OMTEX CLASSES: Principles of Management

6.1 Introduction

6.2 Meaning and Definitions

6.3 Nature of Principles of Management

6.4 Significance of Management

6.5 Fayo1's 14 Principles of Management

6.6 Taylor's Scientific Management and the Principles of Scientific Management

6.7 Techniques of Scientific Management

6.8 Summary

6.9 Exercise

Rahul's father accepted a position of Manager-Production in a multinational company. Before taking up the position, he had to undergo the training for six months at the head office of the company. When he, came back from the training after six months Rahul who was a XII commerce student and his mother, a bank employee asked him some questions about the nature of his training.

Rahul : Hallo, Papa! How was your training?

Father : It was excellent Rahul. Everything is different in a multinational company.

Mother : What is so different?

Father : The work culture, the atmosphere even the training centre and top of all, the trainers we

Rahul : Papa, I am excited, tell me what you have learnt there.

Father : We learnt so many things in training. Actually you know that I already have a diploma in management. But in training what we learnt is how to handle different people, at different situations effectively.

Mother : What difference did you find there?

Father : First of all the training was well planned. Everything went on time. There was no confusion any where. The trainers were using the principles of management and scientific management and giving us assignments of actually using the principles on the job.

Rahul : What are the principles of management, Papa? ,

Father : Henry Fayol and Frederick Taylor were two management thinkers. Both developed different principles by using their theories. These principles are used all over the world to manage the organizations. If you want to know more about these principles, read this book.

Rahul : Thank you, Papa! I will definitely read it.

(Rahul read this book given by his father about the principles of management. We will also get the i information about the principles of management in this chapter.)

6.1 INTRODUCTION

The concept of management is studied in XI standard. Management is everywhere. Management is practiced in every type of organization, whether small or large, business organization on non business organization. However management cannot be practiced arbitrarily. The manager has to apply certain principles while managing any activity. To get the correct results, management is to be done scientifically. Therefore in this chapter the principles of management and the principles of scientific management are discussed in details.

6.2 Meaning And Definition

The term `Principle' has been defined as :

"A basic generalisation that is accepted as true and that can be used as a basis of reasoning or conduct."

According to the above definition principles are the general rules which can be applied to any situation or condition. Principles can be used as a base of analysis. They can be used as the guidelines for taking the decisions.

However it must be noted that the principles are basic statements of truth. They provide guidelines, but they are not to be followed blindly.

Principles of management are the statements of fundamental truth. These principles provide guidelines to managers to take decisions. In short these principles help the managers to take managerial decisions. They help in understanding the results of the decisions taken by the managers.

Management is universal. It is applicable everywhere. However the managers cannot function unless there is some base for their decisions or action. In this case the principles of management help them in managing the business.

Management principles are unwritten rules which are used while practicing management. Therefore it is essential to study the nature of these principles.

6.3 NATURE OF PRINCIPLES OF MANAGEMENT

1. Management principles are universal : Management principles are universally applicable. They can be applied everywhere and all situations of business. Not only that, they are applicable to all types of business organizations, irrespective of size of business, nature of business, etc. Similarly they are applicable to all levels of management.

2. Management principles are flexible : Management principles are flexible in nature. It means they can.be changed or modified according to the situation. Managers can bend these principles to suit the requirement. The situations in a business organization keep on changing continuously. No two circumstances are same. Management principles can be adjusted or modified and used in the organization according to its needs.

3. Cause and effect relationship : principles of management are the base for taking decisions. They determine the cause or reason for a particular effect. e.g. Payment of good wages and incentives helps in increasing the output of workers or making effective advertisement increased the sale of a product.

4. Management principles are aimed at influencing human behavior : Management is a group activity. Management aims at achieving certain goal through a group of human beings. Management principles are designed to influence human beings. These principles control a group of persons and direct them to achieve the objective.

5. All principles are of equal importance : All the principles of management are equally important. All are to be practiced simultaneously to get a perfect result. No one principle is more important than other. If any single principle is not practiced or followed by the manager, it affects the working of the organization.

6. Management principles are relative in nature : Management principles are the principles of social science. They are not absolute like principles of science. It means these principles are applied in different ways in different situations. They are to be changed or modified according to the-situation to get the correct and desired result.

6.4 SIGNIFICANCE OF PRINCIPLES OF MANAGEMENT

Management principles are applicable in every business organization and in every situation: These principles are tested and practiced for years in all parts of the world. Therefore it is important to study its importance or significance. It can be studied with the help of following points.

1. Management principles help to improve understanding : The principles of management help the manager to understand the organization. The study of the principles of management helps to improve the understanding of the situations and problems. It further helps the manager to find out the solutions to the problems and handle situations.

2. Help in increasing the efficiency : By using these principles the organization can increase the efficiency of the employees. Principles can guide the managers about handling the human resource, reducing the wastage, co-ordinate the activities of different departments, etc. All this helps to improve the productivity in the organization.

3. Help to develop the objective approach : The principles The principles of management help the manager to develop an objective approach. Thus the manager can identify the problem in correct manner and he can provide solutions in an objective manner. This approach builds confidence in the minds of the managers.

4. Help to co-ordinate and control : Management principles give the guidelines for better co-ordination and control. While practicing management the managers can make use of these principles to coordinate the activities of different departments. Manager can exercise better control over the organization. Thus the given target can be achieved easily.

5. Understanding social responsibility : In modern world more importance is given to understand the social responsibility of business organizations. It is because business organizations are the part of the society. Business organizations should not only emphasise on making profit but they should discharge their responsibility towards the society also. Management principles help the managers to understand this responsibility. They show the ways to fulfil this responsibility. e.g. Payment of good remuneration is one of the principles of management which is the responsibility towards employees.

6. Research and development : Principles of management are dynamic. Their nature go on changing along with the changes in the business world. Over years they have developed to suit the current needs. Therefore these principles give encouragement to research and development in the organization.

6.5 HENRY FAYOUS PRINCIPLES OF MANAGEMENT

Henry Fayol (1981-1925) : Henry Fayol was a French mining engineer. He worked as the director of mines also. After conducting many experiments in management, he developed fourteen principles of management. These principles are explained in his famous book `General and Industrial Administration'. Due to his contribution to management, he is called `the father of Modern Management'. The principles laid down by Fayol are explained below.

1. Principle of Division of Work : According to this principle the total work should be divided into small sub parts. The divided work should be assigned to different employees, as per their capacities, skills and interests. Fayol says division of work leads to specialization.

Arrange a class trip of class cultural programme. Make parts of the total activity in to small job. Divide the work among your classmates. Find out the results.

2. Principles of Authority and Responsibility : When the work is assigned to a person, he should be given proper authority to carry out that work. e.g. a manager should be given authority to take managerial decision on his own. Then only he can function properly. However authority is always accompanied by responsibility. When a person is given the authority, he should be held responsible for the same task. Authority and responsibility always go hand in hand. If the manager is given the authority to complete a task within a given time, he should be held responsible if he does not do that in time.

3. Principle of Discipline : According to Fayol, discipline is the most essential thing in the organization. Employees must obey and respect the rules that govern the organization. Discipline helps to achieve the goals set in the organization. Good discipline is the result of effective leadership. For that there must be a clear understanding between the management and workers regarding the organization's rules.

4. Principle of Unity of Command : In any organization every employee should receive orders from one superior (boss) only. This is applicable from top management to bottom. The principle of unit of command tries to avoid confusion. If an employee receives orders from more than one superior he will be confused and will not be able to work with concentration. The work will not be performed properly. Whereas if he gets orders from only one person, he will finish his work accurately.

5. Principle of Unity of Direction : Unit of command explains about single person getting directions from a single person. But unity of direction explains about a group working with the same objective under the directions of a single person. According to this principle each group in the organization should have the same objective. The group should be directed by one manager using one plan. Thus , this principle explains about group working in the organization.

6. Principles of Subordination of Individual Interest to General Interest: According to this principle the interest of an individual must be given less importance than the interest of the whole organization. While taking decision in the organization the manager should always consider the interest of the whole group rather than the interest of a single employee. Similarly the employee should also protect the interest of the organization and consider his interest subordinate. If the organization prospers automatically the employee will prosper.

7. Principle of Remuneration : This principle states that the employees must be paid a fair wage for their services. While paying remuneration the skill, expertise, knowledge, tenure etc. of the employee should be taken into account. When the employees are paid fair remuneration they show greater productivity and give more output.

8. Principal of Centralisation : Centralisation refers to the concentration of power or authority. In some organizations this power is vested in one hand or few hands. This situation occurs in the small organizations. But if the size of the organization is large then centralisation becomes difficult. Then there is a decentralisation of the power or authority. The power is given to different people e.g. in large, organizations there are departmental heads or managers handling different tasks or line supervisors.

According to this principle there must be a proper balance between centralisation and decentralisation in the organization. This is to be done according to the size of the organization, nature of AS activity etc.

9. Principle of Scalar Chain : Usually in the organization there is a particular system of communication. It is through a chain. e.g. The Manager will inform about a decision to the departmental head, the departmental head will inform the supervisor, the supervisor will inform the foreman and the foreman will inform the workers. On the other hand the communication can flow from the worker to the manager in the upward direction also. It is known as scalar chain. However this type of communication at times is very time consuming. Therefore sometimes cross communication i.e. communication not exactly following the chain, should be allowed. This is known as `Gang Plank'. It avoids delays. Gang plank must be done with proper permission of the authorities.

10. Principle of Order : According to this principle people and materials should be in the right place at the right time. It means there must be proper arrangement of material. It must have right place. Similarly there must be proper placement of personnel. They must be appointed to do right work at right place. This principle emphasizes on the proper utilisation of physical and human resources.

11. Principle of Equity : This principle is about fair and equal treatment to all employees. Managers should be kind and fair to their subordinates. There should not be any discrimination between the employees. e.g: The employees working on the same level but in different department should be paid same wages. Their wages should not depend on the department but the level at which they are working. While distributing work between people and the departments this principle should be followed by the manager. As far as possible there should be equal division of work. This avoids conflicts in the organization.

12. Principle of stability of Tenure : While appointing an employee the manager should assure the stability of tenure or job security to the employee. This creates a sense of belonging among the employees. There should not be any uncertainty in the mind of the employees regarding the stability of the job.

13. Principle of Initiative : Initiative refers to taking the first step. It also means thinking of new ideas. According to this principle the manager should encourage the employees to take initiative. The employees should come up with the new ideas and the manager should welcome their ideas. This approach h0ps the organization to grow. It also creates a sense of belonging about the organization in the minds of the employees.

14. Principle of Esprit de Corpse : Esprit de Corpse means union is strength. Management is a group activity. Human resource is the great asset of the organization. The manager should create a spirit of team work among the employees. Manager should build a sense of togetherness among the employees.. If the workers work with unity the goal can be achieved easily.

6.6 F.W. TAYLOR'S SCIENTIFIC MANAGEMENT

F.W Taylor (1856 - 1915) : Frederick Winslow Taylor was an American mechanical engineer. He developed the scientific management theory. He experimented in the Midvale Steel Company in USA in early 20th century. His scientific management is accepted initially in USA and then in European countries and all over the world. Due to his scientific approach towards the management, he is called the `father of Scientific Management'.

Taylor formed certain principles of management based on the scientific experiments. These principles are used in the decision making and solving the problems of management. According to Taylor management problems should be solved by experiments and scientific techniques rather than thumb rules or trial and error methods.

Taylor's principles are based on following four areas :

A. Observation and analysis of each task.

B. Determination of the standard of work.

C. Selecting and training people to perform the jobs.

D. Ensuring that the work is done in the most efficient manner.

Taylor's principles of scientific management are as follows.

PRINCIPLES OF SCIENTIFIC MANAGEMENT

1. Development of Science for each of men's job : According to this principle the manager should use the scientific method to determine every activity performed by the employee in the organization. For this he should consider the following points :

i. To calculate the time required for each job by observing the employee.

ii. To determine how much work can an employee perform in a day.

iii. To find out the best way to do a particular job.

iv. Instead of using trial and error method for determining the job use systematic way such as data collection, analysis of data and then drawing conclusions.

Select any job or activity in a production unit. Find out the parts and sub parts of the activity. Calculate the time required to complete each job. Find out the time required to complete the total work.

What did you find out?

Was it the best way to complete the job?

Can you suggest any better alternative to complete the same task?

If yes, then support your suggestions by preparing a report and hand it over to your teacher.

2. Scientific Selection, Training & Development of Workers : According to Taylor selection of employees is an important task before the manager. The selection procedure should be perfect and systematic. For this purpose the following points should be considered.

i. The procedure of selection should be scientific. It means the selection should not be based on the judgement of a single person.

ii. The physical, mental, technical or other qualities required for the job should be clearly defined. This makes the selection easier.

iii. The Employees should be selected on the basis of tests and interviews.

iv. The employees should be trained from time to time. Training makes employees capable to survive in the job.

v. The manager should provide opportunities for development of workers having better capabilities.

vi. The manager should develop each employee in such a way the that employee shows maximum efficiency.

3. Co-operation between Management and Employees : To achieve the objectives or goals there should be proper co-operation between the employees and management. The relations between them should be harmonious. Following points should be noted in this regard :

i. In the organization the emphasis should be given to co-operation between the management and workers and not to individualism.

ii. The goals can be achieved effectively only by co-operation.

iii. The interest of the management and the workers should be one and the same. They should harmonise.

4. Division of Responsibility : While dividing the work there should be the division of responsibility between the managers and the employees. This can be done by the following way :

i. The nature and roles played by different levels of managers and employees should be determined properly.

ii. The managers should be given the responsibility of planning whereas the workers or employees should concentrate on the execution.

This principle helps the employees to perform their best.

5. Mental Revolution : This principle focuses on the complete change in the attitude of the management and employees as regards their relations are concerned. For this change the following points should be taken in to account.

i. The manager should create a suitable working condition for the employees

ii. All the problems should be solved scientifically

iii. The employees should perform their jobs carefully and with devotion

iv. The employees should use the resources carefully. They should not waste the resources.

v. On the other hand management should provide fair remuneration to the employees and boost up their morale.

If there is a change in the attitude of the management and the employees it will help in achieving the goals, increase in the production, creating discipline in the organization and creating a sense of belongingness among the employees.

6. Maximum prosperity for Employer and Employees : The aim of scientific management is to give maximum prosperity to the employer and employee. However it is possible with the help of following points.

i. Each employee should be given proper opportunity to attain his highest efficiency

ii. The employees should give maximum output

iii. There should be the optimum utilisation of resources.

The principles of scientific management cannot be applied unless the techniques of scientific management are studied. They are given below.

6.7 TECHNIQUES OF SCIENTIFIC MANAGEMENT

The techniques of scientific management help a manager to apply the principles of scientific management effectively. These techniques are discussed below.

1. Time Study : This technique helps a manager to calculate the time required to perform a particular job. He can take the decision about production or completion of an activity with the help of this technique. The time study is based on the speed of average worker. Every part of the total work is studied in details and the time required to perform that job is calculated. This enables the manager to ascertain the standard time taken to complete a specific job. The manager can decide the remuneration to be paid to the worker based on this.

2. Motion Study : Motion study is the close study of body movements. That is the movements of hands, legs and other body parts. Manager should study these movements. This study helps the manager to understand the movements required for a person to do a particular task. This technique can be used by the manager to eliminate the unnecessary movements for doing the job. With the help of motion study the manager can eliminate or combine some actions in the process. Motion study increases efficiency and productivity of the employees.

3. Functional Foremanship : This technique refers to the guidance given to the worker by a specialist foreman. According to this technique a single worker is supervised by different supervisors. For doing a particular job, the worker performs various small tasks. While doing this job he will get the guidance and will be supervised by different superiors for each task. This techniques is exactly opposite of Fayol's principle of unit of command. According to Fayol there should one boss for worker but according to this technique for one worker there can be many supervisors. Taylor says that work can be done accurately by this technique. This method is mainly useful for production department.

4. Standardization : Standardization in the production implies (i) Selecting the standard tools and equipments for production and (ii) maintaining standard working conditions at the place of work.

The management should provide good quality of tools and equipments used for production of a good quality. This helps the workers to perform the job easily and efficiently. Secondly the working conditions should be good so that the workers can give their best output. This technique minimises the cost of production and makes best use of available resources.

5. Different Piece Rate Plan : According to Taylor there should discrimination between the efficient and inefficient workers. The payment should be made according to the performance of the worker. The efficient workers should be paid more whereas inefficient workers should be paid less remuneration. In this method a standard is fixed for production. Those who produce more than the standard should be paid more in the form of an incentive and those who perform less than the standard should be paid. less as penalty. This system gives encouragement to those who perform well and motivates those who have underperformed to improve their performance.

6. Other Techniques : In addition to the above techniques some other techniques are also suggested by Taylor. They include the use of instruction cards, strict rules of discipline, and use of charts, graphs, slides, charts to instruct the workers etc. These techniques are also used to develop better relations between the employers and employees.

6.8 SUMMARY

The principles of management are universal. They are applicable everywhere. They are flexible and show cause effect relationship. They are developed to influence human behaviour. All the principles are of equal importance and they are relative in nature.

The management principles are important as they help the managers in many ways such as they help to improve the understanding of the manager and the workers, they increase the efficiency of the employees. The manager can develop the objective approach and he can coordinate and control the activities in the organization. Management principles make the manager understand the social responsibility. The managers can undertake the research and development activity with the help of management principles.

Henry Fayol, a French engineer developed 14 principles of management which are accepted all over the world these principles are :

1. Principle of Division of Work.

2. Principle of Authority and Responsibility.

3. Principle of Discipline.

4. Principle of Unity of Command.

5. Principle of Unit of direction.

6. Principle of Subordination of Individual Interest to General Interest.

7. Principle of Remuneration.

8. Principle of Centralisation.

9. Principle of Scalar Chain.

10. Principle of Order.

11. Principle of Equity.

12. Principle Stability of Tenure.

13. Principle of Initiative.

14. Principle of Esprit de Corps.

An American mechanical engineer F.W. Taylor developed a scientific approach towards management and he developed the following principles of management:

1. Development of Science for each part of men's job.

2. Scientific Selection, Training and Development of workers.

3. Co-operation between Management and employees.

4. Division of Responsibility.

5. Mental Revolution.

6. Maximum Prosperity for employer and Employee.

Along with the principles, Taylor has also furnished certain techniques of management. They are :

1. Time Study.

2. Motion Study.

3. Functional Foremanship.

4. Standardization.

5. Differential Piece Rate Plan.

6. Other Techniques.

EXERCISE

Q.1 (A) Select the proper option from the options given below and rewrite Completed Sentences.

1. 14 principles of management are developed by....................

a) F.W. Taylor b) Henry Fayol c) Peter Drucker

2. Management principles influence ....................

a) human behaviour b) organization c) government

3. Concentration of power of authority is stated in the principles of .................... a) Centralisation b) Remuneration c) Equity

4. According to the principles of .................... all employees should be given same treatment

a) Authority b) Discipline c) Equity.

5. Technique of study of ........ concentrates on the body movements of the worker.

a) Motion b) Time c) Organization

6. F.W. Taylor is called as the father of ....................................management.

a) Modern b) Scientific c) Technical

7. Principle that focuses on complete change in the attitude of the employees is known as the principle of ....................

a) attitude change b) scientific management c) mental revolution.

(B) Match the correct pairs

Group 'A'	Group 'B'
a. Henry Fayol b. Principle of unity of command c. Time study d. F.W. Taylor e. Management principles	1. Universal 2. Father of Scientific Management 3. Specific 4. French engineer 5. Study the time required to do a job 6. German engineer 7. One man one boss 8. Study the body movements of the Worker 9. Father of nation 10. One man many bosses