Principles of Management - Notes

Unit – 2

Syllabus content – (2024-25)

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 Principles of Scientific Management:

1. Science and not rule of thumb:

o Each job must be performed on the basis of scientific enquiry and not on the basis of intuition or hit
and trial method.
o One best method of doing a job must be developed to maximize efficiency.

2. Harmony and not discord:

o Between management and workers.

o Management should be willing to share gains of the firm with the workers and workers should
work hard and accept change for the good of the firm and not go on strikes.
o There should be ‗Mental Revolution‘ = both should transform their way of thinking – interest of
the two are the same and long term prosperity of management cannot be at the cost of management and
vice versa.(eg –Japanese culture) (Similar to Principle of Espirit De Corps given by Fayol)

3. Co-operation and not individualism:

o Extension of harmony and not discord.

o Both should develop understanding and secure mutual co-operation.
o Management should give importance to suggestions made by the workers and workers must
desist from going on strikes and making unreasonable demands.
(Similar to Principle of Espirit De Corps given by Fayol)

4. Development of each and every person to his/her greatest efficiency and

prosperity:

o Industrial efficiency depends upon efficiency and competency of workers.

o Efficiency should be built in right from the process of employee selection, assignment of work on the
basis of their capabilities, giving training when needed.
Techniques of Scientific Management

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 Techniques of Scientific Management

1. Functional Foremanship

Taylor suggested division of work of the factory manager into two sub- departments: planning
department and production department.

 He realized that, a single foreman/supervisor cannot be expected to be an expert in all aspects

of work and therefore he suggested appointment of eight supervisors to give instructions to a
single worker.
 Out of them, four would work under the planning incharge and would be responsible
for planning and the other four would work under the production incharge and would
be responsible for execution.

Specialists under the Planning In charge:

1. Route Clerk: would specify route/sequence production operations

2. Instruction Card Clerk: would draft instructions for workers, in handling their jobs.
3. Time and Cost Clerk: would fix
 Dates for starting and completing work as per schedule.
 Cost sheet to determine expenses for material, labour and other overheads.
4. Disciplinarian: would ensure systematic performance of jobs by enforcing rules and regulations.

Specialists under the Production In charge:

1. Gang Boss: would do all preliminary work—keeps materials, machines, tools etc. ready for
workers.
2. Speed Boss: would ensure timely and accurate completion of jobs.
3. Inspector: would check quality of work done by workers.
4. Repair Boss: would ensure that machines and tools are kept in proper working conditions and
are maintained and repaired properly.

2. Standardization and Simplification of Work

Standardization refers to the process of setting standards for every business activity. It can be
standardization of process, raw materials, time, product, machinery, methods, working conditions. It
is done with a view to:
i. To reduce a given line or product to fixed types, sizes and characteristics.
ii. To establish interchange ability of manufactured parts and products.

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iii. To establish standards of excellence and quality in materials.
iv. To establish standards of performance of men and machines.

Simplification aims to eliminate unnecessary diversity in products as more varieties would mean
more inventory, more machinery, more labour cost etc.
Simplification would lead to savings in cost of labour, machines and tools.

3. Work Study

 Work study means a comprehensive and objective assessment and analysis of all the
operations involved in performing the various jobs in the organization.
 This is done with a purpose of producing maximum possible output of the best quality at
minimum costs.

 It has 4 components: time study, motion study, method study and fatigue study.

a. Time Study

 It is a technique used to measure the time that may be taken by an average worker of reasonable
skill and efficiency to perform a job well defined job.
 To conduct time study, the job is broken into a number of elements and the time taken to
complete each element is noted with the help of a stopwatch. After adding necessary time for
rest periods,
 the standard time of each element of the job and the standard time for performing the complete
job is determined. Many techniques such as process charts, operation research etc are used for
this purpose.

Purpose of time study is that it helps to determine:

i. Standard time required to do a job and number of workers to be employed.

ii. A standard task/fair day‘s work for the workman
iii. To determine the number of employees to be employed
iv. To determine labour costs and to frame suitable incentive schemes.

b. Motion Study

 It is a technique to closely observe movements of body of a worker involved in performing a job

in order to eliminate unnecessary movements.

 Aim is to identify:
o Motions that are productive
o Motions that are incidental and
o Motions that are unproductive.

 The study is generally conducted with the help of a movie camera. Experts observe how the
worker moves, and determine his productive movements, incidental movements and
unproductive movements. Then they instruct and educate workers how to eliminate the
unnecessary/ unproductive movements so that the workers get to know the best way of doing a
job.

 Purpose of motion study is :

i. Finding the best method of doing work by developing the ideal sequence of motions.
ii. Identifying and eliminating unnecessary movements.
iii. Increase efficiency and reduce labour costs.
iv. Reduce human fatigue.

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c. Method Study

 There may a number of possible methods of performing a job with different cost requirements.
Taylor suggests finding ‘One best way’ of performing a job. The purpose of method study is
to minimize production costs and use organization‘s resources such as land, labour, capital etc.
for better results.
 Methods of production should not be decided by ‗rule of thumb‘ but after trying all methods
and the method that maximizes benefits with minimum cost must be selected.
 For example, Taylor devised the concept of assembly line by using the method study. This
technique was used successfully by Ford Motor company and is used by the auto companies
even today.

d. Fatigue Study

 This technique is conducted to find out:

1. frequency of rest intervals
2. duration of rest intervals
3. and the number of rest intervals, in completing a job.

 If an employee keeps working without rest pauses, physical and mental fatigue affects the health
and efficiency of workers. Excessive specialization and poor working conditions may also cause
monotony and boredom resulting in more accidents, spoilage, absenteeism and labour
turnover.
 Taylor suggested that the time and frequency of the rest intervals should not be decided by
manager‘s wish/ experience.

 To do it scientifically, fatigue study should be conducted, by noting down:

1. Duration, after which, an average worker starts getting tired and his efficiency starts
decreasing.
2. Duration within which the worker gets refreshed to resume working.

Difference between Time Study and Motion Study

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 4. Differential Piece Rate Plan

Taylor was a strong advocate of differential piece rate plan. To bring about a differentiation
between efficient and inefficient workers, he introduced the concept of Standard Output/„fair
day‟s work‟.This is the amount of work which an average worker working under proper working
conditions can perform during a working day.

 According to Taylor, two wage rates would be used; one for efficient workers producing
standard output or more, and the other for inefficient workers producing less than standard
output.
 E.g Suppose Standard Output = 10 units. Workers producing Standard output or more, would
get Rs. 50 per unit while those producing less than standard output get only Rs.40 per unit.
 If worker A produces 11 units and worker B produces 9 units, their respective wage payments
would be as follows:
o A = 11 * Rs. 50 = Rs.550
o B = 9 * Rs. 40 = Rs. 360
o According to Taylor, a difference of Rs. 190 would be enough to motivate the inefficient
worker to perform better.
 Conclusion: This system rewards efficient workers and puts pressure on inefficient workers to
improve their efficiency. Also when the payment is given according to the number of units
produced, automatically the production will be maximized.

Conclusion - Techniques of Scientific Management advocate the determination of the best way of
production, to achieve maximum efficiency. However
 Firstly, some of the techniques are not universally applicable.
 Secondly, they would be useful only in industrial enterprises and factories. They may not be
suitable for the overall management of all kinds of enterprises.

5. ‘Mental Revolution’
There should be ‗Mental Revolution‘ = both should transform their way of thinking – interest of
the two are the same and long term prosperity of management cannot be at the cost of
management and vice versa.

 Management should share a part of the profits or surplus with the workers.
 Workers should work hard to make the company profitable.

The latest development in scientific management is ‗LEAN MANUFACTURING‘. Now a days

robotics and computers are being used in production and other business activities.

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Based on his own experience, Fayol developed his concept of administration and propounded 14
principles of management, which act as guidelines for managers to perform managerial activities. He is
known as the “Father of General Management‟.

1. Division of Work

 The whole work should be divided into small tasks or units and each unit of work should be
assigned to one person according to his capability , qualifications and experience.
 This will lead to specialization, improvement in performance, and speed and accuracy in
doing the jobs.

2. Parity Of Authority And Responsibility

 Authority refers to the right to issue orders and ensure compliance of the same.
Authority may be official(formal and positional) or personal (informal).
 Responsibility means obligation of an employee to complete the job assigned, on time.
 There should be a balance between the authority and responsibility granted to a
personality.
 If there is excess authority, it may be misused and if there is insufficient authority, the
employee will be ineffective.

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3. Discipline

Observance of rules and regulations and judicious application of penalties.

According to Fayol, discipline requires good superiors at all levels, clear and fair agreements and
judicious application of penalties.

4.Unity Of Command

According to Fayol there should be one and only one boss for every individual
employee. Employees should receive orders from one superior only. He felt that if this
principle is violated “authority is undermined, discipline is in jeopardy, order disturbed and stability
threatened”.

Dual subordination should be avoided to avoid confusion in the mind of employees and possibility of
conflicts between superiors, and it will be easy to fix responsibility for nonperformance of work.

5. Unity Of Direction

One head one plan- one manager and one plan for all operations having the same objective.

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 6. Subordination Of Individual Interest To General Interest
 Management and employees must reconcile the interest of the individuals and general interest
of the firm.
 In case such reconcilia tion is not possible, then the interest of the firm shall prevail over
individual

7. Stability Of Tenure Of Personnel

“Employee turnover should be minimized to maintain organizational efficiency”,

Fayol.

Personnel should be selected carefully and once they are selected, they should not be moved
around very frequently and the firm must make an effort to retain the personnel.

Positive effects of following Stability Of Adverse effect of violation of Stability Of

Tenure Of Personnel Tenure Of Personnel
 Improves the efficiency level of  Generates insecurity among employees.
employees.  Atmosphere of mistrust in the
 Increase their confidence and job organization.
satisfaction  High employee turnover because of lack
 Helps in retaining good employees in of job satisfaction.
the organisation.  Heavy recruitment expenses to replace
staff.
 Downfall in the reputation

8. Remuneration Of Employees

 Remuneration to employees must be just and fair both to employees and employer.
 That is, it must enable employees to maintain a reasonable standard of living and must be
within the paying capacity of employer, be as per the minimum wages Act of the government
and comparable to average wage rate for similar work in the industry.

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 9. Principle of Centralisation and Decentralisation

According to Fayol, “There is a need to balance subordinate involvement through decentralization

with managers‟ retention of final authority through centralisation.” The degree of centralization will
depend upon the circumstances in which the company is working.

 Concentration of authority at the top level = centralization.

 Systematic delegation of authority across all levels in the firm = decentralization.
 Firm must adjust between the two based on the nature of its organisation structure

10. Principle Of Scalar Chain

According to Fayol, “Organisations should have a chain of authority and communication that runs
from top to bottom and should be followed by managers and the subordinates.”

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 Positive effects of following Scalar Chain Adverse effect of violation of Scalar Chain
 Orderly flow of information  Disorderly flow of information leading
 Systematic functioning and no to communication gap
communication gap.  Problems in superior subordinate
 Better superior subordinate relationships if the management
relationships because of respect of hierarchy is not followed.
authority  Chaos and indiscipline in the
organization.

11. Principle Of Order

According to Fayol,“People and materials must be in suitable places at appropriate time for maximum
efficiency.” The principle of order states that „A place for everything (everyone) and everything
(everyone) in its (her/his) place‟.

Order refers to orderly arrangement of men and materials i.e

 Material order = right place for everything and Social order = specified place for employees

12. Principle Of Equity

Good sense and experience are needed to ensure fairness to all employees, who should be treated as
fairly as possible,” according to Fayol. This principle emphasises kindliness and justice in the
behaviour of managers towards workers. This will ensure loyalty and devotion.

 Equal, kind, fair and just treatment of subordinates by superiors and no discrimination on
any basis – religion, language, caste etc..
 Equity does not mean absence of force. It is in fact necessary to maintain discipline

Positive effects of following the Adverse effect of violation of the

Principle Of Equity Principle Of Equity
 Happy and satisfied workforce. Dissatisfaction and frustration among the
 Employees will get motivated, and it will workforce.
enhance their loyalty and devotion. Increase in absenteeism and labour turnover
 Better performance and increase in
 Decline in efficiency of good workers.
efficiency.

13. Principle Of Initiative

Workers should be encouraged to develop and carry out their plans for improvements according to
Fayol. Initiative means taking the first step with self-motivation.

Initiative means eagerness to initiate action without being asked to do so. According to Fayol,
employees should be allowed to think and execute plans, to bring about improvements in work related
matters.

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However, initiative does not imply freedom to do whatever people like. They must observe discipline.
So once the decisions are taken by management, every employee must follow it whether it is according
to his suggestions or not.

Positive effects of following the Adverse effect of violation of the

Principle Of Initiative Principle Of Initiative
 Enhances creativity and motivation  It suppresses creativity on the part of
 Leads to enhanced sense of  employees.
belongingness  Reduces their morale and inclination to
 and participation work.
 Ensures co-operation from employees in
implementation targets

14. Espirit De Corps

Espirit de corps‘ means ‗union is strength‘. Fayol emphasized on team work and harmony among
employees. He suggested that every employee in the organization must consider himself as a part or
member of a team and try to achieve the team goal.

A manger should replace I with we in organizational communication.

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