Chapter 6- Principles of Management

                                    Principles of Management

            A principle refers to a fundamental truth about some phenomenon.  It establishes cause and effect relationship between two or more variables and predicts the result in a specific set of conditions.  Thus, principles of management are the fundamental truths, which provide guidelines for managerial decision-making and action. These principles enable a manager to tackle his problems in a scientific and systematic manner. However, these principles are not as exact or specific as the rules of science. These should be applied keeping in view the nature and needs of the organisation.

Nature (characteristics) of principles of management

The main characteristics of the principles of management are given below:

         1) Universality: The POM are universally applicable to all kinds of organizations, may it be an educational, a company, a Government, a hospital or any other business undertaking.  These principles are equally useful at every level of management i.e. top level, middle level, or lower level. The principles enable a manager to attend to his problems more effectively.

         2) Flexible in nature:  The POM are flexible in nature.  These can easily be moulded (modified) with the change in environment.  The principles, which are suitable at one place and time,  may be replaced by others, due to change in the conditions or environment in the organization. For example, the principle of division of labour may not be applicable in a small organization, to the extent, as it can be applied in a large organization.

         3) Relative: The POM are relative and not absolute. It means results achieved through the application of principles vary according to the number of factors like, the environment in the org. the experience of manager, the size and nature of business etc.

         4) Directing Human Behaviour: Management is a social science, dealing with complex human behaviour. Management principles are directed towards regulating human behaviour for getting the best possible results. The quality of application depends upon the quality of mangers.  

         5) Cause and effect relationship: Management principles indicate cause and effect relationship between two or more events. These principles are used to solve different managerial problems, with the help of observation, inspection and analysis. For example;  principle of division of labour can be applied to increase efficiency and productivity.  So division of labour is the cause and increase in productivity is the effect.  A similar relation exists in the application of other principles.

         6) Equal in significance: All the principles of management are equal in significance.  It implies that, no principle has greater importance than others.  E.g., the Principle of Unity of Command is as important as the Principle of Unity of Direction, division of labour etc. 

Importance and Need For principles of management:

            With the passage of time, the managers are increasingly realizing and recognizing the need and importance of the principles of management.  The need for learning of POM is justified on basis of following points:

1)      To increase efficiency

2)      To crystallize the nature of management

3)      To improve research

4)      To Train Mangangers

5)      To attain social goals

                                             Points 1-4 Learn from book

6)      Improving art of management: Management principles help in the art of management by suggesting how things should be done and how to get best results. These principles provide a means of organizing knowledge and experience in management.

7)       

Fayol’s Principles of Management:

Henery Fayol (1841-1925) was a French Industrialist. He joined French Mining Company in1860 as an engineer and rose to the position of its Managing Director in 1888. Through his long practical experience, Fayol developed a general theory of management.  He published a book ‘General and Industrial Administration’ to include all theoretical principles of administration.

            Henry Fayol suggested the fourteen principles of management which are given below :-

     1) Division of work:  Division of labour means division of total task in basic elements so that an employee can concentrate on only one type of work. It helps to improve by avoiding wastage of time and effort caused by change from one type of work to another.  Division of work is applicable to all kinds of work, technical as well as managerial.

     2) Authority and Responsibility: Authority is the right to get work done from others and responsibility is the obligation to perform the assigned task.  Anyone who exercises authority must accept responsibility.  Authority and responsibility are coexistent and they must go hand in hand.  Authority without responsibility leads to irresponsibility and irresponsible behaviour, while responsibility without authority will make a person ineffective.  Therefore, there should be parity between authority and responsibility.

     3) Discipline: Discipline means obedience to rules and regulations of the organization. Discipline is essential for the smooth running of the organization. Maintenance of discipline depends upon the quality of leadership, judicious application of rules and orders.  The system of reward and penalties should be such as would encourage respect to the authority, rules and orders of the superiors.

     4. Unity of Command: This principle implies that subordinates should receive orders from one superior and the subordinates should be accountable to one boss only.  In case there are more than one superior for the subordinates, there may be conflict in authority and confusion among subordinates. This will cause indiscipline in the organisation. There may be conflict between subordinates and superiors. Therefore, the principle of unity of command should be strictly observed in order to avoid conflict and confusion.

    5. Unity of Direction: By unity of direction Henery Fayol means “one unit and one plan”.  That should be one head and  one plan for a group of activities having the same objective. Unity of direction helps in the effective management of the enterprise.  If this principle is not followed there will be unnecessary duplication of efforts and wastage of time. Unity of command ensures coordination of efforts.

            ( Difference between unity of command and unity of direction:

1.      Unity of command relates to the functioning of people,  while unity of direction is concerned with the activities.

2.      Unity of command means- employees should be responsible and receive orders from one boss only.  While unity of direction means- one unit and one plan for a group of activities and these should be under the control of one superior.

3.      Unity of command is essential to fix responsibility of the subordinates while unity of direction is essential for a sound organization.)

     6. Subordination of individual interest to common interest: An organization is bigger than an individual.  Therefore, the interests or goals of the organization must prevail upon the personal(  individuals ) interest of employees.  In order to achieve supremacy of group or common interest, managers must set a good example and they must be firm but reasonable in dealing with subordinates.  Constant supervision is necessary to prevent promotion of personal interest at the cost of the organization.

   7. Fair Remuneration: The remuneration payable to employees should always be fair and provide maximum satisfaction to both employer and employees. The management must ensure a fair reward for the work of the employees and calculate wages according to the most suitable method.  The rate of wages and salaries depends upon a number of factors such as, cost of living, demand of labour, general economic conditions, rate of wages paid by the competing firms etc.  The wages and salaries should provide sufficient incentive and promote higher productivity on the part of workers.

    8. Centralization: According to Fayol, anything that increases the importance of the subordinates is decentralization and that reduces the importance of the subordinates is centralisation. An organization should strive to achieve a balance between centralization and decentralization.  In small organizations there is greater centralization while in bigger organizations the degree of centralization decreases.

            The extent of delegation depends upon number of factors such as size of the business, its nature, the experience of the employees and the nature of the duty to be performed etc.

   9. Scalar chain: (Meaning-Scalar chain is a chain of superiors from the top level to the lowest level in the organization.  The line of authority is the route followed during the process of communication. (Significance- It is necessary to ensure unity of command and effective communicaton. It also facilitate good discipline.

            Precaution- Henery Fayol felt that departure from the chain is necessary to make communication fast and effective.  It should be short circuited as far as possible.  This will facilitate quick communication between one line of the chain and the other.  He advised that either the chain should not be very long or a “gang Plank” should be created between the authorities to enable them to share information directly.

            The working of a scalar chain and the gang plank may be elaborated with the help of the following diagram:   

               

                                   

In this diagram there are two chains of authority. One, flowing downwards, from A to E and the second, flowing upwards, from I to A.  I is the final authority.  Instructions, orders follow from I to A and then from A to E .  Similarly suggestions   and the reports flow in the reverse order. It means if  a message is to pass from D to G , it will take a long time. So a Gang plank ( link) should be created between D and I to facilitate quick  communication.

     10. Order: Hanery Fayol defines this principle as “There should be a place for everything and everyone at its place.” It means arrangement of things and placing of people. The right man, at the right job, doing the right kind of things.  Order requires organisation and good selection and placement of both men and materials.  This will avoid delays.  The loss of energy and material can be avoided.

     11. Equity: The employees should be treated with kindness and equity.  Equity does not exclude strictness and forcefulness.  The managers and superiors in the organization should be good natured and experienced to deal with subordinates. They should not be biased and should not discriminate people on the basis of cast, religion, age or experience etc.  Each subordinate should be given a fair treatment in the matters of reward and punishment. The managers should not give undue favour to one and neglect others.

     12.  Stability of tenure: The management should make efforts to remove feeling of insecurity of job in the mind of employees.  Enough time should be given to each worker to acquire confidence and to perform his job satisfactorily.  If the job of a person is not secure, he will look for an opportunity to leave the organization and join somewhere else.  Higher labour turnover involves cost of employing new workers, who will take time to adjust to the new job, causing loss of production.  This may damage the reputation of the organisation as well.

13. Initiative.  Workers at all levels must be encouraged to think about and execute their task in a better way. The initiative of the subordinates must be inspired and maintained. Workers must be encouraged to give suggestions and improvement in the performance of their duties. They should also be encouraged to contribute useful material in the process of making plans.

14. Espirit-de corps (Union is Strength) :  The strength of the business lies in the cooperation and harmony of its workers. Policy of divide and rule should be replaced by unity of command.  Difference of opinions must be settled then and there. Employees must work as a team.

Taylor's Scientific Management:

Frederick Winslow Taylor (1856-1915) 

                     Master of Scientific Management

1. Frederick Winslow Taylor was an American mechanical engineer who sought to improve industrial efficiency. He was one of the first management consultants. Wikipedia
2. His innovations in industrial engineering, particularly in time and motion studies, paid off in dramatic improvements in productivity.
3. He started his Career as an apprentice mechanist in Midvlae Steel Company ( USA). Later, he became a supervisor. During this period, he continued his studies and earned a degree in Mechanical Engineering. Subsequently, he joined Bethlehem Steel Company (USA). At both these places, he continued to develop scientific management. 
4. Based on his experiments, he wrote many papers and book, ' Scientific Management' published in 1911, which became quite popular. Taylor called his findings as scientific management because these findings were marked differnt from other findings of earlier years.