CHAPTER 2

PRINCIPLES OF MANAGEMENT

Que. Define the term Management Principles.
Ans. Management Principles are statement of fundamental truth, which provide guidelines for managerial decision-making & action. Principles of management are derived on the basis of observation & analysis of events, which managers have to face in actual practice. Apart from direct observation another method of deriving principles is conducting experimental studies.

Que. How management principles are different from that of science.
Ans. Management principles are different from that of science in the sense that Management principles are not as rigid as principles of pure science. They deal with human behaviour and, thus, are to be applied differently in different situations. Human behaviour is never predictable and so also technology, which affects business. Hence all the principles have to keep pace with these changes.

Que. Differentiate between the principles of management and techniques of management.
Ans. Techniques are procedures or methods, which involve a series of steps to be taken to accomplish desired goals. Principles are guidelines to take decisions or actions while practicing techniques.

Que. Differentiate between the principles of management and Values.
Ans. Values are something, which are acceptable or desirable. They have moral connotations. Principles are basic truths or guidelines for behaviour. Values are general rules for behaviour of individuals in society formed through common practice whereas principles of management are formed after research in work situations. However, while practicing principles of management values cannot be neglected, as businesses have to fulfill social and ethical responsibilities towards society.

Que. What is nature of management principles?
Ans. Nature of management principles are explained below:
1) Universal: -The management principles are applicable universally to all types of organizations. For example Govt. organizations, Business organizations, educational organization etc. These principles are universal because these are general guidelines for managers. These principles are very helpful for managers for the best possible results out the available resources.
2) General guidelines: The principles are guidelines to action but do not provide readymade 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 principles cannot be underestimated because even a small guideline helps to solve a given problem.
3) Formed by practice and experimentation: Principles of management are derived on the basis of observation & analysis of events, which managers have to face in actual practice. Apart from direct observation another method of deriving principles is conducting experimental studies.
4) Flexible: -Management principles are not rigid. They are flexible in nature according to the requirement of a given situation. There may be a situation where these principles are not exactly applicable and may have to be modified.
5) Mainly behavioural: Management principles are directed towards regulating human behaviour so that people can give their best to the organization.. 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 & effect relationship: -Cause & effect relationship is established by the management principles. These principles indicate what will be the consequences of certain decisions. For example – According to the principle of division of labour specialization is the result of division of labour.
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 according to the requirements.

Que. What is the significance of Management Principles?
Ans.The principles of management are very important for all group activities. Following points highlight the importance of management principles: -
(i) Providing managers with useful insights into reality: The knowledge of the principles of management improves 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. As such management principles increase managerial efficiency.
(ii) Optimum utilisation of resources and effective administration: Managers are capable of making proper use of the available resources of the business. This is possible if activities are planned in advance and organized systematically. Managers can further improve their performance by motivating their employees and monitoring the performance.
(iii) Scientific decisions: Managers have to make decisions to meet changing conditions. They can take stock of various aspects of the organization so that most appropriate decisions are taken for the operation of the business. This could be achieved by following the principle of decentralization of authority.
(iv) Meeting changing enviornment requirements: Principles of management can be applied under different conditions in different ways. There is no set pattern for management. The management principles can be modified depending upon the situations.
(v) Fulfilling social responsibility: Business has its responsibility not only to the shareholders but also to workers, customers, society and the government. Management has to fulfill all these responsibilities. So, if one were to talk of ‘equity’ today, it does not apply to wages alone. Value to the customer, care for the environment, and dealings with business associates would all come under the purview of this principle.
(vi) Management training, education and research: The principles are helpful I identifying the areas of management in which existing and future manager should be trained. The principles of management help the Universities and professional institutes to impart teaching and training in the theory and practice of management.

Que. Define Scientific management.
Ans. Scientific management refers to application of science to management practices. It involves use of scientific methods in decision making for solving management problems rather than depending upon rule of thumb or trial and error method for the purpose. It consists of observations & analysis of each task, fixing standard of work, selecting & training workers, and ensuring that work is done in the most efficient manner. F.W. Taylor is regarded as the father of scientific management.

Que. Explain the Principles of Scientific Management.
Ans. Principles of Scientific Management are as follows-
1) Science, not of Rule of Thumb: - This principle suggests that work given to any employee should be observed & analysed thoroughly. It will help in deciding the best way of performing the work and to determine the standard output. The method so developed should substitute ‘Rule of Thumb’ throughout the organisation. This can result in tremendous saving of human energy as well as wastage of time and materials. The more sophisticated the processes, greater would be the savings.
2)Harmony, not discord: - The workers & managers should carry out their tasks in harmony. They have a complete change of outlook, a mental revolution, in respect of their mutual relations & in relation to the work effort. Mental revolution requires that management should create suitable working conditions & resolve all problems scientifically. Similarly, workers should attend their job with devotion & should not waste resources of the organization.
3) Cooperation, not individualism:-This principle suggests that there should be close cooperation between workers & management without the cooperation of workers; management cannot carry out any work. The interest of workers & management are the same. Workers want more pay & management wants greater production. By producing more, workers can earn more. As such it should be easy to secure the cooperation of the workers.
4) Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity: This principle requires that all workers should be developed and to the fullest extend in their own as well as for companies prosperty for this the selection of workers should be scientific based on job requirement and there should be provision of training for the workers.
5) Maximum, not restricted output:- The aim of management should be to secure maximum prosperity for employers & employees. The dispute may arise mainly on division of surplus. Taylor suggested that the best way to resolve the problem is to increase the size of the surplus so that each side can have a larger share. The interest of workers & management are the same. Workers want more pay & management wants greater production. By producing more, workers can earn more.

Que. Explain different techniques of Scientific management.
Ans. Techniques which facilitated application of the principles of scientific management are known as techniques of scientific management. Different techniques of scientific management are as follows.

Functional Foremanship

This technique suggests that to improve the efficiency of the workers, he should be supervised by several specialist foremen. Taylor identified different types of functional foremen. He believed that a single foreman might not be competent to supervise all functional methods. Specialist should supervise each worker. For example speed boss may supervise speed of the work, repair boss may supervise repair work. Discipline boss may supervise discipline of the work & so on.



Factory Manager nager
Planning Incharge
Production Incharge


Instruction Route Time and Disciplinarian Speed Gang Repair Inspector
Card Clerk Clerk Cost Clerk Boss Boss Boss



Workman


Standardisation of work

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 must be followed during production. The objectives of standardisation are:
(i) To reduce a given line or product to fixed types, sizes and characteristics.
(ii) To establish interchange ability of manufactured parts and products.
(iii) To establish standards of excellence and quality in materials.
(iv) To establish standards of performance of men and machines.

Simplification of work

Simplification refers to the elimination of superfluous varieties, sizes and dimensions. Simplification aims at eliminating unnecessary diversity of products. Simplification leads to economy in the use of machines and tools needed; it reduces labour costs through increased specialization of task. It also brings about reduction in the required raw materials and inventories of intermediate and finished goods. It implies fuller utilisation of equipment through uninterrupted runs and fewer machine set-ups. It helps in improving the quality, increasing the turnover at reduced costs and prices.

Method Study

Method study is concerned with the methods of performing a job. There can be a number of methods to perform the same job with different cost requirements. Taylor suggested that management should find out one best way to perform the task. The object of method study is to keep the production costs to the minimum.

Motion Study

Motion study eliminates useless motions & finds out the best method of doing a particular job. By undertaking motion study it is studied that whether some elements of job can be eliminated, combined or their sequence changed to achieve necessary rhythm. It increases the efficiency of the workers by reducing fatigue & wasteful movements on the job. It leads to increase in production & productivity.

Time Study

Time study is an art of observing & recording the time required to do each part of a work. Through time study the (précised) minimum time required for each element of a man’s work is determined. It helps in fixing the standard time required to do a particular job.

Fatigue Study

Fatigue study aims to determine the amount and frequency of rest intervals in completing a task. A person is bound to feel tired if the works without rest interval for a long period of time. In such a case, he will not be able to work with full capacity. If he is allowed rest intervals, he will be able to regain stamina and start working with same capacity. Taylor suggested that frequent rest pauses be provided to the workers for their efficient functioning.




Differential Wage System

In this method of wage payment efficient & inefficient workers are paid at different rates. The efficient workers are paid at a higher rate than inefficient workers. Workers are paid on the basis number of pieces produced. If a worker produces more than standard number of pieces he is given a higher wage per piece on his total output. But if his output is below the number he is given lower rate per piece.

Example:
Standard output = 10 units.
H.W.R = Rs. 10 per unit Workers ‘A’ produces 10 units he gets Rs. 100
L.W.R. = Rs. 9 per unit Workers ‘B’ produces 9 units he gets Rs. 81
Workers ‘B’ get a loss of Rs. 19 which next time will motivate him to produce 10 units.

Mental Revolution
The workers & managers should have a complete change of outlook, a mental revolution, in respect of their mutual relations & in relation to the work effort. Mental revolution requires that management should create suitable working conditions & resolve all problems scientifically. Similarly, workers should attend their job with devotion & should not waste resources of the organization.

Que. Explain Henri Fayoy’s Principles of Management.
Ans. Principles of Henri Fayol are: -
1) Division of Work: -This principle states that all type of work should be divided and allocated to a number of persons. Subdivision makes the work easier and results in greater efficiency. It increases the specialization and also increases the efficiency of the worker as the worker do a small part of work repeatedly.

2) Parity of authority and responsibility: -Authority refers to the right of a superior to give instructions to subordinate, take decision, use resources of organization and regulate the behavior of the employees. Responsibility means obligation to perform functions in a satisfactory manner.
This principle suggests that there should be parity between authority & responsibility. Giving authority without proper responsibility can lead to (arbitrary) misuse of authority. On the other hand, if a person is given some responsibility he must also be given proper authority lack of proper authority will make an individual ineffective.

3) Discipline: -Discipline means obedience proper conduct in relations to other and to comply with the rules & regulations of the organization. Discipline is required for the smooth functioning of the organization. Discipline is required by both the workers and management. To maintain proper discipline there should be good supervisor, clear rules & regulations and penalties in the organization.

4) Unity of Command: -This principle states that subordinates should receive orders and be accountable to one and only one superior. No employee should receive instructions from more than one person. This principle is necessary to avoid confusion and conflict. Moreover, when there is unity of command it is easy to fix responsibility for mistakes.
5) Unity of Direction: -This principle states that the efforts of all the members of the organization should be directed towards common goals. Fayol suggested, “one head and one plan” which means group efforts of a particular plan be led & directed by single person.

Distinguish between Unity of Command and Unity of Direction.
No
Basis
Unity of Command
Unity of Direction

1.

Meaning

It means that one employee
should receive order from
one superior only.

It means on head and one plan.

2.

Purpose

It aims at ensuring
compliance of order and
instruction.

It aims at better coordination.

3.

Objective
It defines the accountability
of the employee
It defines organisational and departmental
objectives

6) Subordination of individual to general interest: -Individual should surrender their personal interest before the general interest of the organization. If there is a dispute regarding fulfillment of individual interest or general interest, individuals must sacrifice for the general interest.
7) Remuneration of personnel: -This principle suggests that remuneration of employees should be fair & reasonable. Wages should be determined on the basis of work assigned, cost of living, financial position of the business & average wage rates for similar work in the industry. Fair wages reduces the tension between the managers and the workers. However, wages should be paid to the workers according to the financial position of the organization.
8) Centralisation and Decentralisation: -When top management retains most of the decision-making authority to themselves, it is called centralization. If decision-making authority is delegated at lower levels of management, it is known as decentralization. Fayol suggested that there should be a balance between centralization and decentralization; there may be centralization in small organizations & decentralization in large organizations.
9) Scalar Chain: -Scalar Chain is the chain of superiors ranging from the top management to the lowest management. The chain also determines the line of authority. The managers are linked together in their position from highest to lowest level. The scalar chain serves as a chain of command as well as a chain of communication. It is regarded as a chain of command because orders or instructions issued at higher-level flow through lower managers. Similarly, reports & results achieved are to be sent from lower to higher level. The scalar chain also functions as a chain of communications.
A

B E
C F
D _ _____________ G
Gang Plank

The above figure shows the scalar chain principle. If D has to communicate with G he has to send his message through C, B, A, E & F. To avoid the consequent delay in case of an urgent message, Fayol suggested the concept of “GANG PLANK” shown by the line joining D & G but each must inform his superior.
10) Order: -This principle is related with the arrangement of things and placement of people. Arrangement of things is called material order whereas arrangement of people is called social order. Material order requires that a certain place should be fixed for each object and these objects must be found there. Social order refers to that place of work for each individual should be fixed & that individual should be available at that place.

11) Equity: - The principle of equity suggests that similar treatment should be given to people in similar position. Managers should be fair and impartial while dealing with their subordinates. Equity is very much essential to create and maintain healthy relations between managers and subordinates.
12) Stability of tenure of personnel: -This principle suggest that employees should not be moved from their position frequently. An employee cannot render useful service if he is removed from his position frequently. However, it does not mean that employees should not be promoted or transferred even if it is in the interest of the organization.
13)Initiative: -This principle suggests that employees should be allowed to take initiative in work related matters but it does not mean freedom to do whatever the people like. If initiative is allowed workers are motivated to work better & harder.
14)Espirit-De-Corps: -It refers to team spirit among workers. Managers must take step to develop team spirit among workers. If there is team spirit everyone comes forward to help others. It helps in developing an atmosphere of mutual trust and understanding. It inspires them to work harder. Managers should not use subordinates for their personal work. They should not try to take the credit for the work done by lower levels.

Que. “Taylor’s principles of Scientific Management and Fayol’s principles of management are mutually complenmtary” Do you agree with this view?
Or
Que. Distinguish between Taylor ‘Principle of Scientific Management’ and Fayol ‘Principles of Management’.
Ans. The contribution of Taylor and Fayol are complementary to each other. The comparative evaluation of their contributions is discussed below:-
(i) Concern:- Taylor’s main concerns were tasks. Workers and supervisors; whereas Fayol’s work was concerned more with efficiency of administration or managers.
(ii) Emphasis:- Taylor laid greater emphasis on standardization of work and tools. The principles derived by him were more applicable at shop level. But Fayol laid emphasis on the principles of general management and the functions of managers.
(iii) Expression:- Taylor used the expression scientific management and Fayol expressed his ideas as a general theory of administration.
(iv) Focus:- Taylor tried to improve the productivity of the workers and eliminate all kinds of waste. But Fayol tried to develop principles, to ensure better management.
(v) Starting point:- Taylor wanted to improve the efficiency of employees of the lowest level and then he moved upward while formulating principles of scientific management. Fayol on the other hand began from top level and proceeded downward with emphasis on unity of direction, unity of command and coordination.
The works of Taylor and Fayol were of course essentially complementary since, no organization can function effectively with mutual help and cooperation of managers and employees. They both realized the problems of workers and management at all levels.