    Here are the articles to explain, the Importance and Stages of Good Product Design!

    This, therefore, the potential that an organization’s most important focal point needs to be to hire skilled operation managers that would graph well-articulated and favored merchandise that will fulfill the desires of clients at all times. Based on this, consequently, the primary goal of this record is to study the product plan by using an explanation. How it is stood influenced by the way of the patron and to additionally exhibit the place it can recognize on the cost chain of an organization.

    This file stands written with the resource of tutorial textbooks, journals, and articles and it divides into 5 primary sections. Which are the introduction, and the literature review. The effect of the clients on product design, figuring out product layout on the fee chain, and the conclusion.

    Literature Review:

    Product design is a very important aspect of any organization and as such this part of the report aims to review comments on product design from various authors. Product design is a means of adding value to a product by ensuring that its layout is attractive to the customer. Also, Product design is all about trying to link customer needs to product attributes, therefore providing the customer with value.

    “Good design satisfies customers and communicates the purpose of the product to its market. The objective of a good product design is to satisfy the customer by meeting their actual needs or expectation. This, therefore, enhances the competitiveness of the organization; product design can therefore be seen as starting and ending with the customer. The job of product designers is to achieve designs that exceed customers’ expectations. They also try to design a product that performs well and is reliable during their lifetime, a product should be designed in such a way that it is easy to manufacture. Using design through a business ultimately boots the bottom line by helping to create better products that compete on value rather than price”.

    According to Schroeder product design is crucial to the survival of most firms. While a few firms experience little product change, most firm must continually revise their products. Product design is seldom the responsibility of the operations function. But operations exist greatly affected by new product introductions and vice versa. Product design is a prerequisite for production. The result of the product design stands transmitted to operations as product specifications. These specifications state the desired characteristics of the product and allow production to proceed.

    Review 01:

    Designing new products is a critical capability, particularly as life cycles for products become shorter. New product design must introduce to replace outdated design. According to Chase et al, The design of a product differs depending on the industry; for example for consumer products, understanding consumer preference, market testing and prospective product are very important activities. Companies that specialize in the design of products have highly developed processes to support the activities needed for the industry.

    To ensure the proper design of products that will attract customers, a firm must decide what its core competency should be. A core competency is the one thing that the firm can do better than other competitors in the market, with the use of the core competency the firm can design valuable products for example if a firm has a core competency in the manufacturing of mobile phones, it can invest most of its resources into the designing of the more attractive design of mobile phones.

    Nigel et al, Further state that good design also helps businesses connect strongly with their customers by anticipating their real needs, this in turn give them the ability to set themselves apart in increasingly tough markets. The use of design in generating new ideas and turning them into realities allows organizations to set the pace in their markets. Bennett et al, The design of a fast-food restaurant, for example, will comprise elements such as scheduling operations, inventory system, quality control, etc.

    Review 02:

    Hill states that all organizations have a range of products at a given time. To meet up with the competition in the product design market, it is necessary to have a complementary fact, relate to the organization’s strategic decisions associated with issues such as completeness of range, process capability, and distribution costs. New product design is necessary for survival and growth. Hill further stated that there are three important factors to consider during product design. These factors are;

    • The development and introduction of new product designs are both risky and costly.
    • The product tends to follow a life cycle.
    • Some product designs are or have the potential to be more successful than others.
    • Based on these statements, it is necessary for management to critically analyze ideas before investing in product design.

    It is the responsibility of the product designers to ensure that the product satisfies customers. This can achieve through the use of modern technology to design products in line with the trend in technological development. The product should also design to be functional, attractive, have acceptable dimensions, not too noisy, and can maintain. It is also the responsibility of the finance department to demand a product that will generate an adequate return on investment.

    Review 03:

    The decision made at the design stage of a new product can have a long-term influence on the efficiency of the organization. Product design should stand made in such a way that it is within the budget of the organization. But at the same time meets the expectations of the customers and consumers. This is not usually an easy task because the determinants of quality are frequently difficult to identify.

    Supporting the statement above according to Bennet et al. ″Time and cost of manufacture both need to keep to a minimum and the design of any new product should reflect this”. Bennet et al further state that these two aspects are usually closely interdependent. A cheap grade of the material may require slow machining speeds and thus generate high labor costs. And a simple design solution in preference to a complex one may allow the use of unskilled labor rather than skilled workers who stand highly paid. Consequently, a cheap design will not attract customers and as such, there is a need for a more complex design but at a lower cost.

    Importance of good product design:

    • Good product design attracts more customers thereby giving an organization a hedge above other competitors in the market.
    • It is also important because it brings together three important issues, the concept, the package, and the process.
    • Good design makes a business grow by enhancing profitability and turnover. Because it transforms the needs of customers into the desired shape and value of the product demanded.
    • It makes life easy and comfortable for the customer by introducing products that are easy to use.
    • Good product design is important in replacing obsolete designs.

    The stages of product design:

    According to Nigel slack et al, fully specified designs rarely spring, fully formed from a designer’s imagination. The design activity passes through several key stages before it gets a final design, this, therefore, forms an approximate sequence. The stages of product design are concept generation, concept screening, preliminary design, evaluation and improvement prototype, and final design.

    The first stage of product design develops the concept behind the design; most times ideas from. This stage stands gotten from customers through the use of questionnaires or interviews, or by listening to customers daily based. On their complaints about a product, ideas at this stage stand sometimes also gotten from staff who interact with the customers. The next stage is the concept screening stage whereby the concept stands screened to ensure the addition of a relevant product portfolio that meets the defined concept. This stage also ensures proper screening of ideas by assessing the worth or value of each design option.

    The next stage in product design is the preliminary design; this is usually the first attempt at designing the product to ensure that it includes the entire component product. It also involves specifying the components of the product this means specifically outlining the components that will make up the design of the product. The next stage of product design is the evaluation and improvement stage, the purpose of this stage is to examine the preliminary design to find out if it requires any further improvement.

    Other Stages:

    Nigel et al, outlined three techniques that can be useful in design evaluation and improvement, they are; quality function deployment (QFD), value engineering (VE), and Taguchi methods. The final stage of a product design is the prototype and final design. At this stage, the improved design turns into a prototype for testing. An organization cannot go into the full design without prototype testing. If satisfied with the performance of the product after testing. The final design is then rolled out and displayed for customers and consumers.

    It should note that at the beginning of the product design stage. There is a very high level of uncertainty regarding what the final design would look like. This is because there could be several ways in which a concept could translate into a final design. During the stages, all these possible end designs stand successfully eliminated until the end of the process. There is a high level of certainty about what the final design would be like. Various costs affect the design stages.

    The more the changes in the design stages, the higher the cost of design, it is important that as organizations try to design attractive products for their customers there is also the need to watch the cost level because a higher level of product design cost will affect the organizations turnover, so if an organization intend to design a more sophisticated product, it should, first of all, calculate the returns it would get from such a product.

    The five stages of product design can narrow down into three stages as explained below, these stages are;

    The concepts:

    This defines as a clear outline or specification which includes the use and value of the product. Which can use to assess the stages of the design. It means understanding the nature, use, and value of the products.

    The package:

    This provides the benefits defined in the concept and stands made up of the core and supporting products. The cores are the items that are fundamental to the purchase and cannot remove without destroying the nature of the package. The other parts serve to enhance the core, and these are the supporting products. According to Nigel et al, the core good is the car. While the leather seats and guarantee are the supporting goods.

    By changing the core, or adding and subtracting supporting goods, organizations can provide packages and create a quite different concept. Finch, the design of a product and the process that produce them cannot be completely independent. The design of a product determines the type of process used to create it. This perspective has guided process design for decades. Recently products have stood designed with the view that product design can make a process simpler and less costly.

    The process:

    This is the method by which the product will create and delivered. The process is the various activities that take place from the beginning to the end of the assembly line. When the product stands delivered to the customer or the showroom. The packages of components which make up a product are the ingredients of the design. Nigel et al, further state that producing design for products is a process that conforms to the input transformation output model.

    Therefore it has to design and managed like another process. It is important to note that although organizations strive to produce an attractive design of products. This desire is most affected or influenced by the availability of materials and hi-technology.

    The Influence of a Customer on Product Design and a Business Perspective:

    A well-designed product makes a great difference to a customer’s perception of the product. And certain factors influence the decision of a customer about the design of a particular product. These factors are the value attributes, they stand for the value perceived by a customer. These are what the customer considers before, deciding to buy a product, these factors are; convenience, cost, technology quality, style/fashion.

    The design of a product to a large extent influences the decision of a customer to buy the product. For example, the newly designed touch screen phones introduced by almost all mobile phone manufacturers have increased. Their turnover is because it is easy and convenient to use. So it can be said that one of the factors that influence the customer concerning product design is how convenient and easy the design is to the customer.

    Influence Part 01:

    Another factor that can influence a customer is cost, the cost of a well-designed product is sometimes too expensive for a customer. And thereby the customer may either decide to buy it or choose an alternative with a lesser design to save cost. On the other hand, from the business perspective, a well-designed product will increase turnover. But the cost of manufacturing will be high.

    Sometimes an organization can create a cost advantage either by reducing the cost of the individual value chain activities or redesigning the product. Redesigning means, changing some aspects of the design. So that it can manufacture at a lower cost. Technology is another factor that influences customer perception of a product design. The need for modern technology can influence a customer’s perception of a product. And therefore influence the decision to buy or not buy a particular product just because its design does not meet the customer’s expectation.

    For example, the introduction of Windows 7 by the Microsoft corporation will encourage customers to buy laptop computers that have this application rather than buying one without windows 7, because Windows 7 is a more sophisticated and modern technology and customers will prefer it to an outdated version of the same computer, this means that the introduction of modern technology or application into a product design will enable the organization sell more and increase its turnover.

    Influence Part 02:

    Quality with stands also known as fitness for a purpose is also a factor. That can influence the customer about product design. Improved quality of a product design can further attract customers. This involves the use of high-quality materials in the product design process. The outcome of this is that the product will well designed and durable. Therefore the customer will be willing to pay more and have a product. That has a longer life span and can withstand adverse weather conditions rather than buying a low-quality product that will not serve its purpose.

    For example, a company that manufactures shoes like Clarks may decide to use high-quality leather skin in its product design process. This will lead to the production of quality shoes which has good weather-resistant, which will attract customers. Style and fashion is also a value attribute to customers’ perception of product design. Because the latest changes in style and fashion around the globe will seriously influence a customer. To ensure that organization’s products are attractive to customers, there must be a constant change in the design of products.

    This means that the organization should endeavor to produce goods that follow the trends of current style and fashion, this attribute is normally feasible in the cloth industry and the target market should be the youths who are fashion crazy, a typical example would be George a subsidiary of ASDA, in the Wal-Mart family, George will increase its turnover if it can produce clothes that meet with the latest and current standard of style and fashion.

    What is Good Product Design Importance and Stages Image
    What is Good Product Design? Importance and Stages; Photo by Alvaro Reyes on Unsplash.

    Reference;

    • It is Retrieved from https://www.ukessays.com/essays/marketing/importance-of-good-product-design-marketing-essay.php?vref=1
    • Image Source from https://unsplash.com/photos/KxVlKiqQObU
  • What is Consumer Decision Making Process?

    What is Consumer Decision Making Process?

    Consumer Decision Making Process Meaning, Definition, Types, and Stages. The purchaser selection-making method includes the shoppers figuring out their needs, gathering information, evaluating alternatives, and then making their shopping decision. Consumer behavior may additionally decide with the aid of monetary and psychological elements and influenced using environmental elements like social and cultural values.

    Here are the articles to explain, the Meaning, Definition, Types, and Stages of the Consumer Decision Making Process.

    Consumer decision making behavior is a complicated technique and includes a whole lot beginning from hassle attention to post-purchase activities. Every patron has extraordinary wishes in their everyday lives and these are these wants that make to make one-of-a-kind decisions.

    Decisions can be complex, comparing, evaluating, and choosing as properly as buying from a range of merchandise relying upon the opinion of a customer over a precise product. This renders perception and realization of the fundamental hassle of the client selection-making technique for entrepreneurs to make their merchandise and offerings specific to others in the marketplace.

    Meaning and Definition of Consumer Decision Making Process:

    The buying process begins when customers recognize an unsatisfied need. Then they seek information about how to satisfy their need- what, products might be useful and how they can buy them. Customers evaluate the various alternative sources of merchandise such as stores, catalogs, and the Internet and choose a store or an Internet site to visit or a catalog to review. This encounter with a retailer provides more information and may alert customers to additional needs.

    After evaluating the retailer’s merchandise offering, customers may make a purchase or go to another retailer to collect more information. Eventually, customers make a purchase, use the product, and then decide whether the product satisfies their needs. In some situations, customers like Sania spend considerable time and effort selecting a retailer and evaluating the merchandise. In other situations, buying decisions stand made automatically with little thought.

    The types of Consumer Decision Making Process:

    The three types of customer decision-making processes are:

    1. Extended problem solving,
    2. Limited problem solving, and
    3. Habitual decision making.

    Extended Problem Solving:

    Extended problem solving is a purchase decision process in which customers devote considerable time and effort to analyzing alternatives. Customers typically engage in extended problem solving when the purchase decision involves a lot of risk and uncertainty. There are many types of risks. Financial risks arise when customers purchase an expensive product. Physical risks are important when customers feel a product may affect their health or safety.

    Social risks arise when customers believe a product will affect how others view them. Consumers engage in extended problem solving when they are making a buying decision to satisfy an important need or when they have little knowledge about the product or service. Due to high risk and uncertainty in these situations, customers go beyond their knowledge to consult with friends, family members, or experts.

    They may visit several retailers before making a purchase decision. Retailers influence customers engaged in extended problem solving by providing the necessary information in a readily available and easily understood manner and by offering money-back guarantees. For example, retailers that sell merchandise involving extended problem solving provide brochures describing the merchandise and its specifications; have informational displays in the store (such as a sofa cut in half to show its construction); and use salespeople to make presentations and answer questions.

    Limited Problem Solving:

    Limited problem solving is a purchase decision process involving a moderate amount of effort and time. Customers engage in this type of buying process when they have had some prior experience with the product or service and their risk is moderate.

    In these situations, customers tend to rely more on personal knowledge than on external information. They usually choose a retailer they have shopped at before and select merchandise they have bought in the past. The majority of customer decision-making involves limited problem-solving.

    Retailers attempt to reinforce this buying pattern when customers are buying merchandise from them. If customers are shopping elsewhere, however, retailers need to break this buying pattern by introducing new information or offering different merchandise or services.

    For example;

    Sania Mirza’s buying process illustrates both limited and extended problem-solving. Her store choice decision was based on her prior knowledge of the merchandise in various stores she had shopped in and an ad in the San Francisco Chronicle. Considering this information, she felt the store choice decision was not very risky, thus she engaged in limited problem solving when deciding to visit Macy’s. But her buying process for the suit stood extended. This decision was important to her, thus she spent time acquiring information from a friend and the salesperson to evaluate and select a suit.

    One common type of limited problem solving is impulse buying. Impulse buying is a buying decision made by customers on the spot after seeing the merchandise. Sania’s decision to buy the scarf was an impulse purchase.

    Retailers encourage impulse buying behavior by using prominent displays to attract customer attention and stimulate a purchase decision based on little analysis. For example, sales of a grocery item are greatly increased when the item stands featured in an end-aisle display when a “BEST BUY” sign stands placed on the shelf with the item, and when the item stands placed at eye level (typically on the third shelf from the bottom), or when items stand placed at the checkout counter so customers can see them as they wait in line.

    Supermarkets use these displays and prime locations for the profitable items that customers tend to buy on impulse, such as gourmet food, rather than commodities such as flour and sugar, which are usually planned purchases. Impulse purchases by electronic shoppers are stimulated by putting special merchandise on the retailer’s home page and by suggesting complimentary merchandise.

    Habitual Decision-Making:

    Habitual decision-making is a purchase decision process involving little or no conscious effort. Today’s customers have many demands on their time. One way they cope with these time pressures is by simplifying their decision-making process.

    When a need arises, customers may automatically respond with, “I’ll buy the same thing bought last time from the same store.’ Typically, this habitual decision-making process is used when decisions aren’t very important to customers and involve familiar merchandise they have bought in the past.

    Brand loyalty and store loyalty are examples of habitual decision-making. Brand loyalty means that customers like and consistently buy a specific brand in a product category. They are reluctant to switch to other brands if their favorite brand isn’t available. Thus, retailers can only satisfy these customers’ needs if they offer the specific brands desired. Brand loyalty creates both opportunities and problems for retailers.

    Customers stand attracted to stores carrying popular brands. But since retailers must carry high-loyalty brands, they may not be able to negotiate favorable terms with the supplier of the popular national brands. Store loyalty means that customers like and habitually visit the same store to purchase a type of merchandise.

    All retailers would like to increase their customers’ store loyalty. Some approaches for increasing store loyalty are selecting a convenient location, offering complete assortments and reducing the number of stockouts, rewarding customers for frequent purchases, and providing good customer service.

    Stages of Consumer Decision Making Process:

    The buying behavior model stands as one method used by marketers for identifying and tracking the decision-making process of a customer from the start to the end. The process stands categorized into 5 different stages which stand explained as follows:

    Need Recognition:

    Need recognition occurs when a consumer exactly determines their needs. Consumers may feel like they are missing out on something and needs to address this issue to fill in the gap. When businesses can determine when their target market starts developing these needs or wants, they can avail the ideal opportunity to advertise their brands.

    An example who buys water or cold drink identifies their need as thirst. Here; however, searching for information and evaluating alternatives are missing. These consumer decision-making steps stand considered to be important when an expensive brand is under buying consideration such as cars, laptops, mobile phones, etc.

    Problem Recognition:

    The buying process begins when consumers recognize they need to satisfy. This stands called the problem recogni­tion stage. Imagine leaving class to find that high winds had blown one of the oldest trees on campus directly onto your car. You need your car to get to school, work, and social events with your friends and family.

    Because your current car stands destroyed, you would immediately recognize that you need a new type of transportation. In this case, due to a lack of pub­lic transportation and the distance you must travel to meet your day-to-day obligations, you need to purchase a new car.

    Information Search:

    The information search stage in the buyer decision process tends to change continually as consumers require obtaining more and more information about products that can satisfy their needs. Information can also obtain through recommendations from people having previous experiences with products.

    At this level, consumers tend to consider risk management and prepare a list of the features of a particular brand. This is done so because most people do not want to regret their buying decision. Information for products and services can be obtained through several sources like:

    • Commercial sources: advertisements, promotional campaigns, salespeople, or packaging of a particular product.
    • Personal sources: The needs are discussed with family and friends who provided product recommendations.
    • Public sources: Radio, newspapers,s, and magazines.
    • Experiential sources: The own experience of a customer of using a particular brand.

    Information searches fall into two main categories- external and internal.

    External Information Search:

    When consum­ers seek information beyond their knowledge and experience to support them in their buying deci­sion. They are engaging in an external information search. Marketers can help consumers fill in their knowledge gaps through advertisements and prod­uct websites. The Internet has become an increasingly powerful tool. Because it provides consumers with on-demand product information in a format. That offers them as much or as little detail as they prefer.

    Many firms use social media to empower consum­ers’ external information search. For example, Ford uses Facebook, Twitter, YouTube, Flickr, and Scribd to communicate information and deepen relationships with customers. Ford combined paid advertising and content on Facebook by placing a sponsored video about the Ford Mustang on the Facebook logout page. Over 1 million people viewed the video in just one day. Allowing Ford to provide external information about the Mustang to a large audience of consumers.

    The consumer’s friends and family serve as perhaps the most important sources of external information. Think about the example of buying a new car and what those in your life might say about different brands or types of vehicles. You might be impressed by the salespeople and commercials for a certain type of car. But if your parents or friends tell you about a bad experience they had with it. Their opinions probably carry more weight.

    The power of these personal external infor­mation sources highlights why marketers must establish good relationships with all customers. It’s impossible to predict how one consumer’s experience might influence the buying decision and information of another potential customer.

    Internal Information Search:

    Not all purchases require consumers to search for information externally. For frequently purchased items such as – sham­poo or toothpaste, internal information often provides a sufficient basis for making a decision. In an internal information search, consumers use their past experi­ences with items from the same brand or product class as sources of information. You can easily remember your favorite soft drink or vacation destination. Which will likely influence what you drink with lunch today or where you go for spring break next year.

    In our car example, your experience with automobiles plays a significant role in your new car purchase. If you have had a great experience driving a Ford Escape or Toyota Camry. For example, you may decide to buy a newer model of that same car. Alterna­tively, if you have had a bad experience with a specific car, brand, or dealership. You may quickly eliminate those automobiles from contention.

    Evaluation of Alternatives:

    This step involves evaluating different alternatives that are available in the market along with the product lifecycle. Once it has been determined by the customer what can satisfy their need. They will start seeking out the best option available. This evaluation can be based upon different factors like quality, price, or any other factor which are important for customers.

    They may compare prices or read reviews and then select a product that satisfies their parameters the most. Once consumers have acquired information. They can use it to evaluate different alternatives, typically with a focus on identifying the benefits associated with each product. Consumers’ evaluative criteria consist of attributes that they consider important about a cer­tain product.

    For example, you would probably con­sider certain characteristics of a car. Such as price, warranty, safety features, or fuel economy, are more important than others when evaluating which one to buy. Car marketers work very hard to convince you that the benefits of their car, truck, or SUV reflect the criteria that matter to you. Marketing professionals must not only emphasize the benefits of their goods or service. But also use strategies to ensure potential buyers view those benefits as important.

    A company marketing an extremely fuel-efficient car might explain that you can use the several thousand dollars a year you will save on gas to pay off credit card debt or fund a family vacation. In contrast, a company marketing a giant SUV with poor fuel efficiency might tell you about the vehicle’s safety fea­tures and how it can protect your family or the flexibility it will give you to take more family members on trips.

    Purchase Decision:

    When all the above stages have been passed, the customer has now finally decided to make a purchasing decision. At this stage, the consumer has evaluated all facts and has arrived at a logical conclusion. Which is either based upon the influence of marketing campaigns or upon emotional connections or personal experiences, or a combination of both. After evaluating the alternatives, a customer will most likely buy a product. Usu­ally the marketer has little control over this part of the consumer decision-making process. Still, consumers have several decisions to make at this point.

    For example, once you have decided on the car you want, you have to decide where to buy it. Price, sales team, and experience with a specific dealership can directly impact. This decision can finance terms such as lower interest rates. If you decide to lease a car rather than buy one, you would make that decision during this step.

    An effective marketing strategy should seek to encourage ritual consump­tion. Ritual consumption refers to patterns of consumption that are repeated with regularity. These patterns can be as simple as buying the same soft drink or stopping at the same place for breakfast every morn­ing. These types of repeat purchases often provide firms with higher profits and a steady stream of cus­tomer sales.

    Post Purchase Behavior:

    The purchase of the product is followed by a post-purchase evaluation. Which refers to analyzing whether the product was useful for the consumer or not. If the product has matched the expectations of the customer, they will serve as a brand ambassador. Who can influence other potential consumers which will increase the customer base of that particular brand? The same is true for negative experiences; however, they can halt the journey of potential customers toward the product. Post-purchase evalua­tion is even more important to marketers today because of the power of customer reviews available on the Internet.

    Such reviews can become critical factors in the firm’s ability to win over new customers. Though the decision-making process provides marketers with a framework for understanding how consumers decide to purchase a product, consumers don’t always follow the orderly stages discussed. Marketers should not assume that because their strategy succeeds at one stage of the consumer decision-making process it will succeed at the next.

    For example, a car company might do an excel­lent job of providing external information to help interest you in its car but still not receive your business. Because of your inability to secure financing or the objections of your family members. Numerous situational influences like these can occur at various points in the decision-making process and change the customer’s path.

    Meaning Definition Types and Stages of the Consumer Decision Making Process Image
    Meaning, Definition, Types, and Stages of the Consumer Decision Making Process; Photo by Francois Le Nguyen on Unsplash.

    Reference;

    • It is retrieved from https://www.yourarticlelibrary.com/consumer-behaviour/consumer-decision-making/99878 and https://www.marketingtutor.net/consumer-decision-making-process-stages/
    • Image Source from https://unsplash.com/photos/X6rUQ4lH40I
  • Microfinance in India 4 Stages Development Evolution

    Microfinance in India 4 Stages Development Evolution

    4 Stages of Microfinance in India with their Development and Evolution; The Grameen Bank model of microfinance based on the “joint liability” of members has received wide international appeal and popularity in numerous emerging economies like India. The developing economies have even tried to replicate these models for developing small-scale businesses and reducing poverty levels.

    Here is the article to explain, Development and evolution of Microfinance in India with its 4 Stages!

    The evolution of Indian microfinance can broadly divide into four distinct phases:

    The Cooperative Movement (1900-1960);

    During this phase, there was the dominance of two sources of credit viz. institutional sources and non-institutional sources. The noninstitutional sources catered to 93 percent of credit requirement in the year 1951-52; and, institutional sources accounted for 7 percent of total credit requirements about that year. The preponderance of informal sources of credit was due to the provision of loans for both productive and nonproductive purposes; as well as for short-term and long-term purposes and simple procedures of lending adopted.

    But they involved several malpractices like charging high rates of interest, denial of repayment, misappropriation of collaterals, etc. At that time, the government considered cooperatives as an instrument of economic development of disadvantaged masses. The credit cooperatives were vehicles to extend subsidized credit to the poor under government sponsorship.

    They existed characterized as non-exploitative, voluntary membership, and decentralized decision-making. The Primary Agricultural societies (PACS) provide mainly short-term and medium-term loans; and Land Development Banks provide long-term loans as a part of the cooperative movement.

    Subsidized Social Banking (1960 – 1990);

    It stood observed that cooperatives could not do much as existed expected of them. With the failure of cooperatives, the All India Rural Credit Survey Committee in 1969 emphasized the adoption of the “Multiagency Approach to Institutional Credit”; which assigned an important role to the commercial banks in addition to cooperatives. Even Indian planners in the fifth five-year plan (1974-79), emphasized “Garibi Hatao” (Removal of poverty) and the “growth with social justice”.

    It was due to this approach that in 1969, 14 leading banks stood nationalized, and later on; five regional rural banks stood set up for the purpose on October 2, 1975, at Moradabad and Gorakhpur in Uttar Pradesh, Bhiwani in Haryana, Jaipur in Rajasthan and Malda in West Bengal. Hence, as a result of the Multiagency approach and other planning initiatives; the Government focused on measures such as the nationalization of Banks, expansion of rural branch networks; the establishment of Regional Rural Banks (RRBs), and the setting up of apex institutions.

    Such as the National Bank for Agriculture and Rural Development (NABARD); and the Small Scale Industries Development Bank of India (SIDBI). The Reserve Bank of India (RBI) as the central bank of the country played a crucial role by giving overall direction for providing credit and financial support to the national bank for its operations. Therefore, after the multiagency approach, the commercial banks and regional rural banks assumed a major role in providing both short-term and long-term funds for serving the poorest of the poor.

    Part 01;

    Despite, the multiagency approach adopted; a very large number of the poorest of the poor continued to remain outside the fold of the formal banking system. While these steps led to reaching a large population, the period stood characterized by large-scale misuse of credit; creating a negative perception about the credibility of micro borrowers among bankers; thus further hindering access to banking services for low-income people.

    However, the gap between demand and supply of financial services still prevailed due to shortcomings of the institutional credit system; as it provides funds only for productive purposes, the requirement of collateral, massive paperwork leading to inordinate delays. As a response to the failure of the formal financial system in reaching the destitute masses; microfinance through Self-help groups existed innovated and institutionalized in the India scenario.

    “While no definitive date has been determined for the actual conception and propagation of SHGs; the practice of small groups of rural and urban people banding together to form a savings and credit organization well establish in India. In the early stages, NGOs played a pivotal role in innovating the SHG model and in implementing the model to develop the process fully”.

    Part 02;

    The first step towards Microfinance intervention was the establishment of the Self Employed Women’s Association (SEWA); a nonformal organization owned by women of petty trade groups. It stood established on the cooperative principle in 1974 in Gujarat. This initiative existed undertaken for providing banking services to the poor women employed in the unorganized sector of Ahmadabad. Shree Mahila Sahkari Bank stood set up as an urban cooperative bank. At the national level, the SHG movement involves NGOs helping in the formation of the groups.

    During this time, the planners and policymakers were desperately searching for viable ways of poverty alleviation. Around that time, the Government of India launched the Integrated Rural Development Program (IRDP); a large poverty alleviation credit program, to provide credit to the poor and underprivileged; which involved the provision of government-subsidized credit through banks to the poor. But the IRDP was a “supply-led” program and the clients had no choice over the purpose and the amount. At this stage, it existed realized that the poor needed better access to these services and products, rather than cheap subsidized credit. That is when the experts started talking about microfinance, rather than microcredit.

    Part 03;

    Keeping in view the economic scenario of those days, a strong need existed felt for alternative policies, procedures, savings and loan products, other complementary services, and new delivery mechanisms; which would fulfill the requirements of the poorest, especially of the women members of such households. It was during this time, NABARD conducted a series of research studies independently and in association with MYRADA, a leading NGO from Southern India; which showed that a very large number of poor continued to remain outside the fold of the formal banking system. Later on, PRADAN in its Madurai projects started forming women SHG groups”.

    During 1988-89, NABARD in association with Asia Pacific Rural and Agricultural Credit Association (APRACA) undertook a survey of 43 NGOs in 11 states in India, to study the functioning of microfinance SHGs and their collaboration possibilities with the formal banking system. Both these research projects laid the foundation stone for the initiation of a pilot project called the SHG linkage project.

    SHG-Bank Linkage Program (1990 – 2000);

    The failure of subsidized social banking lead to the delivery of credit with NABARD initiating the Self Help Group (SHG) Bank Linkage Programme in 1992 (SBLP), aiming to link informal women’s groups to formal banks. This was the first official attempt in linking informal groups with formal lending structures. “To initiate this project NABARD held extensive consultations with the RBI. This resulted from the RBI issuing a policy circular in 1991 to all Commercial Banks to participate and extend finance to SHGs” (RBI, 1991). This was the first instance of mature SHGs that were directly financed by a commercial bank. “The informal thrift and credit groups of poor were recognized as bankable clients. Soon after, the RBI advised Commercial Banks to consider lending to SHGs as part of their rural credit operations thus creating SHG Bank Linkage”.

    The program has been extremely useful in increasing banking system outreach to unreached people. The program has been extremely advantageous due to the reduction of transaction costs; due to less paperwork and record keeping as group lending rather than individual lending involved. The SHG bank linkage is a strong method of financial inclusion; providing unbanked rural clientele with access to formal financial services from the existing banking infrastructure.

    Other things;

    The major benefit of linking SHGs with the banks is that it helps in overcoming the problem of high transaction costs of banks; as the responsibility of loan appraisal, follow-up, recovery of loans is left to the poor themselves. On the other side, SHGs gain by enjoying larger and cheaper sources.

    Later, the planners in the Ninth Five-year plan (1997-2002) emphasized “Growth with Social Justice and Equality”. The objective of the Ninth plan as approved by the National Development Council explicitly states as follows:

    “Promoting and developing participatory institutions like Panchayati Raj Institutions, cooperatives, and Self -Help Groups”.

    Hence, it was a ninth five-year plan that expressly laid down the objective of establishment of Self Help Groups to achieve the objective of Growth with Social Justice and Equality” as a part of the microfinance initiative. Meanwhile, in 1999, the Government of India merged various credit programs, refined them; and launched a new program called Swaranjayanti Gram Swarazagar Yojana (SGSY). SGSY aimed to continue to provide subsidized credit to the poor through the banking sector to generate self-employment through a Self-Help Group approach.

    Commercialization of Microfinance: The first decade of the new millennium;

    This stage involves greater participation of new microfinance institutions that started taking interest in the sector not only as part of their corporate social responsibility but also as a new business line in India. Several institutions have been set up over time; which stood required to meet the credit requirements of the new society and downtrodden.

    At present Eleventh Five Year Plan (2007-2012) aims at “Towards More and Inclusive Growth”. The word inclusive growth means including and considering; those who are somehow excluded from the benefits which they (poor) should avail. Microfinance is a step towards inclusive growth via inclusive finance; which moves around serving the financial needs and non-financial needs of the poor to improve the level of living of rural masses.

    Microfinance in India 4 Stages Development Evolution Image
    Microfinance in India 4 Stages Development Evolution; Image by Mohamed Hassan from Pixabay.
  • Phases or Stages of Project Management Life Cycle Examples

    Phases or Stages of Project Management Life Cycle Examples

    Project Management Life Cycle Stages and Phases with Examples Essay; Projects are part and parcel of our professional life. In the world of ever-changing technology and business trends, project management is in great demand. In this Topic, we are going to learn about the Project management life cycle. According to PMI, a project defines as temporary with a definite beginning and end in time. Also, the project is unique without routine operation and meant to meet the singular goal with a specific set of operations. PMI further defines project management as the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.

    What is the role of the project manager at each phase or stage of the Project Management Life Cycle? Why? What skills do you think are most important at each and why? What is the most important phase or stage?

    Whether the project is software development, or new product launch, or even a movie; its management will progress through five life cycle phases. Understanding the project management lifecycle is valuable for successfully guiding a project from its initial stages to completion. No matter the project, the project management lifecycle can assist in narrowing the project’s focus; keeping its objectives in order, and finishing the project on time, on budget, and with a minimum of headaches.

    The following are the roles of a PM in each of the phases or stages of the Project Management Life Cycle:

    Project Initiation Phases or Stages;

    In this initial phase, the PM begins multiple rounds of discussion with the stakeholders to decide whether the project can start. If all goes according to the plan Project initiation document create which outlines the requirements of the document. The PM gives the project’s overview in addition to the method that they want to utilize to achieve the results that desire. They also select the team members who require, depending on his or her skills and experience. The PM carries out assessments regarding risks, procurement, and also manages communication between stakeholders. At this phase, the manager needs to have risk assessment skills and cost estimation skills to guarantee that this phase is successful. The initiation phase of a project management cycle and a project life cycle involves:

    • Conducting a feasibility study to assess the practicality of the project.
    • Ascertaining the primary business need that the project will address.
    • Aligning project objectives with those of the organization.
    • Identifying stakeholders and their requirements, and.
    • Develop a project brief or charter with all relevant details.

    Many consider the initiation phase of the project life cycle the most significant of all the steps of project management. In the absence of proper initiation measures, projects are liable to fail or go off track. For a project to proceed to the next stage, stakeholders must approve the project charter.

    Project Planning Phases or Stages;

    In this stage, the PM is responsible for planning, and guaranteeing that there is a breakdown of the tasks from the beginning to the end of the project. The PM creates the roadmap of the whole project. Different goals and plans set by him/her such as scope, WBS, milestones, etc. The PM should make sure that appropriate budgets arrange for the project, and also that a risk assessment carries out. At this stage, the manager needs both budgeting and risk assessment skills. These abilities will make certain that the PM plans well according to the available resources; and, also predict the risks that the project might be dealing with down the road.

    The goals of the project normally place following the SMART and/or the CLEAR methods. Goals-based on the SMART method is Specific, Measurable, Achievable, Realistic, and Timely; while goals based on the CLEAR method are Collaborative, Limited, Emotional, Appreciable, and Refinable. The planning phase of a project management cycle and project life cycle also involves:

    • Identifying project milestones.
    • Determining budget, time, and resource availability.
    • Allocating tasks based on available resources.
    • Establishing key performance indicators, and.
    • Setting up a change management strategy.

    Along with these, in the planning phase of a project life cycle, project managers must also develop a risk mitigation plan. Such a plan traces the potential risks and obstacles in the path of a project and includes strategies to overcome or minimize them.

    Project Execution Phases or Stages;

    At this stage, PM develops the team, assign resources, and daily meetings are taking place to track the progress. The PM should make sure that the project team has the resources that require to perform the project activities. The PM therefore observes and analyzes the work that is being done by the team. For the execution stage, the PM needs to have risk assessment skills. The manager should also embrace teamwork to make sure that the process of achieving the project runs smoothly.

    The execution phase of both a project life cycle and a project management cycle is also recognized as the implementation phase. In this phase, the plan developed in the previous stage placing into action. Once the workflow has been established, project managers direct the execution of the project. They ensure the project is moving on track by holding status check meetings, adapting timelines according to project requirements; and communicating with everyone involved in the project, including stakeholders. A well-developed plan is crucial to the success of the execution phase.

    The execution phase is the busiest among all the project life cycle phases; because this is where all the actual work performs. Managing the workforce is also an integral part of the execution phase. Project managers must not only ensure roles and responsibilities are being fulfilled; but, also keep their teams invested in the work they do through recognition, appreciation, and words of encouragement. In case of setbacks, managers must also prepare to fine-tune the project plan as needed and/or implement corrective actions. The execution phase is often the longest among all the phases of the project management life cycle.

    Project Monitoring Control Phases or Stages;

    Here the PM will utilize the Key Performance indicators to find out if the project is on track or not. The PM will recognize the issues in the project as it does performing. They should also ensure that the project meets the desired quality to satisfy all the stakeholders. The PM needs quality control and reporting skills to ensure that the project possesses the right quality. Reporting skills should help him to answer the various questions of the stakeholders.

    Next in the steps of project management comes the monitoring and control phase. Among all project life cycle phases, this phase runs simultaneously with the execution phase. The monitoring and control phase of a project management cycle deals with performance measurement. The set key performance indicators are used to ascertain whether the project is progressing according to expectations and within budget. This is the stage where project managers control project costs, mitigate risks, evaluate roadblocks, strategize ways to overcome them, and monitor change requests.

    Change requests happen when a team member, client, or stakeholder requests changes in terms of project deliverables that had been determined in the planning phase. It’s a project manager’s responsibility to ensure the change request aligns with the scope of the project; identify the resources required to implement the change; and, also decide whether approving the change request will be beneficial for the project in the long run.

    Project Closure Phases or Stages;

    Project closure is the final stage in both a project management cycle and a project life cycle. Of all the phases of the project management life cycle, this is where the project achieves completion. In this phase, project managers finalize and hand over project deliverables to the client, prepare a thorough project report, release resources, close contracts, and review project documentation to ensure everyone involved has received their dues.

    Formally closing a project also requires project managers to announce the completion of the project to all relevant stakeholders, top-level management, and team members. At the end of it all, a reflection meeting, also known as a ‘post-mortem’, believes to recognize the success of the project and identify areas needing improvement. The performance of the project evaluates in terms of expenses incurred, adherence to timelines, and final project quality.

    The diverse phases of the project management life cycle—from initiation to closure; provide managers with a structured approach to successfully track and deliver projects on time and within budget. Project life cycle phases are essential to controlling costs, promoting communication, and enhancing transparency within an organization.

    At this stage, the role of the PM is to look into the things that are often overlooked, to ensure that the project carries to a proper conclusion. The PM will also organize workshop events to thank for the efforts done by the team members. The PM is also to do the post-mortem to analyze what went wrong in the project and should also write a review of the project to higher management. In this stage, the PM needs reporting and assessment skills to ensure that he evaluates the project for minor defects and also delivers a good report to the higher management.

    An Examples;

    Effective completion of all the stages of the project management life cycle requires project managers to be critical thinkers, efficient problem-solvers, and effective decision-makers. This is where Harappa’s Executing Solutions course comes in. This online strategy execution course will train you to handle the ins and outs of project management life cycle and project life cycle phases; while offering you some neat ideas on how to execute projects faster and better. You’ll be able to effortlessly take a solution from a mere idea to successful implementation; while learning to manage expectations, navigate roadblocks and calmly respond to crises.

    Frameworks such as the Bifocal Approach will help you monitor projects by balancing short-term focus with long-term objectives. You’ll also learn the best ways to plan out your projects and create a roadmap for success, develop a mindset to tackle any obstacle you face, and efficiently delegate tasks to team members. Want to set an example before your team members and peers? Sign up today for Harappa’s Executing Solutions course!

    Planning-Execution Merger;

    The possibilities of issues and changes in requirements from the client in the execution phase can lead to change in the project plan. The planning is again carried out in the execution phase. The agile methodology that is widely used for software projects provides the flexibility to incorporate such last-minute changes. Large projects divide into small modules like manufacturing, and quality can be different modules for a product. Completion of one module can correspond with initiation for other projects. It can conclude that these stages are dynamic, but with the help of different tools for project management; we can ensure the successful completion of the project.

    In our opinion, planning is the most important phase of the project management lifecycle; because it provides the PMs the opportunity to carry out an analysis of the underlying risks of the project. At the planning stage, all requirements gathering, the analysis makes, and the PM gets a better picture of the objective; which helps in project timelines and deliverables. This stage allows the PM to create a contingency plan. Planning saves time and also money that could use in all the other phases of the project.

    Phases or Stages of Project Management Life Cycle Examples Image
    Phases or Stages of Project Management Life Cycle Examples!

    Post Reference and Retrieved from; https://www.ukessays.com/essays/project-management/skills-and-role-of-a-project-manager.php?vref=1, https://harappa.education/harappa-diaries/project-management-life-cycle/, and https://www.educba.com/project-management-life-cycle/

  • What does Money Laundering mean? Definition and Stages

    What does Money Laundering mean? Definition and Stages

    Meaning of Money Laundering: When money obtains from criminal acts such as drug trafficking or illegal gambling, the money consider “Dirty” in that it may seem suspicious if deposited directly into a bank or other financial institution. What does Money Laundering mean? Definition and Stages. Money laundering a process uses by offenders who attempt to conceal the true origin and ownership of the proceeds; these proceeds are results of criminal activities.

    The concepts of Money Laundering explains.

    It allows them to maintain control over the proceeds and provide a legitimate cover for their source of income. Because the money’s owner needs to create financial records ostensibly showing where the money came from, the money must be “Cleaned,” by running it through several legitimate businesses before depositing it, hence the term “Money laundering”. Because the act specifically uses to hide illegally obtained money, it too is unlawful. Different jurisdictions, both foreign and domestic, have their specific definitions of what acts constitute the crime of money laundering.

    Which enforcement agency has the authority to investigate money laundering, as well as punishments for the crime, outline in the statutes of each jurisdiction? The laundering of the proceeds that result from criminal activity is done through the financial system. Also, the people who involve in such an action exploit the facilities of the financial institutions of the world.

    Such action is done easily under these conditions of free movement of capital. Banks involved in such actions risk losing their market reputation. Also, learn Investment Banks with their Principle and Functions.

    Definition of Money Laundering:

    A simpler definition of money laundering would be a series of financial transactions that intend to transform ill-gotten gains into legitimate money or other assets.

    The conversion or transfer of property, the concealment or disguising of the nature of the proceeds, the acquisition, possession, or use of property, knowing that these derive from criminal activity and participate or assist the movement of funds to make the proceeds appear legitimate is money laundering.

    According to the United States Treasury Department:

    “Money laundering is the process of making illegally-gained proceeds appear legal. Typically, it involves three steps: placement, layering, and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money move around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the “dirty money” appears “clean”.”

    The Stages of Money Laundering:

    Money laundering accomplishes in three stages, involving numerous transactions of the launderers.

    Here they are:

    Placement:

    It means the physical disposal of cash proceeds got from illegal activity. Illegal activities like drug trafficking, extortion, generate very volumes of money. People involved in these activities cannot explain the origin and source of these funds to the authorities. There is a constant fear of getting caught.

    So the immediate requirement is to send this money to a different location using all available means. This stage characterizes by facilitating the process of inducting the criminal money into the legal financial system. Normally, this done by opening up bank accounts in the names of non-existent people or commercial organizations and depositing the money.

    Layering:

    It implies a separation of illicit proceeds from their source; there create complex layers of financial transactions meant to disguise the audit trail and they assure anonymity. This uses to distance the money from the sources.

    This achieves by moving the black money from and to offshore bank accounts in the names of shell companies or front companies by using Electronic Funds Transfer (EFT) or by other electronic means. During this process, they make use of the banks wherever possible as in the legal commercial activity.

    Integration:

    Supposing that the laundering process was successful, the proceeds place back into the economy; they re-enter the financial system and seem to be normal business funds. This achieves by making it appear as legally earned.

    This normally accomplishes by the launderers by establishing anonymous companies in countries where secrecy guarantees. They can then take loans from these companies and bring back the money.

    What does Money Laundering mean Definition and Stages
    What does Money Laundering mean? Definition and Stages, #zuckermanlaw.

    Techniques of Money Laundering:

    There are many forms of money laundering though some are more common and profitable than others. Some of the more popular money laundering techniques include:

    • Bulk cash smuggling involves smuggling cash into another country for deposit into offshore banks or another type of financial institution that honors client secrecy.
    • Structuring also refers to “smurfing,” which is a method in which cash broke down into a smaller amount, which then uses to purchase money orders or other instruments to avoid detection or suspicion.
    • Trade-based laundering is similar to embezzlement in that invoices altered to show a higher or lower amount to disguise the movement of money.
    • Cash-intensive business occurs when a business that legitimately deals with large amounts of cash uses its accounts to deposit money obtained from both everyday business proceeds and money obtained through illegal means. Businesses able to claim all of these proceeds as legitimate income include those that provide services rather than goods, such as strip clubs, car washes, parking buildings or lots, and other businesses with low variable costs.
    • Shell companies and trusts use to disguise the true owner or agent of a large amount of money.
    • Bank capture refers to the use of a bank owned by money launderers or criminals, who then move funds through the bank without fear of investigation.
    • Real estate laundering occurs when someone purchases real estate with money obtained illegally, then sells the property. This makes it seem as if the profits are legitimate.
    • Casino laundering involves an individual going into a casino with illegally obtained money. The individual purchases chips with the cash play for a while then cash out the chips and claims the money as gambling winnings.
  • Capital Formation: Significances, Process, Stages, and also Meaning

    Capital Formation: Significances, Process, Stages, and also Meaning

    What does Capital Formation Mean? Capital formation means increasing the stock of real capital in a country. The following points highlight the Capital Formation: Significances, Process, Stages, and also Meaning; Significances of Capital Formation, Process of Capital Formation, Stages of Capital Formation, and Meaning of Capital Formation! Capital-formation refers to all the produced means of further production, such as roads, railways, bridges, canals, dams, factories, seeds, fertilizers, etc. Read and share the given article in English. Understand the Indian Capital Market!

    Explain and Introduction to Capital Formation.

    In other words, capital formation involves making more capital goods such as machines, tools, factories, transport equipment, materials, electricity, etc., which are all used for the future production of goods. For making additions to the stock of Capital, saving and investment are essential.

    #Meaning of Capital Formation:

    Capital-formation or accumulation plays a predominant role in all types of economics whether they are of the American or the British type, or the Chinese type. Development is not possible without capital-formation.

    According to Professor Nurkse,

    “The meaning of (Capital Formation) is that society does not apply the whole of its current productive activity to the needs and desires of immediate consumption, but directs a part of it to the tools and making of capital goods: tools and instruments, machines and transport facilities, plant and equipment— all the various forms of real capital that can so greatly increase the efficacy of productive effort. The essence of the process, then, is the diversion of a part of society’s currently available resources to the purpose of increasing the stock of capital goods so as to make possible an expansion of consumable output in the future.”

    Saving and investment are essential for capital formation. According to Marshall, saving is the result of waiting or abstinence. When a person postpones his consumption to the future, he saves his wealth which he utilizes for further production, If all people save like this, the aggregate savings increase which is utilized for investment purposes in real capital assets like machines, tools, plants, roads, canals, fertilizers, seeds, etc.

    But savings are different from hoardings. For savings to be utilized for investment purposes, they must be mobilized in banks and financial institutions. And the businessmen, the entrepreneurs, and the farmers invest these community savings on capital goods by taking loans from these banks and financial institutions.

    #The Top significance of Capital the Formation:

    Capital formation or accumulation is regarded as the key factor in the economic development of an economy. The vicious circle of poverty, according to Prof. Nurkse, can easily be broken in underdeveloped countries through capital formation.

    It is the capital formation that accelerates the pace of development with fuller utilization of available resources. As a matter of fact, it leads to an increase in the size of national employment, income, and output thereby the acute problems of inflation and balance of payment.

    The following top Significance below is:

    Use of Human Capital Formation:

    Capital formation plays an extraordinary role in the qualitative development of human resources. Human capital formation depends on people’s education, training, health, social and economic security, freedom and welfare facilities for which sufficient capital in needed.

    Labor force needs up-to-date implements and instruments is sufficient quantity so that with the increase in population there will be an optimum increase in production and increased labor is easily absorbed.

    Improvement in Technology:

    In underdeveloped countries, capital formation creates overhead capital and necessary environment for economic development.

    This helps to instigate technical progress which makes impossible the use of more capital in the field of production and with an increase of capital in production, the abstract form of capital changes.

    It is seen that present changes in the capital structure lead to changes in the structure and size of technique and public is thereby more influenced.

    High Rate of Economic Growth:

    The higher rate of capital formation in a country means the higher rate of economic growth. Generally, the rate of capital formation or accumulation is very low in comparison to advanced countries.

    In the case of poor and underdeveloped countries, the rate of capital formation varies between one percent to five percent while in the latter’s case, it even exceeds 20 percent.

    Agricultural and Industrial Development:

    Modern agricultural and industrial development needs adequate funds for the adoption of the latest mechanized techniques, input, and setting of different heavy or light industries.

    Without sufficient capital at their disposal, leads to a lower rate of development thus, capital formation. In fact, the development of these both sectors is not possible without capital accumulation.

    Increase in National Income:

    Capital formation improves the conditions and methods for the production of a country. Hence, there is much increase in national income and per capita income. This leads to an increase in the quantity of production which leads to again rise in national income.

    The rate of growth and the quantity of national income necessarily depends on the rate of capital formation.

    So, the increase in national income is possible only by the proper adoption of different means of production and productive use of the same.

    Expansion of Economic Activities:

    As there is an increase in the rate of capital formation, productivity increases quickly and available capital is utilized in a more profitable and extensive way. In this way, complicated techniques and methods are utilized for the economy.

    This results in the expansion of economic activities. Capital formation increases investment which effects economic development in two ways.

    Firstly, it increases the per capita income and enhances the purchasing power which, in turn, creates a more effective demand.

    Secondly, investment leads to an increase in production. In this way, by capital formation, economic activities can be expanded in underdeveloped countries, which in fact, helps to get rid of poverty and attain economic development in the economy.

    Less Dependence on Foreign Capital:

    In underdeveloped countries, the process of Capital formation increases dependence on internal resources and domestic savings by which dependence on foreign capital is declined.

    Economic development leaves the burden of foreign capital, hence to give interest to foreign capital and bear expenses of foreign scientists, the country has to be burdened by improper taxation to the public.

    This gives a setback to internal savings. Thus, by the way of capital formation, a country can attain self-sufficiency and can get rid of foreign capital’s dependence.

    Increase in Economic Welfare:

    By the increase in the rate of capital formation, the public is getting more facilities. As a result, the common man is more benefited economically. Capital formation leads to an unexpected increase in their productivity and income and this improves their standard of living.

    This leads to improvement and enhancement in the chances of work. This helps to raise the welfare of the people in general. Therefore, capital formations the principal solution to the complex problems of poor countries.

    Capital Formation Significances Process Stages and also Meaning
    Capital Formation: Significances, Process, Stages, and also Meaning! Image credit from #Pixabay.

    #The Top 3 Process of Capital Formation:

    The process of capital formation involves three steps:

    1. Increase in the volume of real savings.
    2. Mobilization of savings through financial and credit institutions, and.
    3. Investment of savings.

    Thus the problem of capital formation becomes two-fold: one, how to save more; and two, how to utilize the current savings of the community for capital formation. We discuss the factors on which capital accumulation depends.

    1. How to Increasing Savings?

    The following savings below are:

    Power and Will to Save: 

    Savings depend upon two factors: the power to save and the will to save. The power to save the community depends upon the size of the average income, the size of the average family, and the standard of living of the people.

    Highly progressive income and property taxes reduce the incentive to save. But low rates of taxation with due concessions for savings in provident fund, life insurance, health insurance, etc. encourage savings.

    The perpetuation of Income Inequalities: 

    A perpetuation of income inequalities had been one of the major sources of capital formation in 18th century England and early 20th century Japan. In most communities, it is the higher income groups with a high marginal propensity to save that do the majority of savings.

    Increasing Profits: 

    Professor Lewis is of the view that the ratio of profits to national income should be increased by expanding the capitalist sector of the economy, by providing various incentives and protecting enterprises from foreign competition. The essential point is that the profits of business enterprises should increase because they know how to use them in productive investment.

    Government Measures: 

    Like private households and enterprises, the government also saves by adopting a number of fiscal and monetary measures. These measures may be in the form of a budgetary surplus through an increase in taxation (mostly indirect), reduction in government expenditure, expansion of the export sector, raising money by public loans, etc.

    2. How to Mobilization can Savings?

    The next step for capital formations the mobilization of savings through banks, investment trusts, deposit societies, insurance companies, and capital markets. “The Kernal of Keynes’s theory is that decisions to save and decisions to invest are made largely by different people and for different reasons.”

    To bring the savers and investors together there must be well-developed capital and money markets in the country. In order to mobilize savings, attention should be paid to the starting of investment trusts, life insurance, provident fund, banks, and cooperative societies.

    Such agencies will not only permit small amounts of savings to be handled and invested conveniently but will allow the owners of savings to retain liquidity individually but finance long-term investment collectively.

    3. How to Investment can Savings?

    The third step in the process of capital formations the investment of savings in creating real assets. The profit-making classes are an important source of capital formation in the agricultural and industrial sectors of a country.

    They have an ambition for power and save in the form of distributed and undistributed profits and thus invest in productive enterprises, besides, there must be a regular supply of entrepreneurs which are capable, honest and dependable. To these may be added, the existence of such infrastructure as well-developed means of transport, communications, power, water, educated and trained personnel, etc.

    #The Top 3 Stages of Capital Formation:

    The following stages below are:

    Creation of savings:

    Capital formation depends on savings. Saving is that part of national income which is not spent on consumption goods. Thus, if national income remains unchanged more saving implies less consump­tion. In other words, in order to save more and more people have to curtail their consumption voluntarily.

    If people reduce their consumption savings will increase. If consumption falls some resources used in the production of consumption goods will be released. The creation of money-savings in a country depends mainly on the people’s ability to save and partly on their willingness to save.

    Conversion of savings into investment:

    However, generation of sav­ings is not enough. Often people save money but this saving largely goes waste because saving is held in the form of idle balance (as in rural areas), or to purchase unproductive assets like gold and jewelry. This is why society’s actual savings falls below its potential savings. Thus, the genera­tion of savings is just a necessary and not a sufficient condition of capital formation.

    The actual production of capital goods:

    This stage involves the con­version of money-savings into the making of capital goods, or what is known as investment. The latter, in turn, hinges on the existing technical facilities available in the country, existing capital equipment, entrepreneurial skill, and venture, the rate of return on investment, the rate of interest, govern­ment policy, etc. 

    Thus the third stage of capital formations concerned with the actual production of capital goods. The process of capital formation is not complete unless business firms acquire capital goods so as to be able to expand their production capacity.

  • Meaning, Definition, and Importance of Career Development PDF

    Meaning, Definition, and Importance of Career Development PDF

    Importance of Career Development PDF with its Meaning, and Definition; The process of organizational career development is important for both employees and employers. There may many unexpected and unwanted changes, as well as results that can change the whole scenario. The concept of career development is a matter of growing concern for organizations; as, it corresponds to the needs of a business with the career goals of the employees. Preparing a career development plan can help employees make their jobs more efficient. In addition, these plans can be beneficial for employees; who want to move forward in a company or look for other jobs in the future. Do you study to learn: If Yes? Then read the lot. Let’s Study Meaning, Definition, and the Importance of Career Development PDF. This Also, read in the Hindi language: करियर विकास का अर्थ, परिभाषा, और महत्व।

    The concept of career development Discussing the topic – Meaning, Definition, Benefits, Importance, and Stages of Career Development PDF.

    Today, challenging organizations have developed new concerns regarding the development of their employee’s careers. He emphasized “Career” with consistent induction, training, and development with an accumulation of valuable experiences and qualifications in the labor market.

  • Performance Management Systems (PMS)

    Performance Management Systems (PMS)

    A Performance Management System (PMS) is a structured approach designed to enhance organizational performance by aligning employee goals with company objectives, fostering continuous feedback, and promoting accountability. Discover its types, stages, key components, benefits, and challenges to implement an effective PMS that drives growth and employee satisfaction.

    What are the Performance Management Systems?

    A Performance Management System (PMS) is a strategic framework designed to enhance organizational performance by managing employee productivity. It aligns individual goals with company objectives, encourages continuous feedback, fosters employee development, and establishes accountability, ultimately driving growth and satisfaction within the organization.

    Definition

    A Performance Management System (PMS) is a systematic and strategic approach aimed at improving organizational performance through effectively managing employee performance.

    This expansive framework provides structure and methodology by which organizations can align their objectives with employee goals, ensuring that everyone is working towards a common purpose.

    PMS not only focuses on evaluating employee productivity but also encompasses continuous development and support to achieve optimal performance.

    Purpose

    The primary purpose of a performance management system is multifaceted. It serves to ensure that the activities of employees and teams are aligned with the strategic objectives of the organization. By promoting consistency in performance expectations, PMS helps to enhance communication between managers and employees.

    This alignment encourages employee growth and development, ultimately leading to improved job satisfaction and motivation. additionally, a well-structured PMS fosters a culture of accountability, where individuals take ownership of their roles and contributions to the organization’s success, while also providing a clear avenue for feedback and performance correction.

    Types

    1. Traditional Performance Management: This type often centers around annual reviews, where managers assess employee performance based on preset criteria or past performance. These reviews may be infrequent and retrospective, offering limited opportunities for timely feedback and adjustment.
    2. Continuous Performance Management: In contrast to the traditional model, continuous performance management emphasizes ongoing feedback, frequent check-ins, and real-time discussions regarding performance. This approach allows for immediate identification of areas needing improvement and fosters a proactive performance culture.
    3. 360-Degree Feedback: This comprehensive type of PMS involves collecting performance feedback from multiple sources, including peers, direct reports, managers, and sometimes even customers. This holistic view provides a broader perspective on the employee’s performance and behaviors, encouraging a more rounded approach to development.
    4. Management by Objectives (MBO): This method consists of setting specific, quantifiable objectives for employees to achieve within a designated timeframe. Progress towards these objectives is typically monitored through regular meetings, allowing for adjustments as needed and ensuring employees stay on track toward achieving their goals.

    Stages

    1. Planning: The first stage involves setting clear performance expectations and establishing measurable goals. This stage is critical because it lays the foundation for what is expected and helps employees understand their contributions to the overall business strategy.
    2. Monitoring: In this stage, performance is regularly observed and assessed against the established goals. Continuous monitoring aids in identifying trends and addressing any issues proactively, rather than waiting until a formal review.
    3. Reviewing: This stage includes formal evaluations where both managers and employees discuss performance outcomes. These discussions should be constructive and aimed at identifying successes, areas for improvement, and potential development opportunities.
    4. Developing: The final stage focuses on personal and professional growth. Based on feedback and review discussions, development plans are created, highlighting training needs or resources that can help employees enhance their skills or overcome challenges.

    Implementation

    Implementing a Performance Management System requires careful planning and execution. Key steps can include:

    • Defining Clear Objectives: Establishing performance metrics that are closely aligned with the broader business goals ensures that all employees are focused on contributing to the organization’s success.
    • Training and Development: Equipping managers and employees with the skills needed to engage in effective performance management is vital. Training programs should cover communication techniques, feedback methods, and how to set SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals.
    • Communication: Establishing transparent communication channels is essential for discussing performance expectations. Employees should feel comfortable approaching their managers with questions or concerns regarding their performance.
    • Technology Integration: Utilizing software tools for performance tracking and evaluation can streamline the process and make it easier to collect data, conduct assessments, and monitor progress over time.

    Components

    A functional Performance Management System typically includes several key components:

    1. Goal Setting: Effective goal-setting practices ensure that employees have clarity on their objectives. Combining individual, team, and company-level goals creates a cohesive focus.
    2. Performance Appraisals: Regular assessments enable managers to evaluate employee performance formally. These should be constructive and objective to ensure fairness and accuracy in evaluations.
    3. Feedback Mechanisms: Structured feedback processes encourage managers to provide timely and specific feedback to employees. This can include both positive reinforcement and constructive criticism aimed at fostering improvement.
    4. Development Programs: Initiatives aimed at skill enhancement are integral to a PMS. These programs can include mentorship opportunities, training sessions, and professional development workshops tailored to employee needs.

    Benefits

    A well-implemented performance management system offers numerous benefits:

    • Enhanced Clarity: By providing clear performance expectations, employees can better understand their responsibilities and how their work fits into the organization’s goals.
    • Improved Employee Engagement: Involving employees in their performance discussions boosts their commitment to their roles, fostering a more motivated workforce.
    • Increased Accountability: With defined performance metrics, employees are more likely to take responsibility for their contributions, enhancing overall organizational accountability.
    • Data-Driven Decisions: An effective PMS enables the collection and analysis of performance data, facilitating informed decision-making regarding promotions, training needs, and strategic adjustments.

    Disadvantages

    Despite the advantages, there are also notable disadvantages in implementing a performance management system:

    • Time-Consuming: Managing and maintaining an effective PMS can require significant time and resources, potentially diverting attention from other critical operational tasks.
    • Possible Bias: Evaluation processes may inadvertently introduce bias, whether from personal relationships, subjective evaluations, or unclear performance criteria, leading to perceived or real unfairness.
    • Stressful for Employees: Formal evaluations can create anxiety, making employees feel under pressure during review periods. This stress may negatively impact performance rather than enhance it.
    • Resistance to Change: Employees may resist new systems or methods, particularly if they are accustomed to traditional evaluation processes. This reluctance can hinder the successful implementation of a PMS, making buy-in from all levels of the organization crucial.

    Frequently Asked Questions (FAQs)

    1. What is a Performance Management System (PMS)?

    A Performance Management System (PMS) is a structured approach that organizations use to improve employee performance and align individual goals with the overall objectives of the company. It encompasses goal setting, monitoring, feedback, and development.

    2. Why is Performance Management important?

    Performance management is crucial because it helps ensure that employees are meeting organizational goals, encourages communication, fosters accountability, and supports employee development, which can lead to increased job satisfaction and productivity.

    3. What are the different types of Performance Management Systems?

    1. Traditional Performance Management: Focuses on annual reviews based on preset criteria and past performance.
    2. Continuous Performance Management: Emphasizes ongoing feedback and real-time performance discussions.
    3. 360-Degree Feedback: Collects input from multiple sources, providing a comprehensive view of an employee’s performance.
    4. Management by Objectives (MBO): Involves setting specific, measurable objectives for employees.

    4. What are the stages of Performance Management?

    1. Planning: Setting clear expectations and measurable goals.
    2. Monitoring: Regularly assessing performance against goals.
    3. Reviewing: Conducting formal evaluations and discussions about performance.
    4. Developing: Creating development plans based on feedback and reviews.

    5. What are the key components of a Performance Management System?

    1. Goal Setting: Establishing clear objectives for employees.
    2. Performance Appraisals: Regular evaluations of employee performance.
    3. Feedback Mechanisms: Structured processes for providing timely feedback.
    4. Development Programs: Opportunities for skill enhancement and professional growth.

    6. What are the benefits of implementing a PMS?

    • Enhanced Clarity: Clear expectations help employees understand their roles.
    • Improved Employee Engagement: Involving employees in performance discussions motivates them.
    • Increased Accountability: Defined metrics encourage responsibility for contributions.
    • Data-Driven Decisions: Enables informed choices regarding promotions and training needs.

    7. What are the disadvantages of Performance Management Systems?

    • Time-Consuming: Maintaining an effective PMS can require significant resources.
    • Possible Bias: Evaluations may introduce subjective bias leading to perceived unfairness.
    • Stressful for Employees: Formal reviews can create anxiety and pressure.
    • Resistance to Change: Employees may resist new systems, impacting implementation success.

    8. How can organizations successfully implement a PMS?

    Organizations can ensure successful implementation by defining clear objectives, providing training, maintaining transparent communication, and integrating technology for performance tracking.