CHAPTER-2

PRINCIPLES OF MANAGEMENT
1. DIVISION OF WORK
According to this, Fayol has suggested that the whole work of an organization should be
divided into small manageable task and for performing each and every task they appoint
specialist. It helps to create specialization in an organization. If the work is performed by
a specialist it helps to increase efficiency in an organization
Fayol applies this principles to all the kinds of work technical or mechanical

2. AUTHORITY AND RESPONSIBILTY

Authority is the power or right to take decision.
Responsibility is the obligation to complete the assign task.
According to this principle, authority should be equal to responsibility
If the authority is more than responsibility then there will be misuse of power
If responsibility is more than the authority then work performance cannot be achieved. So
according to this principle, authority should be equal to responsibility.
 A manager should have the right to punish the subordinate for willfully not obeying a
legitimate order. But only after sufficient opportunity has been given subordinate on
presenting his or her case.

3. DISCIPLINE
It is concerned with obedience of rules and regulations in an organizations. To maintain
discipline in an organization there should be-:
-good superior at all level
-fair agreement
-judicious application of penalty
For example
Soppose mgt. and workers have entered into an agreement wherby wokers have agreed to
work overtime without any additional payment to revive the company out of loss. In
return the mgt. hag promised to increase wages when this mission is accomplished.
Here displine would mean that both workers and mgt. honour their commitments without
any prejudice towards one another.
4. UNITY IN COMMAND
According to this principle Fayol has suggested that there should be one commanding
Power over the subordinates. If the employee get orderfrom more than one superior, the
subordinate gets confused as whose order is to be followed. Moreover responsibility for mistake
cannot be easily find out. So employee should get order only from one superior.
According to this dual subordination should be avoided which means if a subiordinate is
receiving orders from more then one superior

5. UNITY OF DIRECTION
According to this principle, the efforts of all the persons working in an organization should
be directed for the achievement of organizational goals. For this, there should be one head
one plan. This helps to create unity of action and coordination
For example If a company is manufacturing motorcycle as well as cars then it should have
two separate divisions for both of them . eah division should have its qwn incharge , plans
and execution resources.
It prevent overlapping of activities.
 6. SCALER CHAIN
It is a chain of superior to subordinate ranging from top to bottom.This chain perform two
important functions.
chain of command.
chain of communication

A-> B-> C-> D-> (SCALER CHAIN)

Chain of command- it specifies who is going to command to whom. Superior is going to

command subordinate.a
Chain of communication- it specified hoe the communication will pass from top to bottom.
For example, if a want to communicate with D. it passed through A to B, B to C, C to D then
C to D.
This chain is very time consuming. So Fayol has introduced the concept of GANG PLAN.

B E

GANG PLANK C F

D G

According to this, the two persons are working at the same level but in different departments,
they can communicate with each other but with the prior approval of their superior. This is a
shorter route and help been provided so that communication is not delayed. Fayol suggested that
in case of emergency it can be possible that a worker can directly contact with the CEO of the
company.
7. CENTRALISATION AND DECENTRALIZATION
CENTRALISATION- when the decision making power is only at the top level which implies
that top level is taking each and every decision related to the organization. The other managerial
positions are not allowed to take any decision

DECENTRALISATION- when decision making authority is DISTRIBUTED throughout the

organizations from top to bottom the system is known as decentralization.

According to this principle, these should be balanced between centralization and

decentralization.
An organization neither be completely centralized nor decentralized. The overall policy making
decision should be centralized whereas the daily matter decision should be decentralized.
Moreover the degree of centralization and decentralization depend on the size of organization. In
small scale business it should be centralized while in large scale it should be decentralized.

8. STABILITY OF PERSONAL
According to this principle, Fayol has suggested that there should not be frequent movement
among the job position of the employees working in an organization. Ifthis principle is not being
followed it will increase the employee turnover ratio which further increases the cost of
selection, recruitment and training.
so employees should be kept at their post or position for a minimum fixed time period.

9. SUBBORDINATE OF INDIVIDUAL INTEREST TO GENERAL INTEREST

According to this principle, the interest of an organization should take priority over the interest
of any one individual employee. This is so because larger interest of the workers and
stakeholders are more important than the interest of any one person. Managers should not use his
power for his individual and family benefit.
For example interest of various stakeholders cannot be sacrificed for one individual.
If a manager workm for the group it will hlp to increase his respect and image among the
workers and at the same time workers also start working for the benefit of organization.

10. REMUNERATION OF EMPLOYEES

According to this principle, fayol has suggested that employee should be given fair remuneration
which can give them a reasonable standard of living.
At the same time it should be within the paying capacity of the company.
This will create a good relation between the workers the management and the working of the
company would be smooth.
11. PRINCIPLE OF ORDER
It consist of material order and social order which implies people and material must be in a
suitable places at appropriate time
SOCIAL ORDRE- a place for every one working in an organization
MATERIAL ORDER- a place for everything used in an organization
If this principle is followed in an organization there will be no problem in business activities,
which help to increase productivity and efficiency

12. EQUITY
This principle emphasis kindness and justice in the behavior of managers towards the workers,
there should be no discrimination on the basis of sex, religion, language, caste or nationality. It
will help to create loyalty and devotion of the employees towards the organization.
Now a days multinational companies are giving equal opportunities to everyone . thus we find
india born CEO’s such as rajat gupta who heads multinational like mckinsey inc.
13) INITIATIVE:
According to fayol initiative means taking the first step with self motivation. Employees should
be encouraged to develop and carry out their plans it is one of the quality of an intelligent person.
But it should not be against the policy of the organization.
A company should have an employee suggestion system whereby initiative /suggestion which
result in substantial cost/ time reduction should be rewarded.

14) ESPIRIT DE CORPS:

ACCORDING TO FAYOL there should be team work, unity, and harmony among the
employees working in an organization
If this principle is not being followed objectives of the organization cannot be achieved moreover
it would be difficult to maintain coordination
A manager should replace I with WE in all his conversation with workers to foster team work.
It will help to minimize the use of penalties,.
SCIENTIFIC PRINICIPLES OF MANAGEMENT
BY F. W TAYLOR

1) SCIENCE NOT RULE OF THUMB:

Taylor believed that there was only one best method to maximize efficiency
This method can be developed through study and analysis.
The method so develop should substitute the rule of thumb.this result in tremendous saving of
human energy as well as wastage of time and material.
Scientific method involved investigation of traditional method s through work study, unifying
the best practices and developing a standard method, which would be followed throughout the
organization.

2) HARMONY , NOT DISCORD: In an organization there always a class of conflict

between mgt. and workers.
So according to fayol there should be complete harmony between mgt. and workers.
Both should realize that each one is important.
To achieve this state there should be complete mental revolution on the part of both mgt.
and workers.
Workers should work for the benefits of mgt. at the same time mgt. should share the
gains of the company with the workers.
Workers will not go for a strike and work haed for the glory of the company.
 According to taylor prosperity for the employer cannot exiot for a long time uless it is
accompanied by prosperity for the employeese versa.

3) COOPERATION , NOT INDIVIDUALISM : THIS PRINCIPLE IS AN EXTENTED

FORM OF Harmony not discord
Competition should be replaced by cooperation . mgt. should not close its ears for any
constructive suggestion made by employees
Employees should be rewarded for their suggestion, which result in reduction ion cost .
mgt. should consult with workers before taking any decision , at the same time workers
should not go for a strike.
Workers should not make unresonable demand .
According to taylor , there should be equal division of authority and responsibility b/w
the workers and mgt. mgt. should work side by side with workers by encouraging them
and guiding them.

4) 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 THE RIGHT from the
process of selection . each employee should be selected scientifically work assign
should be according to his or hr physical , mental and intectual capability . employees
should be given required training so that they can produce more and earn more .

TECNIQUES OF SCIENTIFIC MANAGEMENT

GIVEN BY TAYLOR . HE HAS GIVEN SEVEN TECHNIQUES TO INCREASE THE

EFFICIECY OF THE WORKERS AT THE FACTORY LEVEL

1) FUNCTIONAL FOERMANSHIP: It is an extension of the priniciple of division of

work and specialization at the work place .
According to taylor , a single person is not competent to handle each and every problem
of the worker so he has introduced the concept of functional foremanship .
According to this factory level is divided inti two parts – production incharge and
planning incharge.
Under planning incharge there are four heads ( instruction card clerk, route clerk , time
and cost clerk, disciplinarian)
Under production incharge there are four heads ( speed boss, gang boss, repair boss,
inspector)
All these 8 foreman control the activites of the workers .
 Function of different clerk
Instruction card clerk : to graft instructions for the workers.
Route clerk: tospecify the route of production.
Time and cost clerk: to prepare time and cost sheet.
Disciplinarian: to ensure displine.

Speed boss : to be responsible for timely and accurate completion of the job.
Gang bosss: to keep machine and tools ready for operation by the workers.
Repair boss: to ensure proper working condition of machines and tools.
Inspector: to check the quality of work.

2) METHOD STUDY : the objective of method study is to find out one best
way/method of doing the job.
To determine the best way there are several parameters right from the procurement of
material till the final product is delivered to the customer , every activity is a part of
method study.
It helps to minimize the cost of production and maximize the quality and satisfaction of
the customer. For this many techniques like process charts and operations research etc.
are used.
For example for designing a car , the assembly line production would require deciding he
sequence of operations, place for mn, machn and raw materials etc. all this is part of
method study.

3) 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 typhical job.
Th objective of motion study is ot eliminate the unnecessary movements so that it take less
time to complte the job efficiently . taylor used stop watch and various symbols and colours
For identify different motion.
Taylor used stop watches and various symbols and colours to identify different motions.
4) TIME STUDY: It is a technique to determine the std. time taken by a worker of
reasonable skill and efficiency to perform a well defined job.
The objective of time study is to find out the std. time for the completion of task . the std.
time is fixed for the whole of the task by taking several readings.
Time measuring devices are used for each element of task .
The method of time study will depend upon :
1) Volume and frequency of the task,
2) The cycle time of the opration
3) Time measurement

5 FATIGUE STUDY: THE OBJECTIVE OF FATIGUE STUDY IS TO DETERMINE

THE FREQUENCY OF REST INTERVALS in completing a task.
A person is bound to feel tired physically and mentally if he/she does not get
rest intervals . the rest intervals helps to regain stamina and energy to work
again . this will result in increased productivity.
There can be many causes for fatigue like long working hours , doing
unsuitable wprk, having uncordial relation with the boss or bad working
conditions eyc.

6 STANDARDISATION AND SIMPLIFICATION OF WORK :

standardization refers to the process of setting standard for every
business activity.
Std. are the bench mark for having the standard production . there should be std.
quality of raw material , machine and tools .
the objective of standard are:
1) To reduce the given line or product to ix type .
2) To establish inter change ability of manufactured parts and products
3) To establish standard of excellence
4) To establish std. of performance of men and machines.

SIMPLIFICATION : aims at eliminating unnecessary diversification of

products. It result in saving of cost of labour , machine and tools . it help in
reducing the inventories and fuller utolisation of equipment
7 DIFFERENTIAL PIECE WAGE PLAN SYSTEM : this technique act as a
strongestmotivator to motivate thje workers . this helps to differentiate
between efficient and inefficient workers
Taylor wanted to give rewards to efficient workers for this so he has introduced
the concept of different wage plan .
Accoeding to this he has given a wage plan to workers
Standard output =100 units
Standard time = 8 hours
Standard rate = rs. 5 / piece for producing 100 units or more and rs. 4 / piece
for producing less then 100 units .
For example : two workers are there A and B

A has produced 110 units within a given time period while B is able to produce
only 90 units
So A is entitled to get rs. 550 for his work while B will get rs. 360
The difference of rs. 190 is sufficient to motivate the B . to perform better

Q) Explain the concept of mental revolution

Mental revolution : it involve the chamge in outlook of both mgt. and workers
mgt. should think for the benefi of workers and workers should work for the
benefit of mgt. this attitude will be good for both of them and also for the
company . in the long run only workers wellbeing wll eusure prosperity of the
business.

Q Explain the features of priniciples of management

1) UNIVERSAL APPLICABLE: the priniciple of mgt. are universal

applicable as well as applied to all types of organization , business as well as
non business , small as well as large , public or private sector .
How ever the extent of their applicability could vary with the natue of
organization

2) GENERAL GUIDELINES : the principles of mgt. are general guidelines to

action . I do not provide readymade solution to all the problems because real
business problems are very complex and dynamic .
3) FORMED BY PRATICE AND EXPERIMENTATION: the
Principles of mgt. are formed on the basis of observation and experimentation and collective
wisdom of managers

4) FIEXIBLE : the principle of mgt. are not rigid prescriptions , they are flexible and can be
modified by the managers when the situation arise. They give the manager enough
discretion to do so . for example the degree of centralization and decentralization

5) MAINLY BEHAVIOURAL : mgt. principle aply on the human beings therefore

principles of mgt, are behavioural in nature . apart from this principles create a beter
understanding of the relation ship between human and material resources,.

6) CAUISE AND EFFECT RELATION SHIP : the principles of mgt. shows cause and
effect relation ship . they tell us if a particular principle is applied in a particular situation
what would be the effect.

7) CONTIGENT: the application of principle is contigent or depending upon situation at a

particular point of time . the application of princilples has to be changed as per the
requirement.
Q Explain the significance / role/ importance/need of mgt. principles ?

1) PROVIDING MANAGERS WITH USEFUL INSIGHT INTI REALITY: the

principles of mgt. provides managers with useful insight into real situation

as these principle will add to their knowledge ,ability and understanding of managerial
situation and circumstances

it will also help managers to learn from past mistakes and conserve time by solving
recurring problems quickly.

2) OPTIMUM UTILISATION OF RESOURCES AND EFFECTIVE

ADMINSTRATION: mgt. principle helps managers to use their resources in efficient
manner .

So that it should give maximum benefit with minimum cost such as wastage associated
with the trial and error approach can be over come.

Principles of mgt. help in effective administration by limiting the boundary of managerial

discreation so that their decision may be free from personal predices and biases or by
clarifying the chain of authority and chain of communication.

3) SCIENTIFIC DECISION MAKING: mgt. principles help in thoughtful decision

making . they give more importance to logic rather then blind faith. Mgt. decision are
free from personal bias. They are based on objective assessment of the situation.
4) MEETING CHANGING REQUIREMENT although the principles are in the nature
of general guidelines but they are modified and as such help managers to meet
changing requirement of the environment . mgt. principle are fliexible to adopt to
dynamic business environment.
5) FULFILING SOCIAL RESPONSIBILITY : THE INCREASED AWARENESS OF
THE PUBLIC FORCES BUSINESS ESPICALLY LIMITED COMPANIES TO
FULFILL THEIR SOCIAL RESPONSIBILTY . MGT. PRINCIPLES HAVE
Evolved in response tyo the demands of the public.

Q) DEFINE PRINCIPLES OF MANAGEMENT

Principles of mgt. are the broad and general guidelines for decision making and
behavior.
Q) Define technique of management
Techniques are the procedures or methods which involve a series of steps to be taken
to accomplish desired goals.