NCERT Business studies | Principles of management | CBSE/PUC

https://sugarybloom.blogspot.com/

Chapter 2 

PRINCIPLES OF MANAGEMENT

1.Explain the concept of principles of management. 

• A managerial principle is a broad and general guideline for decision making and behaviour. 
• For example while deciding about promotion of an employee one manager may consider seniority, whereas the other may follow the principle of merit. 

• Principles of management deal with human behaviour  and must be applied creatively according to the situation
•  all the principles have to keep pace with the changing human behaviour

• Principles are guidelines to take decisions or actions while practising techniques. They are  guidelines for behaviour. 
• Principles of management are formed after research in work situations, which are technical in nature. But while practising principles of management, businesses have to fulfil social and ethical responsibilities towards society.  

 2.Explain the significance of management principles.

The significance of principles of management can be discussed in terms of the following points: 

(i) Providing managers with useful insights into reality:

• It provides 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. 

(ii) Optimum utilisation of resources and effective administration: 

• Resources both human and material,should be put to use in such a manner that they should give maximum benefit with minimum cost.
•  Principles equip the managers to foresee the cause and effect relationships of their decisions and actions. 
•  Effective administration necessitates impersonalisation of managerial conduct .
• Principles of management limit the boundary of managerial discretion so that their decisions may be free from personal prejudices and biases. 

(iii) Scientific decisions: 

• Decisions must be based on facts, thoughtful and justifiable in terms of the intended purposes. 
• They must be timely, realistic and subject to measurement and evaluation. 
• They help in thoughtful decision-making. 
• They emphasise logic and are taken  free from bias and prejudice. 
• They are based on the objective assessment of the situation. 

(iv) Meeting changing environment requirements: 

• The principles  are modified to help managers to meet changing requirements of the environment. 
• They are flexible to adapt to dynamic business environment. 
• companies are specialising in their core competency and divesting non-core businesses.
• Some companies are outsourcing their non-core activities like share-transfer management and advertising to outside agencies and even core processes such as R&D, manufacturing and marketing are being outsourced today. 

 (v) Fulfilling social responsibility: 

• The increased awareness of the public, forces businesses to fulfil their social responsibilities.  
• Value to the customer, care for the environment, dealings with business associates would all come under the purview of this principle. 
• As an application of this principle,  Public Sector Undertakings have developed entire townships 

(vi) Management training, education and research:

• Principles of management are at the core of management theory.  
• These principles provide basic groundwork for the development of management as a discipline. 
• Courses such as MBA , BBA  also teach these principles as part of their curriculum at the beginner’s level. 
• These principles enable refinement of management practices by facilitating the development of new management techniques. 
• Techniques like Operations Research (OR), cost accounting, ‘Just in Time’, ‘Kanban’ and ‘Kaizen’ have developed due to further research on these principles. 

3.Discuss the principles of scientific management developed by Taylor.

(i) Science not Rule of Thumb: 

• Taylor pioneered the introduction of the method of scientific inquiry into the domain of management practice. 
• He believed that the best method to maximise efficiency  can be developed through study and analysis and must substitute ''Rule of Thumb'
• 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. 

(ii) Harmony, Not Discord: 

• Taylor called for complete mental revolution on the part of both management and workers. 
• It means that management and workers should transform their thinking. 
•  He emphasised that there should be complete harmony between the management and workers. Both should realise that each one is important and must be part of the family.
•  According to Taylor, " prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice versa’. 

(iii) Cooperation, Not Individualism: 

• There should be complete cooperation between the labour and the management instead of individualism. This  is an extension of principle of ‘Harmony not discord’. 
• Both should realise that they need each other. 
• management should be open 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. 
• At the same time workers should desist from going on strike and making unreasonable demands on the management.

 (iv) Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity: 

• Taylor was of the view that the concern for efficiency could be built in right from the process of employee selection. 
• Each person should be scientifically selected. 
• Then work assigned should suit her/his physical, mental and intellectual capabilities. 
• To increase efficiency, they should be given the required training.
•  Efficient employees would produce more and earn more. 
• This will ensure their greatest efficiency and prosperity for both company and workers. 

4.Explain techniques of ‘Scientific  Management’. 

Techniques of Scientific management

There are seven techniques of scientific management

1.Functional Foremanship 

• In the factory system, the foreman represents the managerial figure with whom the workers are in face-to-face contact on a daily basis. 
•   Functional foremanship is an extension of the principle of division of work and specialisation, to the shop floor.
• Since all these qualities could not be found in a single person so Taylor proposed eight specialists. 
•  Each worker will have to take orders from these eight foremen in the related process or function of production.
• Each specialist is to be assigned work according to her/his qualities. 
• For example, those with technical mastery, intelligence and grit may be given planning work. Those with energy and good health may be assigned execution work. 

2.Standardisation and Simplification of Work 

• Taylor refined to develop a standard which should be followed throughout the organisation. 
• This can be done through work-study techniques which include time study, motion study, fatigue study and method study,  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 unnecessary diversity of products. 
• It results in savings of cost of labour, machines and tools. 
• It implies reduced inventories, fuller utilisation of equipment and increasing turnover. 

3.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. 
• 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 maximise the quality and satisfaction of the customer. 

4.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., 

5.Time Study 

• It determines the standard time taken to perform a well-defined job. 
• 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. 

6.Fatigue Study 

• It uses the concept that if the work involves heavy manual labour then small pauses have to be frequently given to the worker so that she/he can recharge her/his energy level for optimum contribution. 

7.Differential Piece Wage System 

• Taylor wanted to differentiate between efficient and inefficient workers. 
• The standard time and other parameters should be determined on the basis of the work study . 
• 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 

5.Explain Fayol's principle of management

The 14 principles of management given by Fayol are: 

(i) Division of Work: 

• According to Fayol, “The intent of division of work is to produce more and better work for the same effort. 
• Specialisation is the most efficient way to use human effort.” 
•  In business work can be performed more efficiently if it is divided into specialised tasks; each performed by a specialist or trained employee. 
• This results in efficient and effective output. 
• Thus, in a company there are  separate departments for finance, marketing, production and human resource development etc.

. 

(ii) 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.”
• There should be a balance between authority and responsibility. 
• A manager should have necessary authority to carry out his responsibility.  
• Manager should have the right to punish a subordinate for wilfully not obeying a legitimate order but only after sufficient opportunity has been given to a subordinate for presenting her/his case. 

(iii) 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. 
• discipline when applied would mean that the workers and management both honour their commitments without any prejudice towards one another. 

(iv) 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. 

(v) Unity of Direction: 

• All the units of an organisation should be moving towards the same objectives through coordinated and focused efforts. 
• This ensures unity of action and coordination. 
• For example, if a company is manufacturing motorcycles as well as cars then it should have two separate divisions for both of them. 
• Each division should have its own in charge, plans and execution resources. 

(vi) Subordination of Individual Interest to General Interest: 

• According to Fayol,'The interests of an organisation should take priority over the interests of any one individual employee '
• Every worker has some individual interest for working in a company. 
• The company has got its own objectives.  
• the interests of the company will supersede the interest of any one individual. 
• This is so because larger interests of the workers and stakeholders are more important than the interest of any one person. 

(vii) Remuneration of Employees: 

• The overall pay and compensation should be fair to both employees and the organisation. 
• The employees should be paid fair wages, 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. 

(viii)Centralisation and Decentralisation: 

• The concentration of decision-making authority is called centralisation whereas its dispersal among more than one person is known as decentralisation.  
• The degree of centralisation will depend upon the circumstances in which the company is working. 
•  large organisations have more decentralisation than small organisations. 

 (ix) 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.”  
• However, in an emergency it can be possible that a worker can contact CEO directly. 

(x) 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. 

(xi) Equity: 

• According to Fayol."Good sense and experience are needed to ensure fairness to all employees, who should be treated as fairly as possible,”  
• This principle emphasises kindliness and justice in the behaviour of managers towards workers. 
• This will ensure loyalty and devotion.  
• There should be no discrimination against anyone on account of sex, religion, language, caste, belief or nationality etc.

(xii) Stability of Personnel: 

• According to Fayol.“Employee turnover should be minimised to maintain organisational efficiency”,  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. 
• stability in tenure of personnel is good for the business.

(xiii)Initiative: 

• According to Fayol workers should be encouraged to develop and carry out their plans for improvements 
•  Initiative means taking the first step with self-motivation. 
• It is thinking out and executing the plan. 
• A good company should have an employee suggestion system whereby initiative/suggestions which result in substantial cost/time reduction should be rewarded.

 (xiv) 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 belonging among team members.

6. Compare the contributions of Fayol and Taylor. 

Henri Fayol	F. W. Taylor
For his contribution he is   known as the ‘Father of General  Management’	Taylor emerged as the ‘Father of  Scientific Management’
Mainly 14 Management  Principles	4 principles
Top-Down approach concerning  top management and other  manager’s conduct.	bottom upward approach ie  from lower level to upper
Top level of management	Shop floor level of a factory
Staunch Proponent	Did not feel that it is important as under  functional foreman ship a worker received  orders from eight specialists
Applicable universally	Applicable to specialised  situations
improving overall administration	Increasing productivity
basis of formation is personal experience	rely on observation and experimentation

Go to Home