CHAPTER 2

MANAGEMENT

PRINCIPLES OF

Principles are the fundamental truth about some process based on cause and effect
relationship.
Management principles are general guideline formulated by keeping in mind the standard
human behavior , for taking managerial decisions but applied creatively according to the given
situation.
MANAGEMENT PRINCIPLES
v/s science principles
Management principles are not rigid , they are flexible as the can be modified according to
change in business demand and change in demand , they are also not developed in any
laboratory and the management principles can give differ effect in differ situation but in same
direction as they deal with human behavior they have to be used creatively .
v/s management techniques
management techniques are generally some procedure which is performed to complete a given
task inn a systematic manner , which is not flexible but management principles are general guide
line provide to managers for taking various managerial decisions.

DERIVATION OF MANAGEMENT PRINCIPLES

Management principles are not developed over night a complete procedure is undertaken to
develop a management principle. A management principle is developed in two ways :DEEP OBSERVATION : researchers usually observe the workers while working and note down
there reaction on various managerial decisions ,
REPEATED EXPERIMENTS : A decision which observed repeatedly is being test in different types
of organization , and if result came in same direction of all organization, then the particular
statement is derived as a MANAGEMENT PRINCIPLE.

CHARACTERISTICS OF MANAGEMENT PRINCIPLE

UNIVERSALLY APPLICATION
Principles of management are developed universally and were used in every types of
organization, application of these principles may be vary as the situation for these
principles Is changed in different types of organization.
GENERAL GUIDELINE.
Principles of management provide a manager some basic idea to solve the problems of a
business, these principles doesnt gave a ready-made solution of every problems, the
manager have to use these general guideline as a base .. applied in creative manner to
solve problems even he can modify these principles according to different situations.
FORMED BY PRACTICE AND EXPERIMENTS.
The principles of management are not developed over night a complete procedure is
undertaken to develop these principles. These principles are derived after a deep
observation and repeated research work. These principles are the expression of deep
experiences of leaders of management and thoughts.
FLEXIBILITY
The principles of management can be used differently in different situation, managers
can modify these principles depending upon the need of situation. They are not rigid as
science principles.
BEHAVIOURAL IN NATURE
Are formed to provide a better understanding of human and material resources, insist on
the behavior of superior , subordinate and other individual of an organization for
improvement among them .
BASED ON CAUSE AAND EFFECT RELATIONSHIP
Are mainly applied to human behavior which is not identical in even the similar situation,
so when any principle of management is applied to an organization , it not possible for
manager to know the full effect of the principles principles of management can give a
direction about their effect but not the full effect.
CONTINGENT
2

Contingent means uncertainty , the application of principle is uncertain whether the

principle can be applied to a organization or not, the manager have to be effective for
using a principle in such a way that he can bring maximum prosperity for organization.

IMPORTANCE/SIGNIFICANCE OF MANAGEMENT PRINCIPLE

PROVIDE MANAGER WITH USEFULL INSIGHT INTO REALITY

Principles provide knowledge , better understanding of circumstances which a

manager can face & better understanding of the ways to solve these complex and
similar problems.
Generally Guide Managers by Provide Them a base for taking Right Decision on
Right Time.

OPTIMUM UTILISATION OF RESOURCES

Enables the manager to foresee the effect of decisions and actions taken by him,
through which the manager can only use limited human and material resources.
Even these principles are insist on systematic working, which directly effect the
optimum utilization of resources.

Facilitates Scientific decisions

Principles of Management are developed on the basis of experiments, observation

and logic, thus they enables the manager to approach ( ideas to deal with various
situations ) various problems systematically and scientifically.

Meeting changing environment

Manager can change or modify the principles according to changing the

environment which is effect the organization, also the train the manager in
implementing (applying in a manner ) in right direction and at right level

Effective Administration

Principles makes the administration more effective by discouraging ( taking away

the hope ) the personal prejudices ( partiality) and biases , and limits of managerial
discretion ( power of making choices without considering external factor )

Fulfilling Social Responsibilities

Management principles not only act as a guideline for taking decisions but also
guide managers to fulfill social responsibilities . principles also include values like ,
3

providing equal wage to every working, a safe and secure working environment
etc.
Management Training , education and research

These principles provide organized body of knowledge to perform research ,

generate more and more knowledge.
Provide base for management training and education and researches , is a core of
management theories .
FOR EXAMPLES : Kanban , kaizen the newer management techniques are result
of existing management theories.

Scientific ManaGement PrinciPles

By Fredrick Winslow Taylor
Scientific Management means knowing exactly what you want
your men to do and seeing that they do it in the most
effective and efficient manner
SCIENCE NOT RULE OF THUMB

Each Task Should be performed on the basis of standardized methods developed

through study and analysis, which increases efficiency and reduces costs.

Rule of thumb means dictatorship of manager, which should not be followed.

Taylor believed that there is one best method to maximize efficiency which could
be developed through work study and analysis of situations.

HARMONY , NOT DISCORD

Actually there were two groups in an organization, Management group and worker
group and both group are rival of each other , management groups feels worker are not
properly working and workers groups think that they are overburdened and less paid.
Taylors says that , there should be proper understanding in opinion and action of each
other , and they should not be discord ( lack of harmony ) among them.
Through this organization can achieve more efficiency and effectiveness in working.

COOPERATION NOT INDIVIDUALISM

Work must be carried on in co operation with each other, with mutual confidence
(concerning each other with freedom form doubt) and understanding.
4

Management must take suggestion from workers before setting up standards task,
so that workers can give their best. And employee must also make all efforts for
betterment of the company and doesnt make unreasonable demand.
There will be equal division of work and responsibility .

DEVELOPMENT OF WORKERS TOWARDS THEIR GREATEST

EFFICIENCY

Business must follow scientific approach while selecting the work force and they
should be assigned tasks according to there capability & qualification.
They should be provided proper training to update their knowledge
This will ensure greatest efficiency
and prosperity for both workers and organizations.

Scientific Management Techniques

By Fredrick Winslow Taylor
FUNCTIONAL FOREMANSHIP
Taylor suggested that,

There should be two departments in a Factory, PLANNING DEPARTMENT &

PRODUCTION DEPARTMENT
There must be some functional experts in each department to supervise , guide
and instruct the workers.
Each department is assisted with 4 experts , as each foreman doesnt will be
intelligent, educated, energetic or specialized.
Each foreman is specialist in one aspect of work and for observing and instructing
thw workers there will be other specialist too.

UNDER PLANNING DEPARTMENT

a. Route Clerk : Responsible for fixing the sequence of steps for performing
differ tasks.
b. Instruction Card clerk : Gives general instruction to workers for working
c. Disciplinarian : Responsible for keeping The Performance of workers in a
systematic manner.
d. Time & Cost Clerk : Fix up the time for starting and completion of job , also
prepares the cost sheets.

UNDER PRODUCTION DEPARTMENT

a. Gang Boss : Arranges all the material resources required for completion of
job.
5

b. Speed Boss : Responsible for completion of job on time.

c. Repair Boss : responsible for keeping the tools and equipment in a working
condition.
d. Inspector : Keeps check on quality of the product.

STANDARDISATION AND SIMPLIFICATION OF WORK

Standardization refers to setting standards for each business activity. IT can be
Raw materials . time, product, machinery, methods or working condition.
Standardization could be set up By fixing the standard for Types, sizes, quality ,
machines and tools to be used, weights for products.
Simplification refers to elimination of unnecessary diversity of products, sizes and
varieties. Which leads to optimum utilization of resources and less labors and
overhead costs.
OBJECTIVES :

To maintain quality standards.

To set up performance standards for men and machine.
To allow interchangeability of manufactures products and parts.

WORK STUDY
It includes
i.
ii.
iii.
iv.
v.

Method study
Motion study
Time study
Fatigue study
Differential piece wage System

METHOD STUDY

It is followed to find out best possible ways of doing a particular task.

The method study decides the sequences of operation , placing of human and
physical resources like machines , raw material.
All the method of production must be tried to find out best method of productions
in an organization.
Aim to minimize the cost of production and maximize the efficiency and quality of
product.

MOTION STUDY

It refers to study of all physical moments which are undertaken while performing a
job.
Unnecessary movement are eliminated by classifying the movement of a a
average worker while doing a job in (i) Productive moments & (ii) unproductive
moments .
Suitable equipment should be designed to eliminate unnecessary movements.

TIME STUDY
It Involves,

Deciding an standard time require to perform a job

Setting up standard target for worker
Determining the number of workers to perform a job
Categories the workers as efficient and inefficient ..

FATIGUE STUDY
Objectives
The frequency of rest intervals
The duration of rest intervals
The number of rest intervals.
Method To Conduct

Observe an worker while he is working , and note down the time when his
efficiency level start decreasing then give him a break
this time can be noticed to decide there frequency of their rest intereval &
how much time he is taking to refresh and join work can be the time of rest
intervals

DIFFERENTIAL PIECE WAGE SYSTEM

This technique is about paying different rate of wage for efficient and inefficient
employee.
WAYS TO CONDUCT
i.
ii.
iii.

First, Company have to fix a standard rate of wage for worker for producing
standard target.
Then, workers who produce more then there standard target must be paid a
higher rate of wage
And those workers who produce less then there standard target should be
paid less.
7

Insist on ,
Paying different rate of age to efficient employee
Extra wages to efficient employee will motivate them to remain efficient and
less wage to inefficient employee will motivate them to be efficient.
Production will be maximized when payment is given according to number of
units produce, every employee try to produce more and more ..

ADMINISTRATIVE MANAGEMENT PRINCIPLES

By Sir Henry Fayol
DIVISION OF WORK

The whole work must be divided into small task and units
Each task is assigned according to the qualification, experience and capability of
workers.

POSITIVE EFFECTS

When a task is assign according to qualification, this lead to specialization in works

When an employee perform only single task , he can work with more concentration
which improves his efficiency.

AUTHORITY AND RESPONSIBILITY

Proper authority should be provided to an individual to full fill the responsibilities

given to him & Vice Versa.
There should be safe guard against abuse of managers informal authorities.

POSITIVE EFFECT

When only sufficient authority is given to an individual, he cannot misuse his

authority.
Responsibility can be complete with proper authorities given to an individual.

DISCIPLINE
8

There should be rules and regulation for systematic working at every level of
organization.
Superior and subordination must follow their commitments towards each other and
organization.
There should be judicious (Good Judgment) application penalties.

Positive effect
POSITIVE EFFECT

When everything followed according to rules, there will systematic working in

organization.
Improves efficiency as superior could function according to their choice and every
work is performed under standard rules.

UNITY OF COMMAND

An individual should receive orders from one boss only.

Orders given by superior should provide clear direction to work.

POSITIVE EFFECTS

When an individual receive order from one boss, there is no confusion in his mind .
There would be no ego clashes between two superiors, as the individual working
for them will complete their assigned task because no other task is given to him by
another superior
An employee could concentrate on the task more efficiently , when he doesn,t
have other task to complete given by other superiors.

UNITY OF DIRECTION

The efforts of all the individuals in an organization must be coordinated and

focused towards the goal of organization.
The departments with same objectives must follow one plan and have only one
head to lead the work force. This ensures unity of action.

POSITIVE EFFECT

Organizational goal could be achieved more effectively.

Efforts of all employee get coordinate towards one direction.

SUBORDINATION OF INDIVIDUAL INTEREST TO GENERAL INTEREST

9

Interest of group and organization must take place the interest of individual.
When the interest of an individual in another direction, manager must need to
make that compatible with interest of group.
Interest of group cannot be sacrifices for individual interest

POSITIVE EFFECT
There should be a coordination between organizational goal and individual goal.

REMUNERATION OF PERSONS
Wages and salaries paid to an individual must be fair and ensure a reasonable standard
of living
Fair Wage Is Determined By :

Financial Capacity of organization

BY keeping in mind the minimum wage act of government
The wage and salaries paid by competitors

POSITIVE EFFECT

Decrease in turnover of employee , an employee will be satisfied by their salaries.

Commitment of employee towards there work increases
Employee will get motivated

CENTRALISATION AND DECENTRALISATION

( Centralization means concentration of power to take decision is mostly at top level
and Decentralization means evenly distribution of power to take decision at every level
of management )

The authority to take essential and core decision must be at top level.
The authority to take routine decision must be in the hands of middle level and
lower level management.

POSITIVE EFFECTS

No delay in decisions
No misuse of authority
Fast decisions at operational level and strict control by top level

PRINCIPLE OF SCALAR CHAIN

10

A line of authority form highest to lowest rank must be followed.

Every information must be pass through from each of one individual in this chain.
At an emergency , Gang plank can be followed which allows direct communication
between employee working at same level or authority

POSITIVE EFFECT

Systematic flow of information, as information flow from lower to higher level or

Vice versa.
No communication gap in the organization , as information is passed through every
level.

PRINCIPLE OF ORDER
There should be a place assigned for all physical resources and all human resources
should be at their place.
POSITIVE EFFECT

Smooth and systematic working , as everything was on the its place.

No wastage of time for searching man and material , increases effectiveness.

PRINCIPLE OF EQUITY

Fair & kind behavior BY manager towards every employee.

Disciplinary rules for every employee irrespective of gender, position and grade.

POSITIVE EFFECT

Employees get satisfied, as there was no unfair treatment with them

Motivate the employee, ensures loyalty and devotion from them.

STABLITY OF TENURE OF PERSONNEL

Time period for working of an individual must be fixed for a minimum period to
provide job security to him/her.
Frequent transfer should be also be avoided because employee cannot become
efficient in one job in short time, employee need time to settle and learn the job.

POSITIVE EFFECTS

Decrease in turnover of employees.

Improves efficiency level of individual, when he continuously work on same task.
No wastage of time and resources, when there were no frequent transfers.

INITIATIVE
11

Employees must be encouraged to give suggestion , which improve productivity

and should be provide bonuses for good suggestions.
But once decisions are taken after taking suggestions , every employee should
follow them whether it according to employee suggestion or not.

POSITIVE EFFECTS

Develops feelings of belonging ness in employee, because taking their suggestion

will make them feel that they are part of organization.
Goals were achieved on time when they are according to employees wish.

ESPIRITE DE CORPE (Union Is Strength)

Every employee should be treated and consider as the part of the organization,
and try to achieve group goal.
Employee must feel themselves as members of organization and contribute their
maximum to achieve team goal

POSITIVE EFFECT

Develops teams spirit , as every employee is now a part of organization

Achievement of group goal , because employee contribute maximum towards the
goal.

12