CH-2 (PRINCIPLES OF MANAGEMENT)

Concept of Principle of Management :

A principle may be regarded as a statement which reflects fundamental truth about some phenomena. It establishes cause and effect relationships and serves as a guide to thought and action.

Therefore we can say, Management principles are statements of fundamental truth which provide guidelines for managerial decision making and action. The principles are derived on the basis of observation and analysis or experimental studies. 

Nature of Principles of Management

• Universal applicability:- The management principles can be applied in all types of organizations, business as well as non-business, small as well as large. However the extent of their applicability changes with the size, nature and type of activities.
• General Guidelines:- The management principles are General Guidelines to action, which however do not provide readymade solutions to all problems as the business environment is very changing or dynamic.
• Formed by practice and experimentation:- Management principles are developed on the basis of experience gained and practices i.e. after thorough research work on the basis of experiences of managers. Researchers undertake experimental study to find out the principles of management.
• Flexible:- The principles of management are dynamic in nature and cannot be called stagnant or fixed. They can be modified when situation demands. As and when political , economical or social changes take place, new problem arise and as per problem these are modified.
• Mainly Behavioural:- These management principles are aimed at influencing human behaviour in an organisation. They help in motivating and inspiring the employees which increases their efficiency.
• Cause and Effect relationship:- They intend to establish relationship between cause & effect so that they can be used in similar situations. Generally these principles deal with the human behaviour so accurate cause and effect relationship is difficult to establish. However they assist managers to some extent.
• Contingent:- The principles of management are not permanent. Their applicability depends upon the prevailing situation at a particular point of time. Therefore decision to implement them or not is taken according the situations.

Significance of the Principles of Management

• Providing managers with useful insights into reality:- The principles of management were developed on the basis of experience of various professional people. It also enables manager to learn from past mistakes and saves time by solving repeated problems quickly. It also informs the manager about the manner in which he should act in different situations.
• Optimum utilization of resource and effective administration:- In every organisation physical and human resources are used. The function of management is nothing but to put them to optimum use or avoid wastage of resources i.e. resources should be used in such a manner that they give maximum benefits with minimum cost.
• Scientific decisions:- A scientific decision means a balanced decision. Management principles help in thoughtful decision making which emphasis more on logics and facts rather than blind faith. They must be timely, realistic and subject to measurement and evaluation.
• Meeting the changing environmental requirements:- in modern times only such business unit can survive for long and develop which can adapt to the rapidly changing environment. The principles of management enable the managers to face the challenge. A manager who can understand the changing situation well in time can alone face competition successfully.
• Fulfilling social responsibility:- The increased awareness of the public, forces business organisations to fulfil social responsibilities. Value to the customer, care for the environment, dealings with business associates would all come under the purview of this principle.
• Management training, education and research:- The principles are helpful in identifying the areas of management in which existing and future managers should be trained. It indicates the lines on which research should be undertaken to make management practices more effective. Therefore it helps to impart teaching and training in the theory and practice of management.

Principles of Scientific Management : (Taylor’s)

Scientific management refers to the use of scientific methods in decision making to resolve management problems rather than trial and error method.

• Science not rule of thumb:- Taylor believed that there was only one best method to maximise efficiency. This method can be developed through study and analysis. He stated that “Trial & Error” or “hit or miss” method should be avoided, instead scientific and researched methods should be adopted.
• Harmony, Not discord:- In every organisation there are two groups of people i.e. workers and management, both always feel dissatisfied with each other. In this principle, Taylor insisted that both the groups should work together with a positive attitude and mutual cooperation. For this he emphasized on Mental Revolution. Management should take care of the workers by providing them better working conditions and workers should take care of management by giving their best towards the achievement of organisational gaols.
• Cooperation not individualism:- This principle states that the work should be done in cooperation and mutual confidence. Employees and management should cooperate with each other. Any constructive suggestions made by the employees should be rewarded i.e. workers should be taken into confidence. No individual alone or management without employees can make any change in the organisation. Thus the management should try to maintain cordial relation with the workers and among the workers.
• Development of Each and Every Person to His or Her greatest Efficiency and Prosperity:- According to this principle, the efficiency of each and every person should be taken care of right from his selection. A proper arrangement of everybody’s training should be made. It should also be taken care that each individual should be allotted work according to his ability and interest.

Techniques of Scientific Management

• Functional Foremanship:- Functional foremanship is a technique in which planning and execution are separated. Here, 8 foreman (lower level manager or supervisor) are required to supervise the workers. This is because one foreman cannot be an expert in all the functions. ( Refer Book for the chart).
• Standardisation and Simplification of work:- Standardization refers to the process of setting standards for every business activity, it can be standardisation of process, raw material, time, product quality etc. Simplification means to eliminate the unnecessary varieties, sizes, weights etc. It results in savings of cost of labour, Machines and tools. It leads to fuller utilization of equipment and increase in turnover.
• Method Study:- The objective of method study is to final out one best way of doing the job to maximise efficiency in the use of materials, machinery, manpower and money. To conduct this study process chart, operations research etc. are used. The main objective of this study is to minimise the cost of production and maximise the quality and level of consumer satisfaction.
• Motion Study:- It refers to the study of movements like lifting, putting objects, sitting etc. being performed by workers and machines while doing the job. The main objective of this study is to eliminate the useless motions to find out the best method to do a particular job and keep the number of activities at the minimum. Therefore motion study seeks to eliminate unnecessary motions in the execution of a job to enable it to be completed in less time efficiently.
• Time study:- It determines the standard time taken to perform a well defined job. The objective of time study is to determine the number of workers to be employed, frame suitable incentive schemes & determine labour costs. Various time measuring devices are used for each element of task.
• Fatigue study:- It refers to determine the duration and frequency of rest intervals to complete a particular job. The proper rest intervals refreshes the workers i.e. workers can maintain the same efficiency level. There may be so many causes of fatigue such as Long working hours, poor working conditions, poor relations with management etc.
• Differential Piece Wage system:- Under Differential Piece Wage system, a standard output is fixed first which is used to reward efficient workers. Two wage rates are fixed as follows:- 
• Low wage rate for those workers who produce less than the standard output.
• Higher wage rate was fixed for those workers who produce the standard output or more than the standard output.
• Mental Revolution:- It involves a change in the attitude of workers and management towards one another from competition to cooperation. In other words, management and workers should have positive attitude towards each other, it will increase productivity and profits.

Fayol’s Principles of Management : 

• Division of Work:- This principle states that every work should be divided into smallest possible part and each such part is to be performed by an individual person. Instead of assigning the whole work to an individual, it’s better to assign one task to one person. This principle guarantees specialization, increased efficiency and maximum output with minimum time.
• Authority and Responsibility:- Authority is the power to give orders or power to take decisions, whereas responsibility means answerability i.e. obligation to complete a job assigned on time and in best way. Both are closely related, it means proper authority should be delegated to meet the responsibilities. If adequate authority is not delegated employees cannot discharge their duties with efficiency, which may hamper the achievement of organisational goals.
• Discipline:- It is the obedience to organizational rules and employment agreement which are necessary for working of the organization. Discipline can be established by providing good supervision at all levels, clearly explaining the rules and implementing a system of reward and penalties. A manager can present a good example to his subordinates by disciplining himself.
• Unity of Command:- This principle states that an individual should get orders from a single superior so that he does not get confused and can discharge his duties effectively. Dual subordination reduces the efficiency of subordinates, creates confusion and it may also lead to overlapping of orders and instructions.
• Unity of Direction : This principle states “One Head One Plan”. It means that all the employees having same objective must be directed towards the achievement of common goal. This ensures unity of action and coordination. There are different divisions in the organisation for different activities and thus the efforts of the employees must be directed towards common objective.
• Subordination of Individual Interest to General Interest : Each and every individual joins the organisation with certain expectations and objective. The manager must try to integrate the individual goal with the organisational goal in such a manner so that the both objectives are achieved with efficiency and effectiveness i.e. organisational objective must take priority over the individual interest.
• Remuneration of Employees : According to Fayol, the overall pay and compensation should be fair to both employees and the organisation. A fair remuneration system motivates the employees to perform better, ensures safety and security and raise standard of living of employees. Such a fair system satisfies the employee in terms of payment received and satisfies the owners in terms of work completed.
• Centralization and Decentralization : When the power to take decision rests with the top management it is called as CENTRALISATION and when the power to take decision is given to the person performing the job it is called as DECENTRALISATION. According to the Fayol, there should be a proper balance between centralisation and decentralisation depending upon the size, nature and location of business.
• Scalar Chain : The formal lines of authority between superiors and subordinates from the highest to the lowest ranks is known as scalar chain. This chain specifies the route through which the information is to be communicated to the desired person. This chain should be followed strictly but in emergency employees at same level can contact through GANG PLANK.
• Order : It means right arrangement of things and activities. This principle states that there should be a fixed place for everything to facilitate smooth working and avoid wastage of resources. According to Fayol there should be proper place for physical resources as well human resources as per their designations. Therefore there will be no confusion and delay in working and this also helps in eliminating wastage of time, resources and efforts.
• Equity : It means the applicability of same rules and regulations for all employees in the organisation irrespective of their religion, sex, caste, colour, language, nationality, grade, position etc. This principle states that each and every employee in the organisation should be treated with equality and in just and fair manner i.e. there should not be any discrimination on any ground with any employee of the organisation.
• Stability of Personnel : It means that in an organisation whenever an employee is appointed for a job, he/she should not be removed or transferred from that position frequently. Stability helps the employees to know each and every aspect of the job which helps in performing the job with greater efficiency and minimum wastage.
• Initiative : Initiative means to start, to begin or to instruct in a project. Here in this principle Fayol suggested that each employee should be given an opportunity to take some initiative in framing the functional plan as well as in determining the steps to be taken at each level for proper execution.
• Esprit De Corps : It means spirit and team work. UNITY IS STRENGTH is the essence of this principle. The organisation should be considered as team and all the employees as its members, it develops a feeling of belongingness among them and thus each of them contributes to the achievement of organisational goal.

 TAYLOR Vs FAYOL

Basis	Taylor	Fayol
Perspective	Shoop floor level of factory	Top level of management
Formation	On the basis of observations and experimentation	On the basis of personal experience
Focus	Increasing productivity	Improving-overall administration
Expression	Scientific management	General theory of administration
Applicability	Applicable to specialised situation	Applicable universally
Personality	Scientist	Practitioner
Unity of command	No unity, command from 8 different foreman	Favoured one superior over the subordinates.

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