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

Chapter: 2

What Are Principles Of Management ?

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    A managerial principle is a broad and general guideline for decision making and behavior. Management principles are not as rigid as principles of pure science as management principles deal with human behavior. Principles are just guidelines which are applicable when certain conditions are present.

    Nature Of Principles Of Management

    • Universal Applicability
    • General Guidelines
    • Formed by practice and experimentation
    • Flexible
    • Mainly behavioral
    • Cause and effect relationships
    • Contingent

    Significance Of Principles Of Management

    • Providing managers with useful insights into reality
    • Optimum utilisation of resources and effective administration
    • Scientific decisions
    • Meeting changing environment requirements
    • Fulfilling social responsibility
    • Management training, education and research

    Taylor’s Scientific Management

    Scientific Management refers to an important stream of one of the earlier schools of thought of management referred to as the ‘Classical’ school.

    Principles Of Scientific Management

    • Science not Rule of Thumb: Efficiency can be maximised through study and analysis.
    • Harmony, Not Discord: Management and workers should transform their thinking through mental revolution. Management should share the gains of the company and workers should work hard for the company.
    • Cooperation, Not Individualism: There should be complete cooperation between the labor and the management and Competition should be replaced by cooperation.
    • Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity: Each person should be scientifically selected and the work assigned should be assigned to individual according to her/his physical, mental and intellectual capabilities.

    Techniques Of Scientific Management

    • Functional Foremanship: Taylor advocated that there should be distinction between planning and execution functions. Under Production incharge, personnel who would work were speed boss, gang boss, repair boss, and inspector and under planning incharge four personnel namely instruction card clerk, route
    • clerk, time and cost clerk and a disciplinarian worked.
    • Standardisation and Simplification of Work: Standard should be followed throughout the organisation and this can be done through work-study techniques which include time study, motion study, fatigue study and method study.

    Simplification aims at eliminating unnecessary diversity of products which will help in savings of cost of labor, machines and tools.

    • Method Study: The aim of method study is to find out one best way of doing the job.
    • Motion Study: It suggests that unnecessary movements should be eliminated so that it takes less time to complete the job efficiently.
    • Time Study: It determines the standard time taken to perform a well-defined job. The main objective of time study is to determine the number of workers to be employed; frame suitable incentive schemes and determine labor costs.
    • Fatigue Study: This helps in determining the amount and frequency of rest intervals required in completing a task.
    • Differential Piece Wage System: Taylor differentiated between efficient and inefficient workers. He introduced different rate of wage payment to reward efficient workers.
    • Mental Revolution : It involves a change in the attitude of workers and management towards one another from competition to cooperation.

    Fayol’s Principles Of Management

    For his contribution, Henri Fayol is also known as the ‘Father of General Management’. The 14 principles of management given by him are:

    • Division of Work: Work is divided into small tasks/ jobs so that the work can be performed more efficiently.
    • Authority and Responsibility: Managers require both authority and responsibility but there should be a balance between authority and responsibility.
    • Discipline: Discipline requires good superiors at all levels, clear and fair agreements and judicious application of penalties.
    • Unity of Command: There should be one and only one boss for every individual employee and each participant should receive orders from and be responsible to only one superior.
    • Unity of Direction: Each group of activities having the same objective must have one head and one plan which will lead to unity of action and coordination.
    • Subordination of Individual Interest to General Interest: The interests of an organisation should be given priority over the interests of any one individual employee.
    • Remuneration of Employees: The overall pay and compensation should be fair to both employees and the organisation.
    • Centralisation and Decentralisation: Centralisation is the concentration of decision-making authority whereas its dispersal among more than one person is known as decentralisation.
    • Scalar Chain: The formal lines of authority from highest to lowest ranks are known as scalar chains. Fayol insists that every organization should have a chain of authority and communication that runs from top to bottom and should be strictly followed by managers and the subordinates.
    • Order: There is a place for everything (everyone) and everything (everyone) in its (her/his) place.
    • Equity: There should be kindness and justice in the behavior of managers towards workers.
    • Stability of Personnel: Employee turnover should be minimised to maintain organisational efficiency.
    • Initiative: Workers should be encouraged to give suggestions for improvements.
    • Esprit De Corps: Management should promote a team spirit of unity and harmony among employees. A manager should try to replace ‘I’ with ‘We’.