Notes - Principles of Management

Principles of Management

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1. Concept of Management Principles Principles of management are broad and general guidelines for decision-making and behaviour. These principles serve as general practical guidelines for the manager, assisting him to make decisions, take action and solve problems systematically.

2. Nature of Principles of Management

(i) Universal Applicability Principles of management are applicable in all types of organisations, business as well as non-business, small as well as large enterprises depending on the nature of the organisation.

(ii) General Guidelines They are general guidelines to actions but they do not provide readymade solution to all managerial problems.

(iii) Formed by Practice and Experimentation

They are formed by experimentation, experience and collective wisdom of the managers.

(iv) Flexible It can be modified by a manager according to the situation as they are not rigid prescriptions.

(v) Mainly Behavioural Since the principles aim at influencing complex human behaviour, they are behavioural in nature.

(vi) Cause and Effect Relationship Management principles establish relationship between cause and effect i.e., if a particular principle is applied in a particular situation, what would be its likely effect.

(vii) Contingent The use of management principles is contingent or dependent upon the prevailing situation at a particular point of time.

3. Significance of Principles of Management

(i) Provide Useful Insights into Reality to the Managers Use of these principles increases managerial efficiency by adding to their knowledge and ability to understand various real world situations more accurately.

(ii) Optimum Utilisation of Resources and Effective Administration Principles of management help the managers to foresee the cause and effect relationships of their decisions and reduce wastage associated with trial and error approach. They help in effective administration by making managerial decisions free from personal prejudices.

(iii) Scientific Decisions Principles of management help in taking decisions scientifically based on logic and objective assessment of situations rather than blind faith and personal prejudices.

(iv) Meeting Requirements of Changing Environment Principles of management are modified to help the managers to meet requirements of changing environment.

(v) Fulfilling Social Responsibility The management principles have been developed in such a way that they help in fulfilling social responsibilities of an organisation.

(vi) Management Training, Education and Research Principles of management are the basis of management theories, which are used in training, motivation, research and development.

4. Principles of Management Developed by Fayol

Henry Fayol is known as the ‘Father of General Management’. He developed his own concept of administration. He has given fourteen principles of management which are as follows

(i) Division of Work Work is divided into small tasks. This helps in taking the advantage of specialisation.

(ii) Authority and Responsibility According to Fayol, “There must be a balance or parity between authority and responsibility.”

(iii) Discipline It signifies obedience to organisational rules and regulations which are necessary for the smooth working of an organisation.

(iv) Unity of Command According to this principle, an employee should receive orders or instructions and should be accountable to only one superior.

(v) Unity of Direction According to this principle, each group of activities having the same objective, must have one head and one plan.

(vi) Subordination of Individual Interest to General Interest According to Fayol, “In all situations company's interest should supersede the interest of individual.”

(vii) Remuneration of Employees According to Fayol, “The quantum and methods of remuneration payable to the employees should be fair and reasonable.”

(viii) Centralisation and Decentralisation According to Fayol, “An organisation should strive to achieve a proper balance between centralisation and decentralisation.”

(ix) Scalar Chain and Gang Plank According to Fayol, scalar chain refers to the chain of authority and communication that runs from top to bottom and should be followed by managers and their subordinates.

Gang plank refers to an arrangement in which two managers working at the same level can communicate with each other directly for quick communication.

(x) Order According to Fayol, “People and materials must be in suitable places at appropriate time for maximum efficiency.”

(xi) Equity This principle advocates that everyone should be equal in the eyes of the management. There should be no discrimination against anyone on account of sex, religion, language, caste, belief or nationality.

(xii) Stability of Personnel According to Fayol, “Personnel should be selected and appointed after due and rigorous procedure. But once selected they should be kept at their position for a minimum fixed tenure.”

(xiii) Initiative Fayol suggested that employees at all levels should take initiative or actions without any force or boundations.

(xiv) Esprit de Corps According to Fayol, “Management should promote team spirit of unity and harmony among employees.”

5. Taylor’s Scientific Management Scientific management means applying the scientific methods and tools to increase the output, its quality and reduce costs and wastages.

It is a systematic and thoughtful approach, which was developed by FW Taylor. It stresses that there is always ‘one best way’ of doing work.

According to Taylor, “Scientific management means knowing exactly what you want from men to do and seeing that they do it in the best and the cheapest way.”

6. Principles of Scientific Management

(i) Science not Rule of Thumb Taylor is of the view that there is one best method of doing a job and this method should be developed through scientific study and analysis rather than wish of manager or hit and trial method and it should substitute the age old method of doing a job.

(ii) Harmony not Discord There should be harmony between the management and the workers.

(iii) Cooperation not Individualism There should be cooperation between workers and management. Every one should work for the betterment of the organisation.

(iv) Development of Each and Every Person to his/her Greater Efficiency and Prosperity Adequate opportunities must be made available for employees, so that they strive to improve their performance to achieve new heights in their careers.

7. Techniques of Scientific Management

(i) Functional Foremanship Under this technique, planning and execution are separated from each other.

Taylor advocated the appointment of eight foremen; out of which, four of them will be responsible for planning viz, route clerk, instruction card clerk, time and cost clerk and disciplinarian and the rest four viz, speed boss, gang boss, repair boss and inspector will be concerned with the execution of work.

(ii) Standardisation of Work It refers to the process of setting standards for every business activity. It can be standardization of process, raw material, time, product, machinery, methods or working conditions.

(iii) Simplification of Work Simplification means eliminating superfluous sizes, varieties and dimensions. Its aim is to eliminate unnecessary diversity of products and thereby reduce costs.

(iv) Method Study This technique of scientific management is conducted to find out the one best way of performing a particular task.

(v) Motion Study It refers to the study of movements like lifting, putting objects, sitting and changing positions, etc. which are undertaken while doing typical jobs.

(vi) Time Study It determines the standard time taken to perform a well defined job.

(vii) Fatigue Study This study seeks to find out the amount and frequency of rest intervals required in completing a task.

(viii) Differential Piece Wage System Under this system of wage payment, wages are paid on the basis of work done.

(ix) Mental Revolution It involves change in the attitude of workers and management. Both should realise the importance of each other and cooperate with one another.