Implementing Organizational Policies

A complete strategy to prevent and address human rights issues should include:

1. A plan for preventing, reviewing and removing barriers
2. Anti-harassment and anti-discrimination policies
3. An internal complaints procedure
4. An accommodation policy and procedure
5. An education and training program.

An effective strategy will combine all of these elements. For example, while it is an essential part of any human rights strategy, an education and training program on its own will not remove underlying systemic barriers. On the other hand, without education and training, it will be difficult to ensure organizational support for, and compliance with, human rights policies, programs and procedures.

No strategy will be effective without strong, visible and ongoing commitment from the senior levels of the organization.

Performance Management System and Process

The role of HR in the present scenario has undergone a sea change and its focus is on evolving such functional strategies which enable successful implementation of the major corporate strategies. In a way, HR and corporate strategies function in alignment. Today, HR works towards facilitating and improving the performance of the employees by building a conducive work environment and providing maximum opportunities to the employees for participating in organizational planning and decision making process.

Industrial Relations

Industrial relations is a multidisciplinary field that studies the employment relationship.Industrial relations is increasingly being called employment relations or employee relations because of the importance of non-industrial employment relationships; this move is sometimes seen as further broadening of the human resource management trend. Indeed, some authors now define human resource management as synonymous with employee relations. Other authors see employee relations as dealing only with non-unionized workers, whereas labor relations is seen as dealing with unionized workers. Industrial relations studies examine various employment situations, not just ones with a unionized workforce. However, according to Bruce E. Kaufman "To a large degree, most scholars regard trade unionism, collective bargaining and labor-management relations, and the national labor policy and labor law within which they are embedded, as the core subjects of the field."

Industrial Relations (IR) is the study of the laws, conventions and institutions that regulate 'the workplace'. It is a fundamentally important aspect of our way of life, our culture and our society.

Industrial relations means different things to different people. The following illustration depicts how IR shapes our working life, our society and the national economy.

Concept of Industrial Relations:
The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and ‘Relations’. “Industry”

refers to “any productive activity in which an individual (or a group of individuals) is (are) engaged”. By “relations” we mean “the relationships that exist within the industry between the employer and his workmen.”.
The term industrial relations explains the relationship between employees and management which stem directly or indirectly from union-employer relationship. 

Definitions:

The term ‘industrial relations’ has been variously defined. J.T. Dunlop defines industrial relations as “the complex interrelations among managers, workers and agencies of the governments”.
According to Dale Yoder “industrial relations is the process of management dealing with one or more unions with a view to negotiate and subsequently administer collective bargaining agreement or labour contract”.

The HR Employee Relations Manager directs the organization's employee relations function. They develop employee relations policies and ensure consistent application of company policies and procedures. In addition, they are responsible for employee dispute resolution procedures, performing internal audits, and taking appropriate action to correct any employee relations issues.

Importance of Industrial Relations:
The healthy industrial relations are key to the progress and success. Their significance may be discussed as under – 

• Uninterrupted production – The most important benefit of industrial relations is that this ensures continuity of production. This means, continuous employment for all from manager to workers. The resources are fully utilized, resulting in the maximum possible production. There is uninterrupted flow of income for all. Smooth running of an industry is of vital importance for several other industries; to other industries if the products are intermediaries or inputs; to exporters if these are export goods; to consumers and workers, if these are goods of mass consumption.
• Reduction in Industrial Disputes – Good industrial relations reduce the industrial disputes. Disputes are reflections of the failure of basic human urges or motivations to secure adequate satisfaction or expression which are fully cured by good industrial relations. Strikes, lockouts, go-slow tactics, gherao and grievances are some of the reflections of industrial unrest which do not spring up in an atmosphere of industrial peace. It helps promoting co-operation and increasing production.
• High morale – Good industrial relations improve the morale of the employees. Employees work with great zeal with the feeling in mind that the interest of employer and employees is one and the same, i.e. to increase production. Every worker feels that he is a co-owner of the gains of industry. The employer in his turn must realize that the gains of industry are not for him along but they should be shared equally and generously with his workers. In other words, complete unity of thought and action is the main achievement of industrial peace. It increases the place of workers in the society and their ego is satisfied. It naturally affects production because mighty co-operative efforts alone can produce great results.
• Mental Revolution – The main object of industrial relation is a complete mental revolution of workers and employees. The industrial peace lies ultimately in a transformed outlook on the part of both. It is the business of leadership in the ranks of workers, employees and Government to work out a new relationship in consonance with a spirit of true democracy. Both should think themselves as partners of the industry and the role of workers in such a partnership should be recognized. On the other hand, workers must recognize employer’s authority. It will naturally have impact on production because they recognize the interest of each other.
• Reduced Wastage – Good industrial relations are maintained on the basis of cooperation and recognition of each other. It will help increase production. Wastage of man, material and machines are reduced to the minimum and thus national interest is protected.

Thus, it is evident that good industrial relations is the basis of higher production with minimum cost and higher profits. It also results in increased efficiency of workers. New and new projects may be introduced for the welfare of the workers and to promote the morale of the people at work. An economy organized for planned production and distribution, aiming at the realization of social justice and welfare of the massage can function effectively only in an atmosphere of industrial peace. If the twin objectives of rapid national development and increased social justice are to be achieved, there must be harmonious relationship between management and labor.

Objectives of Industrial Relations: 
The main objectives of industrial relations system are:-

• To safeguard the interest of labor and management by securing the highest level of mutual understanding and good-will among all those sections in the industry which participate in the process of production.
• To avoid industrial conflict or strife and develop harmonious relations, which are an essential factor in the productivity of workers and the industrial progress of a country.
• To raise productivity to a higher level in an era of full employment by lessening the tendency to high turnover and frequency absenteeism.
• To establish and promote the growth of an industrial democracy based on labor partnership in the sharing of profits and of managerial decisions, so that ban individuals personality may grow its full stature for the benefit of the industry and of the country as well.
• To eliminate or minimize the number of strikes, lockouts and gheraos by providing reasonable wages, improved living and working conditions, said fringe benefits.
• To improve the economic conditions of workers in the existing state of industrial managements and political government.
• Socialization of industries by making the state itself a major employer
• Vesting of a proprietary interest of the workers in the industries in which they are employed. 

Employee Welfare

Employee welfare is a term including various services, benefits and facilities offered to employees by the employers. The welfare measures need not be monetary but in any kind/forms. This includes items such as allowances, housing, transportation, medical insurance and food. Employee welfare also includes monitoring of working conditions, creation of industrial harmony through infrastructure for health, industrial relations and insurance against disease, accident and unemployment for the workers and their families. Through such generous benefits the employer makes life worth living for employees.

Importance of Employee Welfare
As a business, you have to provide various benefits to ensure your employees' welfare. While this may increase your business expense and negatively affect your bottom line, looking after your employees will benefit you in other ways.
Compliance:

As an owner, you are required by law to provide certain benefits for the welfare of your employees. You may have to match the Social Security taxes your employees pay and obtain a worker's compensation insurance policy. If you terminate an employee, you may have to funds to extend his health insurance.

Hiring and Retention:
The benefits an employee receives from his employer for his welfare are often a significant reason why he decides to accept a job offer. As such, providing employee benefits allow you to compete with other businesses to recruit and retain qualify employees. If other employers offer better benefits, good employees may choose to go there.

Employees Motivation:
By providing a plan that's good for employees' welfare, you show them that you value them. This can help make them feel welcome and happy in your company, motivating them to work harder. If your health plan has wellness coverage and preventative care, employees are more likely to stay healthy, cutting down on absenteeism and sick days.

Employees' Well-Being:
For companies that have a large base of employees working under stressful conditions or living away from family, it is important to look at fostering personal happiness and professional growth. Investing in employees pays dividends in terms of higher productivity and greater loyalty

Company Image:
Providing a good employee welfare plan reflects well on your business, building a good company image. It may even earn you some press coverage, giving you free publicity to improve awareness among potential customers. This may boost your sales and increase your profits.

Features of Employee Welfare

• Employee welfare is a comprehensive term including various services, facilities and amenities provided to employees for their betterment.
• Welfare measures are in addition to regular wages and other economic benefits available to employees under legal provisions and collective bargaining.
• The basic purpose of employee welfare is to improve the lot of the working class and thereby make a worker a good employee and a happy citizen.
• Employee welfare is an essential part of social welfare. It involves adjustment of an employee's work life and family life to the community or social life.
• Welfare measures may be both voluntary and statutory.

How to Develop an Effective Employee Welfare Program

• Conduct employee surveys to understand their needs and expectations
• Indentify key areas of building skills and engagement and facilitating trainings for the same
• Propose solutions for personal upkeep, family uplifting and future security
• Create opportunities for greater synergies between the management and employees
• Conduct impact assessments and feedback surveys

Employee Welfare Schemes 
Organizations provide welfare facilities to their employees to keep their motivation levels high. The employee welfare schemes can be classified into two categories viz. statutory and non-statutory welfare schemes. The statutory schemes are those schemes that are compulsory to provide by an organization as compliance to the laws governing employee health and safety. These include provisions provided in industrial acts like Factories Act 1948, Dock Workers Act (safety, health and welfare) 1986, Mines Act 1962. The non-statutory schemes differ from organization to organization and from industry to industry. 

Statutory Welfare Schemes

The statutory welfare schemes include the following provisions:

1. Drinking Water: At all the working places safe hygienic drinking water should be provided.
2. Facilities for sitting: In every organization, especially factories, suitable seating arrangements are to be provided.
3. First aid appliances: First aid appliances are to be provided and should be readily assessable so that in case of any minor accident initial medication can be provided to the needed employee.
4. Latrines and Urinals: A sufficient number of latrines and urinals are to be provided in the office and factory premises and are also to be maintained in a neat and clean condition.
5. Canteen facilities: Cafeteria or canteens are to be provided by the employer so as to provide hygienic and nutritious food to the employees.
6. Spittoons: In every work place, such as ware houses, store places, in the dock area and office premises spittoons are to be provided in convenient places and same are to be maintained in a hygienic condition.
7. Lighting: Proper and sufficient lights are to be provided for employees so that they can work safely during the night shifts.
8. Washing places: Adequate washing places such as bathrooms, wash basins with tap and tap on the stand pipe are provided in the port area in the vicinity of the work places.
9. Changing rooms: Adequate changing rooms are to be provided for workers to change their cloth in the factory area and office premises. Adequate lockers are also provided to the workers to keep their clothes and belongings.
10. Rest rooms: Adequate numbers of restrooms are provided to the workers with provisions of water supply, wash basins, toilets, bathrooms, etc.

Non Statutory Schemes:
Many non-statutory welfare schemes may include the following schemes:

1. Personal Health Care (Regular medical check-ups): Some of the companies provide the facility for extensive health check-up
2. Flexi-time: The main objective of the flextime policy is to provide opportunity to employees to work with flexible working schedules. Flexible work schedules are initiated by employees and approved by management to meet business commitments while supporting employee personal life needs
3. Employee Assistance Programs: Various assistant programs are arranged like external counseling service so that employees or members of their immediate family can get counseling on various matters.
4. Harassment Policy: To protect an employee from harassments of any kind, guidelines are provided for proper action and also for protecting the aggrieved employee.
5. Maternity & Adoption Leave – Employees can avail maternity or adoption leaves. Paternity leave policies have also been introduced by various companies.
6. Medi-claim Insurance Scheme: This insurance scheme provides adequate insurance coverage of employees for expenses related to hospitalization due to illness, disease or injury or pregnancy.
7. Employee Referral Scheme: In several companies employee referral scheme is implemented to encourage employees to refer friends and relatives for employment in the organization.

Compensation and Benefits

Compensation includes topics in regard to wage and/or salary programs and structures, for example, salary ranges for job descriptions, merit-based programs, bonus-based programs, commission-based programs, etc. (Also see the Related Info (including Benefits).)

Compensation is payment to an employee in return for their contribution to the organization, that is, for doing their job. The most common forms of compensation are wages, salaries and tips.

Compensation is usually provided as base pay and/or variable pay. Base pay is based on the role in the organization and the market for the expertise required to conduct that role. Variable pay is based on the performance of the person in that role, for example, for how well that person achieved his or her goals for the year. Incentive plans, for example, bonus plans, are a form of variable pay. (Some people might consider bonuses as a benefit, rather than a form of compensation.) Some programs include a base pay and a variable pay.

Organizations usually associate compensation/pay ranges with job descriptions in the organization. The ranges include the minimum and the maximum amount of money that can be earned per year in that role.

Performance Appraisal

Performance Appraisal is the systematic evaluation of the performance of employees and to understand the abilities of a person for further growth and development. 
According to Flippo, a prominent personality in the field of Human resources, “performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job.”
In the words ofYoder, “Performance appraisal refers to all formal procedures used in working organizations to evaluate personalities and contributions and potential of group members.” Thus performance appraisal is a formal programme in an organization which is concerned with not only the contributions of the members who form part of the organization, but also aims at spotting the potential of the people.”

Executive Development

Executive development is the whole of activities aimed at developing the skills and competencies of those that (will) have executive positions in organisations. While "executive" and "manager" and "leader" are often used interchangeably, "executive" is commonly used to signify the top 5% to 10% of the organization. Similarly, "development" and "training" and"education" are often used as synonyms, however "development" is generally seen as the more encompassing of the three in terms of activities that build skills and competencies.

While it is typical to find organizations that have dedicated corporate training & development people and processes, it is not always the case that an organization will have a dedicated executive development set of activities. In some organizations (typically large multi-nationals), there is a separate executive development team, in other organizations executive development is handled as one of many activities by the larger corporate training group, and in yet other scenarios there is no executive development activity to speak of.

Training and Development

 Training refers to the imparting of specific skill, abilities and knowledge to  employee ( development of those employees who do not supervise activities of others, operative level)
System and practices get outdated due to new discoveries in technology, including technical, managerial and behavioral aspects. In this context training enhances the knowledge, skills and attitudes of employees to increase efficiency and effectiveness on the prsent job as well as expected future job.
The objective of training is to achieve a change in the behavior of those trained. It is expected that employees apply their newly acquired knowledge & skill on the job in such a way as to aid in the achievement of organizational goal.

Recruitment and Selection Process

One of the significant roles of HRM is to select suitable staff and decide to hire right professionals or employees to fill recruitment needs, and provide training the best employees and, make certain that these selected candidates can give better performance, deal with performance issues and follow the rules to diverse system. Recruitment is of the fundamental job of Human Resource management. Fundamentally, recruitment is the process of attracting, assessing, and hiring employees for companies. Once HRM requirements are understood, the next step of HRM is to employ workers. Recruiting and staffing is a complicated activity in competitive business surroundings. Earlier, HRM employees were dependent on recommendation from existing employees. At present, the major challenge is to fill suitable positions and equal employment opportunity which requires more complicated procedures to distinguish and select potential employees. There is difference in enrolment and selection practices reflecting an organizations strategies and perspective to manage workforce. Talented employees represent the core workforce of organization. Applicants are employed on the basis of their ethical level and skills (Guest, 1989). In many organizations, skill framework have been developed and utilized to recognize the talent and qualities essential from potential employees (Roberts, 1997). Such criteria are important to implement many recruitment and selection procedures to classify and select suitable people.

Recruitment is the process of searching for and obtaining applications so as to build a pool of job seekers from whom the right people for the right jobs may be selected.

Job Analysis

Job analysis is the process of gathering and analyzing information about the content and the human requirements of jobs, as well as, the context in which jobs are performed. This process is used to determine placement of jobs. Under NU Values the decision-making in this area is shared by units and Human Resources. Specific internal approval processes will be determined by the unit's organizational leadership.

Job analysis defines the organization of jobs within a job family. It allows units to identify paths of job progression for employees interested in improving their opportunities for career advancement and increasing compensation.

A relative value is placed on the differing factors described in the Zone Placemnet Matrix. All new and existing positions will be assigned to a job family and zone using the job analysis process. This process is designed to place positions into families and zones based upon assigned duties, qualifications and competencies as measured by the five criteria found in the Zone Placement Matrix.

Job specification
A statement of the minimum acceptable human qualities necessary to perform a job properly. It is a standard of personnel and designates the qualities required for acceptable performance.

Human Resource Planning Process

Human resource planning is a process through which the company anticipates future business and environmental forces. Human resources planning assess the manpower requirement for future period of time. It attempts to provide sufficient manpower required to perform organizational activities. HR planning is a continuous process which starts with identification of HR objectives, move through analysis of manpower resources and ends at appraisal of HR planning. Following are the major steps involved in human resource planning:

1. Assessing Human Resources
The assessment of HR begins with environmental analysis, under which the external (PEST) and internal (objectives, resources and structure) are analyzed to assess the currently available HR inventory level. After the analysis of external and internal forces of the organization, it will be easier for HR manager to find out the internal strengths as well as weakness of the organization in one hand and opportunities and threats on the other. Moreover, it includes an inventory of the workers and skills already available within the organization and a comprehensive job analysis.

2. Demand Forecasting
HR forecasting is the process of estimating demand for and supply of HR in an organization. Demand forecasting is a process of determining future needs for HR in terms of quantity and quality. It is done to meet the future personnel requirements of the organization to achieve the desired level of output. Future human resource need can be estimated with the help of the organization's current human resource situation and analysis of organizational plans an procedures. It will be necessary to perform a year-by-year analysis for every significant level and type.

3. Supply Forecasting
Supply is another side of human resource assessment. It is concerned with the estimation of supply of manpower given the analysis of current resource and future availability of human resource in the organization. It estimates the future sources of HR that are likely to be available from within an outside the organization. Internal source includes promotion, transfer, job enlargement and enrichment, whereas external source includes recruitment of fresh candidates who are capable of performing well in the organization.

4. Matching Demand And Supply
It is another step of human resource planning. It is concerned with bringing the forecast of future demand and supply of HR.The matching process refers to bring demand and supply in an equilibrium position so that shortages and over staffing position will be solved. In case of shortages an organization has to hire more required number of employees. Conversely, in the case of over staffing it has to reduce the level of existing employment. Hence, it is concluded that this matching process gives knowledge about requirements and sources of HR.

Introduction to Human Resource Management

Human resources management (HRM) is a management function concerned with hiring, motivating and maintaining people in an organization. It focuses on people in organizations. Human resource management is designing management systems to ensure that human talent is used effectively and efficiently to accomplish organizational goals.

HRM is the personnel function which is concerned with procurement, development, compensation, integration and maintenance of the personnel of an organization for the purpose of contributing towards the accomplishments of the organization’s objectives. Therefore, personnel management is the planning, organizing, directing, and controlling of the performance of those operative functions (Edward B. Philippo).

According to the Invancevich and Glueck, “HRM is concerned with the most effective use of people to achieve organizational and individual goals. It is the way of managing people at work, so that they give their best to the organization”.

Work Motivation

Definition of motivation

Motivation originally comes from the Latin root word movers, which means "to move". It is derived from the word 'motive'. Motive may be defined as an inner state of our mind that activates and directs our behaviour. It makes us move to act. It is always internal to us and is externalized via behaviour. Motive is an inner state that energizes, activates, or moves and directs or channels behaviour goals. It is the stimulation of any emotion or desire operating upon one's will and promoting or driving it to action.

Motivating

It is an act of stimulating emotion or desire and promoting it to action. It may be positive motivation (i.e., incentive motivation based on reward) or negative motivation or fear motivation (based on force). Positive motivation is achieved by the co-operation of employees and they have a feeling of happiness. Negative motivation is commonly used to achieve desired results.

Meaning of motivation

Motivation is one's willingness to exert efforts towards the accomplishment of his/ her goal. Let us consider a few important definitions on motivation that will help us understand the meaning of motivation in more clear sense.

Group Decision Making Techniques

Good decision making is an essential skill for career success generally and effective leadership particularly. If you can learn to make timely and well-considered decisions, then you can often lead your team to spectacular and well-deserved success. However, if you make poor decisions, your team risks failure and your time as a leader will, most likely, be brutally short.

The techniques in this section help you to make the best decisions possible with the information you have available. These tools help you map out the likely consequences of decisions, work out the importance of individual factors and choose the best course of action to take.

These techniques build on the tools discussed in the section on Problem Solving Tools, in that Decision Making follows on from an understanding of the situation. The section on Creativity Tools will help you to explore what alternatives that are open to you.

Measuring process, practices, behaviour and culture

Some aspects of supplier performance cannot be ascertained by asking them, as they may not be aware. Gordon (2008) states that a lot of insight is needed into not only supplier performance using quantifiable performance metrics but also the means by which this performance is achieved. This includes the supplier's processes, practices, behaviour and culture. However, if we accept that by forging the right relationship with certain important suppliers we can add value, then it follows that we must also measure processes, practices, behaviour and culture; theirs and those that are joint between us.

There are measures we can develop for aspects of process efficiency and effectiveness, but practices, behaviour and culture are much more subjective. In a close personal relationship norms around practices, behaviour and even culture develop. There may not be a specific discussion around this but in a healthy relationship practices get agreed based on what works for both, behaviour gets shaped through parties agreeing what is mutually acceptable and where boundaries lie and if all these things happen the relationship takes on its own positive culture over time. Split up and meet someone new and the process begins over. The same happens with a supplier relationship, except companies rarely seek to agree what practices and behaviours are appropriate or expected, yet if we do this we then create the basis to measure it or at least check it feels right. In Chapter 11 we will explore the Relationship Charter, a means to define expected practices and behaviours and thus a basis to them measure the degree to which parties emulate this.

Collecting and analysing data

KPIs typically demand different data types, from different sources. Collecting data to create KPIs could be an automatic process in real time, perhaps using a corporate system or well-designed app, or perhaps it requires a regular or even irregular activity to produce the latest set of KPIs. We could do this or we could get the supplier to do this, or a combination of both.

Process of Organizational Development

(OD) Organization development process is a complex and long process. Sometimes it takes a year or more than a year to design, executes and gets end fruits. In some cases it can continue indefinitely.

Organization development process eaters to move the organization from present position to better future position. The process consists of five steps.

The model has been excerpted from Newstrom and Davis’s book Organization Behavior. The model is shown in the following figure and elements are discussed briefly in the points beneath the figure.

Organization development process

The Theory of Planned Behavior

The Theory of Planned Behavior (TPB) started as the Theory of Reasoned Action in 1980 to predict an individual's intention to engage in a behavior at a specific time and place. The theory was intended to explain all behaviors over which people have the ability to exert self-control. The key component to this model is behavioral intent; behavioral intentions are influenced by the attitude about the likelihood that the behavior will have the expected outcome and the subjective evaluation of the risks and benefits of that outcome.  

The TPB has been used successfully to predict and explain a wide range of health behaviors and intentions including smoking, drinking, health services utilization, breastfeeding, and substance use, among others. The TPB states that behavioral achievement depends on both motivation (intention) and ability (behavioral control). It distinguishes between three types of beliefs - behavioral, normative, and control. The TPB is comprised of six constructs that collectively represent a person's actual control over the behavior.

1. Attitudes - This refers to the degree to which a person has a favorable or unfavorable evaluation of the behavior of interest. It entails a consideration of the outcomes of performing the behavior.

Features of Organizational Behaviour

Organizational behaviour has emerged as a separate field of study. The nature it has acquired is identified as follows :

1. A Separate Field of Study and not a Discipline Only

By definition, a discipline is an accepted science that is based on a theoretical foundation. But, O.B. has a multi-interdisciplinary orientation and is, thus, not based on a specific theoretical background. Therefore, it is better reasonable to call O.B. a separate field of study rather than a discipline only.

2. An Interdisciplinary Approach

Organizational behaviour is essentially an interdisciplinary approach to study human behaviour at work. It tries to integrate the relevant knowledge drawn from related disciplines like psychology, sociology and anthropology to make them applicable for studying and analysing organizational behaviour.

3. An Applied Science

The very nature of O.B. is applied. What O.B. basically does is the application of various researches to solve the organizational problems related to human behaviour. The basic line of difference between pure science and O.B. is that while the former concentrates of fundamental researches, the latter concentrates on applied researches. O.B. involves both applied research and its application in organizational analysis. Hence, O.B. can be called both science as well as art.

Personality traits and organizational behaviour

Those personality traits which affect the organizational behaviour of a person are :

1. Authoritarianism : It was developed by the psychologist Adorno to measure susceptibility to autocratic, fascistic, or anti-democratic appeals. It was later extended to human personality. Authoritarians are oriented towards conformity of rules and regulation. They prefer stable and structured work environment. They believe obedience and respect for authority and blind acceptance of authority. They are conservatives. They are concerned with toughness and power, close minded and less educated. They make good followers, work better under directive supervision and are more productive within authoritarian organizational structure.

2. Bureaucratic Personality : It is based upon respect for organizational rules and regulations. Unlike authoritarian person, bureaucratic person's acceptance of authority is not total and blind. A bureaucratic person values subordination, conformity to rules, impersonal and formal relationships. These people are not innovative. They do not like taking risks. They are better supervisors when the type of work is routine, repetitive and proceduralized.

3. Machiavellianism (Mach) : Niccolo Machiavelli wrote in the 16th century on how to gain and use power. This personality trait named after Machiavelli are :

(i) A Mach man is pragmatic, maintain emotional distance and believes that ends can justify means.

(ii) High Mach people flourish when they interact face to face with others.

(iii) They have high self-confidence and high self esteem.

(iv) They are specially successful in exploiting structured situations and vulnerable people. We cannot conclude whether high Machs make good employees or not. The answer will depend upon the type of the job and whether moral and ethical values are considered in evaluating the performance of a person.

Process of Behaviour

We assume that behaviour is caused and this assumption is true. Behaviour takes place in the form of a process. It is based on the analysis of behaviour process over the period of time. Three models of behaviour process have been developed. These are S-R model, S-O-R model, S-O-B-A model and S-O-B-C model.

S-R Model

S-R model of human behavior suggests that the behaviour is caused by certain reasons. The reasons may be internal feeling (motivation) and external environment (stimulus). A stimulus is an agent, such as, heat, light, piece of information, etc., that directly influences the activity of an organism (person). Without the stimulus there is no information to be handled by the internal processes prior to action taken by the person. It implies that his behaviour is determined by the situation. Inherent in the situation are the environmental forces that shape and determine his behaviour at any given moment. The entire situation has been traditionally described as stimulus response (S-R) process.

Models of Organisational Behaviour

Autocratic model

Autocratic model is the model that depends upon strength, power and formal authority.

In an autocratic organisation, the people (management/owners) who manage the tasks in an organisation have formal authority for controlling the employees who work under them. These lower-level employees have little control over the work function. Their ideas and innovations are not generally welcomed, as the key decisions are made at the top management level.

The guiding principle behind this model is that management/owners have enormous business expertise, and the average employee has relatively low levels of skill and needs to be fully directed and guided. This type of autocratic management system was common in factories in the industrial revolution era.

One of the more significant problems associated with the autocratic model is that the management team is required to micromanage the staff – where they have to watch all the details and make every single decision. Clearly, in a more modern-day organisation, where highly paid specialists are employed an autocratic system becomes impractical and highly inefficient.

Importance of Organizational Behaviour

Organizational behavior is defined as actions and attitudes of individuals and groups toward one another and toward the organization as a whole, and its effect on the organization's functioning and performance.

Organizational behavior is defined as the study which deals with all aspects of human behavior that occur within the context of an organization. It entails the study of how individuals behave as individuals and in groups within an organization. Organizational behavior is the study of human behavior, attitudes and performance in organizations.

Organizations are social inventions for accomplishing common goals through group effort. Organizational behavior is concerned with the attitudes and behaviours of individuals and groups in organizations and can be understood in terms of three levels of analysis: the individual, the group, and the organization.

A field of study that investigates the impact that individuals, groups and structure have on behavior within organizations, for the purpose of applying such knowledge toward improving an organization's effectiveness.

Elements of Organizational Behaviour

The key elements in the organizational behaviour are people, structure, technology and the environment in which the organization operates.

Consumption and Investment

A. Consumption and Saving

1. Disposable income is an important determinant of consumption and saving. The consumption function is the schedule relating total consumption to total disposable income. Because each dollar of disposable income is either saved or consumed, the saving function is the other side or mirror image of the consumption function.


2. Recall the major features of consumption and saving functions:


1. The consumption (or saving) function relates the level of consumption (or saving) to the level of disposable income.
2. The marginal propensity to consume (MPC) is the amount of extra consumption generated by an extra dollar of disposable income.
3. The marginal propensity to save (MPS) is the extra saving generated by an extra dollar of disposable income.
4. Graphically, the MPC and the MPS are the slopes of the consumption and saving schedules, respectively.
5. 

Measuring Economic Activity

1. The national income and product accounts contain the major measures of income and product for a country. The gross domestic product (GDP) is the most comprehensive measure of a nation's production of goods and services. It comprises the dollar value of consumption (C), gross private domestic investment (I), government purchases (G), and net exports (X)produced within a nation during a given year. Recall the formula:
   
   GDP = C + I + G + X 
   
   This will sometimes be simplified by combining private domestic investment and net exports into total gross national investment (I^T = I + X):
   
   GDP = C + I^T + G


2. We can match the upper-loop, flow-of-product measurement of GDP with the lower-loop, flow-of-cost measurement, as shown in Figure 20-1. The flow-of-cost approach uses factor earnings and carefully computes value added to eliminate double counting of intermediate products. And after summing up all (before-tax) wage, interest, rent, depreciation, and profit income, it adds to this total all indirect tax costs of business. GDP does not include transfer items such as social security benefits.

Overview of Macroeconomics

A. Key Concepts of Macroeconomics

1. Macroeconomics is the study of the behavior of the entire economy: It analyzes long-run growth as well as the cyclical movements in total output, unemployment and inflation, and international trade and finance. This contrasts with microeconomics, which studies the behavior of individual markets, prices, and outputs.


2. The United States proclaimed its macroeconomic goals in the Employment Act of 1946, which declared that federal policy was "to promote maximum employment, production, and purchasing power." Since then, the nation's priorities among these three goals have shifted. But all market economies still face three central macroeconomic questions: (a) Why do output and employment sometimes fall, and how can unemployment be reduced? (b) What are the sources of price inflation, and how can it be kept under control? (c) How can a nation increase its rate of economic growth?


3. In addition to these perplexing questions is the hard fact that there are inevitable conflicts or tradeoffs among these goals: Rapid growth in future living standards may mean reducing consumption today, and curbing inflation may involve a temporary period of high unemployment.

Capital, Interest and Profits

A. Basic Concepts of Interest and Capital

1. Recall the major concepts:


• Capital: durable produced items used for further production
• Rentals: net annual dollar returns on capital goods
• Rate of return on investment: net annual receipts on capital divided by dollar value of capital (measured as percent per year)
• Interest rate: yield on financial assets, measured as percent per year
• Real interest rate: yield on funds corrected for inflation, also measured as percent per year
• Present value: value today of an asset's stream of future returns
2. Interest rates are the rate of return on financial assets, measured in percent per year. People willingly pay interest because borrowed funds allow them to buy goods and services to satisfy current consumption needs or make profitable investments.

The Labor Market

A. Fundamentals of Wage Determination

1. The demand for labor, as for any factor of production, is determined by labor's marginal product. Therefore, a country's general wage level tends to be higher when its workers are better trained and educated, when it has more and better capital to work with, and when it uses more advanced production techniques.


2. For a given population, the supply of labor depends on three key factors: population size, average number of hours worked, and labor-force participation. For the United States, immigration has been a major source of new workers in recent years, increasing the proportion of relatively unskilled workers.


3. As wages rise, there are two opposite effects on the supply of labor. The substitution effect tempts each worker to work longer because of the higher pay for each hour of work. The income effect operates in the opposite direction because higher wages mean that workers can now afford more leisure time along with other good things of life. At some critical wage, the supply curve may bend backward. The labor supply of very gifted, unique people is quite inelastic: their wages are largely pure economic rent.

Competition among the Few

A. Behavior of Imperfect Competitors

1. Recall the four major market structures: (a) Perfect competition is found when no firm is large enough to affect the market price. (b) Monopolistic competition occurs when a large number of firms produce slightly differentiated products. (c) Oligopoly is an intermediate form of imperfect competition in which an industry is dominated by a few firms. (d) Monopolycomes when a single firm produces the entire output of an industry.


2. Measures of concentration are designed to indicate the degree of market power in an imperfectly competitive industry. Industries which are more concentrated tend to have higher levels of R&D expenditures, but on average their profitability is not higher.


3. High barriers to entry and complete collusion can lead to collusive oligopoly. This market structure produces a price and quantity relation similar to that under monopoly.

Imperfect Competition and Mononply

A. Patterns of Imperfect Competition

1. Most market structures today fall somewhere on a spectrum between perfect competition and pure monopoly. Under imperfect competition, a firm has some control over its price, a fact seen as a downward-sloping demand curve for the firm's output.


2. Important kinds of market structures are (a) monopoly, where a single firm produces all the output in a given industry; (b) oligopoly, where a few sellers of a similar or differentiated product supply the industry; (c) monopolistic competition, where a large number of small firms supply related but somewhat differentiated products; and (d) perfect competition, where a large number of small firms supply an identical product. In the first three cases, firms in the industry face downward-sloping demand curves.


3. Economies of scale, or decreasing average costs, are the major source of imperfect competition. When firms can lower costs by expanding their output, perfect competition is destroyed because a few companies can produce the industry's output most efficiently. When the minimum efficient size of plants is large relative to the national or regional market, cost conditions produce imperfect competition.

Analysis of Perfectly Competitive Markets

A. Supply Behavior of the Competitive Firm

1. A perfectly competitive firm sells a homogeneous product and is too small to affect the market price. Competitive firms are assumed to maximize their profits. To maximize profits, the competitive firm will choose that output level at which price equals the marginal cost of production, that is, P = MC. Diagrammatically, the competitive firm's equilibrium will come where the rising MC supply curve intersects its horizontal demand curve.


2. Variable costs must be taken into consideration in determining a firm's short-run shutdown point. Below the shutdown point, the firm loses more than its fixed costs. It will therefore produce nothing when price falls below the shutdown price.


3. A competitive industry's long-run supply curve, S_L S_L, must take into account the entry of new firms and the exodus of old ones. In the long run, all of a firm's commitments expire. It will stay in business only if price is at least as high as long-run average costs. These costs include out-of-pocket payments to labor, lenders, material suppliers, or landlords and opportunity costs, such as returns on the property assets owned by the firm.

Analysis of Costs

A. Economic Analysis of Costs

1. Total cost (TC) can be broken down into fixed cost (FC) and variable cost (VC). Fixed costs are unaffected by any production decisions, while variable costs are incurred on items like labor or materials which increase as production levels rise.


2. Marginal cost (MC) is the extra total cost resulting from 1 extra unit of output. Average total cost (AC) is the sum of ever-declining average fixed cost (AFC) and average variable cost (AVC). Short-run average cost is generally represented by a U-shaped curve that is always intersected at its minimum point by the rising MC curve.


3. Useful rules to remember are
   
   

Production and Business Organization

A. Theory of Production and Marginal Products

1. The relationship between the quantity of output (such as wheat, steel, or automobiles) and the quantities of inputs (of labor, land, and capital) is called the production function. Total product is the total output produced. Average product equals total output divided by the total quantity of inputs. We can calculate the marginal product of a factor as the extra output added for each additional unit of input while holding all other inputs constant.


2. According to the law of diminishing returns, the marginal product of each input will generally decline as the amount of that input increases, when all other inputs are held constant.


3. The returns to scale reflect the impact on output of a balanced increase in all inputs. A technology in which doubling all inputs leads to an exact doubling of outputs displays constant returns to scale. When doubling inputs leads to less than double (more than double) the quantity of output, the situation is one of decreasing (increasing) returns to scale.

Demand and Consumer Behaviour

1. Market demands or demand curves are explained as stemming from the process of individuals' choosing their most preferred bundle of consumption goods and services.


2. Economists explain consumer demand by the concept of utility, which denotes the relative satisfaction that a consumer obtains from using different commodities. The additional satisfaction obtained from consuming an additional unit of a good is given the name marginal utility, where "marginal" means the extra or incremental utility. The law of diminishing marginal utility states that as the amount of a commodity consumed increases, the marginal utility of the last unit consumed tends to decrease.


3. Economists assume that consumers allocate their limited incomes so as to obtain the greatest satisfaction or utility. To maximize utility, a consumer must satisfy the equimarginal principle that the marginal utilities of the last dollar spent on each and every good must be equal.
   

Basic Elements of Supply and Demand

1. The analysis of supply and demand shows how a market mechanism solves the three problems of what, how, and for whom. A market blends together demands and supplies. Demand comes from consumers who are spreading their dollar votes among available goods and services, while businesses supply the goods and services with the goal of maximizing their profits.

A. The Demand Schedule

2. A demand schedule shows the relationship between the quantity demanded and the price of a commodity, other things held constant. Such a demand schedule, depicted graphically by a demand curve, holds constant other things like family incomes, tastes, and the prices of other goods. Almost all commodities obey the law of downward-sloping demand, which holds that quantity demanded falls as a good's price rises. This law is represented by a downward-sloping demand curve.


3. Many influences lie behind the demand schedule for the market as a whole: average family incomes, population, the prices of related goods, tastes, and special influences. When these influences change, the demand curve will shift.

The Modern Mixed Economy

A. The Market Mechanism

1. In an economy like the United States, most economic decisions are made in markets, which are mechanisms through which buyers and sellers meet to trade and to determine prices and quantities for goods and services. Adam Smith proclaimed that the invisible hand of markets would lead to the optimal economic outcome as individuals pursue their own self-interest. And while markets are far from perfect, they have proved remarkably effective at solving the problems of how, what, and for whom.


2. The market mechanism works as follows to determine the what and the how: The dollar votes of people affect prices of goods; these prices serve as guides for the amounts of the different goods to be produced. When people demand more of a good, its price will increase and businesses can profit by expanding production of that good. Under perfect competition, a business must find the cheapest method of production, efficiently using labor, land, and other factors; otherwise, it will incur losses and be eliminated from the market.


3. At the same time that the what and how problems are being resolved by prices, so is the problem of for whom. The distribution of income is determined by the ownership of factors of production (land, labor, and capital) and by factor prices. People possessing fertile land or the ability to hit home runs will earn many dollar votes to buy consumer goods. Those without property or with skills, color, or sex that the market undervalues will receive low incomes.

The Central Concepts of Economics

A. Why Study Economics?

1. What is economics? Economics is the study of how societies choose to use scarce productive resources that have alternative uses, to produce commodities of various kinds, and to distribute them among different groups. We study economics to understand not only the world we live in but also the many potential worlds that reformers are constantly proposing to us.



2. Goods are scarce because people desire much more than the economy can produce. Economic goods are scarce, not free, and society must choose among the limited goods that can be produced with its available resources.



3. Microeconomics is concerned with the behavior of individual entities such as markets, firms, and households. Macroeconomics views the performance of the economy as a whole. Through all economics, beware of the fallacy of composition and the post hoc fallacy, and remember to keep other things constant.

Glossary Financial Accounting Terms

account payable an amount due for payment to a supplier of goods or services, also described as a trade creditor.

account receivable an amount due from a customer, also described as a trade debtor.

accountancy firm A business partnership (or possibly a limited company) in which the partners are qualified accountants. The firm undertakes work for clients in respect of audit, accounts preparation, tax and similar activities.

accountancy profession The collective body of persons qualified in accounting, and working in accounting-related areas. Usually they are members of a professional body, membership of which is attained by passing examinations.

accounting The process of identifying, measuring and communicating financial information about an entity to permit informed judgements and decisions by users of the information.

accounting equation The relationship between assets, liabilities and ownership interest.

accounting period Time period for which financial statements are prepared (e.g. month, quarter, year).

accounting policies Accounting methods which have been judged by business enterprises to be most appropriate to their circumstances and adopted by them for the purpose of preparing their financial statements.

accounting standards Definitive statements of best practice issued by a body having suitable authority.

Accounting Standards Board The authority in the UK which issues definitive statements of best accounting practice.

accruals basis The effects of transactions and other events are recognised when they occur (and not as cash or its equivalent is received or paid) and they are recorded in the accounting records and reported in the financial statements of the periods to which they relate (see also matching).

accumulated depreciation Total depreciation of a non-current (fixed) asset, deducted from original cost to give net book value.

acid test The ratio of liquid assets to current liabilities.

Financial Accounting Standards

Accounting standards are needed so that financial statements will fairly and consistently describe financial performance. Without standards, users of financial statements would need to learn the accounting rules of each company, and comparisons between companies would be difficult.
Accounting standards used today are referred to as Generally Accepted Accounting Principles (GAAP). These principles are "generally accepted" because an authoritative body has set them or the accounting profession widely accepts them as appropriate.

Securities and Exchange Commission (SEC)
The Securities and Exchange Commission is a U.S. regulatory agency that has the authority to establish accounting standards for
publicly traded companies.
The Securities Act of 1933 and the Securities Exchange Act of 1934 require certain reports to be filed with the SEC.
For example, Forms 10-Q and 10-K must be filed quarterly and annually, respectively.
The head of the SEC is appointed by the President of the United States.

When the SEC was formed there was no standards-issuing body.
However, rather than set standards, the SEC encouraged the private sector to set them.
The SEC has stated that FASB standards are considered to have authoritative support.

Committee on Accounting Procedure (CAP)

In 1939, encouraged by the SEC, the American Institute of Certified Public Accountants (AICPA) formed the Committee on Accounting Procedure (CAP).
From 1939 to 1959, CAP issued 51 Accounting Research Bulletins that dealt with issues as they arose.

Closing Entries | Closing Procedure

Closing entries are journal entries used to empty temporary accounts at the end of a reporting period and transfer their balances into permanent accounts. The use of closing entries resets the temporary accounts to begin accumulating new transactions in the next period. Otherwise, the balances in these accounts would be incorrectly included in the totals for the following reporting period.

The basic sequence of closing entries is:

1. Debit all revenue accounts and credit the income summary account, thereby clearing out the balances in the revenue accounts.
2. Credit all expense accounts and debit the income summary account, thereby clearing out the balances in all expense accounts.
3. Close the income summary account to the retained earnings account. If there was a profit in the period, then this entry is a debit to the income summary account and a credit to the retained earnings account. If there was a loss in the period, then this entry is a credit to the income summary account and a debit to the retained earnings account.

The net result of these activities is to move the net profit or loss for the period into the retained earnings account, which appears in the stockholders' equity section of the balance sheet.

Adjusting Entries

In the accounting process, there may be economic events that do not immediately trigger the recording of the transaction. These are addressed via adjusting entries, which serve to match expenses to revenues in the accounting period in which they occur. There are two general classes of adjustments:

• Accruals - revenues or expenses that have accrued but have not yet been recorded. An example of an accrual is interest revenue that has been earned in one period even though the actual cash payment will not be received until early in the next period. An adjusting entry is made to recognize the revenue in the period in which it was earned.
• Deferrals - revenues or expenses that have been recorded but need to be deferred to a later date. An example of a deferral is an insurance premium that was paid at the end of one accounting period for insurance coverage in the next period. A deferred entry is made to show the insurance expense in the period in which the insurance coverage is in effect.

The Trial Balance

A basic rule of double-entry accounting is that for every credit there must be an equal debit amount. From this concept, one can say that the sum of all debits must equal the sum of all credits in the accounting system. If debits do not equal credits, then an error has been made. The trial balance is a tool for detecting such errors.

The trial balance is calculated by summing the balances of all the ledger accounts. The account balances are used because the balance summarizes the net effect of all of the debits and credits in an account. To calculate the trial balance, construct a table in the following format:

Debit and Credits

Debits and Credits are used to track the changes of account values. They can also be thought of as mirror opposites: Each debit to an account must be accompanied by a credit to another account (that's how the phrase "double-entry bookkeeping" gets its name). Understanding debits and credits is essential for bookkeeping and analysis of balance sheets.

Familiarize yourself with the meaning of "debit" and "credit." In bookkeeping, the words "debit" and "credit" have very distinct meanings and a close relationship. Debits and credits balance each other out —if a debit is added to one account, then a credit must be added to the an opposite account.

• In accounting, the debit column is on the left of an accounting entry, while credits are on the right.
• Debits increase asset or expense accounts and decrease liability or equity. Credits do the opposite — decrease assets and expenses and increase liability and equity.
• To make sense of this, take a look at the basic accounting equation, which is Assets = Equity + Liabilities. Assets are paid for by equity and/or liability —you cannot have one without the other. So if you complete a transaction that increases assets (and you debit the asset account), you must also increase the equity or liability (by crediting the equity or liability account) so that Assets remain equal to Equity and/or Liability.

General Ledger

While the journal lists transactions in chronological order, its format does not faciliate the tracking of individual account balances. The general ledger is used for this purpose.

The general ledger is a collection of T-accounts to which debits and credits are transferred. The action of recording a debit or credit in the general ledger is referred to as posting. The posting of a journal entry to the general ledger accounts is a purely mechanical process using information already in the journal entry and requiring no additional analysis.

To understand the posting process, consider a journal entry in the following format:

General Journal Entry

Date	Accounts	Debit	Credit
mm/dd	Account 1	xxxx.xx
	Account 2		xxxx.xx