Chapter2

Principles of Management
DETAILED THEORY
Principles of Management
Principles of management are broad and general guidelines for managenal decision making and behaviour. They
are different from pnnc1ples of pure science as they are nor rigid lit..e them. Management pnnciples deal "ith
human behaviour and thus are 10 be crea1ively applied 10 the demands of 1he snuauons.
Managcmcnl principles arc d11Teren1 from managcmenl lcchniques. Techniques are procedures or methods \\h1ch
involves a series of Mcps 10 be taken 10 accomplish the desired goab. Pnnc1plcs arc the guidelines 10 take decision
or ac1io11 while pmc11cing 1cchniques.
Nuturc of Principles of Managcmc111:
I. Univcrsnl Applicabilit): They are applied in nil types oforgani7allons. 1rrespcc1ive ofsi7c, scale, ownership
or na1ure.
2. General Guidelines: As business situa1ions are comple1, dynamic and are a resuh of many fac1ors. the
principles do no1 pro, 1de readymade solu1ions 10 all managenal problems bu1 1hey acl as a guideline to
managerial ncuon and dcc1s1on making.
3. Formed By Practice And E,perimentation: The principles of management are formed by e~perimenta1ion.
collccu, c "1sdom and cxpenence of managers.
4. Flc,iblc: They arc 1101 ng1d but gl\e enough d1scrc11on 10 manager.. They can be modified by managers,
depending upon 1hc requirement of the company and 1ype of s11ua11on
5. Main I) Bcha, iourol: The management principles aim al intluencing human behaviour. They enable a
belier undcrstnnding of 1hc rcla11onsh1p between human and malcnnl in ach1c, ing orgam7allonal goals.
6. Cause and Effect Relationship: They !ell us if a pamcular principle is applied in a s1tua11on, "ha! might be
1hc effect As 1hc management principles apply to human behaviour, accura1c cause and efTec1 rela1ionship
may be difficult 10 esrnblish.
7. Contingent: The application of management pnnc1ples 1s con1ingcn1 or dependent upon s11ua11ons prevailing
in 1he organi7311on at d11Tcren1 points of time. The application of principles has 10 be changed as per the
requirement
Significance of Principles of \1anagement:
I. Pro, Id Ing managers \\ilh useful insights into real ii): Adherence to management principles improves
knowledge, ability and understanding of managers. II enables managers 10 learn from 1hc1r pas1 misiat..es
and conserve 11me by wiving recumng problems quict..ly.
2. Optimum utiliution of resources and effecth·c administration: Firm has limned resources and these have
10 be used in a manner 1ha1 they gl\e ma.~imum benefi1 "1th minimum cost The pnnciples of management
provide guidance for optimum u111iza11on of resource,.
3. Scientific decisions: Pnnc1ples of management help in tnking though1ful dec1S1ons 1ha1 are based on facts
and jU!,lifiablc 111 tcnns of intended purpose
4. i\lcetlng changing en, lronmcnt requirements: Modem principles ac1 ns tlex1blc guidelines 1ha1 cnn be
modified 10 mccl 1hc needs of changing cnvironmcnl in which 1hc bu,iness opcra1es.
5. Fulfilling social rc~pon~lbllitics: Principles of mnnagemc111 1101 only help 111 achieving organi7alional
goals bu1 al~o guide managers in performing social rcsponsibih11cs
 6. Management training, education and research: Management principles arc the base for management
training, education and further research and development of already existing management practices. These
principles provide basic groundwork for the development of management as a discipline.
Taylor's Scientific Management
Fredrick Winslow Taylor [March 20, 1856 - March 21, 1915] introduced scientific methods in management,
as opposed to the rule of thumb. He wrote a book on 'shop floor' and an article on 'Principles of Scientific
Management', based on his findings and experiments. For his contributions,he is known as 'The Father of
Scientific Management.' According to Taylor, 'Scientific Management is knowing exactly what you want your
men to do and seeing that they do it in the best and the cheapest way.'
Principles of Scientific Management:
1. Science, not rule of thumb: Taylor believed that there is only one best way of doing a work,
which can be developed through scientific study and analysis. The method, so developed, should
substitute 'rule of thumb' or 'trial and error' method in the organisation. By using scientific
investigation and work study, the method so devised, will save effort and reduce wastage of resources.
2. Harmony, not discord, Harmony: In an organisation, there may exist a class conflict between management
and workers. Taylor recognised that this conflict helped none, neither the workers nor the management.
He emphasised for complete harmony between the management and workers. They, both, should realise
the importance of one another. There should be complete mental revolution on the part of management
and workers. Management should share the gains with the workers and workers should work hard and be
willing to embrace change for the good of company. They should understand that the true interest of the
two are one and the same and the prosperity of one should be accompanied by prosperity of the other.
3. Cooperation, not individualism: This principle is an extension of principle of Harmony, Not Discord.
According to this principle, there should be cooperation in place of competition between management
and workers. The management should listen to the suggestions made by the employees and the
suggestions which lead to reduction in costs should be rewarded. Employees should participate in the
decision making process. The workers should desist from going on strike and making unreasonable
demands before the management. There should be an equal division of work and responsibility
between the workers and the management. The management should work with the workers by
encouraging and motivating them. Paternalistic style of management should be adopted.
4. Development of each and every person to his or her greatest efficiency and prosperity: Workers
development is very important for building and sustaining efficiency in an organisation. Taylor advocated
that the workers should be trained to learn the best method of doing a work which can be de,eloped
only through scientific analysis. Further, each person in an organisation should be scientifically selected
and the work should be assigned to him according to his/her physical, mental and intellectual capabilities.
Efficient employees would produce more and more and this will ensure greatest efficiency and prosperity
for both the organisation and the workers.
Techniques of Scientific Management:
I. Functional Foremanship: A foreman is the lowest ranking manager and the highest ranking worker. Taylor
advocated for functional forcmanship to improve perfonnance of a foreman. This emphasis separation of
planning and execution functions as Taylor believed that no one person can be capable ofexecuting e,erything.
Thus, he suggested functional foremenship through eight persons.
 Under the factory manager, he advocated for a planning in-charge and a production in-charge. Following
arc the responsibilities of specialists under the planning in-charge:
(i) Route Clerk: He would specify route/sequence of production operations.
(ii) Instruction Card Clerk: I le would draft instmctions for workers.
(iii) Time and Cost Clerk: I le would fix time for staning and completing work as per schedule. I le will
prepare the cost sheet to dctcnninc expenses for material, labour and other overheads.
(iv) Disciplinarian: I le would ensure systematic perfonnancc ofjobs by enforcing mies and regulations.
Following arc the responsibilities of specialists under the production in-charge:
(i) Gang Boss: He keeps materials, machines, tools etc. ready for workers.
(ii) Speed Boss: I le would ensure timely and accurate completion ofjobs.
(iii) Inspector: He would check quality of work done by workers.
(iv) Repair Boss: He would ensure that machines and tools arc kept in proper working conditions and arc
maintained and repaired properly.

Fact()()' Manager

Planning lncharge Production lncharge

Instruction Roule Repair Inspector

Clerk nme and Boss
Card
Clerk Cost Clerk

Workmen

This technique of Taylor is an extension of Fayol 's principle of' Division of work' and violates principle of
'Unity of Command.'
2. Standardisation and Simplification of Work: Under Standardisation of work, standards arc set for every
business activity: Process, raw material, time, product, machincry,mcthods or working conditions. These
standards arc the benchmarks which must be adhered to or followed during production. The objectives of
standardization arc:
(i) To reduce a given line or product 10 fixed types, sizes and characteristics
(ii) To establish interchangeability of manufactured pans and products
(iii) To establish standards of excellence and quality in materials
(i1•) To establish standards of perfonnancc of men and machines
Simplification aims at eliminating superfluous varieties, sizes and dimensions of products. It results in
savings of cost of labour, machines and tools due to reduced inventories, fuller utilisation of equipments
and increasing turnover.
3. Method Study: There may be a number of possible methods of pcrfonning a job with different cost
requirements. Taylor suggests finding 'One best way' of performing a job. The purpose is to minimize
production costs and use organization's resources in the best possible way to maximize benefits.
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 till today.
 4. Motion Study: This technique involves closely observing the body movements of a worker involved in
performing a job. Thus, it classifies each motion into productive, incidental and unproductive.
Then workers are instructed how to eliminate the unnecessary/ unproductive movements. This technique
helps in:
(i) Finding the best method of doing work by developing the ideal sequence of motions
(ii) Identifying and eliminating unnecessary movements
(iii) Increasing efficiency and reducing labour costs
(iv) Reducing human fatigue
5. 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 pcrfonn well defined job.
To conduct time study, the job is broken into a number of clements and the time taken to complete each
clement is noted with the help of a stopwatch. Aficr adding necessary time for rest periods. the standard
time of each clement of the job and the standard time for pcrfonning the complete job arc determined.
The time study helps to determine:
(i) Standard time required to do a job
(ii) Standard task/fair day's work for a worker
(iii) The number of employees to be employed
(iv) The labour costs and to frame suitable incentive schemes
6. Fatigue Study: lfa worker keeps working without rest pauses. physical and mental fatigue affects his/her
health and efficiency. Excessive specialization and poor working conditions may also cause monotony and
boredom resulting in more accidents, spoilage, absenteeism and labour turnover. The rest intervals help
one to regain stamina and work again with full capacity. This will also increase his productivity.
Taylor suggested that the time and frequency of the rest intervals should not be decided by manager's
wish/ experience but through fatigue study. This technique is conducted to find out:
(i) frequency of rest intervals
(ii) duration of rest intervals
(iii) the number of rest intervals, in completing a job
7. Differential Piece Wage System: Taylor devised the technique of differential piece wage system,
which is the strongest motivator for a worker to reach standard performance. It determines the
standard output per worker for a day and two differential piece wage rate, one for the efficient
workers, producing equal to or more than the standard output and other for the inefficient workers,
producing less than the standard output. The piece rate of efficient workers is slightly more than
that of inefficient workers. According to Taylor, the difference in the wages earned by both, will
motivate the inefficient workers to perform belier. For example, in an organisation, the standard
output is 20 units per day. A worker, producing 22 units is paid at the rate off 15 per unit i.e.,
f 330, whereas another worker who produces 19 units is paid at the rate of? 14, i.e., ? 266. The
difference off 64 will motivate the inefficient worker to increase his efficiency.

Fayol's Principles of General Management

1lcnri Fayol ( 1841-1925) was the first one to identify four functions of management: Planning, Organizing,
Directing and Controlling. Although his version was a bit different: Plan, Organise, Command, Coordinate and
Control. He 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'.
The management principles given by him arc:
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. Authority and Responsibility: Authority refers to the right to issue orders and ensure compliance of
the same. 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 person. If there is excess
authority, it may be misused and if there is insufficient authority, the employee will be ineffective.
3. Discipline: It implies obedience to organisational rules and regulations and judicious application of
penalties. Adherence to this principle leads to systematic work and smooth functioning of the enterprise,
accomplishment of targets on time and improved efficiency.
4. Unity of Command: According 10 Fayol, there should be one and only one boss for e\'ery individual
employee to prevent confusion in the mind of employees regarding whose command to follow and possibility
of confficts between superiors. This principle helps in easy fixation of responsibility for performance of
work, clarity of instructions and enhanced efficiency.
5. Unity of Direction: Each group of activities having the same objective must have one head and one plan.
This ensures unity of action and coordination. Adherence to this principle helps in enhancing efficiency
and specialization in the organization. Violation of the principle leads to wastage of efforts and resources
by working in different directions.
6. Subordination of Individual Interest to General Interest: According to this principle, management and
employees must reconcile the interest of the individuals and general interest of the firm. The interest of
the firm should take priority over individual interest.
7. Remuneration of Employees: The remuneration of employees should be just and equitable to provide
maximum satisfaction to the employees as well as employer. The employees should be paid fair wages/
salaries which would give at least a reasonable standard of living. At the same time, it should be within
the paying capacity of the company.
8. Centralisation and Decentralisation: The concentration of decision-making authority by top management
is called centralisation, whereas delegation of authority throughout all the levels of the organisation is
called decentralisation. There should be a balance between centralisation and decentralisation.
9. Scalar Chain: The fom1al lines of authority from the highest to the lowest rank arc known as Scalar
Chain. According to Fayol, --organisations should hm·e a chain ofauthority and communication that nms
from top to bouom and should be followed by managers and the subordinates... In case of emergencies,
the concept of 'Gang Plank' can be used.
10. Order: According to the principle of order, a right person should be placed at the right job and a right
material should be placed at the right place.
11. Equity: 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. should be there.
12. Stability of Personnel: Personnel should be selected carefully and once they arc selected, they should
have stability of tenure. They should be given reasonable time to show results.
13. Initiative: '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
mailers.
Adherence to this principle enhances creativity and ensures cooperation from employees. On the other
hand its violation lead to reduced motivation and inclination to work among workers.
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. Management should promote team spirit,
unity and hannony among employees. This encourages mutual trust and belongingness, which results in
minimum need for using penalties.
15. C.:ompari~on betnccn the contribution, of Ta~ lor and Fa)ol:

Basis Taylor's principles Fayol's principles

(a) Perspective The principles were framed from the The principles were framed from the
perspective of shop floor level, with perspective of top level management,
the aim of gelling maximum output at with the aim to improve overall
minimum price. management in the organisation.
(h) Accountability Functional foremanship talked for Unity of command talked about
multiple accountability of workmen. single accountability.
(c) Applicability Applicable to specialised situations. Universal Applicable.
(d) Basis of fonnation Formed on the basis of experiments Formed on the basis of personal
and observations. experience.
(e) Expression These principles are applied in the These principles are general theory of
field of scientific management. administration.
(/} Focus These principles are focused on These principles are focused on
increasing• Productivity'. improving overall administration.
(g) Unity of Command Taylor was not in favor of unity of Foyal was a Staunch supporter of the
command. unity of command.
(h) Personality Taylor was a 'Scientist'. Foyal was a 'practitioner'