Significance of Human Resource in Management

Significance of Human Resource in Management

Elementary students of Economics are familiar with the cour (4) factors of production, namely land, labour capital, and Entrepreneur. Whereas these four factors ensure that the value-added concept is materialised when a finished product is turned out of the factory from the raw material consumed, the entrepreneurial and the managerial skill provide an assurance that an optimum investment is made for maintaining an optimum level of production, thereby obviating the chances of undue competition amongst producers and blocking the capital due to ovr-production in excess of the market demand. Here again a survey is undertaken for a faavourable ecology in locating the production unit where raw material might be available at competitive rates; and necessary services alongwith th essential infrastructure might be available apart from avoiding the unnecessary expenditure on transportation of the goods towards final destination. The last factor is gaining special significance in view of the ever-rising prices of POL, which are reflected in their cost to the producer & ultimate price for the consumer; which should remain within his reach. Demand for most of the goods remains elastic, and demand for essential goods also fluctuates with the change in price. Hence a good entrepreneur & Management would first be addressing itself to the issue of reduction in the cost of production by locating the Unit in favourable environments from the viewpoint that the investment is confined to an optimal level in a centrally located area where labour is available in an atmosphere of industrial peace (without unnecessary labour unrest). Entrepreneur is vitally concerned with the safety of investment & boosting production in accordance with the increasing demand for the consumption of goods produced by his unit.

Entrepreneur is assisted by his Management in achieving the predetermined commercial & managerial objectives by his labour; which is essentially sub-divided in the unskilled, semi-skilled, and skilled categories. Whereas the unskilled labour forms the lowest rung, and the semi-skilled is employed in lower or at the best in the middle management levels, the skilled labour consists of decision-makers who are manning the Top-management jobs. At the turn of the century, it was considered necesary to merge technical knowledge with with the managerial skills; and provision of monetary incentives alongwith better service prospects is very much in vogue in the industry.. It is in view of this attitudinal change that we find Engineers & Doctors with MBA degrees heading big pharmaceutical & Engineering concerns. Whereas this new class of managers demand higher salaries, sometimes in six figures, yet they are in great demand; because they ensure better return on investment by virtue of being familiar with the latest managerial skill.

The above referred categories demand that they should not be merged, nor people with higher management skills be employed on routine jobs normally managed by lower categories; because apart from other considerations it results in financial loss as well due to higher remuneration payable to the higher categories. Similarly if lower categories are vested with the responsibilities of higher categories, the industry would be managed by incapable hands adversely affecting the out-turn & quality control etc.

While middle management is reporting to the top management for the performance of their respective sectors, and Top management is coordinating their efforts for achieving the desired objectives, it is vital that Top management takes necessary measures for avoidingth the time-overrun and cost-overrun; which are generally sequential in nature. This managerial conceern springs out of the fact that time-overrun not only denies the possible profit in the event of delayed completion of project, it also results in cost-overrun due to inflationary spiral set in due to rise of the prices of POL etc. Evidently it is managerial prime concern to ensure a favourable cost-benefit ratio. For undertanding the delay in completion of the project, one has to appreciate that the value of investment increases with the passage of time; hence estimated cost of project is likely to increase in the event of delay. This basic concept for determining the cost-benefit ratio is based on the concept of discounted cash flow.

In addition to above, the Top Mnagement has to realise that Skilled Labour is a valuable human resource, and the management has spent considerable time & resources for sharpening thier magerial skill; which is very much sought after by rival concerns. Hence business & industrial interests demand that they should be kept happy by profiding monetary and other incentives by following the 'stick & carrot' policy. Japan has acquired prominence in the industrial World despite lack of raw material, mainly by putting emphasis on its skilled manpower; which is valued as per Japanese industrial tradition. They are a giant business magnate and an industrial power to reckon with.