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2.12 – Principles of Management

In this chapter we will discuss principles of management. Consider the following situation. You are giving an interview for the post of a production manager at Eat India Company. The interviewer is asking you the following question:

If you are appointed as the production manager, what principles of management will you follow?

Did you understand the interviewer’s question? All you need to answer are:

  1. How you will deal with a crisis in the department? (What are your policies?)
  2. How will you solve a case of food-poison caused by your department? (What are your policies?)
  3. How will you increase efficiency and effectiveness? (What are your policies?)
  4. Will you do all the key works yourself or will you divide the works?
  5. Will you be rude with your subordinates and workers? Will you be lenient?
  6. What policies will you follow in order to maintain discipline?
  7. How will you make sure that the workers and managers will work for a single goal?
  8. What about raising the salaries of the workers?

So, principles of management are general guidelines, which can be used for conduct in work places under certain situations. They help managers to take and implement decisions.

The Principles of Management

The following are the major principles of management followed by most business organizations in the world. The two exponents are Henri Fayol and F W Taylor.

  1. Division of work. (Henri Fayol)
    1. Meaning – Divide the work into compact jobs and allocating these compact jobs to different individuals.
    2. Eat India Company has divided all its functions among 5 managers.
    3. Peter Mortimer is the Production Manager. He takes care of  all production work.
    4. Hari Ram – H R Manager.
    5. Qutab Muhammad – Quality Manager
    6. Mona  Michael – Marketing Manager
    7. Sukhbeer Madan – Sales Manager
  2. Authority and responsibility. (Henri Fayol)
    1. Meaning – There should be a proper balance between higher authorities and their subordinates.
    2. Quasim Malik is a staff in the Production.
    3. Quasim has to obey the orders given by his authority, Peter.
    4. Peter should not misuse his authority upon Quasim.
    5. Peter has got 2 kinds of authority:
      1. Official authority.
      2. Personal authority.
  3. Discipline. (Henri Fayol)
    1. Meaning – Discipline refers to obedience to rules and regulations of the organization which is necessary for systematic working of the organization.
    2. Quasim started reaching the factory very late.
    3. He thought that Peter would not mind that.
    4. This will lead to mismanagement.
    5. Peter has to be strict with Quasim.
  4. Unity of command. (Henri Fayol)
    1. Meaning – Each subordinate should receive orders and be accountable to one and only one boss/manager/superior.
    2. Production Manager gave an order to Quasim to bake 1000 units of cakes without eggs.
    3. Assistant Production Manager A P Mahajan also gave an order to Quasim to bake 2000 cakes without egg.
    4. This will result in discord of command and there will be conflicts and delay.
  5. Unity of Direction. (Henri Fayol)
    1. Meaning – There should be one head and one plan for a group of activities having same objective.
    2. Sales manager Sukhbeer Mahajan made a plan to generate sale of EIC’s Diamond Cakes in Sri Lanka.
    3. While the shipment was on the way to Sri Lanka, Assistant Sales Manager A S Meenakshi thought of selling half of the shipment to Andaman Islands.
    4. Unfortunately, there was no demand for egg-less cakes in the Andamans.
    5. This resulted in big loss to the company.
    6. A S Meenakshi should not have taken her own decisions.
  6. Stability of Personnel. (Henri Fayol)
  7. Centralization and decentralization. (Henri Fayol)
  8. Order. (Henri Fayol)
  9. Initiative. (Henri Fayol)
  10. Espirit de Corpse (Team spirit) (Henri Fayol)
  11. Equity. (Henri Fayol)
  12. Subordination of individual interest to general interest. (Henri Fayol)
  13. Remuneration of employess. (Henri Fayol)
  14. Scalar Chain. (Henri Fayol)
  15. Harmony, not discord. (F W Taylor)
  16. Cooperation, not individualism. (F W Taylor)
  17. Science, not rule of thumb. (F W Taylor)
  18. Development of the worker to their greatest efficiency and prosperity. (F W Taylor)

The techniques of scientific management as per Taylor

  1. Functional foremanship
    1. Meaning – The task of supervision is divided into several specialized functions. Each function is entrusted to a specialist foreman.
    2. Planning In-charge
      1. Instruction card clerk
      2. Route Clerk
      3. Time and cost clerk
      4. Disciplinarian
    3. Production In-charge
      1. Speed boss
      2. Gang boss
      3. Repair boss
      4. Inspector
  2. Standardisation and simplification of work
    1. Standardization Meaning – Process of setting standards for every phase of business operation.
    2. Simplification Meaning – Eliminating unnecessary varieties, sizes and grades of the products manufactured by the organization.
  3. Method Study
  4. Motion Study
  5. Time Study
  6. Fatigue Study
  7. Differential Wage System.

Meaning of Management Principles

  1. What are managerial principles?
    • A managerial principle is a broad and general guideline for decision-making and behaviour.
    • Example – While deciding about promotion of an employee, one manager may consider seniority, whereas the other may follow the principle of merit.
  2. How are managerial principles different from principles of pure science?
    • Management principles
      • Not rigid
      • They deal with human behaviour
      • They are to be applied creatively given the demands of the situation.
    • Principles of pure science
      • Rigid
  3. Why should managerial principles keep pace with (grow) technological changes?
    • Human behaviour is never static and so also technology, which affects business.
    • Hence all the principles have to keep pace with these changes.
    • Example – In the absence of Information and Communications Technology (ICT), a manager could oversee only a small work force that too within a narrow geographical space.
  4. Give an example for the benefit of Information and Communications Technology in business?
    • The advent of ICT has expanded the capability of the managers to preside over large business empires spread across the globe.
    • Example – Infosys headquarters in Bangalore boast of the Asia’s largest flat screen in their conference room from where their managers can interact with their employees and customers in all parts of the world.
  5. How are principles of management different from Techniques of management?
    • Techniques of Management
      • Procedures or methods, which involve a series of steps to be taken to accomplish desired goals.
    • Principles of Management
      • Guidelines to take decisions or actions while practicing techniques.
  6. How are principles different from values?
    • Values
      • Acceptable or desirable.
      • Have moral connotations.
      • Values are general rules for behaviour of individuals in society formed through common practice
    • Principles
      • Basic truths or guidelines for behaviour.
      • Principles of management are formed after research in work situations, which are technical in nature.
  7. Why are management values important?
    • Principles of management values cannot be neglected, as businesses have to fulfill social and ethical responsibilities towards society.

Nature of the Principles of Management

By nature is meant qualities and characteristics of anything. Principles are general propositions, which are applicable when certain conditions are present.

  1. What are the features of management principles?
    1. Management principles are universally applicable.
    2. They are general guidelines to run any organization.
    3. They are formed by practice and experimentation.
    4. They are flexible.
    5. They are mainly behavioral.
    6. They work upon cause and effect relatioship.
    7. They are contingent (changeable).
  2. What do you mean by the Universal Applicability of management principles?
    1. Simple answer: These principles can be applied to any business.
    2. Applicable to all types of:
      1. Organisations
      2. Business as well as non-business
      3. Small as well large
      4. Public sector as well as private sector
      5. Manufacturing as well as the services sectors.
    3. Variations
      1. Extent of their (of these principles) applicability would vary with the:
        1. Nature of the organisation
        2. Nature of the business activity
        3. Scale of operations, etc.
    4. Examples
      1. For greater productivity, work should be divided into small tasks and each employee should be trained to perform his/her specialised job.
      2. This principle is applicable to a government office where there is a diary/despatch clerk whose job is to receive and send mail or documents, a data entry operator whose task is to input data on the computer, a peon and an officer etc.
      3. This principle is also applicable to a limited company where there are separate departments like Production, Finance, Marketing and Research and Development etc. Extent of division of work, however, may vary from case to case.
  3. General guidelines
    1. The principles of management are guidelines to action but do not provide ready-made, straitjacket solutions to all managerial problems.
    2. This is so because real business situations are very complex and dynamic and are a result of many factors.
    3. However, the importance of principles cannot be underestimated because even a small guideline helps to solve a given problem.
    4. For example, in dealing with a situation of conflict between two departments, a manager may emphasise the primacy/importance of the overall goals of the organisation.
  4. Formed by practice and experimentation:
    1. The principles of management are formed by experience and collective wisdom of managers as well as experimentation.
    2. For example, it is a matter of common experience that discipline is indispensable for accomplishing any purpose.
    3. This principle finds mention in management theory. On the other hand, in order to remedy the problem of fatigue of workers in the factory, an experiment may be conducted to see the effect of improvement of physical conditions to reduce stress.
  5. Flexible
    1. The principles of management are not rigid prescriptions, which have to be followed absolutely.
    2. They are flexible and can be modified by the manager when the situation so demands. They give the manager enough discretion to do so. For example, the degree of concentration of authority (centralisation) or its dispersal (decentralisation) will depend upon the situations and circumstances of each enterprise. Moreover individual principles are like different tools serving different purposes, the manager has to decide which tool to use under what circumstances.
  6. Mainly behavioural
    1. Management principles aim at influencing behaviour of human beings. Therefore, principles of management are mainly behavioural in nature.
    2. It is not that these principles do not pertain to things and phenomenon at all, it is just a matter of emphasis. Moreover, principles enable a better understanding of the relationship between human and material resources in accomplishing organisational purposes. For example, while planning the layout of a factory, orderliness would require that workflows are matched by flow of materials and movement of men.
  7. Cause and effect relationship
    1. The principles of management are intended to establish relationship between cause and effect so that they can be used in similar situations in a large number of cases.
    2. As such, they tell us if a particular principle was applied in a particular situation, what would be its likely effect.
    3. The principles of management are less than perfect since they mainly apply to human behaviour.
    4. In real life, situations are not identical. So, accurate cause and effect relationships may be difficult to establish.
    5. However, principles of management assist managers in establishing these relationships to some extent and are therefore useful.
    6. In situations of emergencies, it is desirable that someone takes charge and others just follow.
    7. But in situations requiring cross-functional expertise, such as setting up of a new factory, more participative approach to decision-making would be advisable.
  8. Contingent | Subject to change
    1. The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time.
    2. The application of principles has to be changed as per requirements.
    3. For example, employees deserve fair and just remuneration. But what is just and fair is determined by multiple factors. They include contribution of the employee, paying capacity of the employer and also prevailing wage rate for the occupation under consideration.

Significance of the Principles of Management

Proper understanding of significance of management principles is essential to make sound decisions by managers.

The significance can be discussed under the following heads.

  1. Increase in efficiency
  2. Optimum utilization of resources
  3. Scientific decision making
  4. Adaptation to changing environment
  5. Fulfilling social responsibilities
  6. Proper research and development
  7. Training managers
  8. Effective administration.
  9. Scientific Management.

Questions & Answers

  1. How do the principles of management provide useful insights into reality? Give an example from real-life situation?
  2. How do the ’cause and effects relationship’ help managers to create optimum utilization of resources and effective administration?
  3. What do you understand by thoughtful or scientific decisions in management?
  4. You have studied that principles of management are flexible. Under what circumstances does flexibility help management?
  5. Which two principles of management help an organization fulfill its social responsibilities? How?
  6. How do the principles of management help prepare entrance tests and aptitude tests for management training?

Written by Biju John

Biju John is an educational writer, educator and the author of OM - The Otherwise Men. He gives live classes on Skype and Facebook. You can attend his 3 Day Classes (English & Business Studies) in Delhi, Bangalore, Qatar and Dubai. His Contact number is 91 9810740061.

The Old Brown Horse – W.F Holmes

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