Principles of Management

Meaning of Principles Of Management :

Management principles are the statements of fundamental truth , which serve as guidelines
for decisions and actions of managers. Management principles are derived through
observations and analysis of events , which managers have to face in actual practices.
Management principles are technical whereas values are ethical.
Fayol's Principles of Management :

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Fayol developed his own concept of administration . He has given 14 principles of
management which are described below :

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1 Division of Work : Fayol has advocated the division of work . According to him, if work is
divided into small tasks and assigned to trained specialists , then it will help in taking the
advantage of specialization. The intent of division of work is to produce more and better
work with the same effort. It is the most efficient way to use human effort. When a person is

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performing a part of job again and again he will become perfect and specialised in doing that
and the efficiency level will improve. For example : In a furniture manufacturing company
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one person can be asked to cut the wood pieces, one to join them, one to polish etc. With this
division each person will become specialised in his part of job and his effectiveness and
efficiency improves.
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2 Authority and Responsibility : Authority means power to take decision. Responsibility

means obligation to complete the job assigned on time. According to this principle there must
be a balance or parity between the authority and responsibility. Excess of authority without
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matching responsibility may result in misuse of authority, whereas excess responsibility

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without adequate authority may lead to failure of organisational goals. For example, if an
employee is to be asked to perform the job of cash clerk then he should be allowed to take
care of all the issues relating to performing the job of a cash clerk like accepting money in
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cash or draft or DD, time of getting the money, passing of entry etc.
3 Discipline : Discipline refers to general rules, regulations for systematic working in an
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organisation. Discipline does not mean only rules and regulations but it also means
developing commitment in the employees towards organisation as well as towards each other.
Fayol insists that discipline is required at superior as well as subordinate level. The
disciplinary rules shall not be applicable only on subordinates but discipline requires good
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superiors at every level, clear and fair agreement between superior and subordinates. A
disciplined organisation has a better reputation among the people and it increases the
efficiency of employees. But if discipline is not followed then it results in an atmosphere of
doubt and height of disorder, decline in the confidence of the employees. For example, if the
company has entered into an agreement with employees about their wages for five years then
the company should honour it.
4 Unity of Command : According to this principle of unity of command , an individual
employee should receive orders from only one superior at a time and that employee should be
answerable only to that superior. If in any case , employee gets orders from two superiors at
the same time, the principle of unity of command is violated and it will result in confusion
and chaos. For example, if employee of production department is asked to go slow in
production to maintain quality standard by the production in-charge and sales in-charge
instructs the employee to fasten the production to meet the pending orders. In this situation
employee will get confused as to whose instructions must be followed by him.
5 Unity of Direction : According to this principle , there should be one head for one plan for a
group of activities having the same objective. In other words , the related activities should be
put under one group , there should be one plan of action for them and they should be in the
control of one manager. If this principle is applied it leads to coordination. For example, If an
organisation is producing different lines of products – Cosmetics, Medicines and
confectionery items each product has its own market and it’s own business environment.
Each division must plan it’s target and every employee of that division must put his efforts

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towards the achievement of plan of their division under the direction of one head only. If this
principle is violated then there will be lack of coordination , wastage of efforts and resources

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by working in different directions and difficult in achieving organisational goal.
6 Subordination of Individual Interest to General Interest : According to this principle the
interest of organisation must supersede the interest of individuals or employees . In the

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organisation all the employees are working with some objective and there is always an
objective of organisation . If the objective of individual are in the same direction of
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organisation then there is no problem but if the objectives of both the groups are in different
directions then manager must try to reconcile individual interest with organisational goal. For
example, if individuals objective is to earn more remuneration and organisation is going
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through the situation of financial crisis and has the objective of cutting down the expenses. In
this situation the individual must sacrifice his interest as when organisation will come out
from financial crisis then he can achieve his objective.
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7 Principle of Remuneration of Persons/ Remuneration of Employees : According to this

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principle , the employees should be paid fair remuneration, which should give them at least a
reasonable standard of living. The remuneration must be just and fair because if employees
are underpaid they will not be satisfied and an unsatisfied person can never contribute his
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maximum . Dissatisfaction will lead to increase in employees turnover . So, to have stability
in organisation and to get maximum efforts from employees, the employees must be paid
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fairly . The fair wage is determined according to financial capacity of the company, the wages
and salaries paid by the competitors etc. For example, If the company has earned higher
profits, then it must share some of its part with the employees in the form of bonus, which
would be very satisfying to them.
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8 Centralisation and Decentralisation : Centralisation means concentration of authority or

power in few hands at the top level. Decentralisation means evenly distribution of power at
every level of management. According to Fayol a company must not be completely
centralised or completely decentralized but there must be combination of both depending
upon the nature and size of the organization. Too much Centralisation leads to delay in work
and complete Decentralisation leads to loss of control of top management. So, an optimum
balance should be maintained according to needs of organization. For example :the major
decisions and activities of setting up organisational goals, plans, policies can be centralised
but there van be policy of Decentralisation for the activities of routine work such as purchase
of raw materials, fixing target of workers etc.
9 Principle of Scalar Chain : It refers to a formal line of authority which moves from highest
to the lowest ranks in a straight line. This chain must be followed in a strict manner. It means
each communication must move from top to bottom and vice versa in a straight line. Every
information must pass through every key of this chain, no skipping of any one key should be
allowed. If this chain is broken then there are chances of communication gap in the
organization but sometimes following scalar chain becomes a long process and if some
important information has to be passed, it gets delayed so in case of emergency and urgent
information, Fayol permitted a short cut in the chain which is called Gang Plank. Gang Plank
permits direct communication between the employees working at the same level of authority
without following the Scalar Chain. Following Scalar Chain will lead to Systematic flow of
information and no communication gap in the organization. If violated then there may be

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communication gap and no clarity in authority-responsibility relationship.
10 Principle of Order : According to this principle there should be an orderly arrangement of

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men and material which implies that there is a fixed place for everything and everyone in the
organization. A place for everything is called material order and a place for everyone is called
social order. For example : If a worker is in need of a tool he must know in which box or tool

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room it will be found and if he needs guidance from supervisor he must know the fixed cabin
of supervisor. If no fixed place is given then workers will waste his time and energy in search
of tools or supervisor.
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11 Principle of Equity : According to this principle , there should not be any discrimination
among the employees on the basis of religion, language, caste, sex, belief or nationality. It
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refers to just and fair treatment to employees. Employees will put their maximum efforts only
when they are treated with kindness and justice. Equity doesn’t mean equal salary to a peon
and supervisor but equity means application of same disciplinary rules , leave rules in the
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same way irrespective of their grade , position and gender. For example : The rules for
granting medical leave to an employee should be same irrespective of their positions , grade
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or gender. Following Equity will lead to employees satisfaction and it will motivate the
employees and boost up the morale of the employees but if it’s not followed then it will result
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in dissatisfaction in employees, Increase in turnover and unhealthy relation between superior

and subordinate.
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12 Stability of tenure of Personnel : According to Fayol, employee turnover should be

minimised to maintain organisational efficiency. Therefore, suppose an individual gets
selected for a post, then he should be given appropriate time to prove his abilities. We can say
he should be kept at the post for minimum fixed tenure. This ensures stability and thus he can
get proper time to explore his skills. According to this principle, no frequent termination and
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transfer should be there. The management must provide the feeling of job security among the
employees because with the feeling of insecurity for the job , the employees cannot
contribute their maximum . Frequent turnover of employees is bad for organization and such
decision must be taken when they are almost unavoidable. Not only turnover but frequent
transfer or rotation should also be avoided because it takes sometime to a person to learn and
get settled on a job and by the time he gets settled and he receives transfer order then it will
be a wastage of resources and employee will not be able to contribute his best for
organization.
13 Initiative : It refers to chalking out the plan and then implementing the same. Fayol
suggested that employees in the organization must be given an opportunity to take some
initiative in making and executing a plan. It gives immense satisfaction to employees. So
managers must welcome the suggestions and ideas of employees before framing the plan. It
develops the feeling of belongingness in employees and employees achieve the target on time
if they are setup with their consultation. If not followed employees will not work to the best
of their ability.
14 Esprit De Corps : It means union is strength. Fayol emphasized on the team work. He
suggested that every employee in the organization must consider him as a part or member of
a team and try to achieve the team goal because team contribution is always better and more
than individual contribution. Management must develop a feeling of belongingness among

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the employees as they must feel themselves as members of organisations team and contribute
maximum to achieve team goal. For example:. If the production manager assigned a target of

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manufacturing 100 units to a group of 10 members , divided the target among themselves to
produce 10 units each , principle of team spirit says that each member of the group should not
concentrate only on achieving his individual target of 10units but they must concentrate on

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achieving group target of 100 units so if two workers of that group fall sick, then the other
eight members must divide their individual target among themselves and try to achieve the
target of their group.
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Nature/ Features/ Characteristics/ Traits/ Properties Of Principles of Management :
1 Universal Applicability : The Principles of Management are applicable to all types of
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organization and at all levels of management, be it a business organization or government
organisation or domestic household. Thus, they are universal in nature but their use depends
upon the situation, size of operations, nature of activity etc. For example : The principle of
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Centralisation & Decentralisation is applicable to all types of organisation , but how much
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authority should be given to the subordinates depends upon the size & nature of business
activity of that organisation.
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2 General Guidelines : Management Principles act only as guideline for decision making and
action. They don’t provide direct or readymade solutions to a managerial problem. They have
to be adjusted as per demand of the situation. For example: In dealing with a situation of
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conflict between two departments , while one manager may give due importance to
organisational goals, another manager may handle it entirely differently.
3 Formed by Practice & Experimentation : The Principles of Management have been
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developed through experience & wisdom of managers as well as experimentation (

Management Principles are Evolutionary in nature ) . These are not developed Overnight
but have been developed through experience of the management thinkers.
4 Flexible : The Principles of Management are Flexible i.e. They can be modified by the
managers according to the given situation . These are not set of Rigid statements.
5 Mainly Behaviour : Management Principles are formed to guide & influence the behaviour
of Employees. These Principles insist on improving relationship between superior,
subordinates and all the members of organisation. They also establish relations between
Human & Material Resources. For Example : Principle of Discipline improves commitment
of employees towards the organisation & Principle of Esprit De Corps mould the behaviour
of employees towards team spirit.
6 Based on Cause & Effect Relationship : The Principles of management establish cause &
effect relationships. They tell the managers if a particular principle is applied in a particular
situation, what will be its likely effect. For Example: Division of work leads to specialisation
, just & equitable remuneration of employees will ensure good relation between workers &
management.
7 Contingent : The application of management principles is contingent or dependent upon the
prevailing situation at a particular point of time. The application of principles has to be
changed as per requirements. For Example : Principle of Team Spirit is very important for an

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Organisation where work is carried out by a group of people whereas it is of no use in the
companies where work is performed by individual & not by a group.

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Significance/ Importance of Management Principles :
1 Providing managers with useful insight into reality : Management Principles act as
guidelines for the managers. These principles improve knowledge, ability & understanding of

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managers under various managerial situations. The effects of these principles help the
managers to learn from their mistakes These principles guide managers to take right decision
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at the right time.
2 Optimum Utilisation of Resources : Optimum Utilisation of resources means that the
human & material resources should be put to use in such a manner that they should give
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maximum benefit with minimum cost. For Example : Scientific Principles suggest to cut
down the wasteful movements and setting up of standard time to complete a task. By saving
time, energy & efforts activities can be made economical & result in maximum utilisation of
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resources.
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3 Scientific Decisions : Managers have to take number of decisions every day. The
management principles enable the managers to approach various problems systematically &
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scientifically. For Example : Taylor’s Principle always insisted on Replacement of RULE OF

THUMB by scientific approach, i.e. he suggested to conduct the time study to set up the
standard time required to perform a job rather than leaving it at the discussion or will of
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manager.
4 Meeting Changing Environment requirement : Principles of Management help managers to
meet changing environmental requirements as these principles are flexible & can be modified
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according to given situations. Environment in which Organisations operate is Dynamic &

keeps on changing . In order to be effective , Organisations have to change their working
according to changed environmental requirements . This is done by modifying principles of
management being applied currently.
5 Fulfilling Social Responsibility : Every Business has to fulfil many Social Responsibilities .
Thus, Principles of Management & Management theory have been devised in such a way that
they help in fulfilling these responsibilities. For Example : The Principle of Fair
Remuneration insists on adequate Salary to employees & takes care of interest of employees
also.
6 Management Training, Education & Research :Principles of Management are the central
point of Management theory . So, they are used as a basis for management training, education
& research. These Principles are an Integral & Important part of the Curriculum of various
Management courses at Bachelor level such as BBA & Post Graduate courses like MBA.

F.W. Taylor & Scientific Management

Meaning of Scientific Management : Scientific Management refers to the use of scientific
and standardized tools, methods & trained workers in all business activities in order to
increase the total production, with minimum cost & wastage. It aims at improving the
efficiency of workers & the quality of goods produced . Scientific Management

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emphasises on eliminating RULE OF THUMB and adopting Scientific Techniques for
decision making . It aims at the best mix of 3Ms- Men, Machinery and Material. It

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emphasizes on replacement of rule of thumb by decision making based on scientific
approach.
Principles of Scientific Management :

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1 Science, Not Rule of Thumb : According to this principle Taylor insists that each job
performed in the organisation should be based on scientific enquiry and not on intuition,
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experience and hit & miss methods. He says that there must be thinking before doing which
is not in case of rule of thumb. Rule of thumb means dictatorship of manager whereas
scientific decisions are based on cause & effect and scientific management of methods and
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ways of production. Taylor believed that there is only one best method to maximise efficiency
this method can be developed through work study & analysis. For Example : In Rule of
Thumb the standard time required to do a particular job is decided by the managers on the
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basis of his past experience . Taylor insists that standard time for a job should be set up
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scientifically by performing time study in the organisation and then the days target should be
fixed.
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2 Harmony, not discord : Taylor emphasized that there should be complete harmony
between the workers and the management . If there is any conflict between the two, it will not
be beneficial either for the workers or the management . Both management and the workers
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should realize the importance of each other. In order to achieve this state, Taylor suggested
complete Mental Revolution on the part of both management & workers. Mental Revolution
involves a change in the attitude of workers & management towards each other. They must
develop positive thinking for each other and work with harmony and avoid discord as their
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objectives are in one direction only. Managers should share the gains of the company with
workers at the same time workers must contribute to their best level. Taylor feels that
prosperity of organisation depends upon prosperity of employer as well as employees. For
Example : The main objective of workers is to earn more and the objective of management is
to maximise production; instead of discord for each others objective workers can earn more
by producing more which will help in maximising the production also.
3 Cooperation not individualism : This principle is the extension of the harmony not
discord. According to this principle work must be carried on in Co-operation with each other,
with mutual confidence and understanding for each other. Workers and managers must work
in co-operation. The management must take workers in confidence before setting up the
standard task for them because when standards or targets are set up in consultation of
workers, then they will try their best to achieve it. To have cooperation management should
welcome good suggestions of employees and they should be rewarded for their suggestion.
Management must insist on Paternalistic style of Management , where by the employer
takes care of the needs of employees.
4 Development of workers to their greatest efficiency & prosperity : Efficiency of any
organisation also depends on the skills and capabilities of its employees to a great extent .
Thus, providing training to the workers was considered essential in order to learn the best
method developed through the use of scientific approach. To attain the efficiency, steps
should be taken right from the process of selection of employees. Employees should be
scientifically selected. The work assigned to each employee should suit his/her physical,

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mental & intellectual capabilities. Efficient Employees produce more to earn more. This
ultimately helps to attain efficiency & prosperity for both organisation & the employees.

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Techniques of Scientific Management : Along with scientific principles Taylor developed
some scientific techniques by conducting various experiments at his work place.

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1 Functional Foremanship : In this technique Taylor suggested the division of factory in
two departments : Planning department & Production department as taylor felt that workers
must be free from the burden of planning and they must concentrate on work and production .
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To develop SPECIALISATION in the productivity , Taylor suggested under each department
there must be some functional experts to supervise, guide and instruct the worker. Under
Planning In-charge , he placed four personnel namely instruction card clerk, route clerk, time
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& cost clerk and disciplinarian while under Production In-charge , four personnel namely
speed boss, gang boss, repair boss & inspector were placed. Each boss will be specialised in
one aspect of work and while observing and instructing the worker there will be definitely
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specialisation.
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A brief description of eight functional specialists recommended by Taylor is as follows :

Under Planning Department :
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1 Instruction Card Clerk : To draft instructions for the workers.

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2 Route Clerk : To specify the route of production.

3 Time & Cost Clerk : To prepare time and cost sheet.
4 Discipilnarian : To ensure Discipline respectively.
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Under Production Department :

1 Speed Boss : To ensure timely and accurately completion of task.
2 Gang Boss : To keep machines and tools etc. Ready for operation by workers.
3 Repair Boss : To ensure proper working condition of machines and tools.
4 Inspector : To check the quality of work.
2 Standardisation & Simplification of work : Standardization is the process of setting
standards for different factors. Standard can be set for process , raw material, time, product,
methods or working conditions. It uses standard equipments, methods and processes in order
to maximise the output keeping in mind the quality standards. It helps in establishing the
norms for sizes, types, height etc. Simplification refers to the elimination of unwanted
varieties, sizes, products and dimensions. In other words, simplification means optimum
utilisation of resources viz men, material & machines. As more varieties mean more
inventory , more type of machinery, more labour cost etc. By simplifying the task there can
be economy in use of machine, labour, inventory, maintenance etc. It will also help in
improving the quality and reduction of cost.
3 Method Study : The main objective of this technique is to find out the best way or at least

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one of the best methods of doing a particular job in order to minimize the cost of production
and maximise the quality and satisfaction of the consumer. Taylor suggested that method of

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production should not be decided by rule of thumb method but all the methods must be tried
and the one which brings maximum benefits with minimum cost must be selected. For
example : For production of shoes there can be labour & capital intensive method. To find out

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which is best, management must evaluate the cost of production with both the methods and
compare both the methods with the available resources of the company.
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4 Time Study : Time study determines the standard time taken by a workman to perform a
given task. The standard time is fixed by taking several readings of a specific task. Its
purpose is to decide how much time is normally required by the workers to perform a certain
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job, determining the number of workers required to perform a job, categorising the workers
in efficient & inefficient categories. Taylor suggested that the time required to perform the
job should not be decided by intuition, will & wish of manager, but Time study must be
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conducted to determine the standard time scientifically. To conduct Time study Taylor
suggested to observe an average worker when he is performing the job with a stop watch in
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hand and note down the AVERAGE TIME taken by the worker in completion of job.
5 Fatigue Study : Its human tendency that a person feels physically and mentally tired if
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she/he is made to work continuously without any rest. The rest period enables one to regain
the stamina and to work again with same capacity. Fatigue study refers to determining the
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amount and frequency of rest intervals required in completing a task. Taylor suggested that a
person gets tired when he works continuously without a break. So, he must be provided a
brief rest interval in between so as to enable him to regain lost stamina. Fatigue study is
conducted by observing an average worker while performing job, so as to note down the
time, when their efficiency level starts decreasing. This technique of Scientific Management
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is conducted to find out : A) The frequency of Rest Intervals. B )The duration of Rest
Intervals. C ) The number of Rest Intervals.
6 Motion Study : Motion Study refers to the study of various movements, like sitting,
standing, holding, turning, changing position, lifting etc. Of workers while performing a
particular job. The main objective of this study is to identify the motions which are
PRODUCTIVE & UNPRODUCTIVE. Taylor suggested to observe an average worker when
he is performing the job and note down all the movements he is doing ( Taylor used Movie
Cameras ) . After writing all the movements classify them in productive and unproductive
movements and make the strategy to cut down or minimise the unproductive movements.
The scientific technique of Motion Study is conducted : A) To determine the movements of
workers when they are performing the job. B ) To differentiate between productive &
unproductive movements. C ) For cutting down unproductive & wasteful movements.
7 Differential Piece Wage System : Taylor wanted to differentiate between efficient &
inefficient workers on the basis of their actual performance and the standard performance. He
wanted to reward efficient workers. So, he introduced differential piece wage system. In this
wage system, there are two piece wage rates – one for those workers who produce the
standard output or more, and the other for those who produce less than the standard output.
The difference in wages is enough for the inefficient worker to be motivated to perform better
in future.

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For Example : Standard Output ( per worker per day ) : 100 units.
Wage Rate 1: Rs. 4 per unit. ( for output > 100units )

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Wage Rate 2: Rs. 3 per unit. ( for output<100units )
Worker A Worker B

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ACTUAL OUTPUT 110 units 80 units
TOTAL WAGES 110*4= Rs. 440 80*3= Rs. 240
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Difference in units produced = 30 units
Difference in wages = Rs. 200
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According to Taylor, this loss will be the strongest motivator for worker B to reach
standard performance in future.
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