Module-3

Accounting

Accounting is the process of recording financial transactions pertaining to a business. The

accounting process includes summarizing, analyzing, and reporting these transactions to
oversight agencies, regulators, and tax collection entities. The financial statements used in
accounting are a concise summary of financial transactions over an accounting period,
summarizing a company's operations, financial position, and cash flows.

Types of Accounting

Accountants may be tasked with recording specific transactions or working with specific sets of
information. For this reason, there are several broad groups that most accountants can be
grouped into.

Financial Accounting
Financial accounting refers to the processes used to generate interim and annual financial
statements. The results of all financial transactions that occur during an accounting period are
summarized in the balance sheet, income statement, and cash flow statement. The financial
statements of most companies are audited annually by an external CPA firm.

Managerial Accounting
Managerial accounting uses much of the same data as financial accounting, but it organizes and
utilizes information in different ways. Namely, in managerial accounting, an accountant
generates monthly or quarterly reports that a business's management team can use to make
decisions about how the business operates. Managerial accounting also encompasses many
other facets of accounting, including budgeting, forecasting, and various financial analysis
tools. Essentially, any information that may be useful to management falls underneath this
umbrella.

Cost Accounting
Just as managerial accounting helps businesses make decisions about management, cost
accounting helps businesses make decisions about costing. Essentially, cost accounting
considers all of the costs related to producing a product. Analysts, managers, business owners,
and accountants use this information to determine what their products should cost. In cost
accounting, money is cast as an economic factor in production, whereas in financial accounting,
money is considered to be a measure of a company's economic performance.

Tax Accounting
While financial accountants often use one set of rules to report the financial position of a
company, tax accountants often use a different set of rules. These rules are set at the federal,
state, or local level based on what return is being filed. Tax accounts balance compliance with
reporting rules while also attempting to minimize a company's tax liability through thoughtful
strategic decision-making. A tax accountant often oversees the entire tax process of a company:
the strategic creation of the organization chart, the operations, the compliance, the reporting,
and the remittance of tax liability.

Importance of Accounting

Accounting is a back-office function where employees may not directly interface with
customers, product developers, or manufacturing. However, accounting plays a key role in the
strategic planning, growth, and compliance requirements of a company.

 Accounting is necessary for company growth. Without insight into how a business is
performing, it is impossible for a company to make smart financial decisions
through forecasting. Without accounting, a company wouldn't be able to tell which
products are its best sellers, how much profit is made in each department, and what
overhead costs are holding back profits.
 Accounting is necessary for funding. External investors want confidence that they
know what they are investing in. Prior to private funding, investors will usually require
financial statements (often audited) to gauge the overall health of a company. The same
rules pertain to debt financing. Banks and other lending institutions will often require
financial statements in compliance with accounting rules as part of the underwriting and
review process for issuing a loan.
 Accounting is necessary for owner exit. Small companies that may be looking to be
acquired often need to present financial statements as part of acquisition or merger
 efforts. Instead of simply closing a business, a business owner may attempt to "cash-out"
of their position and receive compensation for building a company. The basis for valuing
a company is to use its accounting records.
 Accounting is necessary to make payments. A company naturally incurs debt, and part
of the responsibility of managing that debt is to make payments on time to the
appropriate parties. Without positively fostering these business relationships, a company
may find itself with a key supplier or vendor. Through accounting, a company can
always know who it has debts to and when those debts are coming due.
 Accounting is necessary to collect payments. A company may agree to extend credit to
its customers. Instead of collecting cash at the time of an agreement, it may give a
customer trade credit terms such as net 30. Without accounting, a company may have a
hard time keeping track of who owes it money and when that money is to be received.
 Accounting may be required. Public companies are required to issue periodic financial
statements in compliance with GAAP or IFRS. Without these financial statements, a
company may be de-listed from an exchange. Without proper tax accounting
compliance, a company may receive fines or penalties.

Types of Accounts
Accounting is a process of recording, classifying and summarizing financial transactions in a
significant manner and interpreting results thereof. Accounting is both science and art. For every
type of entity, whether it is large in size or small in size, it is very important to have a proper system
of accounting for proper management of an entity’s business operations.

 An accountant must have a good understanding of the terms used in accounting and types of
accounts.
 An account is the systematic presentation of all the transactions related to a particular head.
 An account shows the summarized records of transactions related to a concerned person or
thing.

For Example: when the entity deals with various suppliers and customers, each of the suppliers
and customers will be a separate account.
  An account may be related to things which can be tangible as well as intangible. For
example – land, building, furniture, etc. are things.
 An account is expressed in a statement form. It has two sides. The left-hand side of an
account is called a Debit side whereas right-hand side is called as Credit side. The debit is
denoted as ‘Dr’ and credit is denoted as ‘Cr’.

Classification of Accounts in Accounting

 Personal Account

 Real Account

o Tangible Real Account

o Intangible Real Account

 Nominal Account

Personal Account

These accounts types are related to persons. These persons may be natural persons like Raj’s
account, Rajesh’s account, Ramesh’s account, Suresh’s account, etc. These persons can also be
artificial persons like partnership firms, companies, bodies corporate, an association of persons, etc.

For example – Rajesh and Suresh trading Co., Charitable trusts, XYZ Bank Ltd, C company Ltd,
etc.

There can be personal representative accounts as well.

For example – In the case of Salary, when it is payable to employees, it is known how much
amount is payable to each of the employee. But collectively it is called as ‘Salary payable A/c’.

Rule for this Account

Debit the receiver.

Credit the Giver.

For Example – Goods sold to Suresh. In this transaction, Suresh is a personal account as being a
natural person. His account will be debited in the entry as the receiver.

Real Accounts

These account types are related to assets or properties. They are further classified as Tangible real
account and Intangible real accounts.

Tangible Real Accounts

These include assets that have a physical existence and can be touched. For example – Building A/c,
cash A/c, stationery A/c, inventory A/c, etc.

Intangible Real Accounts

These assets do not have any physical existence and cannot be touched. However, these can be
measured in terms of money and have value. For Example – Goodwill, Patent, Copyright,
Trademark, etc.

Real Account Rules

Debit what comes into the business.

Credit what goes out of business.

For Example – Furniture purchased by an entity in cash. Debit furniture A/c and credit cash A/c.

Nominal Account

These accounts types are related to income or gains and expenses or losses. For example: – Rent
A/c, commission received A/c, salary A/c, wages A/c, conveyance A/c, etc.

Rules

Debit all the expenses and losses of the business.

Credit the incomes and gains of business.

For Example – Salary paid to employees of the entity. Salary A/c will be debited when the
expenses are incurred. Whereas, when an entity receives any interest, discount, etc these are credited
whenever these are received by the entity.

There are some other accounts in accounting as well:

 Cash Account – This account is used for keeping the records of payments done by cash,
withdrawals, and deposits.

 Income Account – Purpose of this account is to keep the record of the income sources of
business.

 Expense Account – This account tracks the expenditure of the business.

 Liabilities – If there is any debt or loan then that amount comes under liabilities.

 Equities – If there is an investment of the account owner or common stocks, retained earnings
then these will fall under equities.

Accounting Terminology

Accounting Period

An accounting period defines the length of time covered by a financial statement or operation.
Examples of commonly used accounting periods include fiscal years, calendar years, and three-
month calendar quarters. Some organizations also use monthly periods. Each accounting period
covers one complete accounting cycle. An accounting cycle is an eight-step system accountants
use to track transactions during a particular period.

Steps in the Accounting Cycle

#1 Transactions

Transactions: Financial transactions start the process. If there were no financial transactions,
there would be nothing to keep track of. Transactions may include a debt payoff, any purchases
or acquisition of assets, sales revenue, or any expenses incurred.
#2 Journal Entries

Journal Entries: With the transactions set in place, the next step is to record these entries in the
company’s journal in chronological order. In debiting one or more accounts and crediting one or
more accounts, the debits and credits must always balance.

#3 Posting to the General Ledger (GL)

Posting to the GL: The journal entries are then posted to the general ledger where a summary of
all transactions to individual accounts can be seen.

#4 Trial Balance

Trial Balance: At the end of the accounting period (which may be quarterly, monthly, or yearly,
depending on the company), a total balance is calculated for the accounts.

#5 Worksheet

Worksheet: When the debits and credits on the trial balance don’t match, the bookkeeper must
look for errors and make corrective adjustments that are tracked on a worksheet.

#6 Adjusting Entries

Adjusting Entries: At the end of the company’s accounting period, adjusting entries must be
posted to accounts for accruals and deferrals.

#7 Financial Statements

Financial Statements: The balance sheet, income statement, and cash flow statement can be
prepared using the correct balances.

#8 Closing

Closing: The revenue and expense accounts are closed and zeroed out for the next accounting
cycle. This is because revenue and expense accounts are income statement accounts, which show
performance for a specific period. Balance sheet accounts are not closed because they show the
company’s financial position at a certain point in time.

Accounts Receivable

Accounts receivable ( AR) tracks the money owed to a person or business by its debtors. It is the
functional opposite of accounts payable. Accounts receivable are sometimes called "trade
receivables." In most cases, accounts receivable derive from products or services supplied on
credit or without an upfront payment. Accountants track accounts receivable money as assets.

Assets

Assets are items of value, or resources that a business owns or controls. More technical and
precise definitions specify two technicalities: First, assets result from past business activities.
Second, they will or are expected to generate future economic value. Assets come in many types
and classes. Types include current and noncurrent, operating and non-operating, physical, and
intangible. Classes include broad categories such as cash and equivalents, equities, commodities,
real estate, intellectual property, and fixed income, among others.

Balance Sheet

A balance sheet (or "statement of financial position") is a standard financial statement. It

specifies the business' current state regarding its assets, liabilities, and owners' equity. Some
sources abbreviate the term as BAL SH. Accountants use multiple formats when creating balance
sheets: classified, common size, comparative, and vertical balance sheets. Each format presents
information as line items that combine to provide a snapshot summary of the company's financial
position.

capital

In common usage, capital (abbreviated "CAP.") refers to any asset or resource a business can use
to generate revenue. A second definition considers capital the level of owner investment in the
business. The latter sense of the term adjusts these investments for any gains or losses the
owner(s) have already realized. Accountants recognize various subcategories of capital. Working
capital defines the sum that remains after subtracting current liabilities from current assets.
Equity capital specifies the money paid into a business by investors in exchange for stock in the
company. Debt capital covers money obtained through credit instruments such as loans.

Cash Basis Accounting

Cash Basis Accounting records revenues and expenses when the money involved in each
transaction officially changes hands. It contrasts with accrual basis accounting. Accrual
accounting recognizes revenues and expenses when they occur without regard to whether the
associated funds have been exchanged.

Cash flow

Cash flow (CF) describes the balance of cash that moves into and out of a company during a
specified accounting period. Accountants track CF on the cash flow statement.

Closing The Books

The informal phrase "closing the books" describes an accountant's finalization and approval of
the bookkeeping data covering a particular accounting period. When an accountant "closes the
books," they endorse the relevant financial records. These records may then be used in official
financial reports such as balance sheets and income statements.

Cost of goods sold

Cost of goods sold (COGS) describes the total costs a company incurred in creating a product or
providing a service. With products, the associated costs fall into three broad categories:
materials, labor, and overhead. With services, costs include expenses related to employee
compensation, materials, and equipment. Accountants sometimes use the alternative term "cost
of sales."Accountants use the following basic formula to calculate COGS over a specific
accounting period: Initial Inventory + Purchases - Ending Inventory.

Credits

Credits are accounting entries that increase liabilities or decrease assets. They are the functional
opposite of debits and are positioned to the right side in accounting documents.

Debit
Debits are accounting entries that function to increase assets or decrease liabilities. They are the
functional opposite of credits and are positioned to the left side in accounting documents.

Depreciation

Depreciation (DEPR) applies to a class of assets known as fixed assets. Fixed assets are long-
term owned resources of economic value that an organization uses to generate income or wealth.
Real estate, equipment, and machinery are common examples. Fixed assets can decline in value.
Accountants record those declines as depreciation.

Dividend

In corporate accounting, dividends represent portions of the company's profits voluntarily paid
out to investors. Investors are often paid in cash, but may also be issued stock, real property, or
liquidation proceeds. In most cases, dividends follow a regular monthly, quarterly, or annual
payment schedule. However, they can also be offered as exceptional one-time bonuses.

Double-entry Book-Keeping

Double-entry systems record each financial transaction twice: once as a credit, and once as a
debit. When the sum total of all recorded debits and credits equals zero, the accounting books are
considered "balanced." The system is also known as double-entry accounting. It is a more
complete and accurate alternative to single-entry accounting, which records transactions only
once. Single-entry systems account exclusively for revenues and expenses. Double-entry
systems add assets, liabilities, and equity to the organization's financial tracking.

Equity

At a basic level, equity describes the amount of money that would remain if a business sold all
its assets and paid off all its debts. It therefore defines the stake in a company collectively held
by its owner(s) and any investors. The term owner's equity covers the stake belonging to the
owner(s) of a privately held company. Publicly traded companies are collectively owned by the
shareholders who hold its stock. The term "shareholder's equity" describes their ownership stake.

Fixed Cost
A fixed cost (or fixed expense) is a cost that stays the same regardless of increases or decreases
in a company's output or revenues. Examples include rent, employee compensation, and property
taxes. The term is sometimes used alongside "operating cost" or "operating expense" (OPEX).
OPEXs describe costs that arise from a company's daily operations. However, these costs can be
fixed or variable. Variable costs change as output or revenues change.

Gross profit

Gross profit (or gross income) defines the value of the products and services sold by a business
before factoring in the cost of goods sold. If the gross profit is a negative number, it is instead
called a gross loss. It contrasts with "net profit," which describes the actual profit earned after
accounting for those costs. Gross margin is a related term: It specifies the value of the
organization's net sales, minus the cost of goods sold. Net sales are calculated by correcting gross
sales for adjustments such as discounts and allowances.

Liability

A liability (LIAB) occurs when an individual or business owes money to another person or
organization. Bank loans and credit card debts are common examples of liabilities.

Net profit

Net profit describes the amount of money left over after subtracting the cost of taxes and goods
sold from the total value of all products or services sold during a given accounting period. It is
also known as net income. If the net profit is a negative number, it is called net loss. The related
term "net margin" refers to describing net profit as a ratio of a company's total revenues. Net
profit contrasts with gross profit. Gross profit simply describes the total value of sales in a given
accounting period without adjusting for their costs.

Trial Balance

A trial balance is a report of the balances of all general ledger accounts at a point in time.
Accountants prepare or generate trial balances at the conclusion of a reporting period to ensure
all accounts and balances add up properly. In professional practice, trial balances function like
test-runs for an official balance sheet.
Variable cost

Variable costs are expenses that can change depending on the volume of goods produced or sold
by a company. For example, a manufacturer would incur higher costs if it doubled its product
output. Companies may also face higher tax rates as their sales and profits rise. These are both
examples of variable costs. By comparison, fixed costs remain the same regardless of production
output or sales volume. Examples of fixed costs include rent, wages, and salaries.

Working capital

Working capital refers to money available for carrying on the day to day business operations.
Working capital represents the financial liquidity of the business. It is often said that the way you
manage working capital will make a big difference in the growth and continuity of business. The
concept of working capital includes current assets and current liabilities. The difference between
these two is the working capital available for business to fund its daily operations and seed
further growth. The working capital that a company has to work with is calculated as its current
assets minus current liabilities. Working capital management is the tools and techniques used by
a company to make the best use of these assets and resources in order to meet the company’s
goals and targets, maintain good cash flows and meet all obligations. Good working capital
management also keeps cash flowing, thus enabling the company to generate enough cash to fuel
its own growth rather than raising debt from outside. The company’s growth can be achieved by
funneling its extra money into acquisitions, R&D, product development, mergers or other growth
prospects that are viable at the time. Working capital management is the everyday process of
managing all the aspects of the company’s cash flow to be able to pay for expected and
unexpected expenses. It involves the proper management of accounts receivable, accounts
payable, cash and inventory.

Formula to calculate working capital?

To calculate working capital, you need to consider all the current assets and current liabilities of
the business. Current assets are those which you can convert into cash in the short-term, usually,
1 year and current liabilities include all short-term debts. Following are some of the major
attributes of working capital.
  Current assets
o Cash
o Bank
o Inventories
o Accounts receivables
o Any other short-term receivables

 Current liabilities
o Accounts payable (Amount you owe to suppliers)
o Any other short-term debt

Working Capital = Current Assets – Current Liabilities.

Working capital is simply a difference between your current assets and current liabilities. If your
current assets exceed current liabilities, it said to have positive working capital. Else, it is
negative.

Marketing Management
Marketing management is centered on creating, planning, and implementing strategies that will
help achieve wider business objectives. These business objectives can involve increasing brand
awareness, boosting profits, or entering previously untapped markets. When we begin to
consider the field of marketing management, it’s important to look to marketing experts Philip
Kotler and Kevin Lane Keller, who, in their book “Marketing Management," offer a standard
marketing management definition as “the development, design, and implementation of marketing
programs, processes, and activities that recognize the breadth and interdependencies of the
business environment.” In essence, the right marketing management processes should elevate a
brand, establish a strategic marketing vision for an organization, and coordinate resources to get
it all done.
 Different Marketing Management Types

Marketing management spans a wide range of methods, strategies, and processes, which need to
be coordinated effectively to ensure success. These are just some of the marketing management
types that, when weaved together into a marketing management strategy, raise awareness of and
generate ROI for your brand:

 Marketing strategy: Your organization’s plan for reaching prospects and converting
them into customers

 Business development: Strategic initiatives such as mergers and acquisitions, business

transformation, and entering new markets

 Brand management: Techniques to increase the perceived value of a brand over time

 Product development: The process of bringing a new product to market

 International marketing: Managing international distribution channels

 Media relations: Engaging with media and influencers to spread the word about your
organization

 Customer marketing: Managing the customer experience to improve satisfaction and

reduce churn

 Marketing operations: Managing marketing processes, technology, and data

 Sales: Generating leads, developing opportunities, and closing deals

Process Of Marketing Management

Managers can use these processes to optimize marketing efforts from all angles. Some common
marketing management processes include:

 Market and customer analysis: This marketing management process is all about
understanding your organization’s current market position and analyzing consumer
behavior.
  Development of strategy, goals, and objectives: Where does a business want to go?
How does it plan to get there? After market and customer analysis, strategy will map the
way forward.

 Product development: Marketing managers play a crucial role in product development.

When it comes to articulating the benefits of a product, these professionals help craft
poignant, on-brand messaging.

 Marketing program implementation: Once promising programs and campaigns have

been identified, it’s time to deploy the right resources to launch them.

 Monitoring and control: Analyzing the success of marketing programs and activities is
a crucial process. It informs how future activities will be planned and implemented.
Activities of marketing management

To achieve these goals, a marketing management strategy must consist of a wide range of
marketing channel management activities related to price, product, place, and promotion. This is
widely referred to as the marketing mix. The job of the marketing manager is to adjust each of
these elements in order to maximize sales and ROI.

The activities of marketing management fall into the following categories:

 Price: Price is the monetary value placed on a product. It depends on production costs,
the segment of customers targeted, and their ability to pay for the product, as well as
demand for the product.

 Product: The product on the market needs to be optimized with target customers in mind
for the remainder of the marketing mix to achieve the overall goal.

 Place: In marketing management, place refers to both the general and exact locations
customers are able to purchase a product. This involves making choices about online or
brick-and-mortar availability, as well as the specific locations therein.

 Promotion: Finally, activities such as various advertising channels, direct marketing,

press releases, and even incentives can all be utilized to promote the product once it has
been optimized and produced.
  People: In businesses that deliver a service, employees are a critical component, and the
amount of training or remuneration they receive is a component of the marketing mix.

 Process: Service industries rely on a set of processes to ensure customers receive a

quality result, and processes can be tightened in order to maximize productivity and
efficiency.

 Physical evidence: In service situations, for example, a hair salon, the physical location
can be optimized for the customer’s experience in order to encourage better word-of-
mouth marketing.
Philosophies of marketing management

There are a number of marketing management philosophies that determine marketing direction,
stance, and activities. These philosophies are commonly called “marketing management
concepts.”

These concepts have developed over time, but generally dictate the prioritization of marketing
efforts.

 Production concept: Prioritizes production efficiency

 Product concept: Prioritizes the quality of the product(s)

 Selling concept: Prioritizes customer satisfaction

 Marketing concept: Prioritizes profits through customer satisfaction

 Societal concept: Prioritizes the societal impact of marketing activities

These concepts help marketing managers develop strategies and refine their approaches. They
also dictate monitoring methods as each concept will have unique benchmarks and indicators of
success.
Features of marketing management

Features of marketing management differ from philosophies of marketing management in that

they describe the overall goals a marketing management strategy seeks to address. Features of
marketing management include the following:

 Helps to understand and satisfy the customer’s needs

  Assists in achieving the company’s overall goals

 Consists of a range of activities

 Facilitates successful exchanges between buyer and seller

When designing a marketing management strategy, it is vital that these features are taken into
account. For instance, a marketing management strategy must address the research and data
collection that enables marketing teams to understand the customer’s wants, needs, and demands.
Simultaneously, the marketing management strategy needs to promote and advance the
organization’s business goals and ultimately facilitate a successful exchange of goods between
the organization and the customer.

Marketing Management Roles

In larger companies, marketing management roles can be extensive and involve large teams.
Specialized marketing management roles can range from digital marketing manager to product
marketing manager, and each role has different responsibilities.

Here are five examples of specialized marketing management roles:

 Digital marketing manager: A digital marketing manager develops, implements, and

manages online marketing campaigns designed to promote a company’s products and
services, and enhance its brand.

 Product marketing manager: A product marketing manager devises marketing plans to

communicate features and benefits of new products to customers, delving into the market
research on product trends and serving as the voice of the customer within the company
to ensure products are designed to suit customer needs.

 Brand marketing manager: A brand marketing manager ensures that brand messaging
and imagery is utilized consistently across the company and plans ways to increase brand
recognition in the market.

 Content marketing manager: A content marketing manager focuses on creating

effective, valuable, and consistent content that highlights a company’s products or
services to potential customers.
  Social media marketing manager: A social media marketing manager works
specifically on optimizing social media communication and interactions for the company,
including, but not limited to Facebook, Twitter, and Instagram.

 Marketing campaign manager: A marketing campaign manager is responsible for the

life cycle of a marketing campaign. They work closely with other departments, including
sales, to execute campaigns and compile reports on their effectiveness.
Human Resource Management
Human Resource Management is the process of recruiting, selecting, inducting
employees, providing orientation, imparting training and development, appraising the
performance of employees, deciding compensation and providing benefits, motivating
employees, maintaining proper relations with employees and their trade unions, ensuring
employees safety, welfare and healthy measures in compliance with labour laws of the land and
finally following the Orders / Judgments of the concern High Court and Supreme Court, if any.

Human Resource Management deals with the management functions like planning, organizing,
directing and controlling
 It deals with procurement of human resource , training & development and
maintenance of human resource.
  It helps to achieve individual, organizational and social objectives

Human Resource Management is a multidisciplinary subject.

 It includes the study of management, psychology, communication, economics and
sociology.
 It also deals with building team spirit and team work.
 It is a continuous process.

Human resource management as a department in an organization handles all aspects of

employees and has various functions like human resource planning, Conducting Job
analysis, recruitment and conducting job interviews, selection of human resources, Orienting,
training, compensating, Providing benefits and incentives, appraising, retaining, Career
planning, Quality of Work Life, Employee Discipline, black out Sexual Harassments, human
resource auditing, maintenance of industrial relationship, looking after welfare of employees and
safety issues , communicating with all employees at all levels and maintaining awareness of and
compliance with local, state and federal labor laws.

The historical rule of thumb for Human Resource staffing requirements is one full-time
professional Human Resource person should be hired for every 100 employees. The actual ratio
for a business can vary depending upon factors such as the degree of HR centralization, the
geographic distribution of the employees served, the sophistication level of the employees, and
the relative complexity of the organization.
Why Human Beings are considered as Resource?

Human: refers to the skilled workforce in an organization.

Resource: refers to limited availability or scarce.

Management: refers how to optimize and make best use of such limited or scarce resource so as
to meet the organization goals and objectives.

Therefore, human resource management is meant for proper utilization of available skilled
workforce and also to make efficient use of existing human resource in the organization. The
best example in present situation is, construction industry has been facing serious shortage of
skilled workforce. It is expected to triple in the next decade from the present 30 per cent, will
negatively impact the overall productivity of the sector, warn industry experts. Today many
experts claim that machines and technology are replacing human resource and minimizing their
role or effort. However, machines and technology are built by the humans only and they need to
be operated or at least monitored by humans and this is the reason why companies are always in
hunt for talented, skilled and qualified professionals for continuous development of the
organization. Therefore humans are crucial assets for any organization, although today many
tasks have been handing over to the artificial intelligence but they lack judgment skills which
cannot be matched with human mind.

It is undisputed fact that humans are being replaced by artificial intelligence which are in the
form of robots. But all jobs cannot be handed over to Robots, to say in other words robots have
its own limitations and all roles cannot be handled by robots. Natural intelligence or need for
application of human mind is inevitable in certain roles.

Primary responsibilities of the Human resource manager

1. To develop a thorough knowledge of corporate culture, plans and policies.
2. To act as an internal change agent and consultant.
3. To initiate change and act as an expert and facilitator.
4. To actively involve himself in company’s strategy formulation.
5. To keep communication lines open between the HRD function and individuals
and groups both within and outside the organization.
6. To identify and evolve HRD strategies in consonance with overall business
strategy.
7. To facilitate the development of various organizational teams and their working
relationship with other teams and individuals.
8. To try and relate people and work so that the organization objectives are achieved
effectively and efficiently.
9. To diagnose problems and to determine appropriate solution particularly in the
human resources areas.
10. To provide co-ordination and support services for the delivery of HRD
programmes and services.
11. To evaluate the impact of an HRD intervention or to conduct research so as to
identify, develop or test how HRD in general has improved individual or organizational
performance.

Core responsibilities of Human resource management

 1. Planning for staffing needs
2. Employee Recruitment And Selection
3. Employee Compensation And Benefits
4. Employee Training and performance evaluation

Role Of A Human Resource Manager

He/she is responsible for formulating and designing of Human Resource policies in compliance
with labour laws and sees all Hr related activities staring from hiring to firing of an employees in
an organization. The Human Resource Manager is responsible for overseeing human resources
activities and policies according to executive level direction. They supervise human resources
staff as well as see staffing, compensation , assessing and providing employee benefits,
providing training & development, safety & welfare of staff, maintaining healthy labor relations,
providing employee handbook and maintaining employment records as required by the
employment laws.

Who works for Human resource management? (Supporting staff)

Strategic level

Chief Human Resource Officer (CHRO) is a corporate level officer, responsible for
formulating and executing human resource strategy in match with overall organization's plan and
strategic direction of the organization, particularly in the areas of succession planning, talent
management, change management, executive compensation, organizational performance. He
supervise industrial relations policies, practices and operations of an organization. CHRO may
also involve in selection of board members of an organization.

Supervision level

HR Director belongs to top-level management, responsible for the administration of all human
resource activities and policies. The director supervise employees' compensation, benefits,
staffing, affirmative action, employee relations, health and safety, and training and
development functions. They also oversee below mentioned professional human resources staff.

Execution level

Recruiter (Hiring manager) who is responsible filling vacancies by finding right candidates
and finally placing them in the job. The best recruiters can woo even the most passive
candidates, but should have the data needed to influence their organization’s hiring strategy.
They are part artists and part scientists. Here are some tips to become best recruiter.
 Modern recruiters should have an innate instinct for mutual connection. They
should know how to network and navigate skill sets, hiring manager personalities, to make
a perfect match and suits to company culture.
 They should live and die by mantra, 'if you cant measure it, you can't manage
it' They should understand importance of numbers and data, will not only help them make
better decisions but will also earn the trust of others in the organization
 They should think about jobs the way marketers think about products. Whether
through their own profiles or through employer branding promotions, they should know
how to tell a great story about company.
 They should love recruiting innovation. They should know what tools work best,
and become masters when it comes to using them.
 They should be able to read the candidate and know how to positively influence
their emotions, inspire excitement. and get to a YES!.

Trainers who is a person responsible for imparting required skills for performing job and
updating new skills and knowledge for perfection and error free.

Safety officer who see and ensures the safety of employees at workplace. The fact that is 1 in 4
workplace injuries are caused by overexertion. According to [section 40B] of The Factories
Act, 1948, there must be Safety officer for thousand employees in an organisation wherein
manufacturing does. The fundamental duty of safety officer is to instruct workers about about
safety measures and precautions at workplace.

The general safety instructions to workers are -

 To wear proper protective clothing and use required safety equipment.
 To read all of the instructions and warnings on chemical labels and never mix
chemicals.
 To be aware of your surroundings and watch for any hazards, if there are hazards,
such as wet floors, warn others with the proper signs and barricades.
 To have emergency plans in place, and know where all the exits and first-aid kits
are located.

Welfare officer who sees welfare of employees. According to[section 49] of The Factories Act,
1948, Welfare officer must be appointed for every 500 employees in the organisation. They
usually deal with the task of solving day-to-day experiences of the industrial workers. But this
method is not so effective due to the dual responsibilities on the welfare officers were basically
appointed to deal with welfare measures and their applications in the industry.

Consequently newly a chapter II-B is added in the Industrial Disputes Act, 1947, by way of
amendment with effect from 15th September, 2010, and a new [section 9-C] is added.

Conciliation officer who is charged with the duty of mediating in and promoting the settlement
of industrial disputes. Generally small and medium-sized organisations do not appoint
consideration officers, they refer settlement issues to separate conciliation officer appointed by
the government and the industrial disputes act 1947.

Payroll officer who sees salaries, statutory payments & deductions as taxes and other incentives.

Counsellor who acts as friend for employees so as to resolve any dispute and issues between
employees. He also acts personal friend in giving suggestions for personal issues which could
hamper the efficacy at work place.

Medical officer who is qualified doctor responsible for first aid, health care and certification of
fitness of employees for working or granting leaves.
Insurance officer who see the employees medical policy for securing from diseases and
personal accident policy for securing employees in case of accidents so as avoid burden and risk
on company.

HR Generalist is responsible for all human resource activities for an organization. He or She
provides advice, assistance and follow-up on organizational policies, procedures, and
documentation. Coordinate the resolutions of specific policy-related and procedural problems
and inquiries.

Human Resource Auditor does a complete Human Resources Check-up and verification of
employee records & files, compliance of HR procedures and policies with employment laws,
employee handbook, orientation, training of employees, performance management, employee
compensation and payroll and employee termination procedures. The guiding principle of HR
Audits in 80% organizations is to examine the organization’s compliance with established
regulations and/or company policies .

The primary objective of HR audit is to annihilate management risk of contravention with the
laws, liability exposure, identifying and correcting risk gaps, litigation avoidance, cost
avoidance and enhancement of human resource best practices.

The People Matters HR Audits Study 2016 surveyed 72 companies to assess and evaluate the HR
Audit procedures in Indian Companies. The findings from the survey revealed that HR Audits
are a routine process in a majority of organizations, very few companies employ dedicated
resources that support audit procedures. Further, there is a need for companies to proactively use
them for business risk assessment and process improvements.
 96% of organizations do not have dedicated HR resources for auditing. They are
either done by external audit firms or internal HR auditor.
 And only 52% of organizations perform audits only to establish an “early warning
system”

Frequency of HR audits by companies - could be Annually, Quarterly, Trimester and

Semester

HR Analyst is a challenging job generally appointed by huge organizations where magnitude of

HR issues are high. He is the one who identifies burning issues and its causes with the help of
available data and information and if it unavailable, he is responsible for exploration and
collection of data and information could be with the support of Human Resource Information
Systems so as to analyze and draw a clear picture of current scenario and help executives to
tackle them. HR analyst should have through knowledge of HR metrics for making accurate
analysis. But it is fact that very least percentage of HR managers have the skills to collect
necessary data, analyze it, and present insights in a meaningful and influential way to executives.

HR analyst should be able visualize and predict the level of impact of the burning issues on
the organization and find ways to tackle them and make planning for avoiding such issues in
future. The core issues which are dealt by HR analytics are about employee turnover rate and
their retention, evaluation of employees, deciding salaries and benefits, designing and improving
employee training programs and measuring work burden on employees by using . Below
diagram represents HR issues which can be dealt and tackled by HR analyst so as to avoid
impact on the business and overall performance of the organization.

Rights of an employee

Right against discrimination at workplace

It is a right of every citizen of India to be treated without any discrimination. According to article
16 (2) of the Indian Constitution, no citizen can be discriminated against, or be ineligible for any
employment or office under the state, on the grounds only of religion, race, caste, sex, descent,
place of birth or residence or any of them. Adherence to the rule of equality in public
employment is a being feature of Indian Constitution and the rule of law is its core, the court
cannot disable itself from making an order inconsistent with article 14 and 16 of the Indian
Constitution.

In the United States, Title II of the Civil Rights act, 1964 prohibits discrimination of people on
certain grounds. In this regard, employers implement equal employment opportunity policies and
prohibit discrimination based on race of a person, colour, sex, religious creed, nationality, age,
ancestry, marital status, disability, medical condition, genetic characteristics ( of those of a
family member), political affiliation, et cetera.
The equality act, 2010 of the United Kingdom prohibits discrimination and mandates equal
treatment in matters of employment as well as private and public services irrespective of race,
age, sex, religion or disability .

Scheduled castes and Tribes ( prevention of atrocities) act, 1989 is constituted as a social
justice oriented law, which is enacted to prevent atrocities and other form of derogatory
behaviour towards member of the scheduled caste and scheduled Tribes.

According to the recent Supreme Court judgment in Section 377 of Indian Penal Code 1860,
LGBTQ ( lesbian, gay, bisexual and transgender queer) shall not be shown discrimination or
derogate them in any manner.

Equal pay for equal work

It is an employee right though equal pay for equal work is not expressly declared by the
Constitution as a fundamental right that in view of the directive principles of state policy as
contained in the article 39(d) of the Indian Constitution "equal pay for equal work" has assumed
the status of fundamental right.

According to article 39(d) of the Indian Constitution, the state has to ensure that there is equal
pay for equal work for both men and women. Parliament has enacted the Equal Remuneration
Act, 1976, to implement article 39(d). The act provides for payment of equal remuneration to
men and women workers for the same work, or work of a similar nature and for the prevention of
discrimination on grounds of sex. The act also ensures that there will be no discrimination
against recruitment of woman and provides for the setting up of a advisory committee to promote
employment opportunities for women. It is the duty of HR department and Hr managers to see
that there is no such violation which is unconstitutional, therefore it should be complied by the
every organization.

Working hours

It is an employee right to not to work more than 9 hours in any day or 48 hours in any week in
the factory. There should be interval or break for rest for at least 30 minutes after five hours
continuous work of an employee according to The Factories Act 1948. The same right is
applicable to the employees working in the shops and establishments like hotels, movie theatres
and amusement and entertainment establishments according to the concerned state shops and
Establishment act.

Weekly holiday

It is an employee right to have at least one holiday in a week in the factory or shops and
establishments according to The Factories Act 1948 and shops and establishments act of the
concerned state

Salary or Wage

According to Minimum Wages Act, 1948 it is an employee right to claim for salary or wage for
the work done to his employer. It is the duty of the employer to pay remuneration according to
the work extracted from his employee.

Any deductions from the salary or wage of an employee should be made according to the
employment laws only. If any employee levied fines or collected or deductions from the salary of
an employee, it will be treated as illegal and such employer is liable for legal action.

Payment for overtime working

According to The Factories Act 1948., section 59, if a worker works more than nine hours in
any day or for more than 48 hours in any week, it is an employee right to claim payment for
overtime at the rate of double the ordinary rate of his wage or salary.

Payment of gratuity

The employee on termination of his employment from the specified establishment becomes
entitled for payment of gratuity from his employer provided he has rendered continuous service
of not less than five years. The gratuity is payable on superannuation or retirement as well as on
resignation of the employee. It is also payable on death or disablement of the employee due to
accident or disease.
It is an employee right who completes his five years of continuous service in an organisation
having 10 or more employees, to claim for payment of gratuity at the rate of 15 days of his
current salary for every year of service he or she completed in that organisation, according
to The Payment of Gratuity Act, 1972.

Section 2(e) of the Gratuity Act defines the term 'employee' and any person who is employed for
wages other than an apprentice is covered by the said definition provided the establishment in
which such person is working is covered by the provisions of the said Act.

Payment of bonus

According to the section-10 of Payment of Bonus Act, 1965, it is an employee right drawing
salary of Rs. 21000/- p.m. to claim for payment of minimum bonus that is 8.33% of his salary
(his / her salary will be treated as maximum Rs. 7000/- for calculation of bonus) and it is the duty
of the employer to pay minimum bonus to their employees irrespective of profit or loss to an
organization during that year. Section-11 says maximum percentage of bonus claimable by an
employee is 20% in case of profits to an organization. The procedure for payment of bonus to
employees irrespective of profits or losses to an organization is mentioned under the Payment of
Bonus Act, 1965.

Provident fund

It is an employee right that whoever employee draws salary not more than ₹ 15,000, have social
security benefit in the form of provident fund. It is the duty of the employee to contribute 12%
from his salary towards provident fund and it is it is the duty of employer or an organization
having 20 or more employees, to contribute equally that is 12% of his salary, according to the
Employees' Provident fund and miscellaneous provisions act 1952.

According to the present rules, if an employer becomes unemployed for one month, such
employee can with the 70% of amount from the provident fund. If an employer becomes
unemployed for more than two months such employee can with the total amount from the
provident fund.

Maternity leave

According to the section 5 of the Maternity benefit Act 1961, it is woman employee right to
claim for maternity leave for 26 weeks for 2. Such woman employee can apply maternity leave
just eight weeks before the date of are expected delivery. It is the duty of employer to pay full
salary for a woman employee during her maternity leave for 26 weeks. In case of miscarriage or
medical termination of pregnancy, a woman is entitled to live with wage or salary for a period of
six weeks immediately following that they offer miscarriage or her medical termination of
pregnancy .

Paternity leave

It is male employee right if he is working for the central government of India, he is having right
as employee to claim for paternity leave for 15 days within six months from the date of delivery
of his child. The central is also being followed in many reputed private organizations and
companies in order to boost employee morale and employee satisfaction.

Compensation in case of accidents, injuries and death of an employee

According to the Employee's Compensation act 1923 it is an employee right to claim

compensation in case of accidents or injuries occurred during the course of employment
especially when worker was not under the influence of alcohol. In case of death of an employee
in the course of employment and such employee is not under the influence of alcohol, his or her
dependent is having right to claim compensation in accordance with the workers compensation
act 1923.

Workers participation in the management

The article 43a of the Constitution of India, guarantees participation of workers in management
of industries.

Protection against sexual harassment at workplace

It is an employee right to be protected against sexual harassment at workplace according to

the sexual harassment of women at workplace (prevention, Prohibition and redressal) act
2013. For this purpose the organization with 10 or more employees should constitute internal
complaints committee for helping the victims of sexual harassment. Such victims are also
protected under the section 354 of the Indian penal code, by punishing culprit with
imprisonment.

An incident of sexual harassment of a female at a place of work, amounts to violation of her

fundamental right to gender equality under the article 16(2) of the Indian Constitution. Such
violation of fundamental rights can be filed before High Court of the concern state under article
226 of Constitution of India for seeking justice and for punishing such violators.

 Prevention and dealing with sexual harassment: is a crucial duty of Human

Resource Management, otherwise it may effect the organisation's culture and employer
branding which would consequently lead to collapse of the organization. Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,
2013 protects women at the workplace from sexual harassment. Act defines sexual
 harassment at the work place and creates a mechanism for redressal of complaints. It also
provides safeguards against false or malicious charges. Every employer is required to
constitute an Internal Complaints Committee at each office or branch with 10 or more
employees. Any employer who fails to constitute an Internal Complaints Committee as per
the Sexual Harassment Act shall be liable for a penalty of up to Rs. 50,000 if a complaint
is made to the magistrate.
 Any woman employee who has faced sexual harassment at the workplace, or any
person authorized by the Internal or Local Complaints Committee can file a complaint
with the Magistrate. Repeated non-compliance of this provision can result in the
punishment being doubled or even cancellation of the organisation's business license by
the concern government or local authority.

The Indian Penal Code 1860 Section 354A, 354B,354C, 354D was newly inserted, especially for
the following acts which shall be treated as sexual harassment.
 Physical contact and advances involving unwelcome and explicit sexual
overtures; or
 demand request for sexual favors; or
 showing pornography again as the will of a woman; or
 making sexually colored remarks on women.
 any man who assaults or uses criminal force to any women or abets such
act with the intention of disrobing (taking off one’s clothes) are compelling her to be
naked -section 354B'
 Any man who watches captures images of women engaging in a private
act in circumstances where she would usually have the exception are not being
observed either by the perpetrator or by any other person. - section 354C
 Following a woman and contacts, or attempts to contact such women
repeatedly despite a clear indication of disinterest by such women.- section 354D

Punishment

For the above said offences the punishment shall be for a period of one to three years of
imprisonment or fine, or both
 Function of Human Resource Management

5 basic (Managerial) function of Human Resource Management

1. Planning - HR

Planning is the first and basic function of the management and everything depends upon
planning as it is a process of thinking about things before they happen and to make preparations
in-advance to deal with them. Poor planning results in failure and effects overall system.
Therefore HR Mangers should be aware of when is right time to do things, when things should
be done and when things should not be done in order to achieve goals and objectives of the
organization.

Establishing goals and objectives to be achieved through the employees so as to achieve the
organizational mission set by the top-level management.

Developing rules and procedures which has to be followed by the employees in order to avoid
any sort of discrimination among the employees in any of their functions, to enable fair and
 transparent treatment among employees, to avoid conflict starting from recruitment to the
separation of employees, inculcate discipline among the employees, to drive performance of
employees and ultimately to avoid conflict and contravenes with statutes and employment laws
of the land, ultimately for smooth running of the organization.

Determining plans and forecasting techniques as a part of Human resource planning to

avoid any shortfall of workforce so as to avoid impact on the output of the organisation, to draw
the estimation of workforce exactly needed for the organisation and to plan for attracting talented
candidates.

HR outsourcing: as that of make or buy decision in operations management, human resource

manager should be able to make decisions with regard to HR activities which are to be executed
by the management itself or to be outsourced when there is advantage of expertise to bring in and
cost-saving for organization. The following are the most outsourced HR activities; legal advice
and support, employee payroll, pensions, training and development, recruitment, employee
assistance, compensation and benefits, outplacement is, human resource information systems,
employee relations, policy-making, strategic partnerships, appraisal of employees and resource
planning.

Most small to medium-sized business owners know the frustration of spending more time than
they want on non-revenue generating activities from payroll to human resource management to
benefits and compensation. The answer for many businesses maybe to outsource part of their HR
functions to third party providers so that they can focus on their core business and also has
following benefits-


1. Save money and reduce operating costs

2. Allow the company to focus on its core business
3. Reduce the number of HR staff and related staff expenses
4. Allow HR staff to focus more on strategy
5. Avoid the costs of major investment in technology
6. Improve metrics/measurement

2. Organising- HR
HR managers should be well aware of organizing everything related to human resource and
organization as organizing is the process of making and arranging everything in the proper
manner in order to avoid any confusion and conflicts.

Giving each member a specific tasks to finish overall objectives of the job given to an
employee is the duty of the Human Resource Manager, besides it also to the duty of Human
resource manager to define task clearly before entrusting job to an employee. HR managers
should keep in mind that task entrusted to employees should be matched with their skill set and
abilities and It is also lookout of HR managers to give training to employees in the area or
subject which is going to be entrusted to employees, otherwise the task entrusted to employees
gets failed and defeated.

Establishing departments and divisions according to the nature of jobs and works in order to
improve the efficiency, expertise and speedup the work. Establishment of separate divisions and
departments would give easy and effective control over employees by the management which
would give better results and improve overall performance of the organisation.

Delegating authority to the members for a good cause and to make employees more
responsible towards their job and organisation is a part of employee development. Delegating
authority to employees makes them to be more responsible towards organisation as there is a
principle called authority equals to responsibility, vice versa when you load an employee with
responsibilities, he should be given authority so as to fulfil the responsibilities casted upon
employee. Authority without responsibility and responsibility without authority defeats its
purpose. Therefore when employees feels responsible and accepts responsibilities, it is a good
sign as it makes employees to be engaged in the job.

Establishing channels of authority and communication is the primary responsibility of any

human resource manager which would enable managers to effectively communicate desired
goals and objectives of the organization. Having effective communication will avoid conflicts,
make staff to understand what exactly they are expected to and also enable the manager to get
the things done in time.

Creating a system to coordinate the works of the members so as to make the employees to
work properly and not to cause any conflict in the allocation of the work to the employees.
Improper and discriminating allotment of the work we will make one or the other employee feel
overburden, burnout and can create conflicts among employees among members which is not
good for the organizational health and building teams will create teamwork which creates
synergy among team that will bring out the best out of them.

3. Staffing - HR

Staffing is one of the key functions of human resource management as staffing is the process of
employing right people, providing suitable training and placing them in the right job by paying
them accordingly and satisfactorily.

Determining the type of people to be hired should be emphasized as they are the fundamental
resource and investment for any organization. Every organization wants right people with them
but they come at a price. Employee compensation is a key factor in primary motivating factor to
attract talented and retain them in the organization for a long period of time.

Compensating the employees is one of the core functions of the human resource management.
Among all the motivating factors money is very important and primary motivating factor for any
employee. Providing right compensation for the work done by an employee will not only make
an employee feel happy, it will also make the organization in compliance with employment laws
of the land, if compensation is unjustified it amounts to exploitation of employees which is
against law.

Setting performance standards, measuring and evaluating the employees: A performance

appraisal is meant to help employees realize their strengths and shortcomings and receive a
compensation accordingly. The very purpose of appraising the performance of employees is to
evaluate and compensate accordingly. Unless organization sets performance standards to its
employees, it cannot compare and measure employees actual performance with the standard
performance. HR managers take performance gaps of employees for making decisions on
employees with regard to rewarding them with bonus, profit-sharing, stock options and payment
of incentives or not. These employee performance gaps will not only be considered for making
decisions with regard to compensation but it is also considered for making decisions with regard
to initiate corrective actions on said employees, promoting them to higher levels and if any
employees performance gaps are high, such employees gets demoted, suspended or sometimes
may be discharged from job.
Counseling the employees as a Human Resource manager, for understanding and helping
people who have technical, personal and emotional or adjustment problems with an objective to
reduce them, so that performance of employees are maintained at expected level or even
improved upon.

Recruiting prospective employees and selecting the best ones from them is one of the primary
functions of human resource management. Recruiting is the process of inviting the people who
were willing to join the organization and selecting best out of them is the crucial process in
which various selection tests are conducted. Having best people in the organization will make
that organization is best in all the ways which would create employer brand that will help to
attract talented people and also make them to retain in the organization long period of time.

HR Metrics: Application of formulas for measuring and calculating core HR issues so as to

draw exact HR results and current scenario of organization. The very purpose of HR metrics is to
indicate current position and performance of the organization.

Core HR issues where HR metrics can be applied are Time to fill an employee, Cost per hire of
an employee, Employee absenteeism rate, Employee training others, Turnover cost, Turnover
rate, annual Turnover of an employee, Workers compensation cost for an employee, Revenue per
employee, Return on Investment (ROI) and Yield ratio.

Annual employee turnover rate = No of employees left X 100

beginning + ending No of employee in a year / 2

Absence Rate

[(Number of days absent in month) ÷ (Average number of employees during mo.) × (number of
workdays)] × 100

Cost per Hire

(Advertising + Agency Fees + Employee Referrals + Travel cost of applicants and staff +
Relocation costs + Recruiter pay and benefits) ÷ Number of Hires

Health Care Costs per Employee

Total cost of health care ÷ Total Employees

HR Expense Factor
HR expense ÷ Total operating expense

Human Capital ROI

Revenue − (Operating Expense − [Compensation cost + Benefit cost]) ÷ (Compensation cost +

Benefit cost)

Human Capital Value Added

Revenue − (Operating Expense − ([Compensation cost + Benefit Cost]) ÷ Total Number of FTE

Revenue Factor

Revenue ÷ Total Number of FTE

Time to fill

Total days elapsed to fill requisitions ÷ Number hired

Training Investment Factor

Total training cost ÷ Headcount

Turnover Costs

Cost to terminate + Cost per hire + Vacancy Cost + Learning curve loss

Turnover Rate

[Number of separations during month ÷ Average number of employees during month] × 100

Workers’ Compensation Cost per Employee

Total WC cost for Year ÷ Average number of employees

4. Directing - HR

Directing is a knowledge, discipline and formal way of communicating to others that what you
are expecting from them to do for you or to an organization. Unless a HR manager has capability
of directing, he / she can't be said as full-fledged HR manager. when a HR manager has right
directing capabilities, it is gives clarity for employees what they are expected to perform,
removes confusion in employees and gives clarity of what results are expected by the
management from employees.
Getting work done through subordinates so as to meet the organization's goals and objectives.
Indeed getting work done to others is an art which every Human resource manager should
possess, for which employee motivation by the Human Resource Management influences and
matters a lot.

Ensuring effective two-way communication for the exchange of information with the
subordinates in order to effectively communicate the goals and objectives of the organization as
it plays key role in understanding what the Human Resource manager or organization is
expecting from employees to perform. Miscommunication between employees block the
progress and even would lead to conflicts which eventually affects the overall performance of the
organization.

Motivating subordinates to strive for better performance by way of providing employee

recognition, rewards, intrinsic benefits, paid vacations, increments in salary, gifts, any social
security benefits to employees and their family members is one of the functions of Human
Resource Management.

Maintaining the group morale by way of fair treatment among employees, being ethical and
generous towards employees, management being loyal to its employees and giving priority to
employee concerns. It is the responsibility of human Resource Manager to guide always to its
employees, otherwise lack of guidance often kills the morale of employees. Training and
development programs not only improve the skills of employees but also boost their morale,
thereby making them happy and leading to longer tenures. Apart from breaking the monotony in
the workplace, training programs offer employees a learning platform where they are able to
master new skills and become more marketable.

5. Controlling - HR

HR managers should have the knowledge of controlling all HR related matters, as they should be
able to think and decide what should be done and what should not be done and which should be
done and which should not be done while dealing with employees.
Operative function of Human Resource Management

1. Procurement - HR

Job analysis is a systematic process of gathering all the data & information pertaining to the job
for preparing of job specification which determine the skills, qualifications & traits for job and
preparation of job description which describes the duties and responsibilities so as to recruitment
and selection of employee, give satisfaction on the job, and feel motivation while doing the job,
etc. Harry L. Wylie defines "Job analysis deals with the anatomy of the job.....This is the
complete study of the job embodying every known and determinable factor, including the duties
and responsibilities involved in its performance; the conditions under which performance is
carried on; the nature of the task; the qualifications required in the worker; and the conditions of
employment such as pay, hours, opportunities and privileges"
Job design is the process of deciding on the content of a job in terms of its duties and
responsibilities; on the methods to be used in carrying out the job, in terms of techniques,
systems and procedures and on the relationships that should exist between the job holder and the
superiors, subordinates and colleagues. Job enlargement, job enrichment, job rotation, and job
simplification are the various techniques used in a job design exercise. Job design goal is to
minimize physical strain on the worker by structuring physical work environment around the
way the human body works.

Recruitment & selection - Recruitment and selection of the human resources for an
organisation is the major and basic function of human resource management. Human resources
planning and recruiting precede the actual selection of people for positions in an organisation.
Recruiting is the process of inviting qualified job seekers by using different platforms like
issuing notification in regular newspapers or employment newspapers which are exclusively
meant for employment news and notifications, television media, online and on social networking
websites which have become mostly used resources for recruitment and hiring people. There are
two major source of recruitment of employees, one is recruitment through internal sources and
the other is recruitment through external sources. Internal recruitment is the process of inviting
or giving chance to the people relating to concern organization or to the people relating to the
existing employees or directly giving opportunity to the existing employees. External recruitment
is the process of inviting job seekers who do not belong to or anyway related with an
organization, which simply means inviting outside candidates.

Subsequently, selection of right person form the pool of candidates by administering various
selection tests like preliminarily screening, written tests, oral tests and interviews etc.

Human resource planning (HRP) may be defined as strategy for acquisition, utilization,
improvement and preservation of the human resources of an enterprise. The objective is to place
right personnel for the right work and optimum utilization of the existing human resources. HRP
exists as a part of the planning process of business.

The major activities of Human resource planning include:

1. Placement of employee in the job where he exactly fit
2. forecasting (future requirements),
3. inventorying (present strength),
4. anticipating (comparison of present and future requirements) and
 5. planning (necessary program to meet future requirements).

Induction & Orientation: Induction of Employee is the first step towards gaining an
employees' commitment, Induction is aimed at introducing the job and organization to the recruit
and him or her to the organization. In a nutshell, it covers the organization’s history, philosophy,
mission and vision, and the managerial style of the organization. Inform the financial benefits
and different taxation policies offered. Addresses trainings offered, performance expectations,
and the work schedules of the organization. Educate new employees on the laws, regulations and
company policies that applies to their role. Highlight the different safety and security aspects
related to the work environment.

Orientation is the planned introduction of new employees to their jobs, co-workers, and the
organization so as to alien an employee with their job role.

Explain the role employees have to play to achieve organization's goals.

Portray the organization structure demonstrating the various departments, the people
involved and their respective designation. It covers all the information starting from
customer profile, to the competitors’ product and services.

Socialization is a process of making employees to mingle up with everyone for team-spirit

2. Development- HR

Career planning and Career development; process of establishing personal career objectives
by employees and acting in a manner intended to bring them about. HR managers should help
their employees in knowing their strengths for placing them in suitable job, guide employees
what skills and knowledge should be acquired for attaining higher positions, planning for
suitable training for polishing existing skill set and providing good work-life-balance to make
balance between career and personal life, after all, every one work for their personal life .

Career development according to Schuler, "It is an activity to identify the individual needs,
abilities and goals and the organization’s job demands and job rewards and then through well
designed programs of career development matching abilities with demands and rewards". Career
development does not guarantee success but without it employees would not be ready for a job
when the opportunity arises. HR managers should encourage their employees by providing them
suitable opportunities to grow for promoting them to higher jobs according to their skills and
knowledge, identify and provide opportunities to employees to learn new skills in the job and
compensate accordingly and guiding employees in right career path to develop in their career.

Top preferences for employees in India

* Career development

* Learning and training opportunities

* Good work-life balance

* Good relationship with superiors

Executive development ; developing the skills and competencies of those that (will) have
executive positions in organizations.

Employee training and development is the subsystem of an organization and core function of
human resource management. It ensures continuous skill development of employees working in
organization and habituates process of learning for developing knowledge to work.
Imparting Training and Development to employees through various methods is the foundation
for obtaining quality output from employees. Employee training methods or categorized into on-
the-job training methods and off the job training methods.

On-the-job training methods: job rotation, coaching, job instruction, committee

assignments, apprenticeship and internship

Of the job training methods: classroom lecture method, audio-visual training method,
simulation, case studies, role playing and the programmed instruction method.

Overall development of organization: Though human resource department is one of the

departments in organization, but it is linked to overall development of organization as employees
are center for final output and organization's performance. Whatever type of job or department in
any organization is made up-of employees alone. HR department should keep in mind that it isn't
just simply dealing with employees, but it's every HR activity effects the performance of
employees in turn it will show cascade effect on final output of employees and finally on overall
performance of organization. If employees aren't provided with proper and relevant training, it
would affect their performance, likewise if all employees have same situation it would badly
effects the organization. If employees aren't kept motivated continuously by way of providing
benefits and perks will lead them to become lethargy or if HR department fails to maintain and
comply with employment laws would sometime lead cancellation of business license.

To make this point clear, Human resource department's failure to maintain employee safety,
welfare and healthy measures according to The Factories Act 1948 or failure to have an ICC
(Internal Complaints Committee) according to Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 will sometimes lead to closure or
cancellation of business. Like that there are other employment laws which makes organization to
be in compliance with it for smooth running of organization, if not it will invite unnecessary
troubles to an organization.

4. Compensation - HR

Job evaluation; analyzing and assessing various jobs systematically to ascertain their relative
worth in an organization.

Performance evaluation is also called as performance appraisal of employees. Human

Resource Managers can adopt various methods for assessing the performance of the employees
So as to take decisions with regard to compensating and rewarding employees, training of
employees if performance is poor and it would take corrective actions on employees whose
performance is poor. In order to evaluate the performance of employees, HR managers first have
to set up performance standards for comparing with actual performance of employees to find out
gaps of employee performance. Performance evaluation or appraising performance of employees
is the core and major task when compared with other human resource management functions.
 Establishment of standard performance so as to measure the actual performance of the
employees by conducting performance evaluation for appraisals
 Measurement of actual performance with the established performance standards of
employees for finding out gaps in employee performance.
 Comparison of actual performance with the standard one to find the deviation for
initiation of corrective actions, if there are any deviations. Corrective actions include giving
proper and suitable training to such employees or withholding of increments in payments until
performance gaps are none. Demotion of employee, suspension and discharge from job is
initiated when serious deviations are identified
1. Traditional methods of Performance Appraisal
 2. Modern Methods of Performance Appraisal
3. 360 Degrees Performance Appraisal

Wages or salary administration as prescribed by the labour laws, Wages for workers or salary
for employees is the basic and primary thing for which employee's work for an organization. It's
administration of salaries by HR managers is very crucial function as financial implications and
legal compliance is involved. Any deviations in payment of salaries will lead to immediate
dissatisfaction of employees and effects their moral and any failure in payment of salaries,
statutory contributions by employee and statutory deductions from salary of an employee in
accordance with the employment laws will invite unnecessary complications and will be liable
for penal action by the court of law. Hence it is lookout of the Human resource management
department to avoid such costly mistake which also effects the organization's reputation
(Employer branding). wages are classified as
 Minimum wage - It is also called as irreducible wage, which should be sufficient
for worker to get food clothing and shelter.
 Fair wage - Wage which is paid according to the work of the work
 Living wage - It is just above minimum wage, which is sufficient to meet
minimum health expenses, children education with food, clothing and shelter.

Salary nomenclature is used in the context of employees. Generally salary of employees is paid
monthly and it consist of various components like basic pay, dearness allowance and house rent
allowance especially in the case of government employees. Whereas private employees' salary
normally doesn't consist of said components as it is paid under single head that is salary and
benefits of employees doesn't come under salary head, therefore employee benefits could be
monitory or nonmonetary cannot be counted with salaries of employees, they are specifically
provided for providing social security and motivating employees. Especially government
employee salary format will be Salary = Basic pay+ Dearness allowances+ House rent
allowance.

Employee rewards, perks and benefits payments according to the employment and labour
laws. Employee benefits are categorized into statutory or mandatory and voluntary
benefits. Statutory benefits are compulsory benefits for employees, its denial for payment of
such benefits to their employees by the management, can be challenged in the court of law.
Whereas voluntary benefits claims cannot be legally enforceable in the court of law in case
 management fails to pay to their employees. The purpose of payment of voluntary benefits to
employees is to attract talent, for retention of employees in the organization and for motivating
employees, ultimately to keep employees happy. Most of the voluntary benefits are non-
monetary.

The Best PERKS or rewards of the job

Google
 When a Google employee passes away surviving spouse or partner of a deceased
employee 50% of their salary for the next 10 years.
 Free gourmet food and never ending snacks!
 24/7 in-house tech support from their Tech Stop service Dogs are welcome into
the office
 Employee s given 'massage credits’ for a job well done
 The 80/20 rule allows Google employees to dedicate 80% of their time to their
primary job and 20% on passion projects
 Xoogler alumni support for the rest of their lives
Top employee benefits


1. Additional fixed pay

2. flexible work arrangements
3. retirement benefits
4. professional development support
5. training opportunities
6. hire incentives
7. insurance benefit
8. health care assistance
Employee benefits

Compulsory employee benefits: Payment of bonus, Gratuity, Provident fund, Compensation in

case of accidents, Paid Leaves, Maternity leave for 26 weeks with full pay and Paternity benefit
of 15 days with full pay for male employee.

Employees State insurance provides following benefits to the employees whoever got covered
under employees State insurance scheme.
 Sickness benefit: ESIC provides 70% of average daily wages in cash
during medical leave, up to 91 days in two consecutive benefit periods.
 Medical benefit: ESIC provides reasonable Medical Care for self and
family from day one of entering into insurable employment.
 Disablement benefit: ESIC provides continuous monthly payment till
injury lasts for temporary disablement and for whole life for permanent disablement.
 Maternity benefit: ESIC provides 100% of average daily wages in cash up
to 26 weeks in confinement and 6 week in case of miscarriage, during maternity leave
and 12 weeks for commissioning mother and adopting mother.
 Unemployment allowance: ESIC Provides monthly cash allowance for a
duration of maximum 24 months in case of involuntary loss of employment or
permanent invalidity due to non-employment injury.
Voluntary employee benefits: Payment for time not worked, paid vacations, Surrogacy leave,
Adoption leave, Menstrual leave, Health and security benefits.

5. Maintenance and Motivation - HR

Employee well-being; Providing good working conditions at workplace is the fundamental duty
of Human Resource Management department. Treating employees inhumane is against to the
Constitution of India according to [Article 42 under Chapter XXXIV of Directive Principles of
State Policy of the Constitution of India].

It is also the duty of Human Resource Management to provide welfare measures like Pure water
drinking facilities, restrooms, lunchroom in an organization having more than 150 employees,
minimum medical aid facility for 150 employees, maintenance of an ambulance in an
organization having more than 500 employees, canteen in an organization having more than 250
employees, crèches for children in the organization having more than 30 women employees and
sitting facilities for employees wherever it is required and possible, as prescribed under The
Factories act 1948.

Social security for employees: Providing and contributing Employee Provident fund, Payment
of Bonus, compensation, payment of gratuity, maternity benefit, paternity benefit and employee
insurance. In India there are few social security legislation which are to be followed and
complied by any organization and it is the duty of the Human Resource Manager to look after it.
 Payment of Gratuity Act, 1972
 Workmen's Compensation Act, 1923
 Employee State Insurance Act, [ESI] 1948
 Payment of Bonus Act, 1965
 The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
 Maternity Benefit Act,1961 (Maternity Benefit (Amendment) Act, 2017)
 Maternity leave laws

Worker's participation encouragement either individually or collectively, become involved in

one or more aspects of organizational decision making within the enterprises in which they work
Would make employees feel motivated, satisfaction and stay loyal to the management. Therefore
it would avoid unnecessary conflicts in between employees and management while
implementing management decisions. Management should ensure decisions should not be taken
arbitrarily without considering or consulting their employees who work for their organization.
Especially human resource managers should not take management decisions on their whims and
fancies, especially in decisions relating to their employees.. Article 43A of the Constitution of
India guarantees 'Participation of workers in management of industries' and falls under Part
IV - Directive Principles of State Policy and it should be ensured and honored by an
organization's human resource management.

Providing Good work-life balance

Motivating employees stimulate the desire and energy in employees to be continuously

interested in a job and committed it, role, or subject, and to exert persistent effort in attaining a
goal. The most important motivating factors for employees are to have a healthy and good
working environment, to have good monitory benefits, compensation and rewards, to have
encouragement and support from management and to have a chance of professional growth and
raise.

What Matters & Motivates Most For Employees At Work?

Top 10 global employees preferences

1. Job security & stability
2. Financial compensation
3. Work appreciation by employer
4. Interesting work
5. Good & healthy relationship with colleagues
6. Good work-life balance
7. Good relationship with superiors
8. Learning & training opportunities
9. Career development
10. Financial stability of employer

Job rotation is the human resource management technique in which employee is moved
between two or more jobs in a systematic and planned manner. The objective is to expose an
employee to different experiences and wider variety of skills to enhance job satisfaction and to
cross-train them.
Advantages of job rotation of an employee are eliminate boredom of an employee, encourage
development, give employees a break from strenuous job duties, helps HR manager identify
where employee work best and gives HR manager a backup plan if an employee leaves.

Maintaining HR records in accordance with employment laws and organizational needs is the
basic function of Human Resource Management, conducting research for identification of HR
issues and find suitable solutions, doing Human Resource audit by systematic verification
strategies, policies, procedures, documentation, structure, systems and practices with respect to
the organization’s human resource management.

Human Resource information system implementation lets you keep track of all your
employees and all information about them. It is usually done in a database or, more often, in a
series of inter-related databases.

6. Integration - HR

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 labor contract.
Maintaining proper industrial relationships is the core activity of Human Resource Management
so as to avoid industrial disputes.

Employee Discipline is a systematic procedure the set-rights and corrects or punishes a

subordinate by superior because a rule of procedure has been disobeyed or violated. Discipline is
the force that prompts employees to observe rules, regulations, standards and procedures deemed
necessary for an organization.

Grievance redressed; Grievance procedure is a formal communication between an employee

and the management designed for the settlement of a grievance of employees. Grievance
procedures differ from organization to organization as grievances can be very damaging if not
handled properly.

The key causes of employee grievances are

Grievance resulting from management policies include

Grievance resulting from working conditions

Grievance resulting from inter-personal factors

Dispute settlement : Causes of industrial disputes can be broadly classified into two categories:
economic and non-economic causes. The economic causes will include issues relating to
compensation like wages, bonus, allowances, and conditions for work, working hours, leave and
holidays without pay, unjust layoffs and retrenchments. The non economic factors will include
victimization of workers, ill treatment by staff members, sympathetic strikes, political factors,
indiscipline etc. (The Industrial Disputes Act, 1947 governs rules for the settlement of disputes
between the management of industrial establishments and workmen.)

Now recently in the year 2010, a new chapter II-B is inserted in the Industrial Disputes Act, 1947
by way of amendment w.e.f 15th September, 2010, and a new section 9-C is added for having
grievance redressal committee.
Grievance Settlement Machinery
1. Any organization having 20 or more employees should have grievance redressal
committee for the resolution of disputes.
2. The committee should consist of equal members from employer and employee.
3. The committee members should not exceed more than six members.
4. The committee should consist of one woman and male members equally.
5. The grievance redressal committee should complete its proceedings within 45
days on the receipt of written complaint by the party who is having grievance.

Collective bargaining: The collective bargaining as a policy has been in vogue in the United
Kingdom, the United States of America, Australia, New Zealand and other countries. However
in India the trade unions have more to learn from these countries to tackle the industrial
problems. The phrase ‘Collective Bargaining’ is coined by famous authors Sydney and Beatrice
Webb in their celebrated treatise on ‘History of Trade Unions’. Collective Bargaining is a
method of determining the terms and conditions of employment and settling disputes arising
from those terms by negotiating between the employer and the employees or their trade union.
The very fact that the parties reserve the ultimate right to use economic weapons of strike
and lock out helps in stimulating the parties to arrive at an agreement.

The Encyclopedia Americana states that the American Federation of labor “insists upon the
equity of workers in their right to bargain collectively with employers through representatives of
their own choosing”.
Being a spokesman of employees and organization: It is the responsibility of human resource
manager to be as, spokesman, negotiator and middlemen between management and employees
for smoothening the flow of communication of management decisions from top-level to bottom
level and vice versa, for cushioning conflicts if any by misunderstandings or misinterpretation
and to establish healthy relations and good culture within the organization. In sometimes HR
manager should take the responsibility of a spokesman of organization when representing or
dealing with other stakeholders.

Resolving conflicts among employees is major task of human Resource Management. Hr

manager could follow the below steps for resolving conflicts. According to recent study human
resource managers are spending considerable amount of their job time on resolving conflicts in
between employees as diversity in conflicts are in raise and showing impact on performance of
employees and on organization.
 Understanding the cause, root and nature of the conflict.
 Encourage employees to solve conflicts themselves.
 Do not widen or magnify conflicts, Nip it in the bud quickly.
 Give an opportunity to both sides to say and listen to them
 Determine the real cause of issue, together.
 Check your employee handbook for solution and guidance.
 Come to a solution.
 Put it on paper for make them binding and for future reference in such cases.
 Train them how to communicate and avoid conflicts
 HR manager should be an idealistic and set an example himself.
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Role of support institution and management of small business

Government has recognized the important role of entrepreneurs in the industrial development of
the country, especially through the Small Scale Industries (SSIs). SSIs are essential for Indian
economy in terms of employment generation, foreign exchange earnings, and its share in
industrial output, and contribution to national income. The government of India and state
governments provides a number of special facilities and incentives. The incentives not only
motivate entrepreneurs to set up industries in the small scale sector, but also strengthen the
entrepreneurial base in the economy. The new entrepreneurs face a number of problems on
account of inadequate infrastructure facilities and other support services. The government offers
a package of services through its specialized institutions and motivates entrepreneurs to take
advantage of the various facilities and establish enterprises and flourish. This package includes
assistance in obtaining finance, help in marketing, technical guidance, training, and technology
up gradation etc. It is hoped that institutional incentives would play a key role in the promotion
of small enterprises and ensure their self-sustained growth.

Central Level Institutions

Following are the various central level institutions that support small business enterprises:

Small Scale Industries

Board SSI Board is the apex non-statutory advisory body constituted by the Government of India
to render advice on all issues pertaining to the SSI sector. It provides a forum to its members for
interaction to facilitate cooperation and inter-institutional linkages and to render advice to the
Government on various policy matters, for the development of the sector.

Small Industry Development Organization(SIDO)

The Office of the Development Commissioner (Small Scale Industries) is also known as the
Small Industry Development Organization (SIDO). It is an apex body, established in 1954, for
assisting the Ministry in formulating, coordinating, implementing and monitoring policies and
programs for the promotion and development of small scale industries. It has over 60 offices and
21 autonomous bodies under its management, including Tool Rooms, Training Institutions and
Project-cum-Process Development Centres etc. Functions of such main bodies are as follows:
(a) Small Industries Service Institutes (SISIs) are operational one in each state. They provide
technical support and consultancy services, conduct entrepreneurship development programs,
and export promotion and liaison activities Emphasizes is also placed on implementation of
programs on modernization, energy conservation, quality control/ up gradation and pollution
control for the benefit of entrepreneurs.

(b) Regional Testing Center (RTC) provides Testing facilities for product quality up gradation.

(c) Tool Rooms/Tool Design Institutes (TRs/TDI) assist SSIs in technical up gradation, and
provide good quality tooling by designing and producing tools, moulds, jigs & fixtures,
components, etc.

(d) Product-cum-Process Development Centres (PPDCs) look into their specific problems and
render technical service.

(e) Central Footwear Training Institutes (CFTIs) develop footwear designing to promote exports.
Thus, the main services rendered by DC SSI office are:

(a) Advising the Government in policy formulation for the promotion and development of small
scale industries.

(b) Providing techno-economic and managerial consultancy, common facilities to small scale
units.

(c) Providing facilities for technology up gradation, modernization, quality improvement and
infrastructure.

(d) Developing Human Resources through training and skill up gradation. (e) Providing
economic information services.

(f) Maintaining a close liaison with the Central Ministries, Planning Commission, State
Governments, Financial Institutions and other Organizations concerned with development of
Small Scale Industries.

(g) Evolving and coordinating policies and programs for development of Small Scale Industries
as ancillaries to large and medium scale industries.
(h) Monitoring of Prime Minister Rozgar Yojna (PMRY) Scheme

National Small Industries Corporation (NSIC)

The National Small Industries Corporation Ltd. was set up in 1955 with a view to promoting,
aiding and fostering the growth of small scale industries in the country with focus on commercial
aspects of these functions. NSIC continues to implement its various programmes and projects
throughout the country to assist the SSI units. The Corporation has been assisting the sector
through the following schemes and activities:

(a) Composite Term Loan Scheme: To promote small-scale sector, NSIC has launched a
Composite Term Loan Scheme for the benefit of existing and prospective entrepreneurs to
acquire land and building, machinery and equipment and working capital under one roof to the
tiny units.

(b) Hire Purchase Scheme: Supply of indigenous and imported machinery and equipment on
easy financial terms with special focus on women entrepreneurs, weaker sections, handicapped
and ex-servicemen and SC/ST entrepreneurs.

(c) Equipment Leasing: It is done mainly to facilitate SMEs to expand their capacities or
diversify and/or upgrade their technology according to the needs of the market.

(d) Working Capital Finance: This Scheme aims at augmenting working capital of viable and
well managed units, on selective basis in case of emergent requirements to enable them to pay-
off their purchase of consumable stores, spares and production related overheads particularly
electricity bills, statutory dues.

(a) Raw Material Assistance: It facilitates availability of scarce raw material either through the
domestic market or by importing.

(b) Marketing Support Program: NSIC has been trying to act as a major agency to bring
SMEs closer to various Governmental purchasing agencies, with the intention of creating
confidence in the purchasing agencies about SMEs, and their capabilities to supply goods and
services of requisite quality, economic prices and adherence to agreed delivery schedules.
 (c) Tender Marketing: It participates in bulk local/global tender on behalf of Small Scale
Industries/Enterprises. It is aimed at assisting SSIs with the ability to manufacture quality
products but which lack brand equity & credibility or have limited financial capabilities.

(d) Integrated Marketing Support: NSIC has been operating an Integrated Marketing Support
Program in which bills pertaining to supplies made by small scale units to eligible purchasers are
discounted by NSIC up to a certain specified limit.

(e) Government Stores Purchase Program: The units registered with the Corporation for
participation in government purchase program are considered at or with individual purchase
organizations and derive all the benefits like free supply of tender forms, exemption from
payment of earnest money, security deposits, etc.

(f) Technology Up gradation: Excellent technical support is provided to SSIs/SMEs through

five NSIC Technical Service Centers. These centers have been recognized by Council of
Scientific and Industrial Research for in-house R&D. NSIC has set up a Technology Transfer
Centre. The latest information is provided to on-line connections and networks of computers on
matching technology seekers and technology providers are arranged through the Technology
Transfer Centre.

(g) Software Technology Parks: NSIC has set up a NSIC-STP Complex under Software
Technology Parks of India (STPI). Software Technology Parks facilitates small scale units to
establish their units for the 100% export of software and also act as the major point to activate
software exports directly through NSIC. NSIC-STP provides high speed better communication
facilities through VSNL/SATCOM networks, built-up office space, and uninterrupted power
supply, back-up power through DG sets, a modern business centre and other administrative
support.

(h) Exports: NSIC is providing a complete package of export assistance, testing facilities, pre-
shipment credit facility, export incentives etc. apart from exposure to the products of SSEs in
trade fairs, buyer and seller meets etc.
 Khadi and Village Industries Commission (KVIC)

The Khadi and Village Industries Commission (KVIC) is a statutory body created by an Act of
Parliament in April 1957. The KVIC is supposed to do the planning, promotion, organization and
implementation of programs for the development of Khadi and other village industries in the
rural areas in coordination with other agencies engaged in rural development wherever
necessary.

National Institute of Small Industry Extension Training (NISIET)

National Institute of Small Industry Extension Training (NISIET), Hyderabad, which undertakes
operations ranging from training, consultancy, research and education, to extension and
information services. An autonomous arm of the Ministry of Small Scale Industries and Agro
and Rural Industries (SSI & ARI), the Institute strives to achieve its avowed objectives through a
gamut of operations ranging from training, consultancy, research and education, to extension and
information services. A Centre of Excellence: It was in 1984 that the UNIDO had recognized
SIET as an institute of meritorious performance under its Centers of Excellence Scheme to
extend aid. Subsequently, it was also accorded national status and SIET Institute became NISIET
in the same year. The NISIET was setup as an apex institute in 1960 by the Government of India,
with the Charter of assisting in the promotion, development, and modernization of Small and
Medium Enterprises (SMEs) to progress towards success and prosperity. With this vast expertise
in the areas of entrepreneurship, policy, technology, management, and information services, the
institute is consistently assisting the SMEs to face with confidence, the challenge brought about
by globalization and the impact of IT on their businesses. As a global organization, NISIET’s
stellar role in positioning the SMEs on the growth trajectory has benefited not only the Indian
SME sector, but also developing countries around the world, in promoting self-employment and
enterprise development. The institute is constantly evolving with time, modifying is focus with
the emerging need of SMEs, providing them solutions in the form of consultancy, training
research, and education to retain their competitive edge in ever-hanging makers.

National Institute for Entrepreneurship and Small Business Development (NIESBUD)

National Institute for Entrepreneurship and Small Business Development (NIESBUD), New
Delhi, it conducts national and international level training programs in different fields and
disciplines. The National Institute for Entrepreneurship and Small Business Development
(NIESBUD), an autonomous institution under the ministry of micro, small and medium
enterprises, Government of India, has joined hands with the International Finance Corporation, a
member of the World Bank Group, for jointly undertaking different projects relating to
entrepreneurship development in India.

National Institute for Entrepreneurship and Small Business Development (NIESBUD) is a

premier Institute under the Ministry of MSME for coordinating, training and overseeing the
activities of various institutions and agencies engaged in Entrepreneurship Development
particularly in the area of small industry and small business. NIESBUD has launched a major
project for Entrepreneurship and Skill Development of 35,000 youth by December 2011 in the
states of West Bengal, Uttarakhand, Uttar Pradesh, Madhya Pradesh, Haryana, Delhi, Rajasthan,
Orissa, Bihar, Jharkhand, Chhattisgarh, Punjab, J&K, Gujarat and Union Territory of
Chandigarh. NIESBUD is one among several Institutions functioning under the Ministry of
MSME. In its Endeavour to spread entrepreneurial culture throughout the country, the Ministry
is being assisted by two more entrepreneurship development Institutions namely National
Institute for Micro, Small and Medium Enterprises (NI-MSME), Hyderabad and Indian Institute
of Entrepreneurship, Guwahati.

State Level Institutions

State Level Institutions execute different promotional and developmental projects/schemes and
provide a number of supporting incentives for development and promotion of small scale sector
in their respective States. These are executed through State Directorate of Industries, who has
District Industries Centers (DICs) under them to implement Central/State Level schemes. The
State Industrial Development Corporations also look after the needs of the small-scale sector.

State Industrial Development Corporations (SIDCs)

Incorporated under the companies Act, 1956 SIDC’s were set up in different states as wholly
owned companies for promoting industrial development in their respective states. The main
functions of SIDC’s are as follows:

(a) Providing term finance to all small, medium and large industrial enterprises set up in state.
(b) Underwriting and directly subscribing to shares, and debentures of debentures of industrial
enterprises being set up in the state.

(c) Preparing feasibility studies, conducting market surveys and motivating private
entrepreneurs to set up their industrial ventures in the state.

(d) Collaborating with private entrepreneurs to set up industrial ventures in joint and assisted
sector.

(e) Implementing scheme of ‘Industrial Development Bank of India’ of seed capital in the state.

State Directorate of Industries (SDIs)

Under the constitution of India promotion and development of small scale industries is a State
subject. Therefore, the primary responsibility for implementation of policies and programs of
assistance rests with the Directorate of Industries in each State. It acts under the overall guidance
of SIDO and concerned Central institutions. It performs both regulatory and developmental
functions. It functions through a network of District Industries offices, industries offices and
extension offices at district subdivision and block level respectively. The main functions of
Directorate of Industries are as follows:

(a) Registration of small scale units

(b) Providing financial assistance

(c) Distributing scare and indigenous raw materials to industrial units

(d) Granting essentiality certificates for import of raw material

(e) Establishing industrial estates and industrial cooperatives

(f) Developing industrial infrastructure

(g) Undertaking industrial surveys and collecting information

(h) Arranging concessions and incentives for industries

(i) Overall administration of village and small scale industries

(j) Maintaining liaison with other agencies for industrial development

District Industries Centers (DICs)

The District Industries Centers program was launched in 1978 for effective promotion of cottage
and small scale industries widely dispersed in rural areas and small towns. These centers are the
focal points providing all the services and support required by small scale and village
entrepreneurs under one roof. These serves as an integrated administrative framework at the
district level for industrial development. The main functions of DICs are as follows:

1. It conducts surveys to know industrial potential of a district keeping in view the availability of
raw material, human skills, infrastructure, demand, etc.

2. It prepares an action plan for industrial development.

3. It appraises the various investment proposals received from entrepreneurs.

4. It guides and assists entrepreneurs in buying appropriate machinery and equipment and raw
material.

5. It suggests appropriate marketing strategies to entrepreneurs.

6. It maintains links with research and development institutions for up gradation of technology,
quality improvement, industrial training etc.

7. It conducts artisans training programs.

8. It has been assigned operation responsibility for special schemes to provide self- employment
to educated unemployed youths.

Small Industries Development Bank of India (SIDBI)

Of all the elements that go into a business, credit is perhaps the most crucial. The best of plans
can come to naught if adequate finance is not available at the right time. SSIs need credit support
not only for running the enterprise and operational requirements but also for diversification,
modernization/ up gradation of facilities, capacity expansion etc. In respect of SSIs, the problem
of credit becomes all the more critical when ever any episodic event occurs such as a large order,
rejection of consignment, inordinate delay in payment etc. In general, SSIs operate on tight
budgets, often financed through owner’s own contribution, loans from friends and relatives and
some bank credit. Government of India recognized the need for a focused credit policy for SSIs
in the early days of promotion of SSIs and RBI has been instrumental in devising a multi-stage
approach/financial system for credit dispensation to different sectors of the economy, for
example, agriculture, industry, exports, SSIs etc. The SIDBI was established in 1990 as the apex
refinance bank. The SIDBI is operating different programs and schemes through five Regional
Offices and 33 Branch Offices. The financial assistance of SIDBI to the small scale sector is
channelized through the two routes – direct and indirect.

National Bank for Agriculture and Rural Development (NABARD)

NABARD is set up as an apex Development Bank with a mandate for facilitating credit flow for
promotion and development of agriculture, small-scale industries, cottage and village industries,
handicrafts and other rural crafts. It also has the mandate to support all other allied economic
activities in rural areas, promote integrated and sustainable rural development and secure
prosperity of rural areas. In discharging its role as a facilitator for rural prosperity NABARD is
entrusted with:

1. Providing refinance to lending institutions in rural areas.

2. Bringing about or promoting institutional development.

3. Evaluating, monitoring and inspecting the client banks.

Besides this pivotal role, NABARD also:

1. Acts as a coordinator in the operations of rural credit institutions.

2. Extends assistance to the government, the Reserve Bank of India and other organizations in
matters relating to rural development.

3. Offers training and research facilities for banks, cooperatives and organizations working in the
field of rural development.

4. Helps the state governments in reaching their targets of providing assistance to eligible
institutions in agriculture and rural development.
5. Acts as regulator for cooperative banks and RRB’s.

Set up in 1982, provide refinance assistance to State Cooperative Banks, Regional Rural Banks,
and other approved institutions for all kinds of production and investment credit to SSIs, artisans,
cottage and village industries, handicrafts and other allied activities. Helps SSI entrepreneurs to
get loan for setting up SSIs in any part of the country.

Housing and Urban Development Corporation Ltd. (HUDCO)

Wholly owned company of GOI, incorporated Apr.1970, as a Pvt. Ltd. Co. and subsequently,
converted into a Public Ltd. Co. in 1986. Primary objective is to provide assistance for urban,
social sector infrastructure, and the creation of housing facility, of late, to create SSI
infrastructure. Also extends assistance for the promotion of building material industries, besides
imparting consultancy, training and technical in related matters.

Technical Consultancy Organizations (TCOs)

Set up by all-India financial institutions during 70s and 80s to cater to consultancy needs of
SMEs and new entrepreneurs. Services include preparing project profiles and feasibility studies,
undertaking industrial potential surveys, identifying potential entrepreneurs and provision of
technical and management assistance to them, undertake market research and surveys for
specific products, carrying out energy audit and energy conservatism assignment, project
supervision, taking up assignments on a turnkey basis, undertaking export consultancy for EOU.

Small Industries Service Institutes(SISI)

The small industries service institutes (SISI’s) are set-up one in each state to provide consultancy
and training to small and prospective entrepreneurs. The activities of SISs are co-ordinate by the
industrial management training division of the DC, SSI office (New Delhi). In all there are 28
SISI’s and 30 Branch SISI’s set up in state capitals and other places all over the country. SISI
has wide spectrum of technological, management and administrative tasks to perform.

Functions of SISI
1. To assist existing and prospective entrepreneurs through technical and managerial counseling
such as help in selecting the appropriate machinery and equipment, adoption of recognized
standards of testing, quality performance etc;

2. Conducting EDPs all over the country;

3. To advise the Central and State governments on policy matters relating to small industry
development;

4. To assist in testing of raw materials and products of SSIs, their inspection and quality control;

5. To provide market information to the SISI’s;

6. To recommend SSI’s for financial assistance from financial institutions;

7. To enlist entrepreneurs for partition in Government stores purchase program;

8. Conduct economic and technical surveys and prepare techno-economic feasible reports for
selected areas and industries.

State Financial Corporation (SFC):

Its main objectives are:

i. To provide term loans for the acquisition of land, building, plant and machinery.

ii. To promote of self-employment.

iii. To encourage women entrepreneurs

iv. To bring about expansion of industry

v. To provide seed capital assistance.