Class 12 Business Studies Revision Notes Chapter 2 - Principles of Management 

Meaning of Principles of Management

Principles of management are broad and general guidelines for the managerial decision making and action.

Features of Principles of Management

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1. Universal Applicability: The principles of management are applicable to all types and sizes of organizations. 

2. General Guidelines: The principles are guidelines to action but do not provide readymade solutions to all managerial problems as the real business situations are very complex.

3. Formed by practice and experimentation: The principles of management are formed by the management experts through observation and tested through repeated experimentation.

4. Flexible: The principles of management are not rigid. They are flexible and can be modified by the manager as per the given situation so as to achieve the desired goals.

5. Mainly Behavioural: The principles of management aim at influencing behaviour of human beings in a desired manner.

6. Cause and effect relationships: The principles of management seek to establish relationship between cause and effect so that they can be used in similar situations.

7. Contingent: The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time.

Significance of Principles of Management

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1. Provide managers with useful insights into real world: Principles of management help to provide managers with useful understanding of real-world situations, enable them to learn from past and solving problems quickly.

2. Optimum utilisation of resources: They ensure optimum utilisation of resources and effective administration as the principles focuses on scientific work and reduces personal biases. 

3. Scientific Decisions: They facilitate scientific decision making as they emphasize on logical thinking rather than blind faith.

4. Helps in meeting changing environmental requirements: They help to meet the changing requirements of the environment to the best advantage of an organisation.

5. Social Responsibility: Principles of management also guide managers in fulfilling social responsibility of an organisation.

6. Basis for management training, education and research: Principles of management help in increasing knowledge which is used as the basis for management training, education and research.

FAYOL’S PRINCIPLES OF GENERAL MANAGEMENT

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1. Division of work: The work of an organisation should be divided into smaller jobs, called tasks. These tasks are then assigned to different individuals as per their ability, qualifications and experience. It leads to specialization, speed, efficiency and accuracy of work.

 

2. Discipline: It refers to the respect and obedience for rules and regulations of an organisation. 

It is necessary for the systematic working of the organisation. It requires good superiors at all levels, clear and fair agreements and judicious application of penalties.

 

3. Authority and Responsibility: There should always be a balance between the authority given and responsibility given to an employee. 

 

This is because if authority is more than responsibility, the employees are likely to misuse it whereas if authority is less than responsibility, he/she will be unable to do the desired work.

 

4. Unity of command: An employee should receive order from only one superior at a time. 

 

5. Unity of Direction:  Each group of similar activities having the same objective must have one head and one plan. 

 

6. Subordination of Individual Interest to General Interest: In all the situations, the interests of an organisation should take priority over the interests of any one individual employee.

 

7. Remuneration of employees: The overall pay and compensation should be fair to both employees and the organization. 

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 i.e. remuneration should be just and equitable.

8. Centralisation and Decentralisation: The concentration of decision-making authority is called centralisation whereas its dispersal among more than one person is known as decentralization. 

There should be effective centralisation instead of complete centralisation or complete decentralisation.

9. Scalar Chain: All communication should pass from top to bottom and everyone should follow this official line of authority. 

 Gang Plank is exception to scalar chain and is used in the cases of emergencies. In gang plank, employees working at same level can communicate with each other.

10. Order: There should be proper arrangement of materials and people in an organisation. 

Fayol has suggested social order (proper arrangement of people) and material order (proper arrangement of materials).

11. Equity: There should be no discrimination towards workers on any basis such as caste, creed, gender etc. 

12. Stability of Personnel: The employees should be kept at their post for a minimum fixed time period. They should not be frequently transferred or changed from their job posts. 

13. Initiative: Managers should encourage employees to give their suggestions in decision making process. Good suggestions given by the employees should be rewarded. 

14. Espirit De Corps: The management should promote a team spirit among employees. A manager should replace 'I' with ‘We’ in all his conversations with workers.

SCIENTIFIC MANAGEMENT
Scientific Management:
Scientific Management means knowing exactly what you want your employees to do and seeing that they do it in the best and cheapest way.
Fredrick Winslow Taylor is known as the ‘Father of Scientific Management’.

PRINCIPLES OF SCIENTIFIC MANAGEMENT

TAYLOR’S SCIENTIFIC MANAGEMENT:

Principles of Scientific Management: 

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1. Science, not rule of thumb: Work should be done in a planned and systematical manner and not on the basis of intuition or rule of thumb.

Taylor believed that there was only one best method to maximise efficiency which can be developed through study and analysis.

2. Harmony, not discord: There should be harmony between the management and workers. 

Management should share the gains with the workers and at the same time workers should work hard to increase the output of organisation. 

To reduce conflicts, complete mental revolution (change in thinking) on the part of workers and management is needed.

3. Cooperation, not individualism: There should be cooperation between workers and the management. Management should encourage the workers to give suggestions and the workers should avoid making unreasonable demands or going on strikes.

4. Development of everyone to his/her greatest efficiency: In order to increase efficiency, workers should be scientifically selected and the work should be assigned as per their capabilities. Further, they should be given training to increase their skills.

 

Techniques of Scientific Management

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Techniques of Scientific Management given by Taylor are as follows:

1. Functional foremanship: Taylor suggested functional foremanship through eight persons. Each worker will have to take order from eight foremen/supervisors. Taylor stressed on separating planning function from the execution function. Four foremen will be under planning in charge and other four will be under production in charge.

Under Planning in charge:

• Instruction card clerk- preparing instructions for workers

• Route clerk- specifying route of production

• Time & cost clerk- preparing time & cost sheet

• Disciplinarian- ensuring discipline

 Under Production in charge:

• Speed boss- timely and accurate completion of work.

• Gang boss- keeping tools and machines ready for work by workers.

• Repairs boss- ensuring proper working condition of tools and machines.

• Inspector- checking quality of work.

2. Standardisation & Simplification of work:

Standardisation means setting standards. 

Simplification means removing unnecessary types, sizes, varieties etc.

3. Method Study: Finding out one best way of doing the job.

4. Motion Study: Study of movements of employees and reducing/eliminating unnecessary movements.

5. Time Study: Determining the standard time to perform a job.

6. Fatigue Study: Determining duration and frequency of rest intervals.

7. Differential Piece Wage System: To differentiate between efficient and inefficient workers, Taylor has suggested a higher wage rate for efficient workers.