Principles of

Management
• Principles of management are fundamental rules that must be implemented in
practice at all the levels of the organisation
• These principles provide broad and general guidelines for decision making in
the organisation
• The application of these principles increases the effectiveness of various
activities in the organisation
• Principles of management are the means by which you manage and get
things done through others in the organisation
• Management principles are not as rigid as principles of pure science
• They deal with human behaviour, hence applied with creativity in a given
situation
Two legends who contributed to the study of management are F.W.
Taylor and Henri Fayol

1. F.W. Taylor gave the concept of Scientific Management

2. Henri Fayol gave the concept of Administrative Principles
Fayol’s Principles of Management
• Fayol emphasized that managerial efficiency is important in
organisation and to achieve this efficiency, various principles of
management should be followed
• Hence, Henri Fayol gave 14 principles of management and for his
contribution, he is also known as “Father of General Management”.
1. Division of Work: Work is divided into small tasks/jobs, each performed by
a specialist or trained employee. Division of work leads to specialisation.
This increases effectiveness and efficiency in the organisation. More and
better work for the same effort.

2. Authority and Responsibility: Authority means power to take decisions and

responsibility means obligation to complete the job assigned on time.
Proper balance should be there between authority and responsibility.
Excess of authority without matching responsibility may bring negative
results and excess of responsibility without matching authority will not
allow the worker to complete his job on time.

3. Discipline: Disciple refers to rules and regulations for systematic working in

the organization. Discipline requires good superior at all levels, clear and
fair agreements and judicious application of penalties.
4. Unity of Command: Each employee in the organisation should receive orders
from only one responsible supervisor. Multiple orders will confuse the
employee and will hamper his performance.
5. Unity of Direction: Efforts of all the employees in the organisation must be
directed towards the achievement of a common goal. Each group of activities
having the same objective must have one head and one plan.
6. Subordination of Individual Interest to General Interest: Interest of
organisation must supersede the interest of individual employees. If the
interests of the individuals and organisation are in different direction, then
manager must try to reconcile their interests. However, if they do not reconcile,
then individual goal must be sacrificed.
7. Remuneration of Employees: Remuneration should be just and equitable. All
employees must be paid fair wages which provides them reasonable standard
of living and at the same time it should be within the paying capacity of the
company.
8. Centralisation and Decentralisation: Centralization refers to concentration of
authority or power in few hands at the top level. Decentralization means evenly
distribution of power at every level of management. According to Fayol a company
must not be completely centralized or completely decentralized but there must be
combination of both depending upon the nature and size of the organization.

9. Order: It refers to orderly arrangement of men and material. There must be a

fixed place to keep every material used in the organization and fixed place or seat
for every employee of the organization so that no time and energy is wasted in
search of any material or any person. “A place for everything/everyone and
everything/everyone in its place”.

10. Equity: Equity refers to fairness to all employees. Kind, fair and just treatment
shall be given to all employees at the same level in the organization. Biased
treatment towards employees will result in dissatisfied behavior.
11. Scalar Chain: Scalar chain refers to line of authority from highest to lowest
level. All the communication in the organisation that runs from top to bottom
must follow this scalar chain.
Communication from A-F  A-B-C-D-E-F
Communication from A-P  A-L-M-N-O-P
Communication from E-O  E-D-C-B-A-L-M-N-O
Fayol says that this chain of communication should not
be violated in normal course of communication. Gang Plank
However, if there is any emergency and some urgent
information has to be communicated then E can contact
O directly through Gang Plank. But no gang plan can be constructed between
people working at different levels e.g. between D and L.
12. Stability of Personnel: There should be no frequent termination of
employee’s job in the organisation. The employees must be given the feeling of
job security. Employees should be given reasonable time to show their results.

13. Initiative: Initiative should be encouraged in the organisation. Managers

must welcome suggestions and ideas from employees before framing the plan.

14. Esprit De Corps: Esprit De Corps means Union is Strength. Manager should
replace “I” with “We” in all his conversations with employees to promote team
spirit in the organisation. There should be harmony and feeling of belongingness
among the employees.
Case 1:
• Nikita and Salman completed their MBA and started working in a
multi-national company at the same level. Both are working hard and
are happy with their employers. Salman had the habit of backbiting
and wrong reporting about his colleagues to impress his boss. All the
employees in the organization knew about it. At the time of
performance appraisal, the performance of Nikita was judged better
than Salman.
Even then their boss, Mohammad Sharif decided to promote Salman
stating that being a female, Nikita will not be able to handle the
complications of a higher post.
Equity
Case 2:
• Rajeev is a middle lever manager. He keeps all his subordinates under
a lot of discipline. His employees however complain of wastage of
time and efforts as they feel that nothing is being assigned in a proper
way and a proper place, also no proper schedule is made for working.
Which principle of management is violated here?

Order
Case 3:
• ABC company takes care of the fact that the confidence of the
employees should always be at its peak. For this reason they give
surety to their employees for employment for a minimum fixed
tenure of time. Which principle of management is followed here?

Stability of
Personnel
Case 4:
• A floor manager of a Mall is very capable as he utilizes all the
functions of management. He lays stress on developing mutual trust
and spirit of cooperation amongst the employees. Under his guidance
the employees admit that they learn a lot and are able to meet their
targets. This has led to increase in their salaries.

Esprit De
Corps
Case 5:
• The plant superintendent of a company is very sad. When he was on
leave he was expecting his subordinates to take the remaining work to
the finish, however this did not happen. Now after returning, he finds
a new way of dealing with this problem. He develops a system of
suggestion building from the side of workers. For this a suggestion box
is to be kept where the workers can drop their advice and hence take
steps from their side.

Initiative
Case 6:
• Ramesh is the owner of a printing press. The size of his organization
has increased during the recent past. There are many employees who
work in his organization. The organization is considered good and has
earned a lot of reputation in the market. However when it comes to
making key decisions in the organization related to many things he
never considers the opinions of his subordinates. Even though the size
of the organization has increased yet he tries to take all the key
decisions on his own.
Centralisation
and
Decentralisation
Case 7:
• Mohan works on the floor of a mall as a manager. He is very hard working
but is unable to produce results for his organization. His target for last
month was a sale of 10 lakh rupees from his floor. However by the end of
the month the sale was only 8 lakh rupees. He is very regular and takes all
the necessary steps to complete the target. However his staff is not as
competent as he himself is. When he tries to take action against
disobedient employees the top management doesn’t allow him to do so.
They haven’t given him the power to fire employees or take any strict
action against them.

Authority and
Responsibility
Case 8:
• Enlightened Souls Pvt. Ltd. is a tube light manufacturing company.
Before the start of the year they had promised their employees for
bonus for extra production. It was also decided that those who will
put extra time will be paid extra according to the number of hours.
However people in the HR department who worked very hard later
complained that they were not compensated for the extra number of
hours that they used to stay in the office. Which principle of Fayol is
violated here?
Discipline
Remuneration
Case 9:
• Rohan and Amit are working in the purchase department of a company.
Rohan is the brother-in-law of the managing director of the company
whereas Amit has been recruited from an external source. They both have
been performing below average for the last couple of months. Many
people in the organization talk about their lack of responsibility. When the
managing director of the company came to know about their irresponsible
behavior he immediately suspended Amit but did not take any action
against Rohan. Identify the principle of Fayol which has not been followed
by the managing director in the above case.

Equity
Case 10:
• Aditi who is heading the campus recruitment program of the firm that she
is working in, gets an immediate order from the marketing head of the
organization. Mr. Rupesh asks her to hire only those candidates who have
two years’ experience in the field of marketing and offer them a higher
package. Moments later when she is about to enter the campus she gets
another call from the HR head who asks her to hire candidates with zero
experience. He gives her the logic that such candidates would be expecting
lower packages in comparison to the candidates having experience in the
industry. Which principle of Fayol stands violated here?
Unity of
Command
Case 11:
• Rishabh, a manager, very often speaks to people at all levels, passing
on instructions regarding his department and also the other
departments. Which principle of management is overlooked here?

Scalar Chain
 Case 12:
• Radhika opens a jewellery showroom in Jaipur after completing a course in jewellery
designing. She has employed 11 people in her showroom. For greater productivity, she has
allocated tasks to each employee in the organisation. The sales people are allowed to close
a deal with a buyer by giving a maximum of 10% discount, however, the decisions to give
any further discounts rests with Radhika as a final authority. In the earlier days of starting
the business, five of her employees were asked to put in extra hours of work. In return, she
promised them to give a special incentive. After, six months when the business was doing
good, she awarded cash bonus to each of these employees. However, the problems of
women employees is usually given the primacy by Radhika over the problems of her male
employees. Identify the principles of management that are applied and violated by Radhika.

Applied:
1. Division of Work
2. Centralisation and Violated:
Decentralisation 1. Equity
3. Discipline
• Which principle of management implies that there should be ‘one head and
one plan’ for a group of activities having the same objective?
 Unity of Direction
• Which principle of management is violated, if a subordinate is asked to
receive orders from two or more superiors?
 Unity of Command
• Name and explain the principle of management according to which a
manager should replace ‘I’ with ‘We’ in all his conversation with workers?
 Esprit De Corps
• Name and explain the principle of management which requires
judicious application of penalties by the management.
 Discipline
• To avoid wastage of time and resources while communicating in the formal chain
(following the organizational chart), Fayol introduced a concept. What is it better known
as?
 Gang Plank
• “The extent to which authority is concentrated or dispersed". This principle is known in
the management fields as _______ .
 Centralization and Decentralization
• A company manufacturing motorcycles and cars should have separate divisions for both,
headed by separate divisional managers, separate plans and resources. Identify the
principle with the help of this example.
 Unity of Direction
• Ms. Ritu and Mr. Mohit are Data Entry Operators in a company having same educational
qualifications. Ritu is getting Rs. 5,000 per month and Mohit Rs. 6,000 per month as
salary for the same working hours. Which principle of management is violated in the
case?
 Equity
F.W. Taylor’s Principles of Management
• F.W. Taylor gave the concept of Scientific Management
• He said, by scientifically analysing the work, it is possible to find ‘one
best way’ to do it
• For his contribution, he is known as “Father of Scientific
Management”
1. Science not Rule of Thumb: Taylor believed that there is only one best method
to maximize efficiency. This rule focuses on increasing the efficiency of an
organization through scientific analysis of work and not with the ‘Rule of Thumb’
method. Taylor believed that even a small activity like loading paper sheets into
boxcars can be planned scientifically. This will save time and also human energy.
This decision should be based on scientific analysis and cause and effect
relationships rather than ‘Rule of Thumb’ where the decision is taken according
to the manager’s personal judgement.

2. Harmony, Not Discord: The relationship between workers and managers

should be cordial and there should be complete harmony. Management and
workers should realize that conflict between them will help none. For this, Taylor
suggested mental revolution for both management and workers to achieve total
harmony. This technique involves a shift of attitude of management and workers
towards each other. Management should share gains of the company with the
workers and, workers should work hard to achieve goals. Both sides should work
with full participation and cooperation.
3. Cooperation, Not Individualism: This is an extension of principle of Harmony,
Not Discord. Both managers and workers should realize each other’s importance and
hence there should be complete cooperation between them. Competition should be
replaced by cooperation. Managers should always welcome suggestions from
workers and, workers should desists from going on strikes and making unreasonable
demands. There should be equal responsibility between management and workers
and, management should work all day long side by side with the workers.

4. Development of Each and Every Person to his or her Greatest Efficiency and
Prosperity: Industrial efficiency depends to a large extent on personnel
competencies. Since the effectiveness and efficiency of a company relies on the
abilities and skills of its employees, this principle says that worker development
should be emphasized. Efficiency in the organization could be built right from the
process of employee selection. Each person should be scientifically selected. Then
work assigned should suit her/his physical, mental and intellectual capabilities. To
increase efficiency, they should be given the required training.
5. Maximum, not Restricted Output: Both the managers and the workers
should aim at maximizing the output in place of restricted output. Maximum
output will result in higher wages for the workers and greater profit for the
management. Increased productivity is also in the interest of the of the
consumers and society at large.
Techniques of Scientific Management
1. Functional Foremanship: In a factory, foreman is a managerial figure with whom
workers contact on day-to-day basis. Traditionally, factories had just one foreman who
would oversee operations. F.W. Taylor realized that no one person could possibly have
all the qualities that a successful foreman need. Hence, Functional foremanship is a
factory management technique that advocates for having multiple foremen in
different, specialized roles.
2. Standardisation and simplification of Work: After analysing various
methods of production, the best practices can be kept and further refined to
develop a standard that will be followed throughout the organisation.
Standardization refers to the process of setting standards for every business
activity; it can be standardization of process, raw material, time, product,
machinery, methods or working conditions. These standards are the
benchmarks, which must be adhered to during production.
Simplification refers to the elimination of unwanted varieties, sizes, products
and dimensions. It aims at discarding unnecessary diversity of products. It
helps in reducing labor, machines and tools. In other words, simplification
means optimum utilization of resources viz men, machine and material.
3. Method Study: The objective is to find the one best way of doing the job. Method study
is applicable from the stage of procurement of raw materials till the final product is delivered
to the customers. Method Study involves the following steps:
a. Select (the work to be studied)
b. Record (all relevant information about that work);
c. Examine (the recorded information);
d. Develop (an improved way of doing things);
e. Install (the new method as standard practice);
f. Maintain (the new standard proactive).
Taylor devised the concept of Assembly Line by using method study. In assembly line, the
manufacturing of goods is broken into steps that are completed in a pre-defined sequence.
Rather than hiring the workers to put together the entire piece of furniture, companies would
hire a worker to only add a leg to a stool. Hence, workers will be hired and trained to perform
specific tasks only. It thereby helps in reducing labor costs since unskilled workers could be
easily trained to perform specific tasks.
Under this process, companies analyze a product and its design in order to determine
the assembly order. For eg., Complicated products, such as cars, have to be broken
down into components that machines and workers can quickly assemble. At each
stage along the assembly line, some part of the production process takes place. The
workers and machinery used to produce the item are stationary along the line and
the product moves through the cycle, from start to finish.
The objective of the whole exercise is to minimize the cost of production and
maximise the quality.

4. Motion Study: Motion Study is the “science of eliminating wastefulness resulting

from ill-directed and in-efficient motions”. It involves eliminating unnecessary
movements in lifting, putting objects, siting and changings positions, etc. while doing
a typical job. For example, Taylor and his associate Frank Gailberth were able to
reduce motions in brick layering from 18 to just 5. Taylor demonstrated that
productivity increased to about four times by this process. The aim of motion study is
to find the scheme of least wast­age of labor.
5. Time Study: It determines the standard time taken to perform a well-defined job.
By taking several observations, a standard time that will be required to perform a
task is fixed. Time study helps in determining the number of workers to be employed
and their wages.
Eg., On the basis of observation it is observed that standard time to make 1
cardboard is 20 mins
20 mins  1 Cardboard
60 mins/ 1 Hour  3 Cardboards
A worker has to put 8 hours of work in a shift and deducting 1 hour for break, a
worker works for 7 hours in a day
1 Hour  3 Cardboards
7 Hours  21 Cardboards
Hence, this is the standard task that a worker will be doing in one shift, based on
which his wages can be determined.
6. Fatigue Study: The objective of fatigue study is to determine the amount and
frequency of rest intervals in order to complete the task. If a work does not rest while
working, he/she is bound to feel tired physically and mentally. Hence, rest intervals help
workers to work again with same capacity and stamina. Fatigue study says that
depending upon the type of work, a worker must be given appropriate rest intervals in
order to increase his productivity.
7. Differential Piece Wage System: Taylor introduced different rate of wage payment
for efficient and inefficient workers. It was introduced to reward efficient workers.
Eg., Standard Output to be produced  10 Units
For workers producing 10 or more units  ₹50 per unit (Efficient Workers)
For workers producing less that 10 units  ₹40 per unit (Inefficient Workers)
Efficient worker producing 11 units will get  11 X 50 = ₹550 per day
Inefficient worker producing 9 units will get  9 X 40 = ₹360 per day
Taylor said, this difference of ₹190 is enough to motivate inefficient worker to work
hard.
 Case 1:
• Every year a meeting is organized in the lawns of the owner of a
company. In this meeting the owner of the company grants some
funds for the benefit of the families of the employees. The employees
on the other hand never resist any change or put excessive demands.
The general environment in the company is very supportive to the
employees. The employee turnover ratio is very low. Which principle
of Management by Taylor is referred here?

Harmony,
Not Discord
 Case 2:
• Enigma Coolers are the leading manufacturers in their area. They
have decided to increase the productivity of their workers. For this
they have chalked out a plan. They will be hiring operational
managers who to work at the lower level of management. They have
decided to keep eight managers over a single worker. Thus every
worker will have to report to all these eight managers. Which
technique of scientific management is followed here?

Functional
Foremanship
Case 3:
• A scientist working in a factory for the betterment of the operational
aspect studied all the steps involved in the manufacturing of the
product. He very attentively noticed all sorts of movements to arrive
at a simpler way of doing all the activities possible. With his hard work
he was able to bring down the number of activities for the
manufacturing of the final product from 34 to 22. This work was able
to bring down the labor charges and decrease the total time of
production. Thus he gave the organization an added advantage.
Which type of scientific technique is discussed here?

Motion
Study
 Case 4:
• ABCDEF is a world renowned retail chain store. The customers here
are very much pleased with the products and services provided in the
stores. The customer satisfaction and internal efficiency indicator of
the organization is rated best in the industry. However there have
been a few steps taken by the organization which provide the
organization this edge. The organization has used a special type of
software which integrates all the stores and brings uniformity in its
billing and working pattern. Which principle of management by Taylor
is mentioned here?
Science, Not
Rule of Thumb
Case 5:
• Example Pvt. Ltd. is an organization which is governed by people who are egoistic and
consider themselves as the most intelligent. All the suggestions made by the workers are
not even attended which has resulted in many strikes during last couple of months. The
result is lack of productivity. However recent reports from the organization say that there
is a training module going on for the employees so that their individual development can
take place to the maximum. Some training modules are thought of being implemented.
This may take the organization out of its current bad performance. This training module
which is now to be followed at the main branch will be later given a uniform format and
will be applied to all branches of the organization. Identify the Taylor principle of
management which is violated initially and the principle which is followed later on.

1. Violated  Cooperation, Not Individualism

2. Followed  Development of Each and Every
Person to his/her Greatest Efficiency and
Prosperity