Factors of Production : Islamic Perspective

Four (4) factors of production from the Islamic perspective are as follow:

1. Land. It refers to all natural resources gifted by Allah, which are usable in the process of production. Man should utilize the resources according to al-Quran and al-Sunnah as land is a valuable gift by Allah SWT. Land not only include the resources found on sea and land, but also include the climate (such as rain, solar and wind), minerals and animals.

2. Labor. In Islam, it refers to the mean to extract most of the goods from the earth by labor (human effort) who are sane and healthy. The reward given to the labor id not only monetary term (wages), but also the compensation in terms of good deeds in the hereafter. The relationship of employer and employee are also stretched out in Islam, as both should treat each other according to al-Quran and al-Sunnah. For example, the employer should pay wages to the employees before their sweat dried out. (according to Hadith Riwayat Ibn Majah)

3.Capital. It refers to the combination of work to obtain wealth, and the use of the capital (equipment, machinery, wealth) must be in accordance to al-Quran and al-Sunnah). As refer to the writing of Dr. Muhammad Imran Ashraf Usmani, Ph. D. Islamic Finance. His writing posted on Meezan Bank's Guide to Islamic Banking. Capital refers to those means of production which cannot be used in the process of production until and unless during this process they are either wholly consumed or completely altered in form, and which, therefore, cannot be let or leased (for example, liquid money or food stuff etc.)

4. Entrepreneur. It refers to the man who makes the decision and has the ability and capability to produce within Islamic value. His decision will determine the demand of factors of production, influence maximum production of output and quality of goods and services. Decision made by him must be in accordance with the teaching of al-Quran and al-Sunnah.

Elasticity Of Demand : Types & Factors Influence

 The three types of Elasticity of Demand are:
    i. Price Elasticity of Demand
   ii. Income Elasticity of Demand
  iii. Cross Elasticity of Demand

Three factors that influence the Elasticity of Demand are:

   i.The amount of income spent. According to www.investopedia.com, It refers to the total a person can spend on a particular good or services. If there is an increase in price and no change in the amount of income available to spend on the good, there will be an elastic reaction in demand. For example, if the price of a cup of tea raises from RM 1 to RM 2 per cup, while the income of the consumer remain the same, and the income available to spend on tea is RM 3, is now enough for only 1 cup of tea, instead of 3 cups of teat at RM 1 each before.

 ii. The availability of substitute goods. The concept is when one good has more substitutes, the more elastic demand will be. Vice versa, when one good is lack of substitutes, it is called an elastic product. Example of elastic goods are rice, there are variety of rice in the market that the consumer can choose from, not able to buy the Basmathi, may be one can consider to buy the subsidize local rice. Inelastic goods are like unique goods, antiques, rare item like gold and titanium and so on.

iii. Habit. It simply refers to the habit of the consumer and one's demand on certain good. For example, a habitual smoker has more demand in cigarettes, regardless of the price of the cigarettes,habitual smoker would still buy the cigarettes. The demand for cigarettes is inelastic. While non regular smoker, has less demand in cigarettes, when the price of cigarettes fall, the demand of cigarettes may be increase, and when the price raises, the demand would also decrease respectively. The demand for cigarettes is elastic.

Orientation & Induction : The Benefits

The 4 benefits of conducting orientation and induction are:
1. To familiarize the newly hired employee with the organization's objective, goals, and operations.
2. to deliver the objective of the organization to the employees.
3. To reduce anxiety of the new employees.
4. to reduce turnover of human capital.

Recruitment : Why Internet Recruit?

Internet has became so popular in recruitment, for government agencies or private agencies, this is the new trend and the most efficient way to recruit. 

The reasons of why internet has become the main media for recruitment are as follow:

1. Lower cost. For the hiring company, posting job vacancy on the internet would cost less than printing advertisement or by other media such as television and radio. All the company need to do is to post in their website or post on some free posting site about the vacancy. Nowadays, government of Malaysia has provided jobsmalaysia.gov.my for the company to post their job vacancy online with no charges. If the company chose to recruit via printing media, they have to pay a very high cost and get lower output. The charges of their advertisement depends on the sizes the advertisement fits in the paper and the period the company would like to post the vacancy. For example, a 3x4 inch advertisement may cost RM300 for posting of vacancy for 1 week. While posting via television and radio also cost huge amount of money, it depends on the slot the company would like their advertisement to show up. If the advertisement was to post on peak hour, the chargers would be higher than that of off-peak hour.


2. Fast and easy. The posting of vacancy online required only minutes, while posting via printing media requires days and on TV and radio maybe require weeks for the production company needs to arrange the showing slot to enable the advertisement to fit in their show without compromising other advertisement and show.

3. Environmental friendly. Advertising vacancy via internet required no paper, ink or motor vehicles. It is the most environmental friendly method of recruitment, and that's the reason why people preferred this method than others. While recruiting via printing media consume a lot of papers and inks.

4. Popular social medium. People nowadays rely more on internet to communicate with other people, be their family,coworkers, friends or even strangers. The internet was like the 'other world' where people can get tonnes of information at their fingertips. By posting vacancy online, it would attract more people to apply for the job at a quicker rate. Moreover, via internet, people could link the advertisement for recruitment to their friends, they would become the hiring company's 'HR managers' indirectly, who help to spread the news and accelerate the process of recruitment.

5. Border-less. Recruitment via internet could help the company to hire people not only within the nation, but also hiring experts  from foreign country without even traveling and paying high cost to advertise in foreign newspaper.

Human Resource Management : Surplus & Shortage ?

2 ways to reduce surplus of employees would best be:
1. Freeze recruitment / hiring. Stop recruiting new employees and allowed managers to organize and align their employees more efficiently. Department which has surplus members may allowed manager from other department to use the service of the surplus member (cross-service as in matrix structure of organization). The work burden could be share among members and reduce the stress and burden carry by one. 

2. Early retirement.The aim of this action is to cut the labor cost by reducing worker's aging workforce. This is the best way to not only reduce the number of employees, but also can avoid from paying large amount of compensation if one organization have to dismiss or terminate workers.

While 2 ways to overcome shortage of employees would be:
1. Recruiting new employees, either temporary or permanent employee. Temporary workers are best at flexible job description, staffing flexibility and temporary employee has lower service commitment (to both employee and employer), saving money as the wages and benefits of temporary employees are usually lower than those permanent. Permanent employees do save money too, as the job training and induction provided are one-time basis. If company continue hiring temporary workers, the same job training need to be given again and again and this would some how consume higher cost. Permanent employees are committed to their job and employer as they have to perform to ensure their benefits are well guarded throughout their service. 

2. Re-analyzing job process and redesign the job process if necessary. This would help to estimate and limit the number of workers need on each department / job. Through this process, the efficiency of the workforce could be obtain and maintain while the organization working to reach the desired goals. Although the process of analyzing would consume certain amount of money, but the outcome would help the organization to reorganize, reconstruct its organization's structure and to distribute workforce more efficiently.

Human Resource Management : HR Manager's Challenge - Internal

HR Manager is one who administer the human resources / human capital in an organization in order to help achieving the goals of the organization. 3 internal challenges of becoming HR Manager are:

1.Lack of resources to cope with daily activity of the organization could be a real problem for a HR manager.Resources could refer to training facility for the manpower in the organization, low number of workers to cope with high intensity of work burden, low or no budget for employees' performance appraisal, and no suitable tools to assist HR Manager in analyzing the manpower of the organization and to research on employees' needs.

2. Employees' discipline is a challenging factor for a HR Manager. To help motivate the employee with discipline problem, HR Manager need to plan suitable courses and motivation for the employee. HR Manager may face the situation where he/she have to dismiss employee with discipline problem, and to deal with the situation of the lack of manpower to recover the work burden of the employee who has been dismissed.

3.Employees' health & safety at the workplace are also the main challenges for a HR Manager. Despite of keeping the employee motivated and productive ate the workplace, several matters should be taken into precaution such as fire handling procedure, safe workstation for each employee, no harmful particles involved in the daily working condition and so on.

Human Resource Management : The Importance

Human resource management is very important because:
1. To analyze the human resource requirements of an organization, if the number of the human resource is below the expectation of the goals set by the organization (Demand > Supply) , human resource department should recruit new members of the organization, and if the number is more than enough (Demand < Supply) to carry out the tasks in order to achieve the goal of the organization, human resource department would plan to restructure the organization so that every member in the organization play the equal important role and carry equal work burden.

2. To recruit & select manpower for the need of the organization. After analyzing the manpower requirement of the organization, the human resource department conduct recruitment if there are any vacancy, and selecting the qualified applicant to fill in the post.

3. To provide orientation and training for the manpower in the organization, in order to improve their skills, knowledge and to motivate the employees to perform better.

Personnel Administration : Public Sector Vs Private Sector

2 Differences between personnel admin in public sector versus personnel admin in private sectors:

1.In term of  Recruitment Process, Public Sector has more complicated procedure than that of Private Sector.
According to Perintah Am, Bab A, Bahagian III: Pengambilan. Despite the process of every Ketua Jabatan who are required to inform the Suruhanjaya Perkhidmatan Awam about the recruitment information in each recruitment process, any doubt in the scheme of services or the advertisement itself, should also refer to the Ketua Pengarah Perkhidmatan Awam. 

The recruitment process should be advertised in at least 1 Bahasa Malaysia's Newspaper , with 7 features of the vacancy clearly stated, which are:
1.Name of the post and the status of recruitment (contract or permanent)
2. Name of the Scheme of the service
3. Salary information
4.Academic qualification for the post and other relevant qualification needed
5.Nationality of the applicant
6.Closing date of the vacancy
7.The address to where the applicant should send / get the application form
Whereas in private sector, the recruitment process could be way simple and not standardized. Although some may required standard academic qualification, some are just walk-in interview or first-come-first-serve basis. Basic / common requirement for clerk in private sector is the applicant who are able to speak fluent Bahasa Malaysia or English, capable of using computer and able to work according to the time fixed by the company.


2. In terms of size, Personnel Admin in Malaysia Public Sector handled over 1.4 million of human resources, while in private sector in Malaysia, the size are much more smaller.

Discipline : The Approaches

Three (3) approaches to improves employee discipline in the public sector

1.         Progressive approach

Most organizations applying progressive approach in discipline the employee, the management would advise and giving guidelines to employee and try to help the employees to correct their behaviour  Stronger or rougher penalties would be imposed for repeat offences, this would give the employees chances to correct their inappropriate and improve themselves.

Progressive approach involved 5 major steps:

2.         Corrective approach

Referring to the University of North Texas, Human Resource Department on “Corrective & Disciplinary Actions Tool kit , the definition of corrective approach given is ‘a process of communicating with the employee to improve unacceptable behaviour or performance’.

Actions are taken to correct employees who have violated the rules of the organization. 
The main objective of this approach is to encourage compliance with standards and rules of the organization, besides discouraging the employees from repeat violation in the future. 
Action such as sending the problematic employee to consultation, camp, and penalty like suspension would also be imposed depending on the seriousness of the offence. Some suspension may allow pay and some may not.

3.         Preventive / Positive approach

This approach is aimed to encourage employees to obey rules and regulations of the organization to avoid violation and it stresses on employees’ self-discipline by following the rules voluntarily. The employees are taught on the policies, rules, procedures and standards of the organization required. Meaning to say that, the employees are taught of the rules, so, logically, they will not violate the rules and thus, prevent any possible offences. 

Training & Development : The Purposes

English: Economic development training session in a with the member of a community organisation. (Photo credit: Wikipedia)

Training is designed to provide learners with knowledge and skills needed for their present job. While development involves learning that goes beyond today’s job, it prepares employees to perform future job and to keep pace with the organization as it changes.

The three purposes of training and development are:

(i)                     Attainment of precision and clarity in the transaction of daily business and every turn of the organization. Training provides familiarization with the company’s mission, vision, goals, rules, regulations and work environment to the new employees. As for the existing employees, they could enhance their skills and efficiency through training, which would indirectly make them eligible for promotions and at the same time, uplifting the overall output of the organization.

(ii)                   Continuous adjustment to the changing socio-economic needs and increase staff productivity. Training and development programs are designed to enhance knowledge, skills and experience of employees. Well-trained staff would increase their tasking flexibility and show not only quality but also quality in their work performance and cutting unnecessary waste of time and resources.

(iii)                To cultivate a new altitude and behavior in human personality. For existing employees, training and development programs could refresh their knowledge and enhance their skills besides help kills boredom as they have been with the  organization for a while. This would results in positive motivation and encourage innovative and passion in work. For new employees, training could help boost their morale by indirectly offering job security, as they feel easy when they know what the organization is expecting from them. Through understanding organization new goals and turns via training provided, it would enhance staff teamwork.  While the employees feel united, happy and satisfied as they all share the common goals, it would indirectly reduce staff turnover. Talented staff that shows excellence performance after training would be promoted, and this would boost the spirit of the employees to continuously excel in every job.

Regardless of the position of an employee in the organization, he / she

should be given equal opportunity for training and develop. Training and

development program would not only help the organization to evolve and

compete with others, it would also help to increase self confidence in the

employees and hence, increase productivity and marginal output of a 

production. Not all employees should be given the same training,training

and development should be conduct after the needs analysis has been

studied and the methods of training are chosen carefully to suit each

employee's function in the organization.

Performance Appraisal : The Problems

List 4 problems in conducting performance appraisal:

1.       The supervisor may tend to only recognise the recent performance of an employee, and neglect the achievement in the entire year. The recent event marks the most impressions on the appraiser; it is a very subjective and non-empirical method of evaluation. This is so called the recent effect.

2.       The performance appraisal is usually design to be evaluated and appraise annually, instead of year-around evaluation. The design of the appraisal system should be restructured so that the supervisor is able to monitor and evaluate one employee all year around, not only at the end of each year.

3.       Central tendency which lead the appraiser to rate and evaluate all the employee at the certain / same level as average performers. The appraiser tends to rate the employees at a level not too high (overrated) or too low (underrated). In public agency for example, public servants would be rated through annual performance appraisal and the best achiever would be awarded APC. To keep the quota of achiever in a seemingly normal level, the appraiser took the safe path and rates the employees as average performers.

4.       Personal bias and favouritism. The supervisor appraises and rates the subordinate based on his own feelings and opinion on the subordinate, not on the achievement and performance of the subordinate. The bias and favouritism may be caused by political issue, family background, former wrongdoings of the employee that marked the negative impressions and etc.

The performance appraisal has been an issue not only for the appraiser (supervisor), but also an issue for the employee. As the appraisal system mostly designed as one-way appraisal, the interaction between the supervisor and subordinate are extremely low. Usually, after the subordinate submit the performance appraisal form, it rarely came back to their desk to tell them how far they have achieved in a particular year. As the result, in the coming year, the employee may make the same mistakes again and never improve. 

Performance Appraisal : The Importance

4 purposes of conducting performance appraisal could be extracted from two 2 basic purposes for performance appraisal: administrative and developmental. (Refer to Fisher & Shaw 2003)

Administrative; serve as a jury, the appraiser (supervisor) is responsible for any decision made regarding:
1. For salary increment

2. Promotion purpose / reference

Developmental: serve as a helper or mentor, the supervisor is responsible :

3. To identify the developmental needs of an employee for better performance in the future

4. To observe and evaluate the development and performance of an employee are up to the predetermined standards (referring to previous performance appraisal and aim for the current appraisal).  

Promotion : What's the problem ?

4 issues in promotion may be as follow:

1. Transparency of the promotion process may be doubted. In public service for example, the outcome of annual performance appraisal is rarely shared between the supervisor and his subordinate. Supervisor avoids doing explanation on his evaluation, and when the subordinate’s colleague being promoted, whereby they have equal seniority, lots of questions and doubts would raises. Personal relationship, which may led to bias judgement.

2. Stereotype judgement is the most general issue in promotion. The general assumption of a supervisor may influence his judgement to select the right candidate to be promoted. For example, if a male supervisor have an idea of ‘female could not perform 100% as male employee does’, then he would tend to select male employee to be promoted, regardless of the performance and achievement of the female employee.

3. Political favoritism. Misjudgment may happened if the employer promote one employee not simply based on his performance, but also taking in consideration of the political party the employee was in.

4. Seniority versus ability. Promotion based on seniority has always been the argument of both the managerial and also the lower level employee. The employee who excels in work and has better achievement was wasted in the seniority system, as the system choose to promote whoever comes first in the organization, not based on whoever did well. 

RECRUIT : Internal or External?

Internal promotion or hiring new people from outside both have pros and cons to consider.

Internal promotion would lift motivation of both the promoted employee and other unselected workers to perform or work harder to show their true potential in order to get recognize  Whereas, by hiring new people from the outside, psychologically, the existing employees would feel threatened by the new comer. Although new people from outside the company may inject new ideas, innovations to the company, the cons are too much to bear. As the existing employees may feel undervalued by the organization, and led to discipline problem, disloyalty and negative productivity. 

 Internal promotion can also save resources (money, time and human resources) in conducting the staffing process by only recruiting from the inside of the organization. Hiring new people from the outside of the organization is an exhausting process, as the staffing process have to start from recruiting, which will cost a lot of money to be used on advertising to attract people. Panels of interviewer will need to be set up to help the selection process, and normally, the people applying for the job from outside the organization outnumbered the number of interviewers, usually, one interviewer have to make session after sessions of interviews. Moreover, the result of selection is uncertain, as we don’t know who will apply for the job, and did they really are who they said they are on the paper. In terms of performance and all, they are unpredictable since the organization may not held the copy of performance appraisal of the new employee, or worse, the new employee hired from outside of the organisation  does not have any working experience.

 The process of internal promotion is much simpler to undergone compared to hiring new people from outside. The organization keep its own organization chart, the number of posts which has been filled and yet to be filled are complete in hand. It is much easier for the manager to select and shift people from the inside, as he knew best who fits the job. And the existing employees keep their performance record to the organization. Hiring new people from the outside should be the last resort every manager should take if finding no right candidate (from inside the organization) to fill the post. Although recruiting from the outside can help boost up human capital, but a positive marginal productivity is not a guaranteed.

Some may say, by hiring people from outside the organization could help injecting new inspiration to the organization, as outsider see the organization at a different angle than the existing employees, hence, people from outside could bring fresh ideas and creativity to help the organization to evolve and catch up with the developing industry. But, what is more important to an organization: New ideas and creativity or the employees who know the organization best? Considering the stability of the organization in its daily operation, promoting employees from inside the organization would certainly accelerate its development. Inspiration and creativity can be obtain by sending the existing employees to advancement camp, brainstorming session and so on.

 In terms of training and orientation, the existing employee only have to go through basic job-related training and not compulsory for induction, as they've worked with the organization for some time and should know the background and objectives well enough compared to new people from outside the organization. This would help save a lot of money and unnecessary drop of production as employees who are on training are not able to produce. Hiring new people from outside the organization needs a lot of training, start from the basic – induction to the job-related training.

Via analysis of position vacancies, the supply of internal human capital should be evaluate before a manager decide on the hiring method (to hire from inside or outside of the organization). If the internal supply of human capital is low, the shortage occurred, and the best alternative for hiring would surely be by external recruit / hiring from outside of the organisation. Surplus of labor would happen if the manager tends to hire new people from the outside, whilst the internal supply of human capital is sufficient to fill the job vacancies. In conclusion, internal promotion should be applied before any manager consider to hiring new people from the outside,taking into consideration that the number of employee is sufficient to fill in the vacancy. If there are really no qualified candidates from within, then the last resort is to hire people from the outside. This situation is always faced by the manager usually when hiring experts or professionals.

Interview : Problems when conducting interviews

Interview is a process in selecting the best qualified candidate for a specific job title. There are several types of interview; among them are the unstructured interview, structured interview, behavioral interview and stress interview.

Problems that can be identifying in conducting interviews are as follow:

   1.       Limited resources. The information provided by the candidate may be falsified and inaccurate; the interviewer may not have enough resources to check on the details provided.

   2.       Unfair judgement and bias while interview may occur if the candidates are to be interview in a group. Based on one question, each candidate is giving chance to elaborate on their own point of view, personal preferences of the interviewer may lead to misjudgement and bias on the selection of the right candidate for the job. Most of the time, the interviewer would choose the one who has the same point of view as he is.

   3.       Argument between the interviewer and candidates on the issue discussed while interviewing. The interviewer intention to extract the knowledge of the candidates may lead to argument if the interviewer pushing too far and begins to argue for the fact.

   4.       Derailed from the objective of the interview would happened when the interviewer and the candidates are both exhausted from long hour interviewing session.

JD & JS : Job Description & Job Specification : The Differences

Job description and job specification are job documents which are created after the information or data of a job has been gathered and analysed. According to Brian L. Delahaye in his book “Human Resource Development”, these two documents has become the predetermined standard for the performance appraisal as a comparison point for the occupant’s behaviours and abilities.

The differences of these two documents are as follow:

  1.    The job description or best say the desk file “fail meja” is a document which contains a lot of information about the position, such as the position title, position summary, duties, tasks, and responsibilities.

The job specification lists the characteristics such as the knowledge, skill and ability required by one to fill the position, to enable him to carry out his duties and to achieve the predetermined performance indicators.

  2.   The job description contents the general information or an overview of a position. Information such as the relation of one position to the other positions is also included. Such relationship would show who the person reports to, who are the subordinates and who are they working with. Once job description was read, people would get to know what the job or position is about.

Job specification did not content such detail, but job specification would rather elaborate on ‘who and how to’ carry out the duties as said in the job description. For example, position titled ‘Kindergarten teacher’ must have the ability to communicate with children, language knowledge, ability to handle hyperactive kids, kind hearted, friendly, patient and passionate. These are all specific details which would not say in the job description. Once job specification was read, people would get to understand who can perform the job said.

  3.  The outputs expected of the position are listed in job description, and is shown as the performance indicators. But such details are not contented in the job specification; the job specification is more about the characteristics of one person who can perform the job.

Training Needs Analysis

Training as part of human resource planning which aim to help develop the employees in terms of their skills and knowledge to enable them to meet the needs of the organization. Before conducting training programs, the needs of training should be analyse to ensure the objective of the training program is parallel to that of the goals of the organization.

3 types of Training Needs Analysis are as follow:

1. Organizational needs analysis. The organization needs to evolve and expand alongside with the development of the global and to compete with others. To able to do that, the human capital of the organization should be well-trained, updated of current issues and needs of the customer. For example, if a restaurant needs to expand its business from dine-in to drive-through service, the manager should evaluate the supply of the human capital, their capability and so on, and train them on how to take order for drive-through and such.  The analysis focused on the needs of the organization, regardless of the capability of employee.

2. Task needs analysis refers to the job-based training analysis. Say a service manager is transferred to the human resource manager, his previous experience and training report would be evaluated. If needed, he would be recommended to attend human resource seminar and training to enable him to handle the job better. This analysis is necessary to prepare the existing employees well prepared for the job and lowered their anxiety when being transferred or when given new job or task.

3. Person needs analysis refers to individual needs. For example, a newly hired employee who has no experience in assembling a bicycle would be given proper training to give him adequate knowledge to enable him to perform job of assembling the bicycle efficiently in the future. Person needs analysis emphasis on the needs of an individual in the organization.