MANAGEMENT SCIENCE

UNIT – V
INTRODUCTION TO HUMAN RESOURCES MANAGEMENT
Contents: Functions of HRM, job evaluation, different types of evaluation methods. Job description, merit
rating, different methods of merit ratings, wage incentives, different types of wage incentive schemes.
Marketing, selling, marketing mix, product life cycle.

Introduction:
Human resource management focuses on all issues related to ‘people’ in the organization. The
people in an organization are the most important assets. Managing human resource is one of the key
functions of business organizations. The people in the organization instrumental to success, so managing
people in an efficient and effective way is essential.

HRM refers to management of people in the organization. Human resource management is the
process of managing the human resources of an organization in tune with the vision of the top management.
In other words, it is through the human resources that the management attempts to convert its vision and
mission into action.

Definition: Human resource management “the planning, organizing, directing and controlling of the
various aspects of human resources to the end that individual, organizational and social objectives are
accomplished”. - Flippo

Concept of HRM:
HRM is a management function that helps managers to recruit, select, train and
develop members for an organization. HRM is concerned with the people’s dimension in organization. HRM
is the planning, organizing, directing and controlling of the procurement, development, compensation,
integration and maintenance of human resources so that the individual, organizational and social objectives
are accomplished. HRM is a broad concept where as personnel management (PM) and Human Resource
Development (HRD) are part of HRM.

Objectives of HRM:
The primary object of HRM is to ensure the availability of component and willing
work force to an organization. Beyond this there are other objectives, too. Specifically, HRM objectives are
four fold societal, organizational, functional and personal.
a) Societal Objectives: To be ethically and socially responsible to the needs and challenges of the
society while minimizing the negative impact of such demands upon the organization. The failure of
organizations to use their resources for the society’s benefit unethical ways leads to restrictions.
b) Organizational Objectives: To recognize the role of HRM in bringing about organizational
effectiveness. It is only a means to assist the organization with its primary objectives, simply stated,
the department exists to serve the rest of the organization.
c) Functional Objectives: To maintain the department’s contribution at a level appropriate to the
organization’s needs. The department’s level of service must be tailored to fit the organization it
services.

Scope of HRM: The scope of HRM is dividing in three categories mentioned below:
a) HRM in Personnel Management: This is typically direct manpower management that involves
manpower planning, hiring (recruitment and selection), training and development, induction and
orientation, transfer, promotion, compensation, layoff and retrenchment, employee productivity. The

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overall objective here is to ascertain individual growth, development and effectiveness which
indirectly contribute to organizational development.
b) HRM in Employee Welfare: This particular aspect of HRM deals with working conditions and
amenities at workplace. This includes a wide array of responsibilities and services such as safety
services, health services, welfare funds, social security and medical services. It also relates to
supervision, employee counseling, establishing harmonious relationships with employees, education
and training.
c) HRM in Industrial Relations: Since it is a highly sensitive area, it needs careful interactions with
labor or employee unions, addressing their grievances and settling the disputes effectively in order to
maintain peace and harmony in the organization. It is the art and science of understanding the
employment (union-management) relations, joint consultation, disciplinary procedures, solving
problems with mutual efforts, understanding human behavior and maintaining work relations,
collective bargaining and settlement of disputes.
d) Personal Objectives: To assist employees in achieving their personal goals, at least insofar as these
goals enhance the individual’s contributed to the organization. Personal objectives of employees must
be met if workers are to be maintained, retained and motivated.

Significance / Importance / Advantages of HRM:

a) Achieving Objective: HRM helps a company to achieve from its objective from time-to-time by
creating a positive attitude among workers. Reducing wastage and making maximum use of resources
etc.
b) Facilitates Professional Growth: Due to proper HR Policies employees are trained well and this
makes them ready for future promotions.
c) Better Relationships between Union and Management: Healthy HRM practices can help the
organization to maintain co-ordinal relationship with the unions.
d) Helps an Individual to Work in a Team / Group: Effective HR practices teach individuals team
work and adjustment. The individuals are now very comfortable while working in team thus work
improves.
e) Allocating the Jobs to the Right Person: If proper recruitment and selection methods are followed,
the company will be able to select the right people for the right job.

FUNCTIONS OF HUMAN RESOURCE MANAGEMENT:

HRM functions can be broadly classified into two categories:
A. Managerial functions.
B. Operative functions.

Managerial Functions Operative functions

Planning Procurement
Organizing Development
Staffing Compensation
Directing Integration
Controlling Maintenance

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A. Managerial Functions: Managerial functions of the human resource department are planning,
organizing, staffing, directing and controlling. All the functions have an impact on the operative
functions.
a) Planning: Planning involves formulating the future course of action. Planning includes
determining in advance the personnel programmes and changes required that would contribute
to the achievement of organizational goals. It also includes identifying human resource
requirements and forecasting personnel needs, foreseeing the changes in employees’ attitudes
and evolving effective ways of handling these changes.
b) Organizing: Organizing involves establishing an intentional structure of roles for people in
an organization. Structural considerations such as the chain of command, division of labor,
and assignment of responsibility are the part of the organizing function. Careful organizing
ensures effective use of human resources. The organizing function establishes relationships
among employees so that they can contribute collectively towards the attainment of
organizations goals.
c) Staffing: This is a process of obtaining and maintaining capable and competent personnel in
various positions at all levels. It broadly encompasses manpower planning, recruitment,
selection, placement, induction and orientation, transfer, career progression and separation.
d) Directing: It is the process of directing all available resources towards the common
organizational goals thus, direction is vital management function, which ensures maximum
employees contribution and also helps in establishing sound industrial and human relations. It
is the managerial function consisting of all those activities which are concerned directly with
guiding, influencing and supervising the subordinates in their jobs.
e) Controlling: Controlling as a function of management means the measurement and correction
of performance of activities of subordinates in order to make sure that enterprise objectives
and plans devised to attain them are accomplished. This function performance against the
goals and plans identifies the deviations and by placing the process back on track, helps in
accomplishment of plans.
B. Operative Functions: Operative function may be discussed as under:
a) Procurement: It is concerned with the obtaining of the proper kind and number of
personnel necessary to accomplish necessary organization goals. The function is related to
subjects like the determination of manpower requirements and their recruitment, selection
and placement. The manpower requirements are calculated in terms and numbers of
personnel needed and their quality. Selection and placement cover different activities
designed to screen and hire personnel, such as, application forms, psychological tests,
interviews and induction.
b) Development: After the personnel have been obtained, it is necessary to develop them.
Development implies the increase of skill, through training, that is necessary for proper job
performance. This aspect of personnel function has acquired great importance even in our
country during the last quarter of a century or so due to greater use of technology in every
department of a business enterprise.
c) Compensation: This function can be defined as the adequate and equitable remuneration of
personnel for their contributions to organization objectives. In developed countries,
compensation cannot be described as a great motivating force as strong as it is in less
developed countries. Compensating remains one of the basic functions of personnel
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management.
d) Integration: It can be defined as an attempt to effect a reasonable reconciliation of
individual and organizational interests. Integration must follow the above three functions of
procurement, development and compensation. The function of integration relates to
problems of communication, informal organisation and trade unions.
e) Maintenance: Maintenance refers to sustaining and improving the conditions that have
been established. This would thus include the above functions. However, it must be pointed
out that it would be necessary to take care of physical well-being and mental well-being of
the employees. Maintenance activities include improving working conditions, employee
relations, safety and health and soon.
FUNCTIONS OF HR MANAGER:
A human resource manager has two basic functions: overseeing department
functions and managing employees. That's why human resources managers must be well- versed in each of
the human resources disciplines – compensation and benefits, training and development, employee relations,
and recruitment and selection.
a) Managing Employee Relations: Whether a dispute happens between a manager and a regular
employee or between two employees, it needs to be resolved as fairly and equitably as possible.
Employees know they can take their grievances to the HR department, and HR professionals work to
sort everything out to arrive at a compromise.
b) Hiring Employees: From advertising vacancies to interviewing job candidates, HR professionals
play a key role in hiring employees. In larger companies, there may be recruitment specialists on staff
who are strictly there to look for new talent.
c) Administering Pay and Benefits: Although these tasks are increasingly being outsourced, they are
still handled by HR professionals in many small- and mid-sized companies.
d) Coordinating Promotions and Reassignments: HR professionals work to keep a company
operating as smoothly and efficiently as possible. One way they make that happen is by making sure
that the right people are handling the right tasks.
e) Terminating Employees: Termination of employment is an employee's departure from a job and the
end of an employee's duration with an employer. Termination may be voluntary on the employee's
part, or it may be at the hands of the employer, often in the form of dismissal (firing) or a layoff.

JOB EVALUATION
Introduction: Job evaluation is the technique of assessing systematically the relative worth (in monetary
terms) of each job. It provides valuable insights into certain questions such as why the chief executive is paid
the highest, why the production supervisor in the shop floor is paid lesser, and so on. Job evaluation is the
process of systematically determining a relative internal value of a job in an organization. In all cases the
idea is to evaluate the job, not the person doing it. Job evaluation is the process of determining the worth of
one job in relation to that of the other jobs in a company so that a fair and equitable wage and salary system
can be established.
Definition:
According to Kimball and Kimball, “Job evaluation represents an effort to determine the relative value of
every job in a plant and to determine what the fair basic wage for such a job should be.”
Aims of Job Evaluation: The aims of job evaluation are:
 To provide a basis for ranking jobs to grade and group them under a salary scale.

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 To ensure that job values are assessed on an objective basis, from an analytical study of the job
content, to the possible.
 To provide the data base of facilitate the reviews and update of job values.

Importance of Job Evaluation: Job evaluation is a process of determining the relative worth of a job. It is a
process which is helpful even for framing compensation plans by the personnel manager. Job evaluation as a
process is advantageous to a company in many ways:
a) Reduction in inequalities in salary structure - It is found that people and their motivation is
dependent upon how well they are being paid. Therefore the main objective of job evaluation is to
have external and internal consistency in salary structure so that inequalities in salaries are reduced.
b) Specialization - Because of division of labour and thereby specialization, a large number of
enterprises have got hundred jobs and many employees to perform them. Therefore, an attempt
should be made to define a job and thereby fix salaries for it. This is possible only through job
evaluation.
c) Helps in selection of employees - The job evaluation information can be helpful at the time of
selection of candidates. The factors that are determined for job evaluation can be taken into account
while selecting the employees.
d) Harmonious relationship between employees and manager - Through job evaluation, harmonious
and congenial relations can be maintained between employees and management, so that all kinds of
salaries controversies can be minimized.
e) Standardization - The process of determining the salary differentials for different jobs become
standardized through job evaluation. This helps in bringing uniformity into salary structure.
f) Relevance of new jobs - Through job evaluation, one can understand the relative value of new jobs
in a concern.
 It provides benchmarks for comparing the complexities.
 It facilitates career planning.
 It streamlines responsibility levels.
 It helps flatten organizational levels.
 It ensures the hiring of the right people.
Methods of Job Evaluation / Quantitative Methods of Job Evaluation: The methods of job evaluation
cab broadly be classified as:

i) Non-analytical methods and

ii) Analytical methods
Let us discussed:
A. Non-analytical methods: These methods are traditional and simple. They consider all the jobs
available, compare them, and then rank them. In complex organizations, they cannot be used. They
can be used in such cases where the jobs are distinctly different and not similar. Non-analytical
methods of job evaluation are
a) Ranking method: Under this method, the jobs in the organization are arranged either in the
ascending or descending order and numbered serially. The basis of such arrangement could
be the job description in terms of duties, responsibilities, qualifications needed, relative
difficulty involved in doing the job, or value to the company. The job which carries the
highest value to the company is paid the most, and vice versa similarly, the job that carries
critical duties and responsibilities carries a relatively higher worth.
Evaluation- conceptually, this is easy to understand and implement, particularly for a
smaller organization. However, it fails to indicate the degree of difference between each
grade. Subjectivity cannot be ruled out in the process of ranking. In other words, value is

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placed on the people doing those jobs rather than on the job itself. However, this method
cannot be used in larger organizations.
b) Job classification method: This is also called job-grading method. Here, the number of
grades and the salary particulars for each grade are worked out first. The grades are clearly
described in terms of knowledge, skill, and so on. Then the jobs in the organization are
allocated to these grades as per the job description and grades identified.
Evaluation- This is relatively simple to understand and easy to carry out, it is totally based
on the number of grades and salary particulars for each grade worked out first. It may not be
possible to make clear distinctions between jobs. In a complex organization with a wide
variety of specialist roles, it is very difficult to implement this method.
B. Analytical methods: Under these methods, the jobs are broken down into different tasks. Different
factors such as skill, responsibility, education level, and so on, are assessed for each job. The
comparison of factor, sometimes, allocating points or monetary sums for each factor is made for
meaningful. There are two types of analytical methods: a) factor comparison method and b) Points
rating method.
a) Factor comparison method: Every job requires certain capabilities on the part of the person
who does the job. These capabilities are considered as critical factors, which can be grouped
as listed below:
 mental requirements (education , alertness, judgment, initiative , creativity, ingenuity,
versatility )
 Skill requirements (use of equipment and materials, dexterity, precision)
 Physical requirements (strength , endurance)
 Responsibility (for the safety of others ; for equipment, materials, process ; cost of
error , extent of supervision exercised)
 Working conditions(work pressure, accident hazard , environment)

b) Point-rating methods: The point method is an extension of the factor comparison method.
Each factor is then divided into levels or degrees which are then assigned points. Each job is
rated using the job evaluation instrument. The points for each factor are summed to form a
total point score for the job.
 Skill: Education and job knowledge, Experience and training, Initiative and
ingenuity, Physical dexterity (skills)
 Effort: physical effort, Mental and/or visual effort.
 Responsibility (for): tools and equipment, materials or products, Safety of staff,
Others ‘work
 Job conditions: working conditions, unavoidable hazards, Immediate surroundings

Job Description
Introduction:
Job description is an informative documentation of the scope, duties, tasks, responsibilities
and working conditions related to the job listing in the organization through the process of job analysis. Job
description also details the skills and qualifications that an individual applying for the job needs to possess. It
basically gives all the details which might be good for both the company and the applicant so that both
parties are on the same page regarding the job posting. Basically, job analysis is bifurcated into two
components namely job description and job specification.
The job description is used in the recruitment process to inform the applicants of the job
profile and requirements, and used at the performance management process to evaluate the employee’s
performance against the description.
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Importance of Job Description:

 Job description is the most important thing which a candidate gets about a job listing.
 It gives all the relevant and necessary details about a job.
 The details which can help one decide whether the job is relevant or not. Qualifications, roles,
responsibilities etc are included in the job description document which paints a clear picture of
what is expected from the particular role.
 It gives an opportunity for a candidate to prepare well for a job interview. It also helps companies
identify all skills required by a right candidate.

Job Description Components:

A Job description will include the following components:

i. Roles and responsibilities of the job.
ii. Goals of the organization as well the goals to be achieved as a part of the profile are mentioned in the
job description.
iii. Qualifications in terms of education and work experience required have to be clearly mentioned.
iv. Skill sets like leadership, team management, time management, communication management etc
required to fulfill the job
v. Salary range of the job are mentioned in the job description
Steps to Write a Job Description:
Companies have to make sure that they write an accurate &
comprehensive job description giving all job-related details. The main steps to write a job description are:
a) Job Title : The first step is to write the job title decided internally for official purposes.
b) Role Summary: The second step is to write the summary about the job role.
c) Duties: The next step involves writing down all the job responsibilities as well as the job duties
which are required with this particular job.
d) Qualifications: The fourth step is to give the basic education qualifications, work experience or other
criteria required for this job role.
e) Role Expectations: This step defines what is required by an employee to be successful.
f) Reporting: The sixth step is to highlight who the reporting manager would be and who would be the
subordinates.
g) Verification: The final step is to get the job description verified by the HR team for any changes,
updates or validations.

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Advantages of Job Description:

There are many advantages of having a comprehensive job description given
by a company. Some of the advantages are mentioned below:
 Helps companies understand the type of candidate they should search for based on title, position and
location
 Employees are well aware about their job roles & duties
 Job description helps in understanding the workplace environment, benefits etc for a prospective
employee
 Helps in better recruitment & selection
 Job description clearly highlights all the requirements, objectives & goals that it wants an employee to
perform

Disadvantages of Job Description:

Despite being a thorough documentation related to the job, there are certain limitation of job description:
 They are time bound and can change with organization structure, industry policies, company
requirements etc
 It can only highlight the macro criteria of a job but cannot fully explain the obstacles, emotional
requirements etc related to the job
 Incomplete job description lacking quality information can misguide both the HR manager as well as
the employee

Job Description Sample/Example

A typical job description would have job title followed by summary. After these, there could be a detailed
description of the role.Education qualifications required are also mostly included along with location.
Below is an example or sample.
Job Title Regional Sales Manager

Location Delhi

The RSM would be responsible for the sales of territory assigned. The
territories would be in and around the job location.
Job The RSM should be motivated and willing to make decisions on his/her own.
Description The sales quota and targets would be predefined.
The RSM would be leading the local sales team of approx. 5-6 team size.
(The job description should cover all the details of the job)

Education Graduate with Business Degree/Diploma

Experience 7-8 years of experience in FMCG Sales

The table above shows a sample job description. Formats for job description may vary from company
to company but the overall details would be similar.

MERIT RATING

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Introduction:
Merit rating is the process of evaluating the relative merit of the person on a given job. It is an
essential task of the personnel manager to distinguish the meritorious employees from the others. The data
collected from this task is used for strategic decisions such as releasing an increment in pay, promotion,
transfer, transfer on promotion to a critical assignment, or even discharge. It is distinctly different from job
evaluation. In job evaluation, the jobs are evaluated, not the doers of the job. In merit rating, the person doing
the job is evaluated based on his or her performance.
Objectives of Merit Rating:
 It helps to assess an individuals’ merit for better placement, promotion, increment, etc.
 It helps to show the defects of the workers as well as his positive side.
 It helps to ascertain the simplified wage structure and an incentive payment.
 It also helps to place a right person in a right job.
Advantages of Merit Rating:
The advantages of Merit Rating are:
 It eliminates the discrepancies among the workers, reduces labour turnover, improves employer-
employee relation, etc.
 It helps to ascertain fair wages for the workers as per their ratings.
 Promotion, transfer, training etc. may be made on the scientific basis of merit rating.
 It provides an incentive among the workers to improve themselves and the productivity

Methods of Merit Rating:

There are different methods of assessing the performance of the person on the
job. While most of them are based on supervisor’s remarks, some of them are based on self-evaluation. In
other words, particularly at higher executive positions, the employee is given an opportunity to evaluate his
own performance against his own preset objectives. The following are the different methods merit rating.
They are : a) Ranking method
b) Paired comparison method
c) Rating scale
d) Forced distribution method
e) Narrative or essay method
f) Management by objectives (MBO)
let us discussed briefly:
a. Ranking method: In this method, all the staff of a particular cadre or a department are arranged
either in the ascending or the descending order in order of merit or value to the firm. Though this is a
simple method, it cannot be followed where the employees in the department are many in number.
This method fails to identify the degree of differential merit among the staff.
b. Paired comparison method: Here, every employee is compared with all others in a particular cadre
in the department. By comparing each pair of employees, the rater can decide which of the employees
is more valuable to the organization. This method is more useful for an overall comparison of
employees and if the number of employees is reasonable.
c. Rating scale: Here, the factors dealing with the quantity and quality of work are listed and rated. A
numeric value may be assigned to each factor and the factors could be weighed in the order of their
relative importance. All the variables are measured against three or five point scale. For instance, if a
variable such as skill on the job is evaluated, a three point scale could be:
Traits good Fair poor
Skills on the job 3 2 1

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Punctuality 3 2 1

Cooperation 3 2 1
Care towards the equipment and tools 3 2 1

Similarly, a five point scale could be excellent, good, satisfactory, average, and poor in which case
the weightage could be 5, 4, 3, 2 and 1 respectively. Several traits or attributes such as punctuality,
efficiency, cooperation, initiative, and others are evaluated on such a scale. The indication is recorded
by marking the concerned number representing the degree to which the individual satisfies the
standard. The numbers also serve as weights, which can be added to judge the relative merit of the
each employee. The rating scale is a widely used method of evaluating performance because it is
economical to develop and easily understood by the workers and the evaluator. A major weakness is
that each evaluator is apt to interpret the factors such as skills on the job and the degrees describing
that factor are marked off along the scale (such as good, fair, poor). This method is simple to
administer but cannot sharply differentiate the employees.
d. Forced distribution method: Forced distribution is a method of employee performance appraisal
that many companies use. It is also called forced distribution method, stacked ranking, or bell-curve
rating. It is a rating system that employers use to evaluate their workers. Managers must evaluate each
employee, usually into one of three categories, i.e., poor, good, or excellent. There may be more
categories.
e. Narrative or essay method: Essay performance appraisals are for use in addressing performance
factors in the most comprehensive manner possible. Managers who write essays about employee
performance assess virtually every aspect of the employee performance. Essays include performance
assessments concerning job knowledge and proficiency, developmental activities, interpersonal
communication and business ethics and philosophy. This type of performance appraisal is generally
suited to mid- to senior- level managers. Essay performance appraisals require a substantial
investment of the manager’s time – preparation, construction and discussion are three major points in
the essay format performance appraisal.
f. Management by objectives (MBO): Management by objectives (MBO) is a management model that
aims to improve the performance of an organization by clearly defining objectives that are agreed to
by both management and employees. According to the theory, having a say in goal setting and action
plans encourages participation and commitment among employees, as well as aligning objectives
across the organization

Wage Incentives
Introduction:
Wage and salary administration is the process of fixing wage/salary for different jobs in the organization
through job evaluation, negotiations with the unions, and so on. Where wage is paid on the basis of the time
spent in the organization is called Time Wage system. In the production and sales department, the production
or sales staff can be paid based on the units produced or sold. This method is called Piece Wage system. The
salary constitutes the basic salary, dearness allowance, house rent allowance and other allowances.
Depending upon the nature of organization, there are different types of employee benefits. Some benefits
include profit sharing, bonus, leave travel concessions, medical reimbursement, provident fund, gratuity,
group insurance schemes, pension, accident compensation, leave with pay, educational allowance, and so on.
 Wages: It is the payment for the use of effort, which may be physical or manual. It includes both
financial and non-financial payments.

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 Fair Wages: It is the wages which are fair to the efforts (or labour) and work-accomplishment
of an employee. These should be sufficient to fulfill the basic needs of life.
 Salary: salary is employee compensation calculated weekly, monthly, or annual basis. It is usually
paid to white-collar workers such as office personnel, executives and professional employees.
 Fringe-Benefits: Non-financial part of wages is called as fringe-benefits. Examples: free official
car, free house, attendant for house-hold work, gratuity, PF, etc.
 Incentives: Incentives are the rewards an employee earns in addition to regular wages or salary
based on the performance of the individual, the team or the organization.
Type of Wage payment Plans:
a. Time Wage System or Time Rate System
b. Piece Wage System or Work Rate System
c. Other Methods of Wage Payment Plans
Let us discussed
A. Time Wage System or Time Rate System: Under this system, laborers get wage on the basis of
time which is utilized in organisation. This wages may be charged on per hour, per day, per
month or per year basis. There is no relation or quantity of output and wages in this method. In
India's industry, this method is most popular. Its other name is day wages system or time wok
system.
Formula: Total Wages = Time taken X Rate
Ex- A worker produced 10000 articles in 7600 hours. His hourly wage rate is Rs. 2 /- . Calculate
the wage of the worker when he is paid on the basis of time.
Solution: Total Wages = Time taken X Rate = 7600 X 2 = Rs.15200/-.
B. Piece Wage System or Work Rate System: Under this method or system, laborers can get the
wages on the basis of their work done. No time element will be used for calculation of wages.
Rate is also on the basis of quantity or unit produced. This method is also called payment by
result.
Formula: Total Wages = Unit Produced X Rate per unit
Ex- 2500 units were produced by a worker in 1200 hrs. Rate of production is Rs. 3 /- per unit.
Calculate the wage of the worker if he is paid according piece rate method.
Solution: Total Wages = Unit Produced X Rate per unit = 2500 X 3 = Rs.7500/-

C. The Other Methods of Wage Payment under Incentive Plans: They are classified as two ways.
They : a) Output Based methods b) Time Based methods
a) Output Based methods:
They are classified as:
i. Straight Piece Rate System: It is the simplest method of payment by result in which
payment is made according to the number of units produced at fixed rate per unit.
ii. Taylor’s Differential Piece Rate Plan: F.W. Taylor, the Father of Scientific Management
devised this plan. Under this system, standard task is established through time and motion
study. The objective is to provide sufficient incentive to workers to work hard and achieve
the standard.
Ex- Suppose the standard output is 50 units per day. The piece rates fixed are Rs. 4.00
and Rs. 3.00 per unit. Three workers A, B and C produce 40, 50 and 60 units respectively
during a day.
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Their total wags will be as follows:

Worker A: 40 × Rs. 3.000 = Rs. 120
Worker B: 50 × Rs. 4.00 = Rs. 200
Worker C: 60 × Rs. 4.00 = Rs. 240
Merits
 It provides sufficient incentives to efficient workers to put forth their best efforts.
 Inefficient workers are penalized but encouraged to reach the standard.
 Use of time and motion study help to improve and standardize work methods.
 Workers have not to share the reward with the foreman.
Demerits
 There is no guarantee of minimum wage to workers.
 The plan is harsh to workers who are just below the standard.
 It treats the workers as machines rather than as human beings.
 The employer may fix a very high standard which workers may find difficult to
achieve.
iii. Merrick’s Multiple Piece Rate Plan: This plan was developed to overcome a drawback in
Taylor’s plan. This drawback relates to an abrupt change I piece rate. Under it, three graded
piece rates are prescribed. Workers’ producing less than 83% of the standard output are paid
at a basic piece rate. Those producing from 83% to 100% of the standard output are paid
110% of the basic piece rate. Workers producing more than the standard output are paid at
120% of the basic piece rate.
Merits
 This plan reduces the severity of the Taylor’s plan.
 It is less harsh to beginners or learners.
 It is more flexible.
 It is useful where the performance level is to be increased to 100 per cent.
Demerits
 Minimum wage is not guaranteed to workers.
 It is liberal for the efficient workers. But all workers producing from 1% to 82.9% of
the standard output are classified as sub-standard and are paid at the same piece rate.
iv. Gantt’s Task and Bonus Plan: This plan was developed by Henry L. Gantt. Minimum
time wage is guaranteed to all workers. A worker who fails to complete the task within
the standard time receives wage for actual time spent at the specified rate. Workers who
achieve or exceed the standard get extra bonus varying between 20% to 50% of the
hourly rate for the time allowed for the task.
Ex: Suppose the standard time fixed for the job is 8 hours and the time rate is Rs. 20 per
hour and the rate of bonus is 25 per cent. A worker, who completes the task in 10 hours,
will be paid Rs. 160 (8 × Rs. 20) only. On the other hand, the worker who completes the
task in 6 hours will receive Rs. 200 (Rs. 160 + 25% of Rs. 160).
Merits:
 Minimum wage is assured to all workers.
 Wage increase progressively with increase in efficiency. Therefore, there is
sufficient incentive for efficient workers.
 Inefficient workers are not penalized severally.
b) Time Based methods:
They are classified as

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i. Halsey or Weir Plan: This plan was developed by F.A. Halsey and was first introduced
in the Weir Engineering Works, England. Under this plan, a standard time is fixed on the
basis of past performance records. A worker who completes his job within or more than
the standard time is paid a guaranteed time wage. A bonus (usually 50 per cent) of the
time saved is paid to a worker who completes his job in less than the standard time. The
bonus is calculated o the basis of time rate.
Formula: Total wages = T x R + % (S - T) R
Where, T = actual time, R = Rate per hour, S = Standard time, % = 50% otherwise
mentioned in the question.

Merits:
 The plan is simple to understand. A worker can easily calculate his earnings.
 Both the employee: and the workers get equal benefit of time saved.
 A guaranteed minimum wage to every worker provides a sense of security.
 The plan encourages the workers to be efficient because bonus is based on
time saved.
Demerits
 Standards based on past performance may not be scientific and fair.
 Workers get only half of the benefit of their efficiency.
 Much clerical work is involved because records of time saved and bonus earned
have to be kept for each worker.
ii. Rowan Plan: This is a modified form of Halsey Plan. It was developed by James
Rowan of England. Under it, a minimum time wage4 is guaranteed to every worker.
A standard time is determined in advance. The bonus is that proportion of the wages
which the time saved bears to the standard time.
Ex:

Merits
 The guarantee of minimum wage gives a feeling of security.
 Both the employer and the workers share the benefits of time saved.
Demerits:
 The plan is difficult to understand for an average worker.

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 Efficient workers are discouraged to save more than half of the standard time.

MARKETING MANAGEMENT
Introduction: Marketing is an essential function of a modern organization whether it deals in products or
services. In other words, marketing constitutes an essential function of modern business organizations to
ensure that demand for a product or service persists along with customer retention. It has become vital
ingredient in the success of a business.
Market: Market is a place where buyers and sellers gather to exchange goods and services.
Definitions:
“Marketing is the performance of business activity that directs the flow of goods and services from
production centre to consumption centre”. - American Marketing Association.
“Marketing as societal process by which individuals and groups obtain what they need and want through
creating, offering and freely exchanging products and services of value with others”. -Philip Kotler.

Objectives of marketing:
 Ensuring profit to the manufacturers.
 Providing satisfaction to the consumers.
 To provide best solutions for the marketing problems.
 To develop the guiding policies and their implementation for good results.
 To review existing marketing functions.
Marketing Concept: The marketing concept is the way of life in which all the resources of an organization
are mobilized to create, stimulate and satisfy the consumer at a profit. Here mainly we have to know about
two concepts namely: i) the selling concept. ii) The marketing concept.
a. The selling concept: Selling refers to the act of transferring the ownership of the goods and services
from the seller to buyer. Selling is the term applied to the process of distributing goods from producer
to consumer. It is a function of marketing.
Starting pointFocus Means Ends

Factory products selling and promotion profits through sales volume

The selling concept

b. The marketing concept: The marketing concept holds that key to achieve its organizational
goals consists of the company being more effective and efficient in determining the needs, wants,
interests of the target markets and delivering the desired satisfactions than the competitors.
“Marketing starts and ends with the customer only the concept is shown in the diagram.

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Benefits of the marketing:

 Marketing concept benefits the organization: The practice of the concept brings substantial
benefits to the organization that practices. Any organization which practices the concepts of
marketing audit, market research and consumer testing, it can easily faces any changes regarding
the buyer behavior, and capable to provide the satisfaction to the customers then automatically
the organization benefited.
 Marketing concept benefits the Consumer: The consumer is in fact the major beneficiary of
the marketing concept, the attempts of various computing firms to satisfy the consumer put him
in an enviable position. The concept prompts the producers to constantly improve their products
and to launch totally new products it is more beneficiary to consumers.
 Marketing concepts benefits the society: The concept guarantees that only products that are
required by the consumers are produced and thereby it ensures that the society’s economic
resources or channelized in the right direction. It also makes economic planning more meaningful
and relevant to the life of the people.
FUNCTIONS OF MARKETING
All business organizations perform two basic operating functions i.e., they produce product or a service and
they market it. Production and marketing both functions are important to an organization. For marketing a
product a company has to perform no .of marketing functions. Marketing functions have been classified by
different marketing experts in to three different ways. They are shown in the following diagram.

Exchange Functions:
a. Buying: It is one of the important functions of ‘Exchange’. It requires planning of purchases, search
for the sellers, selection of goods to be bought, assembling of goods in right quantity, quality at the
right place and time at the right price. In a formal exchange, the buyer has to negotiate terms of
purchase and enter into a contract of purchase.
b. Assembling: It has two meanings first is creation and maintenance of stock of products, purchased
from different sources at common point. Second is raw materials are purchased and make in to order
to produce goods and services.

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c. Selling: It is an important function from the point of view of the seller as well as the consumer;
Selling creates demand for a product. Selling function involves product planning and development,
finding out or locating the buyers, negotiation of terms of sale such as price, quantity, quality, date of
delivery etc., and sale contract leading to transfer of title and possession of goods.
Functions of physical supply:
a. Transportation: It is physical means whereby goods are moved from point of production to the place
where they are required for consumption. Different modes of transportation like bullock cart, bus,
train, aeroplane, ships, etc., can be used for the movement of goods. However the pros and cons of
using each mode should be carefully analyzed before selecting the appropriate mode.
b. Storage: Storage function provides time utility by holding and preserving products and delivering
them according to the requirements of market. If the product is seasonal and demand is stable, storage
becomes essential.
c. Warehousing: Warehousing makes the storage function more effective. Warehouse creates time and
store utility. It is necessary to carry production and distribution on large scale.
Facilitating functions:
a. Standardization: Standardization refers to determine the basic limits to different classes of products
i.e. to establish standards for different grades of a product. Standard is a list of specifications based
on size, color, appearance, strength, shape, amount of moisture, taste etc., standardization plays an
important role in the marketing of products.
b. Grading: Grading refers to sorting of products into different lots each of which has same
characteristics with respect to quality, size. Grading helps in selling through description rather than
personal verification.
c. Marketing Information: It is a vital resource in business for taking marketing decisions.
Information has to be collected, processed and interpreted. Marketing executives are expected to
know the trends in market demand, supply, prices and related market information.
d. Marketing Research: It is the function concerned with gathering, analyzing and interpreting data in
a systematic and scientific manner. It helps to analyze the buyer’s behavior, popularity of product,
distribution, grading, policies, strength and weakness etc.
e. Financing: Financing is the life blood of commerce. Without finance the whole marketing activity
may come to a standstill. The finance for marketing activities obtained from banks, individuals,
financial institutions etc. Therefore, for exchange of goods and services and for other marketing
activities finance is a vital aspect.
f. Risk Management and Insurance: One of the important functions of marketing management is risk
bearing. In any marketing activity uncertainty is bound to exist. This uncertainty may result in the
form of either loss or profit. The unpredictable nature of the consumers, changing fashions, increasing
competition and increasing costs of production has led to the concept, “Risk-bearing. Some of the
risks may be avoided by taking insurance coverage.
g. Branding: A brand is a name, term, symbol, design or combination of them which is intended to
identify the goods and services of one seller or group of seller and to differentiate them from
capitations.
h. Packing – Packing concerned with formulation of container or wrapper of product. Its main objective
is to provide convenience in handling, ensures freshness and quality of the product.
PRODUCT LIFE CYCLE
The product life cycle (PLC) quite popular in the world of marketing, this concept has been used as a tool for
forecasting and also for developing marketing strategy. In other words, this model explains the market
responses to a new product introduced in the market over a period of time.
Definition:

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“Product life cycle has been defined as an attempt to recognize distinct stages in the sales history of the
product”. -Phillip Kotler
Purpose of product life cycle:
 To take vital product relate to decisions.
 To estimate the sales/ profit of the product at different phases of the life cycle.
 To prolong the profitable phases.

A. Introduction Stage: In this phase the company introduces the product into the market. A period of
slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage
because of the heavy expenses incurred with product introduction stage. This stage is characterized
by slow growth, very low / negative profits, consumer awareness is very low, buyer’s who are
belonging to high income group only purchase the product in this stage even the price of the product
is high.
Features:
 Sales growth is low.
 High distribution cost.
 High promotion cost.
 Competitors are few.
Market Strategies used in this stage:
 Companies try to create product awareness.
 Build distribution network.
 Pricing and promotional strategies are crucial.
 Follow skimming price strategy and high promotion.
 Follow penetration price strategy and low promotion.
 Inform to potential customers.
B. Growth stage: A period of rapid market acceptance and substantial profit improvement. The growth
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stage is characterized by rapid growth in sales and profits. In this stage number of competitors
increase and manufacturers make major product improvements. The product begins to make rapid
profit sales gains because of the effects of the introductory promotion, distribution, and word-of-
mouth influence.
Features:
 Most rewarding stage for the marketers.
 Sales climb up rapidly.
 Marked improvement in profits.
 Competition intensified.
 Enter in to new market and market segments.
Strategies:
 Reduce prices slightly to reach the more price sensitive potential customers particularly
when the market moves towards maturity.
 It improves product quality and adds new product features and improved styling.
 Spend more amounts on promotional activities.
 It increases its distribution coverage and enters new distribution channels.
 It shifts from product awareness- advertising to product preference advertising.

C. Maturity stage: The maturity stage is most common stage for all markets, in this stage that the
competition intense as to maintain their market share, here both marketing and finance become key
activities. Marketing expenditure monitor carefully, any significant moves are likely to be copied by
competitors. The maturity time when more profit is earned by the market as a whole, at this stage the
product covers mass markets. Manufacturers come forward with new product models.
Features:
 Growth rate of sales slowdown.
 Competition becomes severe.
 Marketing is flooded with many competing products.
 This stage continues for a reasonable period of time.
 Consumers start switching to new brands.
Strategies:
 Market modification. (It includes conversion non user in to users, enter in to new
market segments.)
 Product modification. (i.e. means quality improvement, features improvement, and style
improvement of the product)
 Overall change in market mix.( i.e. putting low price for attracting customers, set up
sales promotion measures.)

D. Saturation stage: When the sales growth in stabilize position, such a stage is called saturation.
The size of the market does not increase beyond this stage. In other words, any new customer
entering the market is replaced by an old customer who has stopped buying the product. All
sales are simply replacement sales or repeat purchases by the same customer.
Features:
 In this stage profits are in peak position and don’t shows any further growth.
 It acts as an indication to the manufacture product is ready to fall in decline stage.
Strategies:

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 In this phase the manufacture try to protect his product without fall in decline stage
for that it concentrates more on product that means remodels the product.
 Introduce price-cuts, discounts, and so on. To retain the existing customers.
E. Decline stage: A period where the sales and profits decline to low level or to zero. In this
decline stage, the market is shrinking, reducing the overall amount of profit that can be shared
amongst the remaining competitors. At this stage, great care has to be taken to manage the
product carefully.
The sales and profits are ultimately decline because of the changes occurred in
customer’s preferences, competitive structure in the market, technology, and increased domestic
and foreign competition.
Features:
 Sales may come down to zero.
 Continue at very low levels for some years.
 The customer switch over newer better brands increase.
 Either low profit or low levels of profit maintained.
 Advertisement budget of the company also comes down because company may struggle to
meet its costs.
Strategies:
 Decrease the firm’s investment level selectively by dropping unprofitable products.
 Maintain and sell the product.

Difference between Selling & Marketing

Basis Selling Marketing

It is only a part of process of It is a wide term consisting of a number of activities

Scope
marketing. such aside notification, customers needs etc.

Transfer of the title from Achieving maximum satisfaction of customers needs

Focus
seller to consumer. and wants.

Pre-
Product is given quantity. Customer is treated as the king.
dominance

Profits through sales

Aim Profits through customer satisfaction.
volume.

Bending the customer

Emphasis To develop the products as per the customer needs.
according to the product.

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Marketing mix
Definition of Marketing Mix:
The marketing mix is defined by the use of a marketing tool that combines a number
of components in order to become harden and solidify a product’s brand and to help in selling the product or
service. Product based companies have to come up with strategies to sell their products, and coming up with
a marketing mix is one of them.
What is Marketing Mix?
Marketing Mix is a set of marketing tool or tactics, used to promote a product or services in the market and
sell it. It is about positioning a product and deciding it to sell in the right place, at the right price and right
time. The product will then be sold, according to marketing and promotional strategy. The components of the
marketing mix consist of 4Ps Product, Price, Place, and Promotion. In the business sector, the marketing
managers plan a marketing strategy taking into consideration all the 4Ps. However, nowadays, the marketing
mix increasingly includes several other Ps for vital development.
What is 4 P of Marketing

a. Product in Marketing Mix: A product is a commodity, produced or built to satisfy the need of an
individual or a group. The product can be intangible or tangible as it can be in the form of services or
goods. It is important to do extensive research before developing a product as it has a fluctuating life
cycle, from the growth phase to the maturity phase to the sales decline phase.
A product has a certain life cycle that includes the growth phase, the maturity phase, and the
sales decline phase. It is important for marketers to reinvent their products to stimulate more demand
once it reaches the sales decline phase. It should create an impact in the mind of the customers, which
is exclusive and different from the competitor’s product. There is an old saying stating for marketers,
“what can I do to offer a better product to this group of people than my competitors”. This strategy
also helps the company to build brand value.
b. Price in Marketing Mix: Price is a very important component of the marketing mix definition. The
price of the product is basically the amount that a customer pays for to enjoy it. Price is the most
critical element of a marketing plan because it dictates a company’s survival and profit. Adjusting the
price of the product, even a little bit has a big impact on the entire marketing strategy as well as
greatly affecting the sales and demand of the product in the market. Things to keep on mind while
determining the cost of the product are, the competitor’s price, list price, customer location, discount,
terms of sale, etc.,
c. Place in Marketing Mix: Placement or distribution is a very important part of the marketing mix
strategy. We should position and distribute our product in a place that is easily accessible to potential
buyers/customers.
d. Promotion in Marketing Mix: It is a marketing communication process that helps the company to
publicize the product and its features to the public. It is the most expensive and essential components

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of the marketing mix, that helps to grab the attention of the customers and influence them to buy the
product. Most of the marketers use promotion tactics to promote their product and reach out to the
public or the target audience. The promotion might include direct marketing, advertising, personal
branding, sales promotion, etc.
What is 7 P of Marketing:
The 7Ps model is a marketing model that modifies the 4Ps model. As Marketing mix 4P is becoming
an old trend, and nowadays, marketing business needs deep understanding of the rise in new
technology and concept. So, 3 more new P’s were added in the old 4Ps model to give a deep
understanding of the concept of the marketing mix.
e. People in Marketing Mix: The company’s employees are important in marketing because they are
the ones who deliver the service to clients. It is important to hire and train the right people to deliver
superior service to the clients, whether they run a support desk, customer service, copywriters,
programmers…etc. It is very important to find people who genuinely believe in the products or
services that the particular business creates, as there is a huge chance of giving their best
performance. Adding to it, the organisation should accept the honest feedback from the employees
about the business and should input their own thoughts and passions which can scale and grow the
business.
f. Process in Marketing Mix: We should always make sure that the business process is well structured
and verified regularly to avoid mistakes and minimize costs. To maximise the profit, Its important to
tighten up the enhancement process.
g. Physical Evidence in Marketing Mix: In the service industries, there should be physical evidence
that the service was delivered. A concept of this is branding. For example, when you think of “fast
food”, you think of KFC. When you think of sports, the names Nike and Adidas come to mind.

Marketing Mix Example:

This article will go through a marketing mix example of a popular cereals company. At first, the company
targeted older individuals who need to keep their diet under control, this product was introduced. However,
after intense research, they later discovered that even young people need to have a healthy diet. So, this led to
the development of a cereals product catered to young people. In accordance with all the elements of the
marketing mix strategy, the company identified the product, priced it correctly, did tremendous promotions
and availed it to the customers. This marketing mix example belongs to Honeycomb, one of the most
renowned companies in the cereal niche. Following these rules clearly has managed to make the company
untouchable by all the other competitors in the market.
This makes Honeycomb, the giant we know and love today to eat as morning breakfast!

Marketing Mix Product

All products can be broadly classified into 3 main categories. These are :
a. Tangible products: These are items with an actual physical presence such as a car, an electronic
device, and an item of clothing or a consumer good.
b. Intangible products: These are items that have no physical presence but can be felt indirectly. An
insurance policy is an example of this. Online items such as software, applications or even music and
video files are also intangible products.
c. Services: Services are also intangible products but they are the result of an economic activity that
does not result in ownership. It is a process that creates benefits for customers. Services depend
highly on who is performing them and remain difficult to reproduce exactly.

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Importance of Marketing Mix:

 The marketing mix is a remarkable tool for creating the right marketing strategy and its
implementation through effective tactics.
 The assessment of the roles of your product, promotion, price, and place plays a vital part in your
overall marketing approach.
 Whereas the marketing mix strategy goes hand in hand with positioning, targeting, and segmentation.
And at last, all the elements, included in the marketing mix and the extended marketing mix, have an
interaction with one another.

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