Tag: employee engagement

Management Notes

Trend analysis

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Trend analysis is a technique used in technical analysis that attempts to predict future stock price movements based on recently observed trend data. Trend analysis uses historical data, such as price movements and trade volume, to forecast the long-term direction of market sentiment.

Trend analysis tries to predict a trend, such as a bull market run, and ride that trend until data suggests a trend reversal, such as a bull-to-bear market. Trend analysis is helpful because moving with trends, and not against them, will lead to profit for an investor. It is based on the idea that what has happened in the past gives traders an idea of what will happen in the future. There are three main types of trends: short-, intermediate- and long-term.

A trend is a general direction the market is taking during a specified period of time. Trends can be both upward and downward, relating to bullish and bearish markets, respectively. While there is no specified minimum amount of time required for a direction to be considered a trend, the longer the direction is maintained, the more notable the trend.

Trend analysis is the process of looking at current trends in order to predict future ones and is considered a form of comparative analysis. This can include attempting to determine whether a current market trend, such as gains in a particular market sector, is likely to continue, as well as whether a trend in one market area could result in a trend in another. Though a trend analysis may involve a large amount of data, there is no guarantee that the results will be correct.

In order to begin analyzing applicable data, it is necessary to first determine which market segment will be analyzed. For instance, you could focus on a particular industry, such as the automotive or pharmaceuticals sector, as well as a particular type of investment, such as the bond market.

Once the sector has been selected, it is possible to examine its general performance. This can include how the sector was affected by internal and external forces. For example, changes in a similar industry or the creation of a new governmental regulation would qualify as forces impacting the market. Analysts then take this data and attempt to predict the direction the market will take moving forward.

Critics of trend analysis, and technical trading in general, argue that markets are efficient, and already price in all available information. That means that history does not necessarily need to repeat itself and that the past does not predict the future. Adherents of fundamental analysis, for example, analyze the financial condition of companies using financial statements and economic models to predict future prices. For these types of investors, day-to-day stock movements follow a random walk that cannot be interpreted as patterns or trends.

Types of Trend

Uptrend

An uptrend or bull market is when financial markets and assets as with the broader economy-level move upward and keep increasing prices of the stock or the assets or even the size of the economy over the period. It is a booming time where jobs get created, the economy moves into a positive market, sentiments in the markets are favorable, and the investment cycle has started.

Downtrend

Companies shut down their operation or shrank the production due to a slump in sales. A downtrend or bear market is when financial markets and asset prices as with the broader economy-level move downward, and prices of the stock or the assets or even the size of the economy keep decreasing over time. Jobs are lost, asset prices start declining, sentiment in the market is not favorable for further investment, and investors run for the haven of the investment.

Sideways / horizontal Trend

A sideways/horizontal trend means asset prices or share prices as with the broader economy level are not moving in any direction; they are moving sideways, up for some time, then down for some time. The direction of the trend cannot be decided. It is the trend where investors are worried about their investment, and the government is trying to push the economy in an uptrend. Generally, the sideways or horizontal trend is considered risky because when sentiments will be turned against cannot be predicted; hence investors try to keep away in such a situation.

Uses:

Use in Technical Analysis

An investor can create his trend line from the historical stock prices, and he can use this information to predict the future movement of the stock price. The trend can be associated with the given information. Cause and effect relationships must be studied before concluding the trend analysis.

Use in Accounting

Sales and cost information of the organization’s profit and loss statement can be arranged on a horizontal line for multiple periods and examine trends and data inconsistencies. For instance, take the example of a sudden spike in the expenses in a particular quarter followed by a sharp decline in the next period, which is an indicator of expenses booked twice in the first quarter. Thus, the trend analysis in accounting is essential for examining the financial statements for inaccuracies to see whether certain heads should be adjusted before the conclusion is drawn from the financial statements.

Importance of Trend Analysis

  • The trend is the best friend of the traders is a well-known quote in the market. Trend analysis tries to find a trend like a bull market run and profit from that trend unless and until data shows a trend reversal can happen, such as a bull to bear market. It is most helpful for the traders because moving with trends and not going against them will make a profit for an investor.
  • Trends can be both growing and decreasing, relating to bearish and bullish market
  • A trend is nothing but the general direction the market is heading during a specific period. There are no criteria to decide how much time is required to determine the trend; generally, the longer the direction, the more is reliably considered. Based on the experience and some empirical analysis, some indicators are designed, and standard time is kept for such indicators like 14 days moving average, 50 days moving average, and 200 days moving average.
  • While no specified minimum amount of time is required for a direction to be considered a trend, the longer the direction is maintained, the more notable the trend.
Bangalore University BBA Notes

Organisational Behaviour Bangalore University BBA 3rd Semester NEP Notes

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Unit 1 Introduction to Organizational Behaviour
Meaning, Definition, Importance, Nature VIEW
Scope of Organizational Behaviour VIEW
VIEW
Conceptual Models of OB VIEW
Factors affecting Organizational Behaviour VIEW
Organizational Behaviour Theories VIEW
Unit 2 Individual Behaviour
Individual Behaviour Meaning VIEW
Factors affecting individual behavior VIEW
Reasons for understanding individual behavior VIEW
Personality, Types VIEW
Determinants of Personality VIEW
Traits of Personality VIEW
Personality Theories VIEW
Learning VIEW
Types of Learners VIEW
The Learning Process VIEW
Learning Theories VIEW
Principles of Learning VIEW
Attitude VIEW
Characteristics of Attitude VIEW
Components of Attitude VIEW
Formation of Attitude VIEW
Factor affecting Attitude VIEW
Perception, Importance VIEW
Factors influencing perception VIEW
Interpersonal Perception VIEW
Impre Management VIEW
Unit 3 Group and Team Dynamics
Group Dynamics Meaning, Types of Groups VIEW
Functions of groups VIEW
Stages of Group development VIEW
Strategies for improving group dynamics VIEW
Determinants of Group Behaviour VIEW
Team Dynamics Meaning VIEW
Types of Teams VIEW
Team Building VIEW
Effective Team Management VIEW VIEW
Stages Professional Interpersonal Relations VIEW
Difference between Groups and Teams VIEW
Conflict: Meaning VIEW
Sources of Conflict VIEW VIEW
Conflict Resolving Strategies VIEW VIEW
VIEW
Unit 4 Motivation and Leadership
Motivation Nature and Importance of Motivation VIEW
Motivation Theories VIEW VIEW VIEW
Maslow’s Need Hierarchy Theory VIEW
Hertzberg’s Two Factor Theory VIEW
McGregor’s Theory X and Theory Y VIEW
Leadership Nature and Importance VIEW
Qualities of Good Leaders VIEW VIEW
Leadership Types VIEW
Theories of Leaders VIEW
Models of Leadership VIEW
Styles of Leadership VIEW
Unit 5 Dynamics of Organizational Behaviours
Organisation Culture and Climate Meaning, Importance VIEW
Factors influencing Organization climate VIEW
Organizational Change Importance VIEW VIEW
Organizational Change process VIEW
Resistance to Organizational change VIEW VIEW
Managing Change VIEW
Organizational Development Nature, Objectives, Benefit VIEW VIEW
Organizational Development Process VIEW VIEW
Management Notes

Attitude Formation

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Attitude Formation refers to the process through which individuals develop and adopt attitudes toward objects, people, events, or situations. It is a complex interaction of various factors, including experiences, social influence, cognitive processes, and emotional responses. The formation of an attitude involves a combination of internal and external influences that shape how individuals evaluate and respond to different stimuli.

Experiential Learning (Direct Experience)

One of the primary ways that attitudes are formed is through direct personal experiences. This process is based on an individual’s firsthand interactions with people, objects, or events, which lead to the development of positive or negative feelings toward them.

  • Positive Experience:

If a person has a positive encounter with something or someone, they are likely to form a positive attitude. For example, if a person visits a new restaurant and has an enjoyable experience, they will develop a positive attitude toward that restaurant, influencing future visits or recommendations.

  • Negative Experience:

Conversely, negative experiences tend to shape negative attitudes. For instance, a person who has had a bad experience with a particular brand or product may develop an unfavorable attitude toward that brand, influencing their buying behavior in the future.

Social Learning (Indirect Experience)

Attitudes can also be formed indirectly through social learning, where individuals acquire attitudes by observing the behaviors of others and the outcomes of those behaviors. This process is strongly influenced by the social environment, including family, peers, and media.

  • Observational Learning:

This occurs when individuals observe the actions of others and adopt similar attitudes, especially if those actions lead to positive outcomes. For example, children may adopt the same attitudes toward certain foods, behaviors, or values that their parents express.

  • Social Influence:

Peer pressure, group norms, and societal expectations also play a critical role in attitude formation. For instance, people may adopt certain political views or fashion preferences due to the influence of their social circle or media exposure. Attitudes shaped by social influence are often reinforced by group dynamics and shared beliefs within communities.

Cognitive Processes (Beliefs and Information)

Cognitive processes are fundamental to attitude formation, as they involve the interpretation and evaluation of information. This is a more rational approach, where attitudes are formed based on beliefs, facts, and experiences processed through logical reasoning. Cognitive theories suggest that when people evaluate information, they form attitudes based on how it aligns with their existing beliefs, values, or knowledge.

  • Cognitive Dissonance: This theory, proposed by Leon Festinger, explains that when individuals experience inconsistency between their beliefs and behavior, they may form new attitudes to resolve the discomfort. For example, if a person believes smoking is harmful but continues to smoke, they might rationalize their behavior by changing their belief or minimizing the harm of smoking, thereby reducing cognitive dissonance.
  • Elaboration Likelihood Model (ELM): This model suggests that attitudes can be formed through two different routes:
    • Central Route: Involves careful consideration of arguments and information, leading to well-thought-out, stable attitudes.
    • Peripheral Route: Involves forming attitudes based on external cues like attractiveness, credibility, or emotional appeals, rather than detailed information. This leads to less durable attitudes.

Emotional Responses

Attitudes are heavily influenced by emotions, and emotional reactions to stimuli are often quicker and more intuitive than cognitive evaluations. These emotional responses are powerful drivers of attitude formation and can be both conscious and unconscious.

  • Classical Conditioning:

This occurs when an individual forms an attitude based on the repeated pairing of a neutral stimulus with an emotional response. For example, if a person repeatedly listens to a favorite song while experiencing happy moments, they may form a positive attitude toward the song, associating it with joy.

  • Affective Priming:

Emotional experiences or stimuli can trigger an automatic emotional response that influences the attitude formation process. For example, positive advertisements that evoke feelings of happiness, comfort, or nostalgia often lead to favorable attitudes toward the products being advertised.

Personality and Individual Differences

Personality traits and individual differences also play a role in how attitudes are formed. Factors such as a person’s values, past experiences, cognitive style, and emotional tendencies can influence how they develop attitudes toward different subjects.

  • Openness to Experience:

Individuals who score high in openness to experience are more likely to form attitudes based on novel experiences and new ideas, whereas those with lower openness may form more rigid or traditional attitudes.

  • Self-esteem and Confidence:

People with higher self-esteem may be more confident in their attitudes and less likely to change them, whereas individuals with lower self-esteem may be more susceptible to external influences and might form attitudes based on a desire for social approval.

Cultural and Environmental Factors

Cultural background and the environment in which a person is raised can significantly influence attitude formation. Social norms, traditions, and values dictate what is considered acceptable, desirable, or ethical in a given culture, shaping how individuals form their attitudes toward different issues.

  • Cultural Socialization:

Children learn attitudes from their cultural upbringing, including family values, traditions, and religious beliefs. For example, attitudes toward gender roles or authority figures are often shaped by cultural norms.

  • Globalization and Exposure to Diverse Cultures:

With increased exposure to different cultures and perspectives due to globalization, individuals may form attitudes based on new information or cross-cultural comparisons.

Management Notes

Barriers to Attitude

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Prior Commitment

When people feel a commitment towards a particular course of action that has already been agreed upon, it becomes difficult for them to change or accept the new ways of functioning.

Insufficient Information

It also acts as a major barrier to change attitudes. Sometimes people do not see why they should change their attitude due to the unavailability of adequate information.

Sometimes people do not see why they should change their attitude due to the unavailability of adequate information.

Balance and Consistency

Another obstacle to a change of attitude is the attitude theory of balance and consistency.

Human beings prefer their attitudes about people and things to be in line with their behaviors towards each other and objects.

Lack of Resources

If plans become excessively ambitious, they can sometimes be obstructed by the lack of resources on a company or organization.

So, in this case, if the organization wants to change the employees’ attitude towards the new plan, sometimes it becomes impossible for the lack of resources to achieve this.

Improper Reward System

Sometimes, an improper reward system acts as a barrier to change attitude.

If an organization places too much emphasis on short-term performance and results, managers may ignore longer-term issues as they set goals and formulate plans to achieve higher profits in the short term.

If this reward system is introduced in the organization, employees are not motivated to change their attitude.

Resistance to Change

Another barrier is resistance to change.

Basically, change is a continuous process within and outside the organization to achieve the set goal.

When the authority changes a plan of the organization, the employees have to change themselves.

But some of them do not like this. If their attitude regarding the change of plan cannot be changed, the organization will not be successful.

Ways of Changing Attitudes

Changing Attitudes

Attitude can be changed if we differentiate a negative attitude from a positive attitude.

A positive attitude can bring positive change in life; it is difficult to change attitudes, but with some effort, it can be done.

The individual from a culturally deprived environment who holds an array of hostile attitudes may change often; he is given education opportunities.

A person from a privileged subculture, who has always held to a democratic attitude, may become negative towards some group because of one unfortunate experience.

Well established attitudes tend to be resistant to change, but others may be more amenable to change.

Attitudes can be changed b a variety of ways.

Ways of Changing Attitude

  • New information will help to change attitudes.
  • Negative attitudes are mainly formed owing to insufficient information.
  • Attitudes may change through direct experience.
  • Another way in which attitudes can be changed is by resolving discrepancies between attitudes and behavior.
  • Change of attitude can come through the persuasion of friends or peers.
  • Attitudes may change through legislation.
  • Since a person’s attitudes are anchored in his membership group and reference groups, one way to change the attitude is to modify one or the other.
  • Fear can change their attitude. If low levels of fear are used, people often ignore them.
  • Changing the attitude differs regarding the situation also.
Management Notes

Customer Relationship Management Advantages and Disadvantages

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Advantages

Enhances Better Customer Service

CRM systems provide businesses with numerous strategic advantages. One of such is the capability to add a personal touch to existing relationships between the business and the customers. It is possible to treat each client individually rather than as a group, by maintaining a repository on each customer’s profiles. This system allows each employee to understand the specific needs of their customers as well as their transaction file.

The organization can occasionally adjust the level of service offered to reflect the importance or status of the customer. Improved responsiveness and understanding among the business employees results in better customer service. This decreases customer agitation and builds on their loyalty to the business. Moreover, the company would benefit more by getting feedback over their products from esteemed customers.

The level of customer service offered is the key difference between businesses that lead the charts and those that are surprised with their faulty steps. Customer service efficiency is measured by comparing turnaround time for service issues raised by customers as well as the number of service errors recorded due to misinformation.

A good business should always follow–up with customers on the items they buy. This strategy enables a business to rectify possible problems even before they are logged as complaints.

Facilitates discovery of new customers

CRM systems are useful in identifying potential customers. They keep track of the profiles of the existing clientele and can use them to determine the people to target for maximum clientage returns.

New customers are an indication of future growth. However, a growing business utilizing CRM software should encounter a higher number of existing customers versus new prospects each week. Growth is only essential if the existing customers are maintained appropriately even with recruitment of new prospects.

Increases customer revenues

CRM data ensures effective co-ordination of marketing campaigns. It is possible to filter the data and ensure the promotions do not target those who have already purchased particular products. Businesses can also use the data to introduce loyalty programs that facilitate a higher customer retention ratio. No business enjoys selling a similar product to a customer who has just bought it recently. A CRM system coordinates customer data and ensures such conflicts do not arise.

Helps the sales team in closing deals faster

A CRM system helps in closing faster deals by facilitating quicker and more efficient responses to customer leads and information. Customers get more convinced to turn their inquiries into purchases once they are responded to promptly. Organizations that have successfully implemented a CRM system have observed a drastic decrease in turnaround time.

Enhances effective cross and up selling of products

Cross–selling involves offering complimentary products to customers based on their previous purchases. On the other hand, up–selling involves offering premium products to customers in the same category. With a CRM system, both cross and up selling can be made possible within a few minutes of cross– checking available data.

Apart from facilitating quicker offers to customers, the two forms of selling helps staff in gaining a better understanding of their customer’s needs. With time, they can always anticipate related purchases from their customer.

Simplifies the sales and marketing processes

A CRM system facilitates development of better and effective communication channels. Technological integrations like websites and interactive voice response systems can make work easier for the sales representatives as well as the organization. Consequently, businesses with a CRM have a chance to provide their customers with various ways of communication. Such strategies ensure appropriate delivery of communication and quick response to inquiries and feedback from customers.

Makes call centers more efficient

Targeting clients with CRM software is much easier since employees have access to order histories and customer details. The software helps the organization’s workforce to know how to deal with each customer depending upon their recorded archives. Information from the software can be instantly accessed from any point within the organization.

CRM also increases the time the sales personnel spend with their existing customers each day. This benefit can be measured by determining the number of service calls made each day by the sales personnel. Alternatively, it could also be measured through the face–to–face contact made by the sales personnel with their existing customers.

Enhances Customer Loyalty

CRM software is useful in measuring customer loyalty in a less costly manner. In most cases, loyal customers become professional recommendations of the business and the services offered. Consequently, the business can promote their services to new prospects based on testimonials from loyal customers. Testimonials are often convincing more than presenting theoretical frameworks to your future prospects. With CRM, it could be difficult pulling out your loyal customers and making them feel appreciated for their esteemed support.

Builds up on effective internal communication

A CRM strategy is effective in building up effective communication within the company. Different departments can share customer data remotely, hence enhancing team work. Such a strategy is better than working individually with no links between the different business departments. It increases the business’s profitability since staff no longer have to move physically move while in search of critical customer data from other departments.

Facilitates optimized marketing

CRM enables a business understand the needs and behavior of their customers. This allows them to identify the correct time to market their products to customers. The software gives ideas about the most lucrative customer groups to sales representatives. Such information is useful in targeting certain prospects that are likely to profit the business. Optimized marketing utilizes the business resources meaningfully.

Disadvantages of Customer Relationship Management

Costly:

Implementation of CRM system requires huge cost to be spent by the business. CRM software are too costly as it came with different price packages as per the needs of organizations. It increases the overall expenses of business and may not be suitable for small businesses.

Training:

For proper functioning of CRM, trained and qualified staff is required. It takes a huge cost and time for providing training to employees regarding CRM systems. They need to learn and acquire information regarding CRM software for a proper understanding of it. All this takes large efforts both in terms of money and time on the part of the organization.

Security Issues:

Another major drawback with CRM is the insecurity of data collected and stored. All of the data collected is stored at one centralized location which has a threat of being lost or hacked by someone. Employees may add inaccurate data or manipulate figures leading to wrongful planning.

Eliminates Human Element:

CRM has eliminated the involvement of humans as it works on a fully automated system. Whole Data is collected and processed automatically through CRM software. A company relationship with its customers can be properly managed through direct interaction between peoples and its staff. Loss of human touch may cause customers to shift anywhere else thereby reducing sales and revenue.

Third Party Access:

CRM data can be obtained and misused by other parties. There have been many cases where web hosting companies take and sells CRM data to the third party. Various sensitive data about customers may get into the wrong hands and cause loss to peoples.

Management Notes

Players in the promotion of start ups

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The Entrepreneur

Understand that as the entrepreneur, you are the center of the universe. Without entrepreneurs, there is no startup and no need for financing. Whether you have one founder or multiple, the entrepreneurs have a key role in securing the financing that cannot be outsourced to someone else. You hold the key to ensuring your own start-up’s success.

As time passes, due to complexities in the business, frictions may arise in your company between co-founders. Having a successful round of financing and structuring terms in advance will help reduce any issues when a founder eventually leaves the business.

The Venture Capitalist

Venture Capitalists (VC) can range in sizes and have a corporate hierarchy. Generally, the most senior person at the firm is referred to as Senior Managing Directors (MD), or General Partners (GP). There may be different titles as firms do vary, but the VC makes the investment decisions and generally sit on the governance boards of the start-ups they invest in. Going down the corporate hierarchy, there are principals/directors who manage the juniors, as well as propose deal decisions. These roles are all more deal-centric and are often referred to as relationship managers.

Key other roles include venture partners or operating partners, who are experienced with start-ups and have a part-time relationship with the firm. These guys generally offer advisory services or sit on the board of active investments as a chairman of the board members.

Associates come next, who do many different things ranging from screening out potential deals, building the corporate models, as well as due diligence. Associates lead the analysts who have generally just started, and graduated from post-secondary education.

The associates and analysts (A&As) run most of the grunt work to a potential deal. The line between the two is generally blurred due to firms preparing analysts to become associates eventually. A&As spend the most time with the capitalization table, due diligence, and the underlying technical aspects of a business.

Treat everybody in the hierarchy with respect, as each member of a team has a specific role to play. Although the Managing Director has the most power, building relationships with the juniors may ensure that your work is done quicker and once they are promoted, they may replace the more senior members later on.

VCs could also come as a syndicate of different VCs. A collection of investors is referred to as a syndicate. Just like in an IPO issuance, where the participants are referred to as the syndicate, in a VC financing round, there is generally a lead investor and a couple of co-leads. The role of the entrepreneur here is to communicate with all investors and have the lead investor of the syndicate agree to speak on behalf of the whole syndicate when investment decisions come around. You should not be negotiating deals multiple times with every member of the syndicate, that should be the job of the lead and co-leads. Also remember that SEC laws are extremely strict, and you must treat all investors the same.

The Angel Investor

Angels can refer to anyone ranging from professional entrepreneurs and investors to your friends and family. Not to say anyone can be your angel investor, because there are very specific SEC rules surrounding accredited investors, and you should ensure all of your angel investors qualifies.

Because of this large range of potential angels, VCs may have trouble working together with them to invest in a deal. Your friends and family may be crucial to supporting your business in the beginning, but once it picked up traction, their financing role could be replaced by a larger VC, who might even argue that your friends and family should be bought out since they have nothing else to offer.

With certain legal terms, such as the pay-to-play provision (existing investors must invest on a pro-rata basis in all subsequent financing rounds or they will lose preferential rights) and drag-along rights (VCs have the right to compel the founders and other shareholders to vote in favor of the sale, merger or liquidation of the company).

Always protect yourself from angels. Remember that you are the center of your own universe. Angels can be replaced and make sure if your friends and family are investing, they understand that they may lose this money and family gatherings should not be treated as investor relations.

Management Notes

Valuing specific intangible approach IPR, Brand, Human Capital

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Intangible assets are those assets in a company’s balance sheet that have monetary or business value hidden in them but are not present in the physical form. Intangible assets help companies by performing operations in a unique manner thereby giving them a competitive edge. For example, intellectual property like patents, trademarks and copyrights are types of intangible assets. All businesses can gain access to intangibles by creating intangibles or acquiring intangibles from other businesses.

The intangible value of a business can also be hidden in the brand value of a corporation. Different businesses exhibit different Unique Selling Points that can be considered part of the intangible value of a business.

Important

There can be different reasons to value intangibles; some of them are listed below:

  • Determining the Asset Value: Since an intangible asset is a non-physical asset, the value at which it has to be disclosed should be determined as accurately as possible.
  • Regulatory Purposes: Determining the correct value of the intangible asset for taxation purposes, transfer pricing, taxation for mergers and acquisitions etc.
  • Improving Accuracy and Reliability of Financial Communication: Informing stakeholders (Management, Employees, Shareholders, Regulators, etc) appropriately and reliably is of paramount importance in today’s day and age.
  • Improving and Diversifying Access to Finance: Recognizing the worth and inherent value of intangible assets would greatly improve the chances of any company to successfully apply for financing.
  • Impairment Testing: Impairment testing involves comparing an asset’s carrying amount in the balance sheet with its recoverable amount.
  • Gaining competitive edge: An increase in intangibles investment may trigger an increase in total factor productivity, and therefore long-term economic growth.

Marketing-related intangible assets

  • Trade marks (eg. McDonald’s logo with gold M symbol, Nike logo)
  • Internet domain names (eg. www.google.com, www.yahoo.com)
  • Non-competition agreements

Contract-based intangible assets

  • Licensing, royalty agreements (eg. Lending a license for use)
  • Leasing agreements (eg. Leasing agreement to use an asset)
  • Broadcasting rights (eg. Hotstar’s right to broadcast IPL)

Technology based intangible assets

  • Patented and unpatented technologies
  • Software (eg. Microsoft Office)
  • Databases
  • Secret formulas, processes (eg. Confidential code of a product)

Methods:

1) Relief from Royalty Method (RRM)

In this method, value is assigned to the intangible asset based on approximate royalty rates that would be saved by owning the asset. Because the asset is owned by the Company, it doesn’t have to pay for the use of the asset. The RRM incorporates elements of both the market (royalty rates for comparable assets) and income (estimates of revenue, growth, tax rates) approaches.

2) With and Without Method (WWM)

The intangible asset’s value is determined by calculating the difference between a discounted cash flow model for the enterprise with the asset and a discounted cash flow model without the asset.

It should be noted that identification of incremental income and incremental risk to business cost of capital excluding the capital is of paramount importance here.

3) Multi-Period Excess Earnings Method (MPEEM)

The cash flows related to a particular intangible asset are discounted to calculate the present value. It is applied when the cash flows associated to a particular intangible asset can be properly determined. Software and customer relationships are examples of assets that can be valued using MPEEM.

4) Real Option Pricing

This method is used to value intangible assets that are not presently generating cash flows but are expected to do so in the future. Undeveloped patent options are one example of an intangible asset that may be valued using this method.

Types

  1. Human Capital

Human capital is the umbrella term for the skills, education, experience, and value of an organization’s workforce. It’s the know-how and expertise of individuals within a company, which can bring the company value. An organization’s human capital also shows how effectively management uses resources to help employees achieve their potential.

  1. Relational Capital

Relational capital consists of all the valuable relationships that an organization maintains with customers, suppliers, partners, clients, and other external entities. It also encompasses brand names, reputation, and trademarks that a company owns.

  1. Structural Capital

Structural capital is the organization, process, and innovation capital that supports an organization’s human and relational capital. It includes culture, processes, databases, intellectual property (IP), non-physical infrastructure, hierarchy, and more. It refers to the knowledge and value that belongs to an organization’s structure and processes.

Management Notes

Investments in Training and Development

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Most people have worked for a company that has offered some type of training and development for their employees. From in-office classes to specialty workshops to college hours, it all adds up as an investment in your business, as well as your employees. With current economic conditions, some businesses are making the decision to steer away from developing their most important asset, their employees, because they don’t see the need for it any longer, or they are simply trying to cut costs.

Investment in employability

– (Training, internship, higher level exposure, learning environment, multi- skilling & growth opportunities etc. which makes employees more employable.

  • Investment in training.

– For future strategies and competitive advantage investment in employees training and development to enhance skills to face rapid technological changes.

  • On job training.
  • Investment in management development
  • Prevention of skills obsolescence
  • Reduction in career plateauing. (Stagnation)

Investment practices for improved retention:

  • Organizational culture emphasizing interpersonal relationship values.
  • Effective selection procedures.
  • Compensation and benefits.
  • Job enrichment and job satisfaction.
  • Practices providing work life balance.
  • Organizational direction creating confidence in the future.
  • Retention of technical employees.
  • Other practices in facilitating retention.

Investment in job secure workforce:

  • Employment security/ job guarantee.
  • Recognition of the cost of downsizing and lay-offs.
  • Avoiding business cycle-based lay-offs.
  • Alternatives to lay offs.

– Redeployment.

– Curtailment of sub contracts.

– Reassignment of work to company employees.

– Pay cuts.

– Paid / unpaid leaves.

  • Ethical implications of employment practices
  • Non traditional investment approaches.

– Investment in disabled employees.

– Investment in employee health.

– Countercyclical hiring .-keeping highly technical / skilled for future use when company will have normal operations– bhatta business.

Attracting Better Employees

Companies that offer good paying jobs with room for advancement will always garner a massive amount of interest in their open positions. But, in the hunt for top talent, anything you can do to establish your company as a great place to work is going to pay dividends. One way is to offer employee training and development. This will enable employees to excel in your business as well as their chosen field. This can be as simple as offering in-office training for better pay, advancement opportunities, or bonuses.

Those businesses out there that offer on the job training and development for their workers see more motivated candidates for their open positions. Knowing that there is room for advancement and room to improve themselves is going to be a big draw for potential employees. Having that opportunity there in front of them also gives them the chance to become more engaged in their position, the company, and generally be a happier person at work.

Benefits of Training and Development

So what types of benefits are you going to see in your business if you start to invest more in your employees? There is a long list of benefits that you will enjoy from this simple action, and here are a few of my favorites:

  • Motivation: As I mentioned previously, motivation goes way up when people know that they can move up in a company. They want to perform better and show that they are ready to learn new things to gain better positions in your business.
  • New Technologies: Offering training in a new technology that pertains to your field is key in keeping your business current, competitive, and on top of the latest market trends. It will ensure that you and your employees know how to run with the rest of the pack and stay competitive in the business world.
  • Lower Turnover: When employees know that their company cares about their career, and is willing to offer training and opportunities to improve themselves and advance, they tend to stick around a bit longer. This means less hiring and firing for you, and more time doing business and making money.
  • Lower Risks: Offering specific training in the workplace, such as sexual harassment prevention, can mean less risk for you when hiring new employees, and keeping the old ones. This has the potential to allow your business to run more smoothly, with less hiccups or problems in the long run for you.
  • Satisfaction: Along with lower turnover and increased motivation, when employees are trained well they become happier, more confident, and have higher overall satisfaction doing their jobs. If you can enable all of your employees to feel this way, you have just created a great working environment, and your employees are more likely to stay with you, and not be on the lookout for another job.
  • Image: Your business image means a lot to you, but, it also matters a great deal to your employees as well. When your employees are trained and feel that they can continue to grow with you, it gives your business a better image in their eyes and everyone else’s. You’ll find that your business will become known as one that cares about its employees and ensures that they are not only happy in their job, but, happy overall in their life as well.

Training Costs

One of the best things about training your employees is that it doesn’t have to cost you much at all. You can offer in-office training on a multitude of topics that relate to the workplace (such as sexual harassment and safety), and those that relate to upgrading skills (such as computer training). No matter what you offer, make sure that it all pertains to your business, your field, or growing your employees.

Offering online training can also be a huge help, and you can even do this extremely cheap by creating your own training website for your employees. There are thousands of great articles on how to create a website for training your employees out there and you can even do it without much web design background at all. By offering everything online, employees can easily do this when they have time or during a set time at work thus improving themselves and their performance.

Reasons:

Support Succession planning.

Providing ongoing employee training and development supports succession planning by increasing the availability of experienced and capable employees to assume senior roles as they become available. Increasing your talent pool reduces the inherent risk of employees perceived as “irreplaceable” leaving the organization. Areas of training that support succession planning include leadership, strategic decision making, effective people management, and role-specific skills.

Increase employee value

Effective training can be used to “up-skill” or “multi-skill” your employees. Up-skilling involves extending an employee’s knowledge of an existing skill, providing more experts within a subject area. Multi-skilling is the process of training employees in new or related work areas to increase their usability within the organization. Employees with diverse skill sets can perform a variety of tasks and transition more easily into other roles within the organization.

Reduce attrition rates

Investing in the development of your employees can reduce attrition rates. Well-planned training can provide career pathways for employees making retention within the organization rather than seeing them seeking next-level opportunities elsewhere. Another positive is a reduction in recruitment costs.

Enhance operational efficiency

Training your employees can increase their efficiency and productivity in completing their daily work tasks. Training can also help your organization achieve greater consistency in process adherence, making it easier to project outcomes and meet organizational goals and targets.

Exceed industry standards

Training your employees in industry-standard best practices could also assist you in building your reputation, giving your competitors a run for their money! Many businesses operate in saturated markets, so often it’s the small things that will set your business apart from the rest.

Employee Training is Worth the Investment

Staff training is essential for specific purposes related to your business. You may require new workers to undertake instruction in first aid, food handling or a new booking system. Incorporating training that develops employees toward long-term career goals can also promote greater job satisfaction. A more satisfied employee is likely to stay longer and be more productive while on your team.

The cost of turnover

A recent survey indicates that 40 per cent of employees who receive poor job training leave their positions within the first year. They cite the lack of skills training and development as the principal reason for moving on.

Consider the cost of turnover. With one fewer worker, your company’s productivity slips. Sales decline. Your current staff members are required to work more hours. Morale may suffer. To find a replacement, you spend time screening and interviewing applicants. Once you hire someone, you need to train that person. The cost of staff turnover adds up. Figures vary, but it can cost as much as $2,500, depending on the position, to replace a frontline employee. That is a hefty price to pay for not training staff.

Other benefits of training

Despite the initial monetary costs, staff training pays back your investment. Here are just some of the reasons to take on development initiatives:

  • Training helps your business run better. Trained employees will be better equipped to handle customer inquiries, make a sale or use computer systems.
  • Training is a recruiting tool. Today’s young workers want more than a pay cheque. They are geared toward seeking employment that allows them to learn new skills. You are more likely to attract and keep good employees if you can offer development opportunities.
  • Training promotes job satisfaction. Nurturing employees to develop more rounded skill sets will help them contribute to the company. The more engaged and involved they are in working for your success, the better your rewards.
  • Training is a retention tool, instilling loyalty and commitment from good workers. Staff looking for the next challenge will be more likely to stay if you offer ways for them to learn and grow while at your company. Don’t give them a reason to move on by letting them stagnate once they’ve mastered initial tasks.
  • Training adds flexibility and efficiency. You can cross-train employees to be capable in more than one aspect of the business. Teach them to be competent in sales, customer service, administration and operations. This will help keep them interested and will be enormously helpful to you when setting schedules or filling in for absences. Cross-training also fosters team spirit, as employees appreciate the challenges faced by co-workers.
  • Training is essential for knowledge transfer. It’s very important to share knowledge among your staff. If only one person has special skills, you’ll have a tough time recouping their knowledge if they suddenly leave the company. Spread knowledge around it’s like diversifying your investments.
  • Training gives seasonal workers a reason to return. Let seasonal employees know there are more ways than one to contribute. Instead of hiring someone new, offer them a chance to learn new skills and benefit from their experience.
Management Notes

Evolution of Performance Management

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The evolution of performance management reflects the changing approaches organizations have adopted to improve employee productivity and achieve business objectives. From simple supervision and output measurement to strategic performance management systems, the concept has undergone significant transformation. Modern performance management focuses on continuous improvement, employee development, goal alignment, and organizational effectiveness. Understanding its evolution helps organizations appreciate how performance management has become an essential strategic tool in contemporary business environments.

1. Traditional Performance Measurement Era

In the early stages of industrial development, performance management was primarily focused on measuring employee output and productivity. Organizations emphasized quantity of work rather than quality or employee development. Supervisors closely monitored workers to ensure efficiency and compliance with established procedures. Performance was assessed mainly through observation and production records. Employees were viewed as resources whose primary responsibility was to complete assigned tasks. This traditional approach lacked employee involvement and focused mainly on controlling performance rather than improving it. However, it laid the foundation for future performance evaluation systems.

2. Scientific Management Approach

The scientific management movement introduced by Frederick Winslow Taylor in the early twentieth century significantly influenced performance management. Taylor emphasized efficiency, standardization, and measurement of work performance. Jobs were analyzed scientifically to determine the most efficient methods of performing tasks. Employee performance was evaluated based on productivity and adherence to prescribed procedures. Financial incentives were often linked to output levels. Although this approach improved efficiency and productivity, it paid little attention to employee satisfaction, motivation, and personal development. Nevertheless, it introduced systematic performance measurement into organizational practices.

3. Human Relations Movement

During the 1930s and 1940s, the Human Relations Movement shifted attention from tasks to people. Research conducted by Elton Mayo highlighted the importance of social relationships, employee morale, and workplace conditions in influencing performance. Organizations began recognizing that employee motivation and job satisfaction affected productivity. Performance management evolved from purely measuring output to considering behavioral and psychological factors. Managers started focusing on communication, teamwork, and employee welfare. This period marked the beginning of a more people-oriented approach to managing performance and improving workplace effectiveness.

4. Development of Performance Appraisal Systems

In the 1950s and 1960s, organizations introduced formal performance appraisal systems. Performance evaluations became structured and documented processes conducted periodically, usually annually. Managers assessed employee performance using rating scales, reports, and standardized criteria. Performance appraisals were primarily used for administrative purposes such as promotions, salary increases, and transfers. While these systems provided a more organized approach to evaluation, they often focused on past performance rather than future development. Nevertheless, performance appraisal became a key component of human resource management and laid the groundwork for modern performance management practices.

5. Management by Objectives (MBO)

The concept of Management by Objectives (MBO), developed by Peter Drucker in the 1950s, brought significant changes to performance management. MBO emphasized goal setting and employee participation in defining performance objectives. Managers and employees jointly established measurable goals and evaluated performance based on achievement of those goals. This approach improved communication, accountability, and motivation. Employees gained a clearer understanding of expectations and organizational priorities. MBO shifted performance management from simple evaluation to a results-oriented process focused on achieving organizational objectives through employee involvement and commitment.

6. Performance Management as a Continuous Process

During the 1980s and 1990s, organizations recognized the limitations of annual performance appraisals. Performance management evolved into a continuous process involving planning, monitoring, feedback, coaching, and development. Rather than evaluating employees only once a year, managers began providing ongoing support and guidance. Continuous communication improved employee engagement and performance improvement. Organizations focused not only on evaluating results but also on developing employee capabilities. This evolution transformed performance management into a dynamic system aimed at enhancing both individual and organizational effectiveness through regular interaction and continuous improvement.

7. Competency-Based Performance Management

As businesses became more competitive, organizations started emphasizing competencies in addition to performance outcomes. Competency-based performance management assesses the knowledge, skills, behaviors, and attitudes required for successful job performance. Employees are evaluated not only on what they achieve but also on how they achieve it. Competency frameworks help organizations identify development needs and prepare employees for future roles. This approach supports talent management, leadership development, and succession planning. By focusing on competencies, organizations ensure that employees possess the capabilities necessary to meet current and future business challenges.

8. Strategic Performance Management

In the modern era, performance management has become a strategic function aligned with organizational goals and business strategies. Organizations use performance management systems to connect employee performance with corporate objectives. Balanced scorecards, key performance indicators (KPIs), and strategic metrics are commonly used to monitor performance. Managers focus on aligning individual, team, and organizational goals to achieve long-term success. Strategic performance management ensures that employee efforts contribute directly to organizational competitiveness, innovation, and growth. It integrates performance management with overall business planning and decision-making processes.

9. Technology-Driven Performance Management

Advancements in technology have revolutionized performance management practices. Organizations now use digital performance management systems, cloud-based software, analytics, and artificial intelligence to monitor and evaluate performance. Technology enables real-time feedback, continuous tracking of goals, automated reporting, and data-driven decision-making. Employees and managers can access performance information easily and communicate more effectively. Technology also supports remote and hybrid work environments by facilitating virtual performance reviews and collaboration. This technological evolution has made performance management more efficient, transparent, and responsive to organizational needs.

10. Modern Employee-Centric Performance Management

Contemporary performance management focuses on employee development, engagement, well-being, and continuous learning. Organizations increasingly prioritize coaching, mentoring, recognition, and career development rather than relying solely on formal evaluations. Frequent feedback and meaningful conversations have replaced traditional annual appraisals in many organizations. Employee experience and personal growth are considered essential components of performance management. This employee-centric approach helps organizations attract, retain, and develop talented individuals. It creates a culture of trust, collaboration, and continuous improvement, ensuring sustainable organizational success in a rapidly changing business environment.

Management Notes

What a Performance Management System Should Do

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Link Salary and Status Realistically to the Performance Appraisals

Most personnel departments have a very narrow outlook to appraisals. The general view is to receive the appraisal forms at a date (which usually is the deadline), issue instructions regarding increments and promotions, receive the data regarding the same and they issue letters to the concerned employee informing of their salary increase. The appraisal process gets polluted as the appraiser and appraise have at the back of their minds promotion and salary increase, rather than performance plans and participative reviews. This dilutes the objectives of appraisal to great extent. In fact, if organizations create, a culture of continuous feedback on the performance they would be making the appraisal system more relevant. Several organizations have already started delinking performance appraisal from salary increase.

Making Objectives of Performance Appraisals Clear to All Employees

If performance appraisal should not directly be linked to salary increase the question then arises, what should the objectives of performance appraisals be that could be realistically achieved?

  • To do joint goal setting, and link the goals to the organizational objectives
  • To provide role clarity by defining Key Result areas for Accounting.
  • To establish a level of performance in the current job and seek ways of improving it.
  • To identify potential for development and to support the total process of planning.
  • To increase communication between the appraiser and the appraise.
  • To identify factors that facilitate performance and other factors that hinder performance.
  • To help the employees identify and recognize their own strengths and weaknesses. To make them assess their own competencies and how the same can be multiplied and improved.
  • To generate data about the employee for various decisions like transfers, rewards, job-rotation, etc.

Focus on Developmental Appraisals

Managers should develop part ownership in the employee’s future. Any good appraisal system should focus on developmental appraisal. Developmental appraisal mean that an organization needs to develop not just isolated performance appraisal tool/system, but the total frame work for the individuals development, improvement in job and level of competence and preparing employees for future jobs. Thus, appraisal of people, which is a part of the total HRD system, lies to be linked to long-term development activity and carrier planning.

Organizations have to show vision for the future. Vision, strategies and objectives will give rise to individual objectives and performance standards. The immediate rewards and recognition do not lead to enduring performance and upgrading of competence and therefore are not real motivators. The appraisal as a tool not only gives the individual and the organization the idea of where the individual stands in terms of his skills, competencies and abilities, but also monitors the process of growth and development, together with the inputs that are required to develop a high level of competence by individuals.

Let Employees Appraise Their Own Performance

Subordinates need feedback more often on their performance. The best way to do it is to let them appraise their own performance.

Self-appraisal would;

  • Motivate the employee to take more responsibility for his/her own performance.
  • Focus on the job behavior only.
  • Reduce ambiguity in performance and focus on change in job behavior.

Create a Climate for Open Appraisals in Organizations

In most organizations, the concept of open appraisal is misunderstood. Open appraisal does nut mean that the appraisal ratings are shown by the subordinate, and his/her signature is then obtained. What it does mean that both the appraiser and the appraise share their views on performance with each other, identify the areas of improvement and work towards it. One of the objectives of open communication between the appraiser and the appraise is to bring them together to solve organizational problems and performance related problems. The quality of ratings is likely to improve if there is shared understanding between the appraiser and the appraise.

Muscle Builds the Organization

In today’s competitive world, raising performance goals is essential. This entails analyzing the company’s current situation, projecting the future, establishing higher expectations, and selling the top management on the upgrading process and developing an action plan. Muscle builds the organization by;

  • Enhancing your own performance
  • Accelerating the professional growth of the best performers
  • Not tolerating managerial performers. One cannot muscle build the organization, unless marginal performers are replaced.
  • Developing multiple skills and competencies by worshiping success and potential.
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