Principles of Management

Prof. Atul Agalawe 1

 Principles
• It is a fundamental truth or proposition that serves as the
foundation for a system of belief or behaviour or for a
chain of reasoning.
• Principles means fundamental truth established with
reference to cause and effect relationship between two or
more variables or events.
• It is a techniques or systems which give one directional
result.
• General statement or guidelines that can be used as a base
for framing certain code of conduct.
• Principles are base on observation and experimental
studies.
• Principles are used in pure science and social science
Prof. Atul Agalawe 2
 Principles of Management
• Management principles are the statements of
fundamental truth which act as guidelines for
managerial decision making and behaviour.
• Management principles are developed through
scientific study, enquiry and analysis.
• Management principles have been developed on
the basis of observation and experimentation as
well as personal experiences of the managers.

Prof. Atul Agalawe 3

 Features/ Nature of Management
Principles
1. Universal Application
2. General Guidelines
3. Formed by Practice and experiments
4. Flexibility
5. Behavioral in Nature
6. Cause and Effect Relationship
7. Equal importance to all

Prof. Atul Agalawe 4

 1. Universal Application
• Applicable in all types of organization
irrespective of their size and nature.
• Profit and Non-Profit
• Public Sector and Private Sector
• Large Scale, Medium Scale and Small Scale
• Manufacturing, Trading and Service
• Top, Middle and Lower Level

Prof. Atul Agalawe 5

 2. General Guidelines
• basic guidelines to understand situations and
solve the problems.
• They cannot be applied blindly in all the
situations.
• Not provide solutions to all managerial
problems
• Only provide guidelines, route or way to solve
problems

Prof. Atul Agalawe 6

 3. Formed by Practice & Experimentation

• Principles of management have been developed

on the basis of observation and experimentation.
• These are not developed overnight or personal
feelings of a person.

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 4. Flexibility
• Not static & rigid nature
• Dynamic and relative nature
• Keeps on changing
• Modified as per situations and requirements
• E.g. family management replaced by
professional management

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 5. Behavioral in Nature
• Only relate to human, not related to others
things
• to guide and influence the behaviour of
employees.
• They aim at influencing the behaviour of
human beings.

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 6. Cause and Effect Relationship
• Establish relationship between cause and effect.
• No ‘trial and error’ method
• Every principle have specific cause and after
implementation have specific effect on
organization.
• Principle: Scientific Selection, Training &
Development
• Cause: Imperfection in work
• Effect: Perfection in work

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 7. Equal Importance to All
• For the better results required apply all
principles
• Administrative, Scientific, Behavioral,
Bureaucratic, Modern, Quantitative
• They modify or change according to
requirement and situations

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 Significance/Importance of
Management Principles
1. Provides useful insight to managers
2. Efficient Utilization of Resources
3. Scientific Decisions
4. Understanding Social Responsibility
5. Encourages Research and Development
6. Helps to coordinate and control
7. Develops Objectives Approach

Prof. Atul Agalawe 12

 Theories of Management
• Management theories are the set of general
rules that guide the managers to manage an
organization. Theories are an explanation to
assist employees to effectively relate to the
business goals and implement effective means
to achieve the same.

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Various Management thinkers introduced theories which
are based on different approaches

Management Approaches
Thinkers
Frederick Winslow Scientific Management
Taylor
Henry Fayol Administrative Management

Max Weber Bureaucratic Management

Elton Mayo Behavioral Management (Hawthorne Effect)

Abraham Maslow Motivational theory

Peter Drucker M.B.O (Management By Objective)

Prof. Atul Agalawe 14
Administrative Theory of Management
• Henri Fayol (Istanbul, 29 July 1841 – Paris,
19 November 1925) was a French mining
engineer, mining executive, author and
director of mines who developed a
general theory of business administration
that is often called Fayolism.
• Henri Fayol started his career as an
engineer at the mining company
Compagnie de Commentry
Fourchambeau Decazeville in Commentry
at the age of 19. In 1888, he became the
Chief Managing Director of this mining
company that employed over 1,000
people.

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Administrative Theory of Management
• Henri Fayol was very successful in this
position for over 30 years (until 1918).
Around 1900 the mining company was
one of the largest producers of iron and
steel in France. At that time this industry
was considered to be vital for France.
• In the year 1916 Fayol wrote a book
entitled "Administration Industrielle et
Générale“ in French language.
• Fayol's work became more generally
known with the 1949 publication of
"General and Industrial Administration",
the English translation.
• “Father of Modern Management”

Prof. Atul Agalawe 16

Administrative Theory of Management

Activities of Business Enterprise Functions of Management

1. Technical activities (production, 1. Forecasting and Planning
manufacture, adaptation).
2. Commercial activities (buying, 2. Organizing
selling, exchange).
3. Financial activities (search for 3. Command(Directing)
optimum use of capital).
4. Security activities (protection of
4. Coordination
property and persons). 5. Control.
5. Accounting activities (stock
taking, balance sheet, costs,
statistics).
6. Managerial (Administrative)
activities (planning, organization,
command, coordination and
control).

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Prof. Atul Agalawe 18
 1.Principle of Division of Work

According to this principle the whole work in an

organisation must be divided into small tasks and one
task or unit of work should be assigned to one person
according to his ability and qualification. Division of work
leads to specialisation.It is also helpful to impose
responsibility to a particular person.

Specialisation is the most efficient way to use human effort

 2.Authority and Responsibility
Authority means power to take decision. Responsibility
means obligation to complete the job assigned on time.
If a person is given a responsibility, he should be vested
with the authority to carry out that responsibility.
According to this principle there should be a balance
(parity) between authority and responsibility.
 3. Discipline
Discipline means obedience,respect of authority and
observance of established rules. It is required not only on
the part of workers but also on the part of management
people. To ensure discipline supervisors should be
appointed at all levels, make clear and fair agreements
and careful application of penalties.
 4. Unity of Commend
According to Fayol there should be one and only one
boss for every individual employee. An individual
employee should receive orders from and be
responsible to only one superior. If there is more
than one superior, there can be contradictory orders.
 5.Unity of Direction
According to Fayol there should be ‘one
head(manager) and one plan’ for each group of
organisational activities that have same objectives.
This ensures unity of action and coordination.
 Difference between Unity of Command and Unity of Direction
Basis Unity of Command
Meaning As per this principle,one
subordinate should receive
orders from and should be
responsible to only one boss
Aim To prevent dual subordination
Implications It affects an individual
employee
Need It is needed to fix the
responsibility of each person
in the organization.
Unity of Direction
As per this principle each group
of activities having the same
objectives must have one head
and one plan.
To prevent activities overlapping
It affects the entire organization
It is needed for sound
organization of activities.
6.Subordination of Individual Interest to General Interest
The interest of an organisation should be the first
priority over the interest of any individual in that
organisation. When making decision, managers should
not consider personal gains but the organisation's
general goals.
7.Remuneration of Employees
According to this principle remuneration to the
employees should be fair for both employees and the
organization.It should be sufficient to motivate
employees.At the same time it should be within the
paying capacity of the organisation.Remuneration
should be just and equitable.
8.Centralisation and Decentralisation
Centralisation means concentration of authority in few
hands at the top level. Decentralisation means
delegation of authority to the lower levels of the
organization. According to Fayol, an organistion
should not be completely centralised or decentralised,
there must be proper balance between the two
depending upon the size and nature of the business.
9.Scalar Chain
Scalar chain is the formal line of authority (Chain of
command) which moves from highest to lowest rank in a
straight line. This chain specifies the route through which
the information is to be communicated to the desired
person. According to Fayol, this chain should not be
violated in the normal course of formal communication
 Gang Plank
In case of emergency,Fayol
permitted a short cut
communication in the chain which
is called Gang Plank. Gang plank
allows a direct communication
between the officials working at
same level of authority without
following every link of chain. This
is a shorter route and has been
provided so that communication is
not delayed.
 Gang Plank (Direct Contact)
According to this concept, in case of
emergency, two executives of the
organization of different departments at
the same level can communicate
directly, so that speedy decisions and
actions could be taken. In case of the
above example, if employee ‘E’ has to
contact employee ‘O’, he can easily and
directly communicate the information to
‘O’ using this Gang plank. If an
organisation follow scalar chain,some
business opportunities may be lost due
to lack of timely decisions; gang plank is
a solution for this.
10.Order
According to Fayol, there must be a fixed place for
everything (men and materials) and everything must be
in its place. If this order is strictly followed in an
organisation, there will be no hindrance in the activities
of of the business. This increases efficiency of
company's operations.
 11.Equity
Equity refers to kindness and justice in the behaviour of managers
towards workers. According to Fayol the principle of equity should
be followed by managers at all levels. There should be no
discrimination against anyone on account of
sex,religion,nationality etc.

Pichai,CEO,Google
12.Stability of Tenure of Personnel
According to this principle, employees once selected,
should be kept at their post for a minimum fixed term
(tenure).It refers to no frequent termination and
transfer. A feeling of insecurity for the job, the
employees cannot contribute their maximum.
 13. Initiative
Fayol suggested that employees in the organization
must be given an opportunity to take some initiative in
making and executing a plan. Initiative gives freedom to
its employees to suggest their new ideas, experiences
and more convenient methods of work. It gives more
satisfaction to employees.
 14.Esprit De Corps (Union is Strength)

According to Fayol management should promote a

team spirit in the organization and all the employees
must consider themselves as member of the
organization. A manager should replace ’I’ with ‘We’ in
all his conversations with workers to foster team spirit.
Scientific Theory of Management
• Frederick Winslow Taylor (March
20, 1856 – March 21, 1915) was
an American inventor and
mechanical engineer that applied
his engineering and scientific
knowledge to management and
developed a theory called
scientific management theory.
• In 1874 he became an apprentice
machinist, learning of factory
conditions at grass-roots level. He
qualified as an engineer due to
evening study.

Prof. Atul Agalawe 36

Scientific Theory of Management
• In 1878 he joined Midvale Steel Works as a
mechanical engineer and rose to the position
of Chief Manager of that company in 1884 at
the age of 28.
• He was primarily concerned about the
efficiency of workers and optimum utilization of
resources. He conducted a series of
experiments in management science for two
decades.
• In 1898 he joined Bethlehem Steel to solve an
expensive machine-shop capacity problem.
While at Bethlehem, he discovered many
management techniques. Taylor was forced to
leave Bethlehem Steel in 1901 after discord
with other managers.
• Since then, Taylor was promoting his
management methods through his writings,
lecturing and consultation.

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 Scientific Theory of Management
• In 1909, Taylor published “The Principles of Scientific
Management”. In this book, he suggested that
productivity would increase if jobs were optimized and
simplified. He also proposed matching a worker to a
particular job that suited the person’s skill level and
then training the worker to do that job in a specific
way. Taylor first developed the idea of breaking down
each job into component parts and timing each part to
determine the most efficient method of working.
• “Scientific Management is an art of knowing exactly
what you want your men to do and seeing that they do
it in the best and cheapest way”.

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 1.Science, not rule of thumb
According to this principle, Taylor insists that each job
performed in the organization should be based on
scientific enquiry and not on the basis of rule of thumb.
In rule of thumb decisions are taken on the basis of
practical knowledge and not on the basis of scientific
calculations.
2.Harmony, Not Discord (Conflict)
According to Taylor in an organization there should be
complete harmony between the management and
workers. Both should realize that each one is important.
Management should share the gains of the company with
workers and at the same time workers must contribute
their level best for the organization.
3. Mental Revolution
The technique of Mental Revolution involves a change in the
attitude of workers and management towards each other.
Both should realize the importance of each other and
should work with full cooperation. Management as well as
the workers should aim to increase the profits of the
organisation.
4.Cooperation, not individualism
According to this principle, there should be complete
cooperation between the employees and the
management instead of individualism. Competition
should be replaced by cooperation. Management needs
to trust workers and involve them when making
important decisions. It ensures industrial peace.
5. Division of Responsibility
This principle aims at determining the real nature of roles to be
played by managers & workers at different levels. While the
management is responsible for planning the work. Employees should
take it as their responsibility to execute the work. Hence, there should
be proper planning and execution.
6.Development of workers to their greatest
efficiency and prosperity
Industrial efficiency depends upon the efficiency of
workers. Workers efficiency depends upon proper
selection, training and assigning duties according to
their qualification. This will ensure the greatest efficiency
and prosperity for both company and workers.
 1.Functional Foremanship
In this technique Taylor suggested the division of factory
into two departments-Planning Department and
Production Department. Through this planning is
separated from execution. Taylor said foreman must be
intelligent, educated, energetic, honest and profession
expert. All these qualities can’t be found in one person so
Taylor stressed on having minimum eight experts
(Foremen),four under each department to order and
guide workers.
Functional Foremanship
 Functional Foremanship
A. Under planning department:
1.Route Clerk- determining the sequence of steps for
completing a particular job or task.
2.Instruction Card Clerk-issues instruction card to
workers.
3.Time and Cost clerk-records the time taken for
completion of a job and also prepares cost sheet for
every job.
4. Disciplinarian- ensuring discipline.
 Functional Foremanship
B.Under Production Department:
1.Gang Boss-arranges all the machines, tools and other
resources for work.
2.Speed Boss-assures timely completion of work.
3.Repair Boss-taken care of the maintenance of
machines.
4.Inspector-keeps check on quality control of the output.
 2.Standardization and Simplification of Work
Standardisation refers to the process of setting
standards for every business activity. It refers to setting
up standards for size, type, weights and quality of
product. Simplification aims at eliminating unnecessary
diversity of products.
 3.Method Study
Method study is a technique to know the one best way of
doing a particular job. According to Taylor, there would
be 'one best way' to do a job. Right from the
procurement of raw materials till the final product
delivery to the ultimate consumer all the activities
involved come under method study.
4.Motion Study
Motion study refers to the study of various movements,
like sitting, standing, holding, turning, changing position
etc., of workers, while performing a particular job. This
will avoid unnecessary movements and thereby increase
the efficiency of the workers.
5.Time Study
Time study determines the standard time taken to perform a well
defined job. Time measuring devises are used for each element of
task. Its purpose is to decide how much time is normally required
by the workers to perform a certain job. It also helps in calculating
labour costs and framing suitable incentive schemes.
 6.Fatigue Study
Fatigue study intends to find out the number and
frequency of rest intervals that must be provided to a
worker in completing a job efficiently. It is human
tendency that a person feels tired physically and
mentally if she/ he does not rest while working. The rest
period enables one to regain the stamina and to work
again with same capacity.
 7.Differential Piece Wage System Differential
piece wage system is a system of
wages payment in which efficient and
inefficient workers are paid atdifferent rates. Taylor
has suggested two types ofwages for
similar work. Higher wages for efficient
workers & lower wages for inefficient workers.