Entrepreneurial Finance, Human
Resource Management & Productivity
& Social Entrepreneurship
Muhammad Farooq Azam
IEEE Conference Publishing
NUST Boys Hostel
PNEC PNS Jauhar Karachi
Abstract:
This paper presents the results of an empirical
study on the works in the field of ISO 9000
standards towards Human Resource
Management & Productivity. In this paper we
examine the relationship between Human
Resource Management (HRM) &
Productivity. HRM includes incentive pay
(individual and group) as well as many non-
pay aspects of the employment relationship
such as matching (hiring and firing) and work
organization (e.g. teams, autonomy). We place
HRM more generally within the literature on
management practices and productivity. We
start with some facts on levels and trends of
both HRM and productivity and the main
economic theories of HRM. We look at some
of the determinants of HRM – risk,
competition, ownership and regulation. The
largest section analyses the impact of HRM
on productivity emphasizing issues of
methodology, data and results (from micro-
econometric studies). The results of the study
are presented in six basic Human Resource
Management categories showing the certified
companies’ performance improvement in the
basic elements of each category, and revealing
their strengths and weaknesses on their way to
Human Resource Management and
Productivity. We conclude briefly with
suggestions of avenues for future frontier
work. In this paper we will also present the
importance of entrepreneurial finance i.e.
different ways of investing money or to take
from any investor. At the end I will also
present the concept of social
entrepreneurship. This
is a new concept and will have much
importance in the future.
Introduction
Human resource management (HRM, or
simply HR) is a function in organizations
designed to maximize employee
performance in service of an employer's
strategic objectives. HR is primarily
concerned with the management of people
within organizations, focusing on policies and
on systems.
Traditionally, labor economics focused on the
labor market rather than looking inside the
“black box” of firms. Industrial sociologists
and psychologists made the running in
Human Resource Management
(HRM). This has changed dramatically in last
two decades. Human Resource Management
(HRM) is now a major field in labor
economics. The hallmark of this work is to
use standard economic tools applied to the
special circumstances of managing employees
within companies. HRM economics has a
major effect on the world through teaching in
business schools, and ultimately what gets
practiced in many organizations. HRM covers
a wide range of activities. The main area of
study we will focus on will be incentives and
work organization. Incentives include
remuneration systems (e.g. individuals or
group incentive/contingent pay) and also the
system of appraisal, promotion and career
advancement. By work organization we mean
the distribution of decision rights
(autonomy/decentralization) between
managers and workers, job design (e.g.
flexibility of working, job rotation), team-
working (e.g. who works with whom) and
information provision. Space limitations mean
we do not cover matching (see Oyer and
Schaffer, this Volume) or
development/training. Second, we will only
devote a small amount of space to employee
representation such as labor unions (see
Farber, this Volume). Third, we should also
mention that we focus on empirical work
rather than theory (for recent surveys see
Gibbons and Roberts, 2008, and in particular
Lazear and Oyer, 2008) and micro-
econometric work rather than macro or
qualitative studies. Fourth, we focus on HRM
over employees rather than CEOs, which is
the subject of a vast literature (see Murphy,
1999, or Edmans, Gabaix and Landier, 2008,
for surveys). Where we depart from several of
the existing surveys in the field is to put HRM
more broadly in the context of the economics
of management. To do this we also look in
detail at the literature on productivity
dispersion.
Six Main Functions of a Human
Resource Department
An efficiently run human resources
department can provide your organization
with structure and the ability to meet business
needs through managing your company's
most valuable resources -- its employees.
There are several HR disciplines, or areas, but
HR practitioners in each discipline may
perform more than one of the more than six
essential functions. In small businesses
without a dedicated HR department, it's
possible to achieve the same level of
efficiency and workforce management
through outsourcing HR functions or joining a
professional employer organization.
Recruitment
skill
The success of recruiters and employment
specialists generally is measured by the
number of positions they fill and the time it
takes to fill those positions. Recruiters who
work in-house -- as opposed to companies
that provide recruiting and staffing services --
play a key role in developing the employer's
workforce. They advertise job postings,
source candidates, screen applicants, conduct
preliminary interviews and coordinate hiring
efforts with managers responsible for making
the final selection of candidates.
Safety
Workplace safety is an important factor.
Under the Occupational Safety and Health
Act of 1970, employers have an obligation to
provide a safe working environment for
employees. One of the main functions of HR
is to support workplace safety training and
maintain federally mandated logs for
workplace injury and fatality reporting. In
addition, HR safety and risk specialists often
work closely with HR benefits specialists to
manage the company's workers compensation
issues.
Employee Relations
In a unionized work environment, the
employee and labor relations functions of HR
may be combined and handled by one
specialist or be entirely separate functions
managed by two HR specialists with specific
expertise in each area. Employee relations are
the HR discipline concerned with
strengthening the employer-employee
relationship through measuring job
satisfaction, employee engagement and
resolving workplace conflict. Labor relations
functions may include developing
management response to union organizing
campaigns, negotiating collective bargaining
agreements and rendering interpretations of
labor union contract issues.
Compensation and Benefits
Like employee and labor relations, the
compensation and benefits functions of HR
often can be handled by one HR specialist
with dual expertise. On the compensation
side, the HR functions include setting
compensation structures and evaluating
competitive pay practices. A comp and
benefits specialist also may negotiate group
health coverage rates with insurers and
coordinate activities with the retirement
savings fund administrator. Payroll can be a
component of the compensation and benefits
section of HR; however, in many cases,
employers outsource such administrative
functions as payroll.
Compliance
Compliance with labor and employment laws
is a critical HR function. Noncompliance can
result in workplace complaints based on
unfair employment practices, unsafe working
conditions and general dissatisfaction with
working conditions that can affect
productivity and ultimately, profitability. HR
staff must be aware of federal and state
employment laws such as Title VII of the
Civil Rights Act, the Fair Labor Standards
Act, the National Labor Relations Act and
many other rules and regulations.
Training and Development
Employers must provide employees with the
tools necessary for their success which, in
many cases, means giving new employees
extensive orientation training to help them
transition into a new organizational culture.
Many HR departments also provide
leadership training and professional
development. Leadership training may be
required of newly hired and promoted
supervisors and managers on topics such as
performance management and how to handle
employee relations matters at the department
level. Professional development opportunities
are for employees looking for promotional
opportunities or employees who want to
achieve personal goals such as finishing a
college degree. Programs such as tuition
assistance and tuition reimbursement
programs often are within the purview of the
HR training and development area.
Entrepreneurial Finance
Finance is the science of funds management.
The general areas of finance are business
finance, personal finance, and public finance.
Finance includes saving money and often
includes lending money. The field of finance
deals with the concepts of time, money and
risk and how they are interrelated. It also
deals with how money is spent and budgeted.
Finance works most basically through
individuals and business organizations
depositing money in a bank. The bank then
lends the money out to other individuals or
corporations for consumption or investment,
and charges interest on the loans.
Loans have become increasingly packaged for
resale, meaning that an investor buys the loan
(debt) from a bank or directly from a
corporation. Bonds are debt sold directly to
investors from corporations, while that
investor can then hold the debt and collect the
interest or sell the debt on a secondary
market. Banks are the main facilitators of
funding through the provision of credit,
although private equity, mutual funds, hedge
funds, and other organizations have become
important as they invest in various forms of
debt. Financial assets, known as investments,
are financially managed with careful attention
to financial risk management to control
financial risk. Financial instruments allow
many forms of securitized assets to be traded
on securities exchanges such as stock
exchanges, including debt such as bonds as
well as equity in publicly-traded corporations.
Central banks act as lenders of last resort and
control the money supply, which affects the
interest rates charged. As money supply
increases, interest rates decrease.
Financial bootstrapping
Financial bootstrapping is a term used to
cover different methods for avoiding using
the financial resources of external investors.
Bootstrapping can be defined as “a collection
of methods used to minimize the amount of
outside debt and equity financing needed
from banks and investors”[9]. The use of
private credit card debt is the most known
form of bootstrapping, but a wide variety of
methods are available for entrepreneurs.
While bootstrapping involves a risk for the
founders, the absence of any other stakeholder
gives the founders more freedom to develop
the company. Many successful companies
including Dell Computers were founded this
way.
There are different types of bootstrapping:
* Owner financing
* Minimization of the accounts receivable
* Joint utilization
* Delaying payment
* Minimizing inventory
* Subsidy finance
Social Entrepreneurship
Social entrepreneurship is the work of a social
entrepreneur. A social entrepreneur is
someone who recognizes a social problem
and uses entrepreneurial principles to
organize, create, and manage a venture to
make social change. Whereas a business
entrepreneur typically measures performance
in profit and return, a social entrepreneur
assesses success in terms of the impact s/he
has on society as well as in profit and return.
While social entrepreneurs often work
through nonprofits and citizen groups, many
now are working in the private and
governmental sectors and making important
impacts on society.
The main aim of social entrepreneurship as
well as a social enterprise is to further social
and environmental goals for a good cause.
Although social entrepreneurs often are
associated with nonprofits, this need not be
incompatible with making a profit. Social
enterprises are for ‘more-than-profit,’ using
blended value business models that combine a
revenue-generating business with a social-
value-generating structure or component. A
social entrepreneur in the twenty-first century
will redefine entrepreneurship as we know it,
due to their progressive business models.
Conclusion
Human Resource Management (HRM) has
changed dramatically in last two decades,
with Personnel Economics now a major field
in labor economics. The mark of this work is
to use standard economic tools applied to the
special circumstances of managing labor
within companies. In surveying the literature
we have detected several broads themes:
First, although there have been significant
improvements in measuring management in
general and HRM in particular, we are struck
by the scarcity of high quality data. This is
especially true in the time series dimension
where our basic understanding of trends even
in the more easily measured dimensions of
HRM such as incentive pay is remarkably
poor. This reflects a general paucity of data on
the internal structures of firms which needs to
be addressed by researchers and statistical
agencies. HRM and productivity is an
exciting and lively field and has made great
strides in the last two decades. We see its
future as being integrated in the general
research programs of the economics of
organization and management which are
becoming a major part of modern labor
economics.
ACKNOWLEDGMENT
Firstly I would like to thank Allah Almighty
for His guidance and blessings without which
I was unable to do anything.
Secondly I would like to express my
gratitude towards sir Usman as without their
guidance this would not have been possible.
Thirdly I would like to thank my parents as
without their moral support I could not
achieve my goal.
Finally I would like to appreciate the
support I received from my friends, and all
other sentient beings.
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