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Principles of Management

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Principles of Management

  1. 1. Ritika P. Rathod FY BMS B PRINCIPLES OF MANAGEMENT MF Project Project By Roll No: HFBMS255
  2. 2. FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255 What is Management? In the words of L. A. Allen, “Management is what Manager does.” Management sets strategic goals in accordance with the vision and mission of the organization and makes decisions on how the overall organization will operate. It is a dynamic process of getting things done by others with the aim of achieving common goals effectively and efficiently. For management to implement smoothly in an organization, all the functions starting from planning to organizing then staffing to directing and ending up with coordinating and controlling is essential. Principles of Management Principle is defined as a fundamental truth or preposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning. In simple words, techniques or systems which give one directional result are called as principles. Henri Fayol, also regarded as ‘Father of Modern Management’ has suggested 14 principles of management in his book titled ‘Industrial and General Administration’ in 1916. Fayol stated that all managers in all organizations, whether large or small, need to follow the principles or guidelines in managing business affairs. According to Henri Fayol, “To manage is to Forecast and to plan, to organize, to command, to coordinate and to control.” Who is Henri Fayol? Henry Fayol (1841-1925) was a French mining engineer who turned a leading industrialist and a successful manager. He started his career as a mining engineer in a French mining company and rose to the position of the Chief Managing Director. After conducting many experiments and observations in organization, he proposed 14 principles of management. Due to his contribution in development of managerial thoughts, he is called as ‘Father of Modern Management.’
  3. 3. FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255 14 Principles are summarized as follows: Principles of Management Principle of Division of Work Principle of Authorityand Responsibility Principle of Discipline Principle of Unity of Command Principle of Unity of Direction Principle of Subordination of Interest Principle of Centralization Principle of Remuneration Principle of Scalar Chain Principle of Order Principle of Equity Principle of Stability of Tenure Principle of Initiative Principle of Esprit De Corpse
  4. 4. FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255 Principle of Division of Work According to this principle, the work must be divided into different kinds such as technical, financial, commercial, security operations, accounting, managerial and must be assigned to employees as per their qualities and capabilities to improve efficiency and expertise of employees and increase the productivity level. Eg; Tata Motors recruit for areas like- • Accountant • BPO/Telecaller • Customer Care • Sales and Marketing Executive • IT-Software Engineers, etc. Thus, work is divided and allocated to different employees thereby making them to build up experience and continuously enhance their skills. Principle of Authority and Responsibility According to this principle, there must be proper balance between Authority and Responsibility. If authority is more than responsibility, a manager may misuse it. If responsibility is more than authority, a manager may feel frustrated. Authority always comes with Responsibility. If a manager is given the authority to complete a task within a given time, he should be held responsible if he does not complete the working given time. Eg; Finance Manager has the authority of keeping confidentiality of all the finances of the company. However, if any financial fraud or leak happens, he must be held responsible for the same.
  5. 5. FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255 Principle of Discipline According to this principle, Discipline needs to be followed at all the levels of organization. It not only involves obedience of rules and regulations of the organization, but also the application and dedication on the part of management. Eg; Changing the sanitizer after every two hours, washing hands after every hour, update fries time-this all comes in discipline. How employees fulfill all these responsibilities punctually matter a lot at Burger King and while serving the customers the employee must be very kind and polite to them. Principle of Unity of Command According to this principle each member of organization should receive orders from only one superior. In return, the subordinate should report only to one superior. This principle helps in managing conflict solving disputes and avoiding confusion among people in organization. Eg; Suppose, In Pizza Hut, salesmen are told to give 10% discount to customers by the marketing manager. But the finance manager does not permit to give more than 5% of discount. This will lead to confusion amongst the salesmen and dispute between the two managers. Thus, Principle of Unity of Command holds due importance in any organization.
  6. 6. FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255 Principle of Unity of Direction This principle states that ‘there should be one head and one plan’ in every organization. According to this principle, managers must give same direction to all employees doing similar activities. A particular activity must be directed with the help of a single plan. In absence of unity of direction, there would be confusion among the employees. Eg; In a store of Reliance Fresh, there are 3 departments-Operation, Training and Human Resource Development (HRD). All the 3 departments are headed by 3 different individuals. Each head plans and regulates the activities and direct the employees working in the department supervised by them. Principle of Subordination of Interest According to this principle every member must give primary importance to the organizational interest rather than his/her individual interest. While taking decisions, manager must consider the interest of whole group rather than the interest of a single employee. Eg; The Code of Conduct of Tata Beverage Group clearly states that an employee or director of the company must act in the interest of the company. He/ she should ensure that any business or personal associations which he/she may have doesn't involve a conflict of interest with the operations of the company and his/ her role therein. The code of conduct cites 3 areas of actual or potential conflict of interests. One of the highlights warns employees that the interest of company or group can't be compromised. Any personal interest that may potentially influence companies’ interest should be disclosed. Failure to do so can lead to suitable disciplinary actions.
  7. 7. FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255 Principle of Centralization Centralization refers to the concentration of powers and authorities. Fayol insisted that there must be proper balance between centralization and decentralization in the organization which is to be done on the basis of the nature, size of the organization. Centralization refers to decision making at top level or at the head office level and decentralization involves decision making at lower levels or at branch office level. Fayol also advised that extreme centralization or decentralization is to be avoided, especially in large companies. Eg; McDonald’s have several franchises all over the world. This is an example of Decentralization. However, it uses centralization to get a standardized menu everywhere. It means, they can’t make changes in the flavors or menu as the rights are on the central level. Principle of Remuneration Appropriate remuneration to staff or employees is the principle to keep them satisfied financially as well as retain them for long span of time within the organization. Fair remuneration affects on the productivity and efficiency level in total. The remuneration should be fixed by taking into consideration the skill, expertise, knowledge tenure, cost of living, market trend, profitability of the organization, etc. Eg; Google has consistently been ranked top due to its incredible pay and distinctive business procedures. One of India’s top workplaces, according to the firm, is India. According to some reports, Google pays its employees a salary that is 40% more than that of other businesses.
  8. 8. FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255 Principle of Scalar Chain Scalar chain means the hierarchy of the authority from top level to the lower level for the purpose of communication. According to the principle of scalar chain, organizational information must flow in a particular hierarchy. But sometimes, in case of urgency, to avoid longer chains or to take speedy decisions, there is a direct communication or cross communication which is known as ‘Gangplank’. For direct communication, proper permission of the authorities is necessary. Eg; Amazon is an example of an organization with a hierarchical structure, largely due to its size. Under Bezos, there are several levels of management across many departments. The hierarchical organizational structure works for Amazon because the company is organized into a number of small teams under separate management. This structure allows managers to work more closely with their team members and to facilitate control over their department. Principle of Order This principle is based on ‘A place for everything and everything in its place’. This principle requires orderly organization and placement of men, machines and other resources. Misplacement would lead to misuse and wastage of resources. Eg; In Starbucks, it can be seen that everything is properly arranged which creates a good impression on customers. Also, the workers do not face hassles in finding their tools and thus, the delivery is fast. In this way, Principle of Order helps in efficient management in Starbucks.
  9. 9. FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255 Principle of Equity According to this principle, all members of the organization should be given fair and just treatment. There must not be any discrimination regarding monetary terms, delegation of authorities, division of work, promotions etc. Fayol stressed that managers must exercise justice and kindness while dealing with the subordinates. Eg; Domino’s treat its employees as well as customers friendly and kindness can be seen in their conduct. There is no discrimination among customers on the basis of the extent of the order. Principle of Stability of Tenure According to this principle, at the time of recruitment of employees, the management should assure them about stability of tenure or job security. It plays very important role in creating sense of belongingness among the employees. Insecurity in job always affect the efficiency of employees adversely. Fayol also pointed out that managers as well as non-managers need time to learn and understand their jobs. If they leave or are removed within a short period, then the learning time is wasted. Eg; ITC Limited or ITC, an Indian conglomerate headquatered in Kolkata, has a limited turnover of personnel. It provides a stable job and honestly informs employees about the employment prospects. Half of ITC’s 7000-odd managers have been with the tobacco, hotels and consumer products enterprises for more than a quarter of century.
  10. 10. FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255 Principle of Initiative Initiative refers to volunteering to do work in an innovative way. In every organization, the employees must be given freedom to take initiative while working on given task and work on new ideas. Their initiative should be welcomed by the manager including thorough discussion. This helps to create healthy organizational culture. Eg; TCS Company is well recognized for its ability to attract and retain work force, providing good opportunities for learning and development and for offering its employees challenging assignments, including the opportunity to work for Fortune 500 companies. Principle of Esprit De Corpse Esprit De Corpse means ‘Union is Strength’. Through this principle, Fayol has given emphasis on teamwork. Running any organization is a group activity. If all employees are working as a union and with mutual trust, the difficulties can be solved quickly. Therefore, as a leader, manager should create a spirit of teamwork and understanding among the employees to achieve organizational goals efficiently. Eg. In KFC, there is proper coordination amongst the kitchen staff, production staff, fire station staff which helps the front station staff to satisfy the customers. All the employees work as a union. Thus, best service is provided to the customers.
  11. 11. FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255 hese management principles provide general guidelines in tackling the organizational situations wisely as well as in solving the problems. They are the base for taking decisions. These principles are universal and applicable everywhere. Due to the basis of principles, management need not to work on trial-and-error basis as these principles are formed after systematic observations, experiments and thorough research work. Bibliography Fy BMS Notes (Organisation of Commerce and Management Standard 12th, 2020) T

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