Principles of Management PDF

PRINCIPLES OF MANAGEMENT A principle means a fundamental statement of basic truth that provides a guide to thought and action. It establishes a cause and effect relationship between two or more variables. For example, the law of demand in economics states that when prices fall demand is likely to i...

PRINCIPLES OF MANAGEMENT A principle means a fundamental statement of basic truth that provides a guide to thought and action. It establishes a cause and effect relationship between two or more variables. For example, the law of demand in economics states that when prices fall demand is likely to increase. MEANING OF PRINCIPLES OF MANAGEMENT Principles of management are fundamental truths that explain the relationship between two or more variables under given situations. These principles establish relationship between causes and their effects. Management principles provide guidelines for managerial decision- making and action. These are helpful in predicting and understanding the results of managerial actions. Principles of management originate and grow as a result of past experiences and study. Management principles are derived through the following methods: i) Observation Method: Under this method, managers observe certain events in actual practice. They analyse what is observed and gain experience which is used in future as a guide. ii) Experiment Method: Under this method, researchers in the field of management undertake empirical studies. On the basis of these studies they develop certain principles and test their validity. NATURE (CHARACTERISTICS) OF PRINCIPLES OF MANAGEMENT 1. Universality: Principles of management are fundamental statements of truth having universal validity. These principles can be applied in different types of organisations. The basic task of every manager is the same, i.e., to get the desired results through effective coordination of human and physical resources. 2. Dynamism or Flexibility: Principles of management are not rigid but flexible pop and dynamic in nature. These principles can be modified to suit different situations and all kinds of changes in the business environment. 3. Influencing Human Behaviour: Management is a social science and it deals with human behaviour. Human behaviour is complex and cannot be tested under controlled laboratory conditions. Therefore, principles of management are not as exact as the principles of physical sciences. 4. Contingent: The principles of management are relative and not absolute. These principles should be applied carefully according to organisational needs and prevalent situations. They are contingent or dependent on the prevailing situation. 5. Cause and Effect Relationship: Principles of management indicate cause and effect relationship between two or more variables. These principles are used to solve different managerial problems with the help of observations, analysis and experience. 6. Equal Importance: All the principles of management are equally important. These principles may be used with equal efficiency by the managers at different levels of authority. NEED FOR PRINCIPLES OF MANAGEMENT Principles of management are required for the following reasons: 1.To increase efficiency: These principles provide necessary guidelines to managers as to how they should function in different situations to obtain the best results Principles of management help to improve managerial efficiency. 2. To crystallise the true nature of management: Knowledge and understanding of the principles and concepts of management makes it easier to describe and analyse the true nature of management. 3. To train managers: Principles of management provide a conceptual framework for scientific and systematic training and development of managers. 4. To improve research: These principles have served as the basis for further research and growth in management. Management principles provide new ideas, vision and imagination for conducting research studies in management. 5. To attain social goals: Efficient use of resources helps to improve the quality of life and progress of the society. All type of waste is reduced. Management principles help in achieving cooperation among people to achieve the desired results. 6. To clarify thinking: Principles of management make the thinking of managers clearer and systematic. A new manager can understand the nature of management with the help of these principles. TAYLOR'S PRINCIPLES OF SCIENTIFIC MANAGEMENT F.W. Taylor, an American, laid the foundations of management as a science consisting of fundamental principles. He was the first expert to suggest the use of scientific methods of measurement and study for solving managerial problems. Therefore, Taylor is known as the "father of scientific management". “Scientific management is the art of knowing exactly what you want your men to do and then seeing that they do it in the best and cheapest way.” - F.W. Taylor The basic principles of scientific management are as follows: 1) Science not Rule of Thumb: Each and every job and the method of doing it should be based on scientific study and analysis rather than on trial and error. The task to be performed should be scientifically planned. The materials, equipment and working condition should be standardised. The amount of work to be done should be decided through objective study. ii) Harmony not Discord: There should be healthy cooperation between employer and employees. Taylor advocated a complete mental resolution on the part of both management and workers. Management should adopt favorable attitude and share the gains of productivity with workers. Workers on their part should work with discipline and loyalty. iii) Maximum not Restricted Output: Conflict between management and workers arises mainly on division of surplus. Taylor suggested that the best way to resolve the conflict is to increase the size of surplus so that each side can have a larger share. Management and workers have a common interest in increasing productivity. (iv) Division of Work and Responsibility: Taylor suggested separation of planning from operational work. Management should concentrate on planning the job of workers and workers should concentrate on performance of work. (v) Scientific Selection, Training and Development of Workers: Workers should be selected and trained keeping in view the job requirements. Each and every worker should be encouraged to develop his full potential. (vi) Standardisation: The tools, equipment, work methods and working conditions must be standardised so as to improve efficiency and quality. (vii) Mental Revolution: Taylor suggested a basic change in attitudes on the part of both employers and employees should consider employers as partners in industry. Similarly, employees must treat employer as their fatherfigure and well wisher. The main objectives of scientific management are as follows: 1. To improve productivity through standardisation of tools, equipment and methods and by training workers. 2. To minimise cost of production per unit through proper planning and control. 3. To improve the quality of output through scientific selection and training of workers. Workers' Objections to Scientific Management 1. Overburdening - treats feeder to machines rather than human beings. 2. High performance standards. 3. Attack on unity of workers through differential piece rate system. Advantages of Scientific Management- To the Organisatio 1. Higher productivity 2. Lower costs of production 3. Better utilisation of resources 4. Improved quality of work To the Employee 1. Improvement in working conditions 2. Higher earnings 3. Better skills through training To the Society 1. Higher standard of living 2. Better employer-employee relations 3. Improvement in work methods 4. Higher national income FAYOL'S PRINCIPLES OF MANAGEMENT Henri Fayol was a French industrialist. He joined a French Mining Company as an engineer and rose to the position of its managing director. Through his long practical experience, Fayol developed a general theory of management. Classification of Business Activities: Fayol classified all business activities into six categories as given below: 1. Technical (production or manufacturing) 2. Commercial (buying, selling and exchange) 3. Financial (search for and optimum use of capital) 4. Security (protection of property and persons) 5. Accounting (including statistics) and 6. Managerial (forecasting and planning, organising, commanding, coordinating and controlling) Elements of management: Fayol divided management into the following elements or functions: (i) Forecasting and planning, (ii) organising, (iii) commanding, (iv) coordinating and (v) controlling. Managerial qualities and training: Fayol suggested that a successful manager must possess the following qualities: (i) Physical-Health and vigour (ii) Mental - Ability to understand, analyse and adapt (iii) Moral- Energy, firmness, initiative, loyalty, tact and dignity (iv) Educational - General acquaintance with common matters (V) Technical Knowledge of machines and work processes (vi) Experience - Arising from work proper Fayol stressed upon the need for formal education and training in management. Principles of Management: Henri Fayol suggested the fourteen principles of management which are given below: 1. Division of work: Division of work means division of the total task into compact jobs and allocating these compact jobs to different persons so that an employee can concentrate on only one type of work. It helps to improve efficiency by avoiding wastage of time and effort. 2. Authority and responsibility: Authority is the right to get work done from others and responsibility is the obligation to perform the assigned task. Authority and responsibility are coexistent and they must go hand in hand. Authority without responsibility leads to irresponsible behaviour while responsibility without authority will make a person ineffective. Therefore, there should be parity between authority and responsibility. 3. Discipline: Discipline implies obedience, respect of authority and observance of the established rules and regulations. Discipline is essential for the smooth running of every organisation. According to Fayol, good supervision at all levels, clear and fair rules and built-in system of penalties will help to maintain discipline. 4. Unity of command: According to this principle an employee should receive orders from one superior only and be accountable to him. No person can serve several masters at the same time. If a subordinate has more than one boss, dual command will undermine authority, weaken discipline, divide loyalty and create confusion, delays, etc. Violating the principle of unity of command leads to overlapping of orders and instructions, confusion and indiscipline. 5. Unity of direction: There should be one head and one plan for a group of activities having the same objective. In other words, each group of activities with the same objective must have one plan of action and must be under the control of one superior. Unity of direction should be differentiated from unity of command. Unity of command relates to the functioning of people whereas unity of direction is concerned with the activities. Unity of direction does not automatically lead to unity of command though there cannot be unity of command without unity of direction. Unity of direction relates to the functioning of the whole organisation. 6. Subordination of individual interest to general interest: An organisation is bigger than an individual. Therefore, the interests or goals of the organisation must prevail upon the personal interests of individuals. In order to achieve supremacy of group or common interests, managers must set a good example and they must be firm but reasonable in dealing with subordinates. 7. Remuneration: The remuneration payable to workers must be fair, reasonable and satisfactory both to the employees and the employer. It must reward effort so as to motivate higher productivity. The amount of remuneration and the method of wage payment should both be fair and rewarding. 8. Centralisation: According to Fayol, everything that increases the importance of subordinates' role is decentralisation and everything that reduces it is centralisation. Centralisation and decentralisation is a matter of proportion and the right proportion between them should be decided keeping in view the circumstances of the particular case. There should be a proper balance between centralisation and decentralisation. 9. Scalar chain: It refers to the chain of superiors ranging from the ultimate authority (top) to the lowest rank (bottom). Normally, the prescribed chain of command should be followed and communications should flow through the established chain of command. However, to facilitate quick communication between two links in the chain, a gang plank (direct contact) may be created.  The scalar chain is represented by the double ladder HAO. Any communication from F to M will flow upwards A through E, D, C and B and then downwards through I, J, K and L. A gang plank represented by the dotted line between F and M may be created to avoid delays and difficulties in communication.. 10. Order: There must be material and social order in an enterprise. Material order implies "a proper place for everything and everything in its right place". Similarly, social order means "a place for everyone and everyone in his appointed place". The right man in the right job is very important for the successful functioning of an organisation. 11. Equity: Management should treat the employees with justice and kindness. There should be equity of treatment in dealing with subordinates and no discrimination should be made between them. Nepotism and favouritism should not exist as these are injurious to the motivation and morale of employees. 12. Stability of tenure: It takes time to learn and get used to a job. Therefore, a reasonable security of service should be provided to all employees. Stability of tenure helps to develop loyalty and attachment on the part of employees. Unnecessary labour turnover or change of personnel increases cost of selection and training and spoils the image of the firm. 13. Initiative: Employees at all levels should be encouraged to think out and execute the assigned tasks in a better way. Initiative is a source of strength for an organisation. Therefore, subordinates should be inspired to suggest improvements in the formulation and implementation of plans. 14. Esprit de corps: There must be team spirit and cooperation among the members of an organisation. "Unity of strength' and the strength of an enterprise lies in the cooperation and harmony in individual efforts. Group efforts are more than the aggregate of individual contributions on account of esprit de corps. COMPARISON BETWEEN TAYLOR AND FAYOL There are several similarities between the theories of Taylor and Fayol. Both aimed at improving efficiency. Both applied scientific methods to the problems of management. Both recognised the universality of management principles. Both suggested mutual cooperation between management and workers. Both developed their ideas through practical experience. There are, however, following differences between Taylor's and Fayol's principles. UNIVERSALITY OF MANAGEMENT PRINCIPLES Universality of management principles means the basic principles are applicable in all types of organisations. Therefore, managerial knowledge and skills can be transferred from one organisation or country to another. All organisations require effective coordination of human and physical resources. Therefore, all must observe the same general principles.