Introduction and Concept of Principles of Management

Principal of management: - Broad and general guidelines for decision-making and behavior developed on the basis of observation and experimentation as well as personal experiences of the managers.

Feature & Importance of Management Principle

Nature of Principles of Management:

  1. Cause and effect relationships:
  • Form a cause and effect relationship and indicates the effect of a certain action. they can be used in similar situations in a large number of cases
  • The principles of management are less than perfect since they mainly apply to human behavior.
  • Example. In emergency autocratic style and in case of larger issues participative style can be followed
  1. Universal applicability
  • Applied to all types of organizations and levels, business as well as non-business, public sector as well as the private sector, manufacturing as well as the services sectors.
  • The top-level requires more planning than the middle level
  • Extent of their applicability would vary with the nature of the organization,
  1. Based on Human behavior
  • More emphasis is laid on human behavior
  • Also the understanding between human and material resources
  • Principal of order: - Proper relationship between man and material
  1. Flexible
  • Flexible and can be modified by the manager when the situation so demands.
  • For example, the degree of concentration of authority (centralization) or its distribution (decentralization) will depend upon the situations and circumstances of each enterprise.
  1. Contingent
  • Contingent or dependent upon the prevailing situation at a particular point in time.
  • The application of principles has to be changed as per requirements.
  • Wages are paid based on the skill of the employee, paying capacity of the organization and existing wage rate.
  1. Formed by practice and experimentation:
  • Formed by the experienced and collective knowledge of managers as well as experimentation.
  • Matter of common experience that discipline is necessary for accomplishing any purpose.
  1. General guidelines
  • Guidelines to decision-making but do not provide readymade solutions to all managerial problems.
  • Science not thumb rule increases efficiency managerial problems.

This is so because real business situations are very complex and dynamic and are a result of many facts.

Significance of Principles of Management

  1. Adapted changing environment requirements
  • General guidelines but they are modified and as such help managers meet changing requirements.
  • Management principles are flexible to adapt to a dynamic business environment.
  • Companies outsourced their non-core business and concentrate on core business
  1. Scientific decisions:
    • Principals are based on logic rather than blind faith  and free from personal bias
    • .Management decisions taken based on principles are free from bias and unfairness.
    • Differential wage systems differentiate between efficient and inefficient worker
  2. Social Responsibility:
    • Has increased the role of the business community toward greater social responsibility
    • So, if one were to talk of ‘equity’ today, it does not apply to wages alone.

Value to the customer, care for the environment, and dealings with business associates would all come under the purview of this principle

  1. Administration becomes effective
    • Resources both human and material available are limited.
    • Reduces the chances of trial-and-error method and their effective utilization
  2. Managerial growth
    • Brings the managers into real-world situations.
    • Increases their knowledge, ability and understanding of managerial situations.
    • By giving work to subordinates they can reduce their burden
  3. Management training, education and research
  • Basis for management training, education and research.

Professional courses such as MBA BBA teach these principles as part of their curriculum.

Henri Fayol's POM

Fayol’s principal

  1. Authority and Responsibility:
    • Authority refers to the right of an individual to command his subordinates.
    • Responsibility is the obligation of a subordinate to perform the assigned duty
    • Both should go side by side and should be well balanced.
    • A manager should have the right to punish a subordinate for willfully not obeying a legitimate order but only after sufficient opportunity has been given to a subordinate for presenting her/his case
  1. Centralization and decentralization
  • Decision-making authority is retained by higher management levels
  • Generally exists in a smaller organization
  • Process of giving authority at the lowest level of management to take decisions within their powers
  • Suitable for a large organization and complex organization
  1. Discipline
  • Discipline is the obedience to organizational rules and employment agreements that are necessary for the working of the organization.
  • Discipline requires good superiors at all levels, clear and fair agreements and careful application of penalties
  • That the workers and management both honor their commitments without any injustice towards one another
  1. Division of work: -
        • Every task should be divided into the small task and assigned to the right person who is capable of doing that job. 
        • A person doing the same job will over time specialize in that job
        • In business work can be performed more efficiently if it is divided into specialized tasks; each performed by a specialist or trained employee. This results in efficient and effective output
  1. Espirit –de-corps
  • There should be cooperation and teamwork among the members of an organization.
  • Management should promote teamwork, especially in large organizations because otherwise, Objectives would be difficult to realize.
  • A manager should replace I’ with ‘We’ in all his conversations with workers to encourage team spirit. This will give rise to a spirit of mutual trust and belongingness among team members. It will also minimize the need for using penalties.
  1. Equity:
  • Management should be kind, fair and impartial in its dealing with its subordinates.
  • Fayol does not rule out the use of force sometimes.
  • For example, there should be no discrimination about the position, sex, age, etc while granting medical leave to the employees
  1. Initiative
  • Workers should be encouraged to develop and carry out their plans for improvements
  • Freedom to think and execute a plan is known as initiative.
  • But it does not mean going against the established practices of the company for the sake of being different.
  • A good company should have an employee suggestion system whereby initiative/suggestions which result in substantial cost/time reduction should be rewarded
  1. Order
  • People and materials must be in suitable places at appropriate
  • Implies the right man to the right job and the right material in the right place.
  • if there is a fixed place for everything and it is present there, then there will be no hindrance in the activities of business/ factory
  1. Fair remuneration:
  • The employees should be paid fair wages, which should give them at least a reasonable standard of living.
  • It should be within the paying capacity of the company and the capability of the employee.
  • Organization Decide the most reasonable method of calculating wages
  1. Scalar Chain.
  • Chain of superiors ranging from top management to the lowest rank
  • There should be a clear line of authority from top to bottom linking all managers at all levels.

Gang plank

  • Subordinates may contact a superior or his superior in case of an emergency, disregarding the hierarchy of control.
  • This is a shorter route and has been provided so that communication is not delayed.
  • However, the immediate superiors must be informed about the matter

  1. Stability of Tenure
  • Employees should not be shifted from their position frequently.
  • It takes time for an employee to get used to his work and he cannot give useful service if he is removed before he gets familiar with the work assigned to him
  • They should be given reasonable time to show results.
  • Otherwise, it will create instability/insecurity among employees. They would tend to leave the organization.
  1. Subordination of individual interest to group/general interest
  • The management must put away personal interests and put company objectives first.
  •  Interests of goals of the organization must overcome the personal interests of individual’s pressure on the company.
  • A manager can ensure this by her/his excellent behavior.
  • A manager should not misuse her/his powers for individual/ family benefit at the cost of the larger general interest of the workers/company.
  1. . Unity of command
  • Employee should receive orders from only one superior.
  • If he gets orders from more than one superior at a time then he will be confused as to which superior’s orders should be carried out first.
  • Dual subordination should be avoided. This is to prevent confusion regarding tasks to be done
  1. Unity of direction:
  • There should be “one head and one plan for a group of activities having the same objective to pursue.”
  • An organization or group having different plans and more than one head cannot achieve the desired results.

Taylor's POM

Taylor’s Contribution to Scientific Management

  1. Science not Rule of Thumb:
  • It states that there was only one best method to maximize efficiency.
  • This method can be developed through scientific study and analysis of each element of a job and should substitute ‘Rule of Thumb’.
  •  This standard method should be followed throughout the organization. Involved investigation of traditional methods through work-study, and develop one best method to maximize efficiency
  • Adopt the best practices to  save human energy, wastage of time and materials 
  • Example - Sending information by e-mail instead of a post is more effective
  1. Harmony, Not Discord:
  • There should be absolute understanding and harmony between workers and management.
  • Both should realize that each one is important
  • Management should share the gains of the company with the workers.
  • In return, workers should work hard with discipline and loyalty
  • Prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice versa’
  1. Cooperation, Not Individualism:
  • Extension of principle of ‘Harmony not discord.
  • Competition should be replaced by cooperation.
  • Management should award workers for giving valuable suggestions and involves in decision making
  • Workers should avoid making unreasonable demands and strikes
  • The employer takes care of the needs of employees, which would prevail as in the case of Japanese companies.
  1. Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity:
  • Industrial efficiency depends upon the efficiency of workers. Workers' efficiency depends upon proper training and their selection
  • Employees with the required qualification and experience should be selected.
  • Provide training to the selected employees to make them fit and confident in doing their duties.
  • Assign work that suits her/his physical, mental and intellectual ability
  • Efficient employees would produce more and earn more. This will ensure the greatest efficiency and prosperity for both company and workers

Studies of Taylor

Functional Foremanship:-Separation of planning and execution functions which is extended to the lowest level of the shop floor

  • Extension of the principle of division of work.
  • Each worker will have to take orders from the eight foremen
  • Under the factory manager, there was planning in charge and production in charge.

Planning in charge: In the planning officer, four foremen exist according to Taylor.

  1. Route clerk: specify the route of production
  2. Card and instruction clerk:  issue various instructions to workers to carry on the job
  3. Time and cost clerk:  fix the time for starting and completing of job and prepares a cost sheet.
  4. Disciplinarian:  maintains discipline among the employee.

Production in charge: In the production officer four specialist bosses are existing.

  1. Gang boss: makes arrangements for machinery, material, tools etc. for the job
  2. Speed boss: checks the speed of work and investigates the cause for delays and removes them.
  3. Repair boss: maintains the machinery and other equipment and makes proper repairs.
  4. Inspector: checks the quality of work.

Standardization of Work

Standardization refers to the process of setting standards for every business activity. The company establishes a standard such as product dimensions, size, quality and then the company produces products based on that standard

Process of setting standards for every business activity; it can be standardization of process, raw material, time, product, machinery, methods, or working conditions.

The objectives

  1. Establish standards of quality in materials.
  2. Establish standards of performance of men and machines.
  3. To reduce a given line or product to fixed types, sizes and characteristics.

Simplification of Work

  • Aims at removing unnecessary varieties, sizes and dimensions
  • Simplification aims at eliminating unnecessary diversity of products.
  • It results in savings of costs on labor, machines and tools.
  • It implies reduced inventories, fuller utilization of equipment and increasing turnover.

Method Study

  • Meaning: -find out one best way of doing the job out of various methods
  • Objectives The objective of the whole exercise is to minimize the cost of production and maximize the quality and satisfaction
  • Benefits: - Minimize the cost of production and maximize the quality of the customer
  • Instrument used: process charts and operations research etc

Motion study

  • Meaning:-Motion study refers to the study of movements like lifting, putting objects, sitting and changing positions etc., which are undertaken while doing a typical job. Unnecessary movements are sought to be eliminated so that it takes less time to complete the job efficiently.
  • Purpose:- Possible to find out  motions that are productive  and which are unproductive
  • Benefits:- Unnecessary movements are can be removed so to complete the job efficiently
  • Instruments used:- stopwatches and various symbols and colors

Time Study

Meaning:-Analysis the time taken by each worker to finish a standard

Objective:-Determine number of workers to be employed Determine cost of labor Frame suitable incentive schemes

Benefits: - improving the efficiency of workers by creating time awareness

Example - standard time 1 hour @ 3 boxes, total working hour 7 hour

Instruments used: - stopwatches

Fatigue study

  • There should be proper rest intervals between two work spans.
  • A person will feel tired physically and mentally if she/he does not rest while working.
  • Help workers regain stamina and work again with the same capacity.
  • There can be many causes for fatigue like long working hours, doing unsuitable work, having cordial relations with the boss or bad working conditions, etc.

Differential Piece Wage System

  • Efficient workers are paid at a higher rate for their entire output and a less efficient worker is to be paid less when the production falls below the standard.


  • Standard output per day = 20 units
  • Wage rate for efficient workers =  Rs 50 for standard output/more than standard

Wage rate for inefficient workers.

Fayol versus Taylor-A comparison

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