Principle

A principle is a fundamental statement of

truth that provides guidance to thought and
action.
Principles of Management
Principles of management are broad and
general guidelines for managerial decision
making and behaviour (i.e. they guide the
practice of management).
Universal applicability
General Guidelines
Formed by practice and experimentation
Flexible
Mainly Behavioral
Cause and Effect relationship
Contingent
1. Universal applicability : i.e. they can be applied in all
types of organizations, business as well as non-business, small as
well as large enterprises.

2. General Guidelines: They are general guidelines to action

and decision making however they do not provide readymade
solutions as the business environment is ever changing or
dynamic.

3. Formed by practice and experimentation: They

are developed after thorough research work on the basis of
experiences of managers.
4. Flexible: Which can be adapted and modified by the practicing
managers as per the demands of the situations as they are man-made
principles.

5. Mainly Behavioural: Since the principles aim at influencing

complex human behaviour they are behavioural in nature.

6. Cause and Effect relationship: They intend to

establish relationship between cause & effect so that they can be used in
similar situations.

7. Contingent: Their applicability depends upon the prevailing

situation at a particular point of time. According to Terry, “Management
principles are ‘capsules’ of selected management wisdom to be used
carefully and discretely”.
 Providing
managers with
useful insights
into reality Optimum
Management utilization of
training, resources &
education and effective
research administration

Fulfilling social Scientific

responsibility decisions

Meeting the
changing
environmental
requirements
1. Providing managers with useful insights into
reality: Management principles guide managers to take right
decision at right time by improving their knowledge, ability and
understanding of various managerial situations and circumstances.

2. Optimum utilization of resources and effective

administration: Management principles facilitate optimum
use of resources by coordinating the physical, financial and human
resources. They also help in better administration by discouraging
personal prejudices and adopting an objective approach.

3. Scientific decisions: Decisions based on management

principles tend to be more realistic, balanced and free from personal
bias.
4. Meeting the changing environmental requirements:
Management principles provide an effective and dynamic
leadership and help the organization to implement the changes.

5. Fulfilling social responsibility: Principles of

management not only help in achieving organizational goals but
also guide managers in performing social responsibilities.
Example : “Equity” and “Fair” remuneration.

6. Management training, education and

research: Management principles are helpful in identifying
the areas in which existing and future managers should be
trained. They also provide the basis for future research.
About Henry Fayol: Henry Fayol (1841-1925) got
degree in Mining Engineering and joined French
Mining Company in 1860 as an Engineer. He
rose to the position of Managing Director in
1988. When the company was on the verge of
bankruptcy. He accepted the challenge and by
using rich and broad administrative experience,
he turned the fortune of the company. For his
contributions, he is well known as the “Father of
General Management”.
1. Division of work: Work is divided in small tasks/job and each work is
done by a trained specialist which leads to greater efficiency, specialization,
increased productivity and reduction of unnecessary wastage and movements.

2. Authority and Responsibility: Authority means power to take

decisions and responsibility means obligation to complete the job assigned on
time. Authority and responsibility should go hand in hand. Mere responsibility
without authority, makes an executive less interested in discharging his duties.
Similarly giving authority without assigning responsibility makes him
arrogant and there is fear of misuse of power.

3. Discipline: It is the obedience to organizational rules by the subordinates.

Discipline requires good supervisors at all levels, clear and fair agreements
and judicious application of penalties
4. Unity of Command: It implies that every worker
should receive orders and instructions from one superior
only, otherwise it will create confusion, conflict,
disturbance and overlapping of activities.
5. Unity of Direction: Each group of activities having the
same objective must have one head and one plan. This
ensures unity of action and coordination.

6. Subordination of Individual Interest to

General Interest: The interest of an organization
should take priority over the interest of any one individual
employee.
7. Remuneration of Employees: The overall pay and
compensation should be, fair to both employees and the
organization. The wages should encourage the workers to
work more and better.

8. Centralization and Decentralization:

Centralization means concentration of decisions making
authority in few hands at top level. Decentralization means
evenly distribution of power at every level of
management. Both should be completely centralized or
completely be balanced as no organization can be
completely centralized or completely decentralized.
9. 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 should not be violated but in emergency
employees at same level can contact through Gang Plank by
informing their immediate superiors.

10. Order: A place for everything and everyone and everything

and everyone should be in its designated place. People & material
must be in suitable places at appropriate time for maximum
efficiency.
11. Equity: The working environment of any organization should be
free from all forms of discrimination (religion, language, caste, sex,
belief or Basis Unity of Command Unity of Direction nationality) and
principles of justice and fair play should be followed. No worker should
be unduly favoured or punished.

12. Stability of Personnel: After being selected and appointed by

rigorous procedure, the selected person should be kept at the post for a
minimum period decided to show results.

13. Initiative: Workers should be encouraged to develop and carry

out their plan for improvements. Initiative means taking the first step
with self-motivation. It is thinking out and executing the plan.

14. Espirit De Corps: Management should promote team spirit,

unity and harmony among employees. Management should promote a
team work.
Fredrick Winslow Taylor (1856-1915) was a person who within a
very short duration (1878- 1884) rose from ranks of an
ordinary apprentice to chief engineer in Midvale Steel
Company, U.S.A. Taylor conducted a number of experiments
and came to conclusion that workers were producing much less
than the targeted standard task. Also, both the parties –
Management and workers are hostile towards each other. He
gave a number of suggestions to solve this problem and
correctly propounded the theory of scientific management to
emphasize the use of scientific approach in managing an
enterprise instead of hit and trial method. For his contributions,
he is well known as the “Father of the Scientific Management”.
Scientific Management attempts to eliminate wastes to ensure
maximum production at minimum cost
Science, not rule of Thumb

Harmony, Not discord

Cooperation not individualism

Development of each and every person to his or her greatest

Efficiency and Prosperity

Maximum, not Restricted Output

1. Science, not rule of Thumb: There should be scientific
study and analysis of each element of a job in order to replace the
old rule of thumb approach or hit and miss method. We should be
constantly experimenting to develop new techniques which make the
work much simpler, easier and quicker.

2. Harmony, Not discord: It implies that there should be

mental revolution on part of managers and workers in order to respect
each other’s role and eliminate any class conflict to realize
organizational objectives.

3. Cooperation not individualism: It is an extension of

the Principle of Harmony not discord whereby constructive
suggestions of workers should be adopted and they should not go on
strike as both management and workers share responsibility and
perform together.
4. Development of each and every person to his or
her greatest Efficiency and Prosperity: It implies
development of competencies of all persons of an organization
after their scientific selection and assigning work suited to their
temperament and abilities. This will increase the productivity by
utilizing the skills of the workers to the fullest possible extent.

5. Maximum, not Restricted Output: Both the

management and workers should try to achieve maximum
output in place of restricted output. This will be beneficial to
both the parties. Maximum output will result in higher wages for
the workers and greater profit for the management. Increased
productivity is also in the interest of the consumers and the
society at large.
1. Functional Foreman-ship: Functional foreman-ship is a
technique in which planning and execution are separated. There are
eight types of specialized, professionals, four each under planning and
execution who keep a watch on all workers to extract optimum
performance.

Planning In charges:
1. Route Clerk to specify the exact sequence and route of production.
2. Instruction card clerk is responsible for drafting instructions for the
workers.
3. Time and cost clerk to prepare time and cost sheet for the job.
4. Shop Disciplinarian to ensure discipline and enforcement of rules and
regulations among the workers.
Production Incharges:
1. Gang boss is responsible for keeping tools and machines ready for
operation.
2. Speed boss is responsible for timely and accurate completion of
job.
3. Repair boss to ensure proper working conditions of tools and
machines.
4. Inspector to check quality of work.
2. Standardization and Simplification of work:
Standardization refers to developing standards for every business
activity whereas Simplification refers to eliminating superfluous
varieties of product or service. It results in savings of cost of
labour, machines and tools. It leads to fuller utilization of
equipment and increase in turnover.
3. Method Study: The objective of method study is to
find out one best way of doing the job to maximize
efficiency in the use of materials, machinery, manpower
and capital.
(1) Which technique of scientific management is being
violated here? (Hint: Functional Foreman ship.)
(2) Write one consequence of this violation.
4. Motion Study: It is the science of eliminating
wastefulness resulting from using unnecessary, ill-
directed and inefficient motions by workers and
machines to identify best method of work.
5 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.

6. Fatigue study: Fatigue study seeks to determine time

and frequency of rest intervals in completing a task. The
rest interval will enable workers to regain their lost
stamina thereby avoiding accidents, rejections and
industrial sickness.
7. Differential piece wage system: This system links wages
and productivity. The standard output per day is established
and two piece rates are used: higher for those who achieve
upto and more than standard output i.e. efficient workers
and lower for inefficient and slow workers. Thus, efficient
workers will be rewarded & inefficient will be motivated to
improve their performance.
For example: Standard task is 10 units. Rates are: Rs 50 per
unit for producing 10 units or more and Rs 40 per unit for
producing less than 10 units Worker A produces 11 Units; he
gets Rs 550 (11 units x 50 per unit) Worker B produces 09
units; he gets Rs 360 (9 units x 40 per unit) This difference
of Rs 190 will motivate B to perform better.
 Basis Fayol Taylor
He developed the theory of He developed the concept of
1. Nature of Functional management or Scientific management.
Research Management process

His principles are concerned His principle and techniques

2. Concern with management efficiency are concerned with workers
efficiency

He designed principles for top He designed principles for

3. Level level of management. lower level of management.

Improving overall For him increasing

4. Focus administration by observing productivity through work
certain principles was his main simplification was main focus.
focus
He developed the personality He developed the personality
5. Personality of a researcher and practioner of scientist and was called as
and was called as ‘father of ‘father of scientific
general management. management
 Hid main contribution was to He provided a basis on
6. Major produce a systematic theory of accomplishment on production
contribution management with the help of
fourteen principles of general
line with the help of scientific
techniques and management
management.

He gave due emphasis to He ignored the human element

7. Human human elements by suggesting and emphasized more on
element principles like equality,
initiative, fair remuneration
increasing productivity.

etc.
His principles were flexible He was rigid in his approach
8. Rigidity and and he felt that there should be
flexibility no deviation from fixed
standards
His principles are applicable to His principles are applicable to
9. Applicability business as well as non- production and manufacturing
business organizations i.e. are i.e. are applicable to specific
applicable universally. situations
He strictly follow this He did not follow this
10. Unity of principles i.e. one boss for one principle instead he insisted on
command employee. minimum eight bosses.