Humar Resource Management

Definition:

[Wikipedia]

Human resource management (HRM) is the strategic and coherent approach to the management of an organisation's most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business.[1] The terms "human resource management" and "human resources" (HR) have largely replaced the term "personnel management" as a description of the processes involved in managing people in organizations.[1] In simple sense, HRM means employing people, developing their resources, utilizing, maintaining and compensating their services in tune with the job and organizational requirement.

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2
Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. Human Resource Management can also be performed by line managers.

Human Resource Management is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training.

3.
A model of personnel management that focuses on the individual rather than taking a collective approach. Responsibility for human resource management is often devolved to line management. It is characterized by an emphasis on strategic integration, employee commitment, workforce flexibility, and quality of goods and services.

First : HRM

1.Define HRM
2. What are the differences between Human Resource Management and Personnel Management
3.Trace the development of HRM from PM
4.What are the basic tenants of HRM
5.What factors have contributed to HRM strategic role

Agency Relationship

The relationship between management and shareholders is sometimes referred to as an Agency Relationship, in which managers act as agents for the shareholders, using delegation powers to run the affairs of the company in the best interest of the shareholders.

Agency problem:
a potential conflict of interest between the agent (manager) and the outsider shareholders. (i.e. those not involved in running the business) and the creditors. For example, if managers hold none or very little equity shares of the company they work for, what is to stop them from working inefficiently, not bothering to look for profitable new investments opportunities, or giving themselves high salary or perks?

Agency theory:
proposes that, although the individual members of the business team act in their own self interest, the well being of each individual depends on the well being of other team members and on the performance of the team in competition with other teams.
One power that shareholders possess is the right to remove the directors from office but shareholders have to take initiative to do this, and in many companies, the shareholders lack energy and organisation to take such a step. Even so, directors will want the company’s report and accounts, and the proposed final dividend, to meet with the shareholders’ approval at annual general meeting.
Another reason why managers might do their best to improve the financial performance of their company is that managers’ pay is often related to the size or profitability of the company. Managers in very big companies, or in very profitable companies, will normally expect to earn higher salaries than managers in smaller or less successful companies.
Another source of conflict between managers and shareholders is that they have different attitude towards risk. A shareholder can spread his risk by investing his money in a number of companies; one company may go into liquidation but the shareholders’ financial security is not threatened. A manager’s financial security however, usually depends on what happens to the one company that employs him. The manager could therefore be less inclined than the shareholder to invest company’s funds in a risky investment.
A further situation in which conflict can arise is when a company is subject to takeover bid. The shareholders of the acquired firm very often receive above normal gains for the share price while managers loose their job, if lucky they may be picked by the new shareholders. It can therefore be argued that it is therefore not always the shareholders interest for the sought-after companies put up such a defence to drive the bidder away.
Agency theory suggests that audited accounts of a limited company are an important source of post- decision information minimising investors’ agency costs, in contrast to the alternative approaches which see financial reports as primarily a source of ‘pre-decision’ information for the equity investors.

Functions of Financial Management

Financial functions can be divided into three broad categories:
(1) Investment decision
(2) Financing decision and
(3) Dividend decision.

In other words, the firm decides how much to invest in short - term assets and how to raised the required funds. In making these decisions the financial manager should aim at increasing the value of the shareholder stake in the firm.

The financial manager rises from capital markets. He or she should therefore know how the capital market functions to allocate capital to the competing firms and how security prices are determined in the capital markets. Most companies have only one senior financial officer. But a large company may have both a treasurer and a controller.

The treasurer’s function is to raise and /manage company funds while the controller oversees whether funds are correctly applied. A number of companies in India either have a finance director or a vice president of finance as the chief financial officer.

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Goals of Corporate Finance

Finance management is a process of planning decisions in order to
maximize the owner's wealth. Financial managers have a major role in cash mangement, in acquisition,raising & allocating financial capital, trade off betweek risk and return.

Goals of Corporate Finance
1. Stockholder wealth maximization.
2. Profit Maximization.
3. Managerial reward maximization.
4. Behavioral goals and
5. Social Responsibilities.

Profit Maximization:
* single Period (short period less than a year).
* Organization can maximize short-term profits at the expense of its long term profitability.

Stockholder wealth maximization
* Wealth for long term
* Risk or uncertainty
* Timing of Returns
* Stockholder's Return.

Finance management

Goals of Corporate Finance

1. Stockholder wealth maximization.
2. Profit Maximization.
3. Managerial reward maximization.
4. Behavioral goals
5. Social Responsibilities.

Profit maximization
* basically single-period or short term (within 1 year)

Stockholder maximization
* Long term
* risk,
* timing of return (early is better)
* stockholder's return

Finance Concepts

FINANCE CONCEPTS FOR MANAGERS

Finance is the universal language of business, the language of goals, objectives, and results. Financial concepts are important for cash management, profit planning, capital investment, contingencies and risk planning, and measuring management performance. This program enhances the participants " financial savvy ", and helps to master the " how to " of financial communication. Today's managers need to have " finance savvy" to get ahead and stay ahead. This program will include the language of finance, presentation of financial data in financial statements and performance reports, and understanding the relevance of accounting rules and procedures.