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PRINCIPLES OF MANAGEMENT

CHAPTER AT A GLANCE
A. Principles of Management: Concept, Nature and Significance
1. Concept: A principle can be defined as a statement of fundamental truth which has been established with
reference to a 'cause and effect relationship' between two or more variables. The principles of
management can be used by managers as guidelines for decision-making and action. Management
principles enable the managers to manage the enterprise effectively.
2. Nature or Features of Management Principles
o General guidelines to action
o Universal application
o Formed by practice and experimentation
o Flexible and dynamic
o Influence human behaviour
o Establish cause and effect relationship
o Contingent
o Interdisciplinary
3. Need or Importance of Management Principles
o Meet the requirements of the changing environment
o Provide an insight to managers
o Help in scientific decision-making
o Guide management training, education and research
o Optimum utilisation of resources and effective administration
o Help in discharging social responsibility
B. Fayol's Fourteen Principles of Management
1. Division of Work: The work is divided into small tasks or jobs and each job is performed by a specialist.
2. Parity of Authority and Responsibility: There should be balance between authority and responsibility.
3. Discipline: There should be obedience to the rules of the organisation on the part of both superiors and
subordinates.
4. Unity of Command: A subordinate should receive orders and be accountable to one and only one
superior.
5. Unity of Direction: The efforts of all members of an organisation should be directed towards common
organisational goals.
6. Subordination of Individual Interest to Group Interest: The interests of the organisation will supersede
the interest of any individual.
7. Remuneration of Workers: The pay and compensation should be fair to the employees.
8. Centralisation and Decentralisation: There should be balance between centralisation and
decentralisation.
9. Scalar Chain: Scalar chain means line of authority or chain of command (superiors) from highest to the
lowest rank.
10. Order: Order refers to orderly arrangement of men and materials, i.e., a place for everything and
everyone and everything (and everyone) in its (her/his) place.
11. Equity: Equity refers to kind, fair and just treatment of employees. There should be no discrimination
against anyone on account of religion, sex, caste, language, etc.
12. Stability of Tenure of Personnel: According to Fayol, personnel should be selected and appointed after
a thorough and rigorous procedure. But once selected, they should be given reasonable time to show the
results.
13. Initiative: This implies that subordinates should be given an opportunity to take initiative in making and
executing plans.
14. Esprit de corps: This means that 'unity is strength'.
C. Taylor's Scientific Management (Founder -Frederick Winslow Taylor)
According to Taylor, "Scientific management is the art of knowing exactly what you want men to do
and seeing that they do it in the best and cheapest way."
Scientific management is the application of a scientific approach to managerial decision-making.
1. Principles of Scientific Management
o Science, not rule of thumb
o Harmony, not discord
o Cooperation, not individualism
o Development of each and every person to his or her greatest efficiency and prosperity
2. Elements or Techniques of Scientific Management
o Job analysis or work study-consisting of Method, Time, Motion and Fatigue Study
o Functional foremanship
o Differential wage system
o Bilateral mental revolution
o Standardisation and Simplification of work