PRINCIPLES OF MANAGEMENT

CONCEPT: Principles of management are broad guidelines for decision making and behaviour of managers. They served as
general guidelines to the managers for making decisions, taking actions and solving problems systematically.

DERIVATION OF MANAGEMENT PRINCIPLES:

1. OBSERVATION:

The management thinkers and researches observe certain events in actual practice and analyse them to get
certain guidelines, which may be used in future.

2. EXPERIMENTATION

The guidelines developed through observation are repeatedly by experimented to test their validity. Such guidelines are
tested in various organisations with different environment. If they provide same result in all conditions, then the
guidelines are designated as management principles.

Management Principles v/s Pure Science Principles

 GEMENT PRINCIPLES
ILITY re flexible
ATION ave to be applied creatively
deal with unpredictable
behaviour
ON WITH ENVIRONMENT ave to keep pace with
ng environment as human
our is never static
CIENCE PRINCIPLES
re rigid in nature
re applied in static or
te manner
re not required to keep pace
e changing business
nment as they do not change
me.

MANAGEMENT PRINCIPLES v/s MANAGEMENT TECHNIQUES

GEMENT PRINCIPLES GEMENT TECHNIQUES

NG re guidelines to take re the procedures, which
ns or actions while s a series of steps to achieve
ing techniques d goals.
ity re flexible re not so flexible

MANAGEMENT PRINCIPLES v/s VALUES

GEMENT PRINCIPLES S
NG re guidelines to take decisions are general rules for behaviour of
ual in the society
ATION re formed after research in work re formed through common
ons es
E re technical in nature re ethical in nature

NATURE/ FEATURE / CHRACTERISTICS OF PRINCIPLES OF MANAGEMENT

1. UNIVERSAL APPLICATION:

The principles of management can be applied to all kinds of organisation irrespective of size ( Small or large
organisations)and nature( Business, government or social organisation). However, extent of application varies
depending upon nature and size of the organisation.

Example: Principle of division of work is related with creating specialisation in all kind of organisation.
Although, the extent of division of work may vary as per nature and size of the organisation.
2. GENERAL GUIDELINES:

Management principles are guidelines to action and cannot be used as tailor made tools i.e., they do not
provide readymade straitjacket solutions. They have to be adjusted as per demand of the situation.
This is so because real business situations are very complex and dynamic. So, principles should be applied
carefully in accordance with the needs of the organisation.
Example :As per principle of the ‘Subordination of Individual Interest to General Interest’, a manger may
emphasise the primacy of overall goals of the organisation in case of any conflict between the two
departments.
3. FORMED BY PRACTICE AND EXPERIMENTATION:

Management principles are evolutionary in nature, i.e. they have been developed through observation,
experimentation and experience of management thinkers.
The principles of management are formed by experience and collective wisdom of managers as well as
experimentation.
It is a matter of common experience that ‘Discipline’ is crucial to achieve any purpose.
4. FLEXIBLE:
 Management principles are not rigid as prescriptions to be followed in an absolute manner. They are
flexible and can be modified by the managers as per changes in the business environment. These
principles cannot be applied blindly, even in an identical situation. Individual principles are like different
tools serving different purposes and mangers has to decide which principle to use under each situation.
Example: According to the principle of ‘Centralisation and Decentralisation’ degree of authority and
dispersal of authority has to be adjusted as per the circumstances.
5. MAINLY BEHAVIOURAL:

Principles of management aims at influencing human behaviour because all work is done by human
beings. Human behaviour is very complex and dynamic in nature. Management principles aims to
influence such unpredictable behaviour in order to achieve organisational goals. Therefore, principles of
management are mainly behavioural in nature.
Principles also enable a better understanding of relationship between human and material resources in
accomplishing organisational purposes.
Example: While planning the factory layout, the principle of ‘Order’ would require that workflows are
matched by the flow of materials and movement of men.
6. CAUSE AND EFFECT:
The principles of management are intended to establish relationship between cause and effect
relationship so that it can be used in similar situations in large number of cases. It means principles helps
in predicting the outcome of managerial actions.
 7. CONTINGENT:

The application of management principles is dependent or contingent upon the prevailing situation or
conditions at a particular point of time. They have to be suitably amended as per the situations.
Example: the principle of division of work cannot be applied in organisations where personal skills are
needed.

SIGNIFICANCE OR IMPORTANCE OF PRINCIPLES OF MANAGEMENT

The principles of management provide useful insights to managerial behaviour and influence managerial
practices. Principles guide managers in taking and implementing decisions.
Following points to be considered the importance of management principles:
1. PROVIDING MANAGERS INTO USEFUL INSIGHTS INTO REALITY:

The principles of management provide the managers with useful insights into real world situations.
Adherence to the principles improve their knowledge, ability and understanding of managerial situations
and circumstances.
They also provide timely guidance, which helps in increasing the efficiency of managers. Principles
enables managers to learn them from past mistakes and to save time by solving recurring problems
quickly.
 2. OPTIMUM UTILISATION OF RESOURCES AND EFFECTIVE ADMINISTRATION:

The resources available with a company are limited and they need to be put to optimum use. By
optimum use we mean that resources are used in manner that give maximum benefits with minimum
cost. Principles help the mangers to foresee the cause and effect relationships of their decisions as a
result, wastage and inefficiency associated with trial and error approach can be reduced.
Example: Principles of division of work, unity of direction, order, etc. facilitates better utilisation of
human and physical resources.
Principles of management makes administration more effective by discouraging personal prejudices
and biases. These principles insist on adopting an objective approach.
Example: Principle of ‘Subordination of Individual Interest to General Interest’ gives more importance
to achievement of the organisational objectives.
3. SCIENTIFIC DECISION:
 The management decision must be based on facts and justifiable in terms of the intended purposes. They
must be timely, realistic and subject to measurement and evaluation.
Decisions based on the principles are free from bias and prejudices. They are based on the objective
assessment of the situation and emphasize on logic rather than blind faith.
Example: Taylor’s principle of ‘Science not Rule of Thumb’ stresses on scientific analysis of each part of
work.

4. MEETING CHANGING BUSINESS REQUIREMENTS:

In order to survive and grow, it is compulsory for an organisation to continuously adapt itself as per
changing business environment.
Although, principles are general guidelines but they are flexible and can be modified to meet the
dynamic business environment. Management principles provide an effective and dynamic leadership
and helps the organisation to implement the changes.
Example : Management principles of ‘Division of Work’ results in specialisation and due to this reason
many companies are specialising in their core competencies and outsourcing their non- core activities
5. FULLFILLING SOCIAL RESPONSIBILITY:
 The increased awareness of the public has made it mandatory for the business firms to fulfil their
social responsibilities. Management theory and principles have also evolved in response to these
demands. Principles helps in fulfilling social responsibility by responding to the demand of the public.
Principles of management not only help in achieving organisational goals but also guides managers in
performing social responsibilities.
Example: Principle of ‘Equity ‘emphasise fair treatment of all workers in the organisation and helps in
fulfilling social responsibilities towards them.

6. MANAGEMENT TRAINING, EDUCATION AND RESEARCH:

 The principles help to increase knowledge and are used as a basis for management training,
education and research. Due to this reason, principles have also been included in graduate courses
likeB.com., BBA, BBS, etc and postgraduate courses like MBA.
The principles of management enable refinement of management practices and facilitate
development of new management techniques.

FAYOL’S PRINCIPLE OF MANAGEMENT:

HISTORY:
Henri Fayol (1841-1925) was a French management theorist. He graduated from the Mining Academy
of St. Etienne in 1860 in Mining Engineering.
 He joined a French Mining Company in 1860 as an engineer and rose to the position of its
managing director in 1888.
 At that time, the company was at the verge of bankruptcy. With rich and broad administrative
experience, Fayol contributed a lot in turning the fortune of the company.
 In 1918, when he retired, the company was in excellent position in terms of finance and
operations.

CONTRIBUTIONS OF HENRI FAYOL

 Fayol found that activities of an industrial organisation could be divided into 6 groups: Technical,
Commercial, Financial, Security, Accounting and Managerial. He made clear distinction
between technical and managerial skill.
 Fayol was first to identify four functions of management: Planning, Organising, Directing and
Controlling.
 Fayol not only identified management as a separate field of endeavour, but also developed 14
principles which acts as guidelines for managers.
For his contributions, he is well known as ‘FATHER OF GENERAL MANAGEMENT’.
 MANAGEMENT PRINCIPLES DEVELOPED BY HENRI FAYOL
1. DIVISION OF WORK:

According to this principle, whole work must be divided into small tasks or jobs and each job
must be assigned to a trained specialist who is competent to perform it.
 Fayol recommended that work of all kinds must be divided and allocated as per
competence, qualification and experience. The intent of division of work is to
produce more and better work for the same efforts.
 Divisions makes each task simpler and repetitive performance helps in gaining speed,
accuracy and specialisation.
 This principle applies to both managerial and technical work.
 Due to this reason, big companies have separate departments for finance, marketing,
production and human resources.

ADVANTAGES:

a. Leads to specialisation as work divided as per qualifications.

b. It simplifies the work and increases the efficiency as same work is performed
again and again.

CONSEQUENCES FOR VIOLATION

a. There will be lack of efficiency and specialisation.

b. There will be waste of time and efforts due to changes from one work to
another.
2. AUTHORITY AND RESPONSIBILITY

 According to this principle, there should be proper balance between authority

and responsibility.
 Authority is the right to give orders to subordinate and responsibility is the duty,
which a subordinate is expected to perform by virtue of his position in the
organisation. Authority and responsibility go hand in hand.
 Parity between authority and responsibility helps in meeting responsibilities on
time and prevent misuse of authority.
 Authority is of two types: official authority (authority to command) and personal
authority (authority of individual manager)
 A manger should have the right to punish a subordinate for wilfully not obeying a
legitimate order but only after sufficient opportunity has been given to a
subordinate for presenting his case.

ADVANTAGES

a. It prevents misuse of authority

b. It helps in fixing responsibility
 CONSEQUENCES FOR VIOLATION

a. If responsibility exceeds authority, then subordinate cannot perform their

duties.
b. If authority exceeds responsibility, subordinate may misuse it.
3. DISCIPLINE

 Discipline refers to obedience to rules and regulations of the organisation, which is

necessary for systematic working of the organisation.
 According to Fayol, discipline requires good supervisors at all levels, clear and fair
agreements regarding rules and regulations and judicious applications of penalties.
 It is also related with fulfilments of commitments made by both employers and
employees. Discipline is must for all the enterprises and for all the levels.

ADVANTAGES
a. Smooth and systematic functioning of the business.
b. Better relations between management and employees.

CONSEQUENCES FOR VIOLATION

a. It results in chaos and leads to disruption of working in the organisation.

b. Relations between management and employees may not be so cordial.
DON’T WORRY BE HAPPY
4. UNITY OF COMMAND

 According to this principle, each subordinate should receive orders and be

accountable to one and only one superior.
 If an employee gets orders from two superiors at the same time, then the
principle of unity of command is violated.
 Dual subordination should be avoided as it creates confusion in the subordinate
and conflict between the superiors. So , in order to avoid confusion, conflicts
,disharmony and many other unpleasant situations, the employee should receive
order from one boss only.
 According to Fayol, if this principle is violated, then’ authority is undermined,
discipline is in jeopardy, order disturbed and stability threatened.’

ADVANTAGES

a. There will be no confusion in the mind of subordinates.

b. Responsibility can be easily fixed.

CONSEQUENCES FOR VIOLATION

a. It creates confusion in the mind of subordinates as to whose order to be

compiled.
b. It will be difficult to fix responsibility.
5. UNITY OF DIRECTION

 Unity of direction implies that there should be one head and one plan for group
activities having the same objectives.
 According to this principle, all the units of an organisation should be moving
towards the same objectives through coordinated and focussed efforts.
 It ensures unity of action and coordination and unnecessary duplication of
efforts.
 This principle is utmost necessity in multi-product companied based on certain
divisions.

ADVANTAGES

a. It emphasises importance of common goals and helps in achieving them.

b. It ensures unity of action and facilitates coordination.

CONSEQUENCES FOR VIOLATION

a. Unnecessary duplication of efforts and wastage of resources.

b. There will be lack of coordination.
6. SUBORDINATION OF INDIVIDUAL INTEREST TO GENERAL INTEREST:

 According to this principle, interest of the organisation as a whole must prevail over the interest of the
individual or employees.
 In an organisation, every individual has his own interest and company has got its own objectives. This
principle demands that each individual should sacrifice his personal interest for achieving personal’s
objectives.
 In all the situations, company’s interest should supersede the interest of individuals. In case, individual
interest and organisational interest differ, it is the duty of the management to reconcile them. However, if
reconciliation is not possible, then individual interest must be sacrifice in favour of general interest.
 A manager can ensure this principle through his behaviour. He should not misuse his power for his own
benefit at the cost of general interest of workers or company.

ADVANTAGES

a. It helps in achieving the goals of the organisation.

b. It brings coordination between individual and organisational objectives.

CONSEQUENCES FOR VIOLATION

a. The firm will not be able to achieve its goals.

b. Lack of coordination between individual and organisational objectives.

7. REMUNERATION OF EMPLOYEES
  According to this principle, overall pay and compensation should be fair to both employees and
organisation.
 The remuneration should be fair and just to everybody. 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.
 It will ensure congenial atmosphere and good relations between workers and management.
 If a company earned higher profit (more than the estimated) ,then it must share some of its part with
the employees in the form of bonus, which would be very satisfying to them.

ADVANTAGES
a. High level of motivation as they are fully paid for services rendered.
b. Improvement in commitment of employees towards organisation.

CONSEQUENCES FOR VIOLATION

a. Lack of motivation among employees.

b. Increases in labour turnover.
8. CENTRALISATION AND DECENTRALISATION:
 According to this principle, there should be proper balance between centralisation and
decentralisation in the organisation.
 There is a need to balance subordinate involvement through decentralisation and manager’s retention
of final authority through centralisation.
 The degree of centralisation and decentralisation depends on various factors such as experience of
superior, ability of subordinates. Size of the organisation, etc.
 Panchayats in our country have been given more power to decide and spend funds granted to them by
the government for the welfare of the villages. This is decentralisation at national level.

ADVANTAGES:
a. It leads to quick decisions at middle and operational level.
b. It decreases the work load of superiors.

CONSEQUENCES FOR VIOLATION:

a. Slow decision making in case of complete centralisation.

 b. Risk of misuse of authority in case of complete decentralisation.

SCALER CHAIN:
INFORMAL EXAMPLE

 According to this principle, organisations should have a chain of authority and communication that runs
from top to bottom and should be followed by managers and subordinates.
 The formal lines of authority from highest to lowest ranks are known as scaler chain. It states superior-
subordinate relationship and authority of superiors in relation to subordinates at various levels.
According to Fayol, this chain should not be violated in the normal course of action or communication. However, in case
of urgency, Fayol permitted a short cut in the chain known as’ Gang Plank.’ Gang plank allows direct communication
between two employees of the same level, in different sections or sub-sections, without following the scaler chain.

ADVANTAGES:

a. Orderly flow of information.

b. Clear lines of authority -responsibility relationship.
c. Unity of command due to no confusion of dual order.

CONSEQUENCES FOR VIOLATION

a. Information may not flow in orderly direction.

b. Authority and responsibility relationship will not be clear.
c. Lack of unity of command.
10. ORDER

 According to this principle, there should be place for everything (everyone) and everything (everyone) at
its place.
 According to Fayol, people and material must be in suitable places at appropriate time for maximum
efficiency.
 If there is a fixed place for everything and its present there, there will be no obstruction in work.
Essentially, it means orderliness.
 It will leads to productivity and efficiency.
Fayol emphasised two types of orders
1. Material Order: related with proper placement of material resources.
2. Social Order: related with proper placement of employees.

ADVANTAGES

a. Efficient use of resources as no time is wasted in tracing the resources.

b. Smooth and systematic functioning of the organisation.

CONSEQUENCES FOR VIOLATION

a. Inefficient use of resources due to loss of time and energy in search of resources.
b. Lack of discipline in the organisation.
11. EQUITY:

 According to this principle there should not be any kind of discrimination among the employees on the
basis of religion, language, caste, sex, belief and nationality.
 This principle emphasises kindliness and justice in the behaviour of managers towards workers. This
will ensure loyalty, devotion and cordial relations between superiors and subordinates.
 If the management is partial or biased in dealings with employees, then employees will get dissatisfied
and will not contribute to the maximum of their potential.
 It must be noted that Fayol does not rule out use of force sometimes. He also advocates the use of
strict treatment of lazy personnel in order to send the message that everyone is equal in the eyes of
management.
 Now a days, in MNC’s, people of various nationalities work together in a discrimination free
environment
ADVANTAGES:

a. Improves satisfaction and motivation among employees.

b. Cordial relations between employees and management.

CONSEQUENCES FOR VIOLATION

a. Decrease in satisfaction and motivation level of employee.

b. Unhealthy relations between employees and management.

12. STABILITY OF PERSONNEL:

 According to this principle, there should be proper efforts to achieve stability and continuity of tenure
personnel.
 Fayol was of the view that employees should be selected and appointed after due and rigorous
procedure. Once selected, they should be kept at their position for a minimum period and must give
reasonable time to show results.
 In short, employee turnover should be minimised to maintain organisational efficiency.
 Continuous changes will create instability and insecurity among employees and they would tend to leave
organisation. It will raise the cost of recruitment, selection and training.

 Any Adhocism will create instability/ insecurity among employees.

ADVANTAGES:

a. Increase efficiency of employees due to feeling of job security.

b. Less expenses on recruitment, selection and training
c. Better reputation and goodwill of the company.

CONSEQUENCES OF VIOLATION

a. Unnecessary labour turnover creates an atmosphere of belief.

b. Increase in cost of recruitment, selection and training.
 c. Decline in the reputation of the company.
13. INITIATIVE:

 Initiative means taking the first step with self -motivation and a source of strength for the organisation. It
is the traits of an intelligent person.
 According to this principle, workers should be encouraged and given an opportunity to take some
initiative in making and executing the plans.
 Fayol suggested that employees at all levels should be encouraged to take initiative in work related
matters
Or doing something against the discipline

 Initiative should be encouraged. However, it does not mean going against the established practice for
the company for the stake of being different

ADVANTAGES:

a. Increase in mental growth and feeling of belongingness in employees.

b. It increases commitment of employees towards the organisation.

CONSEQUENCES FOR VIOLATION:

a. Leads to frustration among employees.

b. Lack of initiative may create an atmosphere of non-cooperation.
14. ESPIRIT DE CORPS:

It means unity is strength and enhances the concept ‘TEAM ‘which stands for:
Together Everyone Achieve MORE.

 According to this principle, management should promote a team spirit of unity and harmony among
employees.
 Management should promote the feeling of team spirit among employees, especially in the large
organisations otherwise objectives would be difficult to realise and there will be loss of coordination.
 A manger should replace ‘I’ with ‘WE’ in his conversation to give rise to a spirit of team spirit. It will
develop an atmosphere of mutual trust and belongingness among team members and will minimise
use of penalties.
ADVANTAGES:

a. Develops an atmosphere of mutual trust.

 b. Leads to cordial relations between management and workers

CONSEQUENCES FOR VIOLATION:

a. Lack of team spirit and employees may not cooperate with each other.
b. Unhealthy relation between management and workers.

SCIENTIFIC MANAGEMENT: PRINCIPLES AND TECHNIQUES

F.W. TAYLOR and SCIENTIFIC MANAGEMENT:

HISTORY

 Fredrick Winslow Taylor was an American Mechanical Engineer.

 In 1874, he became an apprentice mechanist and rose to the position of chief engineer in Bethlehem
Steel Company, USA. During his career of 26 years, he experimented with his ideas and made significant
contribution to the management theory.

CONTRIBUTIONS

 Taylor gives a concrete shape to theory of scientific management. He was the first one to emphasise
the importance of scientific approach managing an enterprise instead of hit and trial method.
 Taylor’s major contribution was his two important books.’ Shop Management and ‘Principles of
Scientific Management’, which were published in 1903 and 1911 respectively.
 For his contributions, he is well known as the ‘Father of the Scientific Management’.
CONCEPT: Scientific Management refers to the use of scientific, systematic, objectives and logical principles and
techniques to various managerial functions. It stresses that there is always ‘one best way’ of doing a work.

Scientific Management means knowing exactly what you want men to do and seeing that they do it in the best and the
cheapest way: F.W. Taylor

PRINCIPLES OF SCIENTIFIC MANAGEMENT

1. SCIENCE NOT RULE OF THUMB:

 
According to this principle, there should be scientific study and analysis of each element of a job, in order to
replace the old rule of thumb approach or hit and trial method.
 Taylor believed that there was only one best method to maximise efficiency. This method can be developed
through study and analysis.
 Scientific method involves investigation of traditional methods through work study, unifying best practices and
developing a standard method of work.
 The method so developed should substitute Rule of Thumb throughout the organisation.
 For instances, the use of internet has brought about dramatic improvements in internal efficiencies and
customer satisfaction.
 Example: standard time or standard method of doing a task must be scientifically analysed and should not be
based on estimates, past experiences or hit and trial method.
2. HARMONY, NOT DISCORD:

 Under the factory system of production, there always exist a possibility of class conflict, i.e., the managers
versus workers. Taylor recognised that this conflict helped no one and therefore, the principle of ‘Harmony ,Not
Discord’ came into existence.
 According to this principle, there should be complete harmony and proper understanding between
management and workers and they should work for organisational goals.
  To get such harmonious relations, Taylor stressed on ‘Mental Revolution’ i.e. complete change in their mental
outlook.
 Both should give up their attitude of opposition and enmity towards each other and should have a positive
feeling for each other.
 It means that management and workers should transform their thinking. In such a situation, even trade unions
will not think of going on strike.
 According to the Taylor, true interest of the management and workers are one and the same. Prosperity of the
employer can not exist for a longer duration unless it is accompanied prosperity for the employees and vice-
versa.
 Instead of fighting over distribution of profits, they must focus attention on increasing it. Management should
share a part of profit (over and above the standard profit) in order to create complete harmony in the
organisation.

3. COOPERATION, NOT INDIVIDUALISM.

 According to this principle there should be cooperation between management and workers instead of
individualism.
 This principle is an extension to ‘Harmony, Not Discord’.

 Competition should be replaced by cooperation. Both management and workers should realised the need
and importance of each other.
 For this management should encourage constructive suggestions by employees through proper rewards.
 Management should take workers into confidence before making any important decisions. At the same
time, workers should avoid strikes and unreasonable demands.
 According to Taylor, there should be an almost equal division of work and responsibility between workers
and management.
  Management must insist on Paternalistic style of management, whereby the employer takes care of the
needs of the employees. An open communication system and goodwill may even avoid the needs of trade
union.

4. DEVELOPMENT OF WORKERS TO THEIR GREATEST EFFICIENCY AND PROSPERITY:

  Industrial efficiency depends upon personal competencies i.e., efficiency of workers and scientific
management insist on development of workers. According to this principle, management should aim to
develop workers to their greatest efficiency and prosperity.
 The concern for efficiency should start from the selection process. Every organisation should follow a
scientific system of selection. The selected worker should be assigned jobs as per their physical, mental
and intellectual abilities.
 To increase the efficiency and to achieve maximum potential of workers, they should be provided
scientific training. This will ensure their greatest efficiency and prosperity for both workers and
management.
 Now a days, companies send their employees to attend seminars of eminent management experts for
mental growth of the employees.

TECHNIQUES OF SCIENTIFIC MANAGEMENT:

1.

 Under the factory system,’ Foreman’ is the lowest ranking manager and highest-ranking worker with whom
the workers are in contact on day to day basis.
 The entire production, planning, implementation and control depends upon the competence of foreman. So, he
should have intelligence, education, tact, grit, judgement, special knowledge, energy, honesty and good health. He
found that no single person could fit them all. As a result, he suggested the technique of ‘Functional Foremanship’
 According to this technique, the task of supervision is divided into several specialised functions and each function
entrusted to a specialist foreman.
 In this technique, Taylor advocated separation of planning and execution functions and each function is to be
managed by a group of four foreman, i.e. total of eight specialists will guide and direct a worker.
 Taylor suggested the division of factory in two departments: Planning Department and Production Department. S
under the factory manager, there will be a planning incharge and production incharge.
 It is the extension to the principle of ‘Division of Work’ but contrast to the principle of ‘Unity of Command’.
  Functional foremanship focussed on specialisation of work to the shop floor. Each worker will have to take order
from eight foreman in related process.

The eight functional recommended by Taylor are:

UNDER PLANNING DEPARTMENT
 Instruction Card Clerk: To draft instructions to the workers.
 Route Clerk: To specify the route of production.
 Time and Cost Clerk: To prepare time and cost sheet
 Disciplinarian: To ensure discipline respectively.

UNDER PRODUCTION DEPARTMENT

 Speed Boss: To ensure timely and accurately completion of job.
 Gang Boss: To keep machines and tools ready for operations by workers.
 Repair Boss: To ensure proper working conditions of machinery and tools.
 Inspector To check quality of work.

2. STANDARDISATION AND SIMPLIFICATION

 Standardisation refers to the process of setting standards for every phase of business operation.
 It involves fixing certain values or standards in quality and quantity of goods, by using standardised equipment’s,
materials, production methods, etc.
 These standards should act as the benchmarks during production. Similarly, the working conditions, i.e.
temperature, lighting, humidity, etc. should also be standardised.
The objectives of Standardisation are:
 To reduce a given line or product to fixed types, sizes and characteristics.
 To establish interchange ability of manufactured parts and products.
 To establish standards of excellence and quality in materials.
 To establish performance standards of men and machines.

Example: Standard time can be fixed to produce a given level of output. If workers take more than the standard
time, then corrective measures should be taken to check it.

 Simplification refers to eliminating superfluous or unnecessary varieties, sizes and grades of the product
manufactured by the organisation.
 It aims to eliminate unnecessary diversity of products, sizes and types.
 It implies reduced inventories, fuller utilisation of equipment and increasing turnover.
 It results in savings of cost of labour, machines and tools and facilitates better control of activities.

Example: Hindustan Unilever Limited reduced its varieties of soaps and it generates efficient and effective
results for the company.

WORK STUDY INCLUDES

h od study on study
study ue study
3. METHOD STUDY:
 Method study is concerned with finding ‘one best way’ of doing a job.
 There are various methods of doing the job. To determine the best way, there are several parameters. The search
for the best method starts from procurement of raw material and continues till the final product delivered to the
customer.
 For finding one best method of performing the job, critical analysis is made for plant layout, product design,
material handling and work processes. Many techniques like process charts, operations research, etc. are also
used.
 The objective of Method Study is to minimise the cost of production and maximise the quality and satisfaction
of the customers.

Example: To design a car, the assembly line production would need to decide the sequence of operations, places for
men, machines and raw materials. All this is part of method study.

4. MOTION STUDY:

Motion Study refers to making through analysis of various motions being performed by workers while he doing
a particular task.

 Motion study involves study of movements like lifting, putting, objects, sitting and changing positions,
etc., which are undertaken while doing a typical job.
 On close examination of body motions, it is possible to find out productive, incidental and
unproductive movements.
 The purpose is to detect and eliminate unnecessary movements or motions to find out a best
method of doing a particular job.
 It helps to save time and increase production.
  Taylor and his associate Frank Gailberth were able to reduce motion in brick layering from 18 to just 5.
Taylor demonstrated that productivity increased to about 4 times by this process.
 Taylor used stopwatches, movie cameras and various symbols and colours to identify different
motions.
 Through motion study, he was able to design various equipment to reduce unproductive
movements.
( Bold lines are objectives of motion study)

Example: It is observed that in search of tools, workers have to move from one place to another, then such unnecessary
movements can be eliminated by keeping the tool box near the workers. It will increase their productivity and efficient
level.

5. Time study:

Time study refers to the technique which is used to determine the standard time taken by a workmen of reasonable
skills and abilities to perform a well-defined job.
 It helps in determining how much work an employee should be able to do in a given period of time.
 Under time study, the job is divided into series of elements and time taken to perform each element of work is
recorded with measuring devices like stop watch.
 The standard time is fixed for the whole of the task by giving several readings.
 The method of time study depends on volume and frequency of the task, the cycle time of the operation and
time measurement costs.
OBJECTIVES OF TIME STUDY:
 To determine number of works to be employed.
 To frame suitable incentive schemes
 To determine labour costs.

Example: On the basis of several observations, it is determined that a worker takes a standard time of 30 minutes to make
one box. It means, the worker can make 2 boxes in 1 hour and 14 boxes in 7 hours. Now this is the standard task a worker
has to do and wages can be decided accordingly.
6. FATIGUE STUDY:
 Fatigue Study refers to determining the amount and frequency of rest intervals required in completing a task
 Fatigue means a tiredness from physical or mental work. Taylor suggested that a person gets tired when he
works continuously without a break.
 So, he must be provided a brief rest interval in between so as to enable him to regain los stamina. This will
result in increased productivity.
 Fatigue study seeks to determine the amount and frequency of rest intervals in completing a task.
 This study is conducted by observing workers while performing job, so as to note down time, when their
efficiency level starts decreasing.
 In case of heavy manual work, small pauses must be frequently given to the worker so that they recharge
his energy level for optimum contribution.
 Fatigue study helps to reduce/ avoid accidents, rejections and industrial sickness.
 There can be many causes for fatigue like, long working hours, doing unsuitable work,having uncordial
relations with boss or bad working conditions
(Bold lines indicate objectives of fatigue study)

7. DIFFERENTIAL PIECE WAGE SYSTEM:

 Differential piece wages refer to a system in which efficient and inefficient workers are paid at different
wages.
 According to Taylor, financial incentives acts as motivators and scope of extra earnings motivates the
workers to put extra efforts. So, Taylor developed the concept of ‘Differential Piece Wage System.’
 Differential piece rate Differential piece wage system is the strongest motivator for a
worker to reach standard performance. It is a method of wage payment in which
efficient and inefficient workers are paid at different rates
 In this technique, incentive is directly linked with productivity. First of all, a standard task is established with
the help of time and motion study. Then, two rates are fixed. High wage rate for workers who produce equal
to or more than the standard output. Low wage rate for workers who do not reach the standard.
 The basic purpose of fixing two rates is to differentiate between efficient and inefficient workers and to
suitably reward the efficient workers.
 Example:

According to Taylor, the difference of Rs10 should be sufficient enough for the inefficient worker to be
motivated to perform better.
 DIFFERENTIATE BETWEEN FAYOL AND TAYLOR

Basis FAYOL TAYLOR

PERSPECTIVE op level of management Shop floor level of a
factory
UNITY OF Staunch Proponent Did not feel that it is
COMMAND important as under
functional foremanship a
worker received orders
from 8 specialists
APPLICABILITY Applicable universally Applicable universally

BASIS OF Personal experience Observations and

FORMATION experimentation

FOCUS Improving overall Increasing Productivity

administration
PERSONALITY Practitioner Scientist
EXPRESSION General theory of Scientific Management
Administration

IMPORTANT QUESTIONS WITH THEIR ANSWERS:

1. Sanchit, after completing his entrepreneurship course from Sweden returned to India and started a coffee shop
‘AromaCoffeeCan’ in a famous mall in New Delhi. The speciality of the coffee ship was the special aroma of
coffee and a wide variety of flavours to choose from. Somehow, the business was neither profitable nor popular.
Sanchit was keen to find out the reason. He appointed Sandhya, an MBA from a reputed college, as a Manager to
find out the causes for the same.
Sandhya took feedback from the clients and found out that though they loved the special unique aroma of
coffee but were not happy with the long waiting time being taken to process the order. She analysed and found
out that there were many unnecessary obstructions in between which could be eliminated. She fixed a standard
time for processing the order.
She also realised that there were some flavours whose demand was not enough. So, she also decided to stop the
sale of such flavours. As a result with in a short period Sandhya was able to attract the customers.
Identify and explain any two techniques of scientific management used by Sandhya to solve the problem.
Answer:
The two techniques of scientific management used by Sandhya to solve the problem are: (any two)

1. Time study: It seeks to determines the standard time taken to perform a well-defined job.
The objective of time study is to determine the number of workers to be employed
, frame suitable incentive schemes and determine labour costs. By using time measuring
devices for each element of task the standard time is fixed for the whole of the task by taking
several readings.
2. Simplification (Standardisation and Simplification): Simplification aims at
eliminating superfluous diversity of products in terms of varieties, sizes and dimensions. It not
only helps to reduce inventories but also save cost of labour, machines and tools. Thus it helps
to increase turnover by ensuring optimum utilisation of resources.
3. Motion study: Motion study refers to the study of movements of limbs of a worker
while doing a particular task. It seek to divide all such movements into three categories
namely;
 Motions which are required
 Motions which are unnecessary
 Motions which are incidental.
Thus, motion study helps to eliminate unnecessary movements of a work and
enables him to complete the given task efficiently.

2. Explain briefly ‘discipline’ and ‘scalar chain’ as principles of general management.

Answer:

1. Discipline: Discipline refers to the obedience to organisational rules and employment

agreement which are necessary for the working of the organisation. According to Fayol,
discipline requires good superiors at all levels, clear and fair agreements and judicious
application of penalties. .
2. Scalar chain: According to Fayol the formal lines of authority from highest to lowest
ranks are known as scalar chain. He suggests that the,”Organisations should have a chain of
authority and communication that runs from top to bottom and should be
followed by managers and the subordinates.” However in order to ensure speedy
communication during emergencies, Gang Plank is a shorter route that has been provided
. However, the superior has to be informed later on.
 For example in the following case there is one head ‘A’ who has two lines of authority under
her/ him. One line consists of B-C-D- E-F. Another line of authority under ‘A’ is L-M-N-O-
P. If ‘E’ has to communicate with ‘O’ who is at the same level of authority
,then she/he has to traverse the route E-D-C-B-A-L-M-N-O. This is due to the principle of
scalar chain being followed in this situation. However, if there is an emergency then ‘E’ can
directly contact ‘O’ through ‘Gang Plank’ as shown in the diagram. But they should inform
their superiors about it later on.

3. What did Taylor want to communicate through mental revolution?

Answer:
Through the concept of mental revolution Taylor emphasized that there should be complete
transformation in the outlook of the management and workers towards each other.
Managers should share surplus with workers and the workers should work with full devotion instead
of indulging in any form of class conflicts.
4. Briefly explain work study techniques that help in developing standards to be followed
throughout the organization.
Answer:
The various work study techniques that help in developing standards to be followed throughout the
organization are described below:

1. Time study: It seeks to determine the standard time taken to perform a well-defined job.
The objective of time study is to determine the number of workers to be employed, frame
suitable incentive schemes and determine labour costs. By using time measuring devices for
each element of task, the standard time is fixed for the whole of the task by taking several
readings.
2. Motion study: Motion study refers to the study of movements of limbs of a worker
while doing a particular task. It seek to divide all such movements into three categories
namely;
 Motions which are required
 Motions which are unnecessary
 Motions which are incidental.
Thus, motion study helps to eliminate unnecessary movements of a work and
enables him to complete the given task efficiently.
3. Method study: The objective of method study is to find out one best way of doing the job
among the various methods available of doing the job. This can be done by taking into
consideration several related parameters.
4. Fatigue study: It seeks to determine the amount and frequency of rest intervals that should
be provided to the workers for completing a task. This technique helps in increasing
productivity as the rest intervals will help a person to regain stamina and work again with the
same capacity.
5. Nutan Tiffin Box service was started in Mumbai by the Mumbai Dabbawalas. The Dabbawalas who
are the soul of entire Mumbai aim to provide prompt and efficient services by providing tasty
homemade tiffin to all office goers at the right time and place. The service is uninterrupted even on
the days of bad weather, political unrest and social disturbances. Recently, they have started online
booking system through their website ‘mydabbawala.com’. Owing to their tremendous popularity
amongst the happy and satisfied
 customers and members, the Dabbawalas were invited as guest lecturer by top business schools.
The Dabbawalas operate in a group of 25-30 people along with a group leader. Each group teams
up with other groups in order to deliver the tiffin on time. They are not transferred on frequent
basis as they have to remember the addresses of their customers. They follow certain rules while
doing trade—no alcohol during working hours; no leaves without permission; wearing white caps
and carrying ID cards during business hours.
Recently, on the suggestion of a few self-motivated fellow men, the dabbawalas thought out and
executed a plan of providing food left in tiffin by customers to slum children. They have instructed
their customers to place red sticker if food is left in the tiffin, to be fed to poor children later.

1. State any one principle of management given by Fayol and one characteristic of
management mentioned in the above case.
2. Give any two values which the Dabbawalas want to communicated to society.

Answer:

1. The relevant principle of management given by Fayol is:

Stability of Personnel: The employee turnover should be minimized to maintain organizational
efficiency. Personnel should be selected and appointed after due and rigorous procedure. After
placement, they should be kept at their post for a minimum fixed tenure so that they get time to
show results. Any adhocism in this regard will create instability/insecurity among employees.
They would tend to leave the organisation.
(The other correct answers are principle of Discipline / Initiative / Espirit de corps) The
characteristic of management mentioned in the above case is:
Management is goal oriented as it seeks to integrate the efforts of different individuals towards
the accomplishment of both organizational and individual goals.
(The other correct answers are management is intangible/ group activity/dynamic)

6. Aapka Vidyalaya’ believes in the holistic development of students and encourages team building
through a mix of curricular, co-curricular and sports activities. On its Founder’s Day, a stage
performance had to be put up. A committee of ten prefects was constituted to plan different aspects
of the function. They all decided to use recycled paper for decoration. There was a spirit of unity and
harmony and all the members supported each other. With mutual trust and a sense of belonging, the
programme was systematically planned and executed. Kartik, one of the prefects, realised that the
group had unknowingly applied one of the principles of management while planning and executing
the programme. He was so inspired by the success of this function that he asked his father to apply
the same principle in his business. His father replied that he was already using this principle.

1. Identify the principle of management applied for the success of the programme.
2. State any two features of management highlighted in the above paragraph.

Answer:
 1. The principle of management applied for the success of the programme is Espirit De Corps.
2. The two features of management mentioned in the above paragraph are as follows:
 Management is goal oriented as it seeks to integrate the efforts of different
individuals towards the accomplishment of both organizational and individual
goals.
 Management is pervasive as it is applicable to all types of organizations,
(economic,
social, political) all sizes of organizations (small, medium, large) and at all levels
of management (top, middle and lower).

7. Telco Ltd. manufactures files and folders from old clothes to discourage the use of plastic files and
folders. For this, they employ people from nearby villages where very less job opportunities are
available. An employee, Harish, designed a plan for cost reduction but it was not welcomed by the
production manager. Another employee gave some suggestions for improvements in design, but it
also was not appreciated by the production manager.

State the principle of management that is violated in the above paragraph.

Answer:

The principle of management that has been violated in the above case is Initiative. Initiative
means taking the first step with self-motivation. The workers should be encouraged to develop
and carry out their plans for improvement. Suggestion system should be adopted in the
organization.

8. Pawan is working as a Production Manager in CFL Ltd. which manufactures CFL bulbs. There is no
class-conflict between the management and workers. The working conditions are very good. The
company is earning huge profits. As a policy, the management shares the profits earned with the
workers because they believe in the prosperity of the employees.

1. State the principle of management described in the above paragraph.

Answer:

1. The principle of management described in the above paragraph is ‘Harmony, not Discord’.
Taylor emphasised that there should be complete harmony between the management and
workers instead of a kind of class-conflict, the manager versus workers. To achieve this state,
Taylor called for complete mental revolution on the part of both management and workers.
The prosperity for the employer cannot exist for a long time unless it is accompanied by
prosperity for the employees and vice versa. He advocated paternalistic style of management
should be in practice.

9. Voltech India Ltd. is manufacturing LED bulbs to save electricity. However, it is running under
heavy losses. To revive from the losses, the management shifts the unit to a backward area
where labour is available at a low cost. The management also asks the workers to work overtime
without any additional payments and promises to increase the
 wages of the workers after achieving its mission. Within a short period, the company starts earning
profits because both the management and workers honour their commitments.

State the principle of management described in the above paragraph.

Answer:

The principle of management described in the above paragraph is ‘Discipline’. Discipline- It

refers to the obedience to organizational rules and the employment agreement. It is
necessary for the systematic working of the organization. It requires good superiors at all
levels, clear and fair agreements and judicious application of penalties.

10. ABC Ltd. is engaged in producing electricity from domestic garbage. There is almost equal
division of work and responsibilities between workers and the management. The management even
takes workers into confidence before taking important decisions. All the workers are satisfied as the
behaviour of the management is very good.

State the principle of management described in the above paragraph.

Answer:

1. The principle of management described in the above paragraph is ‘Cooperation, Not

Individualism’.
This principle is an extension of principle of ‘Harmony, Not Discord’. There should be
complete cooperation between the labour and the management instead of individualism.
Competition should be replaced by cooperation and there should be an almost equal division
of work and responsibility between workers and management. Also, management should
reward workers for their suggestions which results in substantial reduction in costs. At the
same time, workers should desist from going on strike and making unreasonable demands on
the management

11. The principles of Taylor and Fayol are mutually complementary. One believed that
management should share the gains with the workers while the other suggested that
employees’ compensation should depend on the earning capacity of the company and should
give them a reasonable standard of living.
Identify and explain the principles of Fayol and Taylor referred to in the above paragraph. (
Answer:
The principles of Fayol and Toylor referred to in the above paragraph are ‘Remuneration of
employees’ and ‘Harmony, Not Discord’.
Remuneration of Employes: According to Fayol, the overall pay and compensation should be
fair and equitable to both employees and the organisation. The employees should be paid fair wages
so that they are able to maintain at least a reasonable standard of living. At the same time, it should
be within the paying capacity of the company. This will ensure pleasant working atmosphere and
good relations between workers and management.
Harmony, Not Discord: Taylor emphasised that there should be complete harmony between
the management and workers instead of a kind of class-conflict, the managers versus workers. To
achieve this state, Taylor called for complete mental revolution on the part of both management
and workers. The prosperity for the employer cannot exist for a
 long time unless it is accompanied by prosperity for the employees and vice versa. He
advocated paternalistic style of management should be in practice

12. The principles of Taylor and Fayol are mutually complementary. One believed that management
should not close its ears to constructive suggestions made by the employees while the other suggested that
a good company should have an employee suggestion system whereby suggestions which result in
substantial time or cost reduction should be rewarded.
Identify and explain the principles of Taylor and Fayol referred to in the above paragraph.
Answer:
The principles of Fayol and Taylor referred to in the above paragraph respectively are ‘Initiative’ and
‘Cooperation and Not Individualism’.
Initiative: Initiative means taking the first step with self-motivation. The workers should be encouraged
to develop and carry out their plans for improvement. Suggestion system should be adopted in the
organization.
Cooperation and Not Individualism: This principle is an extension of principle of ‘Harmony, Not
Discord’.There should be complete cooperation between the labour and the management instead of
individualism. Competition should be replaced by cooperation and there should be an almost equal division
of work and responsibility between workers and management. Also, management should reward workers for
their suggestions which result in substantial reduction in costs. At the same time, workers should desist from
going on strike and making unreasonable demands on the management.
13. Nikita and Salman completed their MBA and started working in a multinational company at the same
level. Both of them worked hard and were happy with their employer. Salman had the habit of back-biting
and wrong reporting about his colleagues to impress his boss. All the employees in the organisation knew
about it. At the time of performance appraisal, the performance of Nikita was judged to be better than
Salman. Even then their boss, Mohammed Sharif, decided to promote Salman stating that being a female,
Nikita would not be able to handle the complications of a higher post.

Identify and explain the principle of management which was not followed by this, multinational
company.

Answer:

The multinational company didn’t follow the Principle of Equity. It emphasizes

kindliness and justice in the behaviour of managers towards workers. No
discrimination should be made by them on the basis of caste, creed, gender or
otherwise.

14. Hina and Harish are typists in a company having the same educational qualifications. Hina gets
Rs.3,000 per month and Harish gets Rs.4,000 per month as salaries for the same working hours. Which
principle of management is being violated in this case? Name and explain the principle.
Answer:
The principle of Equity has been violated in this case. It emphasises kindliness and justice in the behaviour
of managers towards workers. No discrimination should be made by them on the basis of caste, creed,
gender or otherwise.