Chapter 2: Principles of Management

                                              

Principles of Management Class 12 explains Fayol’s principles, features, importance, and their role in improving organizational efficiency and management.

 

MEANING OF PRINCIPLE OF MANAGEMENT

• Principles of management are general guidelines, which can be used for conduct in work places under certain situations. They help managers to take and implement decisions.
• Principle of management are broad and fundamental truth that establish a relation between cause and their effect.
• Management principle are not as a rigid as principles of science as it deal with human behavior and thus are to be applied creatively as the situation demands.

NATURE OF PRINCIPLES OF MANAGEMENT:-

1. UNIVERSAL APPLICABILITY:- The principle of management are intended to apply to all types of organisations, business as well as non-business, small as well large, public sector as well as private sector, manufacturing as well as the services sectors. However, the extent of their applicability would vary with the nature of the organisation, business activity, scale of operations and the like.
2. GENERAL GUIDELINES:– The principles are guidelines to action but do not provide readymade, straitjacket solutions to all managerial problems. This is so because real business situations are very complex and dynamic and are a result of many factors. However, the importance of principle cannot be underestimated because even a small guideline helps to solve a given problem.
3. FORMED BY PRACTICE AND EXPERIMENTATION:- The principles of management are formed by experience and collective wisdom of manager as well as experimentation. For example, it is a matter of common experience that discipline is indispensable for accomplishing any purpose.
4. FLEXIBILE:- The principles of management are not rigid prescriptions, which have to be followed absolutely. They are flexible and can be modified by the manager when the situation so demands. They give the manager enough discretion to do so.
5. MAINLY BEHAVIOURAL:- Management principles aim at influencing behaviour of human beings. Therefore, principles of management are mainly behavioural in nature. It is not that these principles do not pertain to things and phenomenon at all, it is just a matter of emphasis.
6. CAUSE AND EFFECT RELATIONSHIPS:- The principles of management are intended to establish relationship between cause and effect so that they can be used in similar situations in a large number of cases.
7. CONTINGENT:- The application of principles of management 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.

principles of management class 12 handwritten notes

SIGNIFICANCE OF PRINCIPLES OF MANAGEMENT:-

1. PROVIDING MANAGERS WITH USEFUL INSIGHTS INTO REALITY:- The principles of management provide the managers with useful insights into real world situations. Adherence to these principles will add to their knowledge, ability and understanding of managerial situations and circumstances. It will also enable managers to learn from past mistakes and conserve time by solving recurring problems quickly.
2. OPTIMUM UTILISATION OF RESOURCES AND EFFECTIVE ADMINISTRATION:- Resources both human and material available with the company are limited. They have to be put to optimum use. By optimum use we mean that the resources should be put to use in such a manner that they should give maximum benefit with minimum cost.
3. SCIENTIFIC DECISIONS:- Decisions must be based on facts, thoughtful and justifiable in terms of the intended purpose. They must be timely, realistic and subject to measurement and evaluation. Management principles help in thoughtful decision-making.
4. MEETING CHANGING ENVIRONMRNT REQUIREMENTS:- Although the principles are in the nature of general guidelines but they are modified and as such help managers to meet changing requirements of the environment. You have already studied that management principles are flexible to adapt to dynamic business environment.
5. FULFILLING SOCIAL RESPONSIBILITY:- The increased awareness of the public, forces businesses especially limited companies to fulfill their social responsibilities. Management theory and management principles have also evolved in response to these demands. Moreover, the interpretation of the principles also assumes newer and contemporary meanings with the change in time.
6. MANAGEMENT TRAINING, EDUCATION AND RESEARCH:- Principles of management are at the core of management theory. As such these are used as a basis for management training, education and research. You must be aware that entrance to management institutes is preceded by management aptitude tests.

TAYLOR’S SCIENTIFIC MANAGEMENT:-                                       Fredrick Winslow Taylor (1856-1915) was a person who within a very short duration (1878-1884) rose from ranks of an ordinary apprentice to chief engineer in Midvale Steel Company, USA .Taylor conducted a number of experiments and came to conclusion that workers were producing much less than the targeted standard task. Also, both the parties management and workers are hostile towards each other. He gave a number of suggestions to solve this problem and correctly propounded the theory of scientific management to emphasize the use of scientific approach in managing an enterprise instead of hit and trial method. For his contributions, he is well known as the “Father Of The Scientific Management”. scientific management attempts to eliminate wastes to ensure maximum production at minimum cost.

PRINCIPLES OF SCIENTIFIC MANAGEMENT:-

1. SCIENCE NOT RULE OF THUMB:- Taylor pioneered the introduction of the method of scientific inquiry into the domain of management practice. We have already referred to the limitations of the rule of thumb approach of management. As different managers would follow their indigenous rules of thumb, it is but a statement of the obvious that all would not be equally effective. Taylor believed that there was only one best method to maximize efficiency. This method can be developed through study and analysis. The method so developed should substitute ‘Rule Of Thumb’ throughout the organisation. Scientific method involved investigation of traditional methods through work-study, unifying the best practices and developing a standard method, which would be followed throughout the organisation.
2. HARMONY, NOT DISCORD:- Factory system of production implied that managers served as a link between the owners and the workers. Since as managers they had the mandate to ‘get work done’ from the workers, it should not be difficult for you to appreciate that there always existed the possibility of a kind of class-conflict, the mangers versus workers. Taylor recognized that this conflict helped none, the workers, the managers or the factory owners. He emphasized that there should be complete harmony between the management and workers.
3. COOPERATION, NOT INDIVIDUALISM:- There should be complete coordination between the labour and the management instead of individualism. This principle is an extension of principle of ‘Harmony not discord’. Competition should be replaced by cooperation. Both should realise that they need each other. For this, management should not close its ears to any constructive suggestions made by the employees. They should be rewarded for their suggestions which results in substantial reduction in costs. They should be part of management and, if any important decisions are taken, workers should be taken into confidence.
4. DEVELOPMENT OF EACH AND EVERY PERSON TO HIS OR HER GREATEST EFFICIENCY AND PROSPERITY:- Industrial efficiency depends to a large extent on personnel competencies. As such, scientific management also stood for worker development. Worker training was essential also to learn the ‘best method’ developed as a consequence of the scientific approach.

TECHNIQUES OF SCIENTIFIC MANAGEMENT

FUNCTIONAL FOREMANSHIP:- A foreman refers to a person who is in charge of the operational level workers. Taylor suggested that to increase the efficiency, performance of the foreman should be improved. That is, Taylor focused on the importance of the foreman in an organisation. Taylor observed and identified few qualities, such as intelligence, fact, judgment, etc., that a foreman should have. He found that no single person can have all the required qualities. Thus, he suggested that instead of a single person, there should be eight persons through which the functions of a foreman should be accomplished. This technique was given the name Functional Foremanship. According to this, the planning and the production functions should be separated. That is, under the manager, there would be one planning incharge and one production incharge. Each in charge would have four personnel under him/her.

The following are the four persons that worked under the planning in charge.

1. Instruction Card Clerk-To give instructions to the workers.
2. Route Clerk-To show the route of production.
3. Time and Cost Clerk-To take care about the time and costs.
4. Disciplinarian-To ensure that discipline is being maintained.

The following are the four persons that worked under the production incharge.

1. Speed Boss-To ensure timely completion of tasks
2. Gang Boss-To keep the machines and tools ready for the workers.
3. Repair Boss-To ensure proper working of the machines.
4. Inspector-To control the quality of work done.

 

 

STANDARDISATION AND SIMPLIFICATION OF WORK

Taylor was a supporter of standardisation. Standardisation refers to the process of setting standards for every business activity it can be standardisation of process, raw material, time, product, machinery, methods or working conditions. These standards are the benchmarks, which must be adhered to during production. Simplification aims at eliminating superfluous varieties, sizes and dimensions while standardisation implies devising new varieties instead of the existing ones. Simplification aims at eliminating unnecessary diversity of products. It results in savings of cost of labour, machines and tools. It implies reduced inventories, fuller utilization of equipment and increasing turnover.

METHOD STUDY:-  The objective of method study is to find out one best way of doing the job. There are various methods of doing the job. To determine the best way there are several parameters. Right from procurement of raw materials till the final product is delivered to the customer every activity is part of method study. Taylor devised the concept of assembly line by using method study. The objective of the whole exercise is to minimise the cost of production and maximize the quality and satisfaction of the customer. For this purpose many techniques like process charts and operations research etc. are used.

MOTION STUDY:- Motion study refers to the study of movements like lifting, putting objects, sitting and changing positions, etc., which are undertaken while doing a typical job. Unnecessary movements are sought to be eliminated so that it takes less time to complete the job efficiently. For example, Taylor and his associate Frank Gailberth were able to reduce motions in brick layering from 18 to just 5. Taylor demonstrated that productivity increased to about four times by this process. On close examination of body motions, for example, it is possible to find out:

1. Motions which are productive
2. Motions which are incidental (Example, going to stores)

• Motions which are unproductive.

Taylor used stopwatches and various symbols and colours to identify different motions. Through motion studies, Taylor was able to design suitable equipment and tools to educate workers on their use. The results achieved by him were truly remarkable.

TIME STUDY:- It determines the standard time taken to perform a well-defined job. Time measuring devices are used for each element of task. The standard time is fixed for the whole of the task by taking several readings. The method of time study will depend upon volume and frequency of the task, the cycle time of the operation and time measurement costs. The objective of time study is to determine the number of workers to be employed, frame suitable incentive schemes and determine labour costs.

FATIGUE STUDY:- A person is bound to feel tired physically and mentally if she/he does not rest while working. The rest intervals will help one to regain stamina and work again with the same capacity. This will result in increased productivity. Fatigue study seeks to determine the amount and frequency of rest intervals in completing a task/

DIFFERENTAL PIECE WAGE SYSTEM:- Taylor was a strong advocate of piece wage system. He wanted to differentiate between efficient and inefficient workers. The standard time and other parameters should be determined on the basis of the work. The workers can then be classified as efficient or inefficient on the basis of these standards. He wanted to reward efficient workers. So he introduced different rate of wage payment for those who performed above standard and for those who performed below standard.

FAYOL’S PRINCIPLES OF MANAGEMENT:-

Father of the general principle of management, Henry Fayol(1841 to 1925) was a French industrialist. He joined a French mining company in 1860 as an engineer and rose to the position of its managing director in 1888. at that time, his company was at the stage of bank insolvency. With broad administrative experience, ‘Fayol’ contributed a lot to his company. When he retired in the year 1918, the company was in excellent condition. Henri Fayol recognized the need for principles of management. He identified 14 Principles of Management.

1. DIVISION OF WORK:- Work is divided into small tasks/jobs. A trained specialist who is competent is required to perform each job. Thus, division of work leads to specializations. According to Fayol, “The intent of division of work is to produce more and better work for the same effort. Specialization is the most efficient way to use human effort.”
2. AUTHORITY AND RESPONSIBILITY:- According to Fayol, “Authority is the right to give orders and obtain obedience, and responsibility is the corollary of authority. The two types of authority are official authority, which is the authority to command, and personal authority which is the authority of the individual manager.” Authority is both formal and informal. Managers require authority commensurate with their responsibility. There should be a balance between authority and responsibility. An organisation should build safeguards against abuse of managerial power. At the same time a manager should have necessary authority to carry out his responsibility.
3. DISCIPLINE:- Discipline is the obedience to organisational rules and employment agreement which are necessary for the working of the organisation. According to Fayol, discipline requires good superiors at all levels, clear and fair agreements and judicious application of penalties. Suppose management and labour union have entered into an agreement whereby workers have agreed to put in extra hours without any additional payment to revive the company out of loss. In return the management has promised to increase wages of the workers when this mission is accomplished. Here discipline when applied would mean that the workers and management both honour their commitments without any prejudice towards one another.
4. UNITY OF COMMAND:- According to Fayol there should be one and only one boss for every individual employee. If an employee gets orders from two superiors at the same time the principle of unity of command is violated. The principle of unity of command states that each participant in a formal organisation should receive orders from and be responsible to only one superior. Fayol gave a lot of importance to this principle.
5. UNITY OF DIRECTION:- All the units of an organisation should be moving towards the same objectives through coordinated and focused efforts. Each group of activities having the same objective must have one head and one plan. This ensures unity of action and coordination.
6. SUBORDINATION OF INDIVIDUAL INTEREST TO GENERAL INTEREST:- The interests of an organisation should take priority over the interests of any one individual employee according to Fayol. Every worker has some individual interest for working in a company. The company has got its own objectives. For example, the company would want to get maximum output from its employees at a competitive cost (salary). on the other hand, an employee may want to get maximum salary while working the least. In another situation an individual employee may demand some concession, which is not admissible to any other employee like working for less time.
7. REMUNERATION OF EMPLOYEES:- The overall pay and compensation should be fair to both employees and the organisation. The employees should be paid fair wage, which should give them at least a reasonable standard of living. At the same time it should be within the paying capacity of the company. In other words, remuneration should be just and equitable. This will ensure congenial atmosphere and good relations between workers and management. Consequently, the working of the company would be smooth.
8. CENTRALISATION AND DECENTRALISATION:- when decision-making authority vested in only one person is called centralisation whereas its dispersal among more than one person is known as decentralisation. According to Fayol, “There is a need to balance subordinate involvement through decentralisation with managers’ retention of final authority through centralisation.” The degree of centralization will depend upon the circumstances in which the company is working. In general large organisations have more decentralisation than small organisations. For example, panchayats in our country have been given more powers to decide and spend funds granted to them by the government for the welfare of villages. This is decentralization at the national level.
9. SCALAR CHAIN:- An organisation consists of superiors and subordinates. The formal lines of authority from highest to lowest ranks are known as 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.” for example E wants to communicate with I for some important work. The message should orderly move from E to D then C, B, A, and then down from A to F then to G, H and finally to I. this will take lots of time so to avoid this delay in work, Fayol suggested the concept of gang plank. In this concept ‘E’ can communicate directly with ‘I’ on an urgent matter, the gang plank allows two employees of the same level to communicate directly with each but each must enforce to its superior.
10. 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’. Essentially it means orderliness. If there is a fixed place for everything and it is present there, then there will be no hindrance in the activities of business/factory. This will lead to increased productivity and efficiency.
11. 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 behavior of managers towards workers. This will ensure loyalty and devotion. Fayol does not rule out use of force sometimes. Rather he says that lay personnel should be dealt with sternly to send the message that everyone is equal in the eyes of the management. There should be no discrimination against anyone on account of sex, religion, language, caste, belief or nationality etc.
12. STABILITY OF PERSONNEL:- “Employee turnover should be minimized to maintain organisational efficiency”, according to Fayol. Personnel should be selected and appointed after due and rigorous procedure. But once selected they should be kept at their post/position for a minimum fixed tenure. They should have stability of tenure. They should be given reasonable time to show results. They would tend to leave the organisation. Recruitment, selection and training cost will be high. So stability in tenure of personnel is good for the business.
13. INITATIVE:- 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. It is thinking out and executing the plan. It is one of the traits of an intelligent person. Initiative should be encouraged. But it does not mean going against the established practices of the company for the sake of being different. A good company should have an employee suggestion system whereby initiative/suggestions which result in substantial cost/time reduction should be rewarded.
14. ESPRIT DE CORPS:- Management should promote a team spirit of unity and harmony among employees, according to Fayol. Management should promote teamwork especially in large organisations because otherwise objectives would be difficult to realise. It will also result in a loss of coordination. A manager should replace ‘I’ with ‘We’ in all his conversations with workers to foster team spirit. This will give rise to a spirit of mutual trust and belongingness among team members. It will also minimize the need for using penalties.

nature and significance of management