Big picture
Principles of management are broad, general guidelines for decision-making and behaviour. They are not rigid rules like the laws of physics; a manager applies them with judgement, depending on the situation.
Two thinkers dominate this chapter. F.W. Taylor looked at the shop floor and asked how each job could be done in the one best way. Henri Fayol looked at the whole organisation from the top and gave fourteen principles of administration. Exam case studies describe a situation and ask you to identify which principle or technique is applied or violated.
Learning goals
Explain the nature and significance of principles of management.
Explain Taylor's four principles of scientific management.
Explain the techniques of scientific management, including a differential piece wage calculation.
Explain Fayol's fourteen principles with examples, and the effect of violating them.
Compare the contributions of Taylor and Fayol.
Core ideas
1. Nature of management principles
Universal applicability: they apply to all kinds of organisations, big or small, business or not.
General guidelines: they guide action but do not give ready-made solutions.
Formed by practice and experimentation: they come from the experience and research of managers.
Flexible: they can be modified to suit the situation.
Mainly behavioural: they aim to influence human behaviour.
Cause and effect relationship: they tell us what is likely to happen if a principle is applied.
Contingent: their application depends on the prevailing situation.
2. Significance of management principles
Provide managers with useful insights into reality, improving their knowledge and understanding.
Optimum utilisation of resources and effective administration, by showing cause–effect relationships that reduce trial and error.
Scientific decisions, based on objective assessment rather than personal prejudice.
Meeting the changing environment, since principles are flexible.
Fulfilling social responsibility, as principles evolve to include it (for example, fair remuneration).
Management training, education and research, as principles form the core of management knowledge.
3. Taylor's scientific management: principles
Scientific management means knowing exactly what you want people to do and seeing that they do it in the best and cheapest way.
Principle | Meaning | Example |
|---|---|---|
Science, not rule of thumb | Find the best method for each job by scientific study, not by guesswork or habit | Taylor's shovelling experiment found the ideal load per shovel |
Harmony, not discord | Replace conflict between management and workers with mutual trust; Taylor called this a mental revolution | Management shares gains with workers; workers do not strike over petty issues |
Cooperation, not individualism | Management and workers cooperate fully, with management taking workers' suggestions and workers giving their best | A suggestion box with rewards for useful ideas |
Development of each and every person to their greatest efficiency | Select workers scientifically, train them and match them to the jobs they are best at | Training each worker in the best method for their task |
4. Taylor's techniques of scientific management
Functional foremanship. Taylor separated planning from execution and gave each worker eight specialist bosses instead of one foreman.
Planning incharge | Role | Production incharge | Role |
|---|---|---|---|
Route clerk | Sets the sequence of operations | Speed boss | Ensures timely and accurate completion of work |
Instruction card clerk | Draws up instructions for workers | Gang boss | Keeps machines and tools ready |
Time and cost clerk | Sets time and cost of the job | Repair boss | Keeps machines in working order |
Disciplinarian | Ensures discipline | Inspector | Checks the quality of work |
This applies the principle of division of work (specialisation) at the shop floor, but it violates Fayol's unity of command, since one worker has eight bosses.
Standardisation and simplification of work.
Standardisation sets standards for every business activity: processes, raw materials, time, product, machines, working conditions.
Simplification eliminates unnecessary varieties, sizes and grades of products. Example: a paint company cuts 40 nearly identical shades down to 12, reducing inventory and machinery costs.
Method study. Finds the one best way of doing a job, from procuring raw materials to delivering the product, to minimise cost and maximise quality (for example, redesigning an assembly line layout).
Motion study. Studies the movements of a worker (lifting, reaching, turning) to eliminate unnecessary motions.
Time study. Determines the standard time for a well-defined job, which helps fix the number of workers needed, frame incentive schemes and estimate labour costs.
Fatigue study. Determines the frequency and length of rest intervals needed so workers can recover from fatigue and stay productive.
Differential piece wage system. Pays efficient workers a higher rate per unit than inefficient ones, to reward and motivate efficiency.
Example. Standard output is 10 units a day. Workers who produce the standard or more get ₹50 per unit; those below the standard get ₹40 per unit.
Ravi produces 11 units: 11 x 50 = 550
Sunil produces 9 units: 9 x 40 = 360
Difference in wages = 190, for just 2 units of output.The large difference motivates Sunil to reach the standard.
5. Fayol's fourteen principles of management
# | Principle | Meaning | Example or effect of violation |
|---|---|---|---|
1 | Division of work | Work is divided into small tasks done by specialists | A car factory has separate teams for body, engine and paint |
2 | Authority and responsibility | Authority (right to give orders) must be balanced with responsibility (obligation to perform) | A manager made responsible for sales targets must be given authority to hire sales staff |
3 | Discipline | Obedience to rules and agreements, with good supervisors, clear rules and fair penalties | Management keeps its promise of a bonus; workers follow the rules |
4 | Unity of command | Each employee receives orders from one superior only | If a clerk gets conflicting orders from two managers, confusion follows |
5 | Unity of direction | One head and one plan for a group of activities with the same objective | A company making motorbikes and cars has separate divisions, each with its own plan and head |
6 | Subordination of individual interest to general interest | Organisation's interest comes before personal interest | A manager does not award a contract to a relative's firm |
7 | Remuneration of employees | Fair and just pay to employees, affordable to the company | Paying at least a reasonable wage keeps a pleasant working environment |
8 | Centralisation and decentralisation | A balance between concentrating decisions at the top and dispersing them | A bank's head office sets policy, while branch managers sanction small loans |
9 | Scalar chain | A formal line of authority from highest to lowest; gang plank allows direct communication between employees at the same level in emergencies | A shop floor worker in one department contacts a counterpart in another to avoid a delay |
10 | Order | A place for everything and everyone, and everything in its place | Tools kept in fixed racks so no time is wasted searching |
11 | Equity | Kindness and justice in behaviour towards workers; no discrimination | Same rules for workers regardless of caste, religion or gender |
12 | Stability of tenure of personnel | Employees should not be moved frequently; give them time to settle and perform | High turnover raises training costs and lowers morale |
13 | Initiative | Encourage workers to think out and carry out plans | A reward for suggestions that cut costs |
14 | Esprit de corps | Promote team spirit and unity; the manager should say "we" instead of "I" | A manager shares credit for a successful project with the team |
Unity of command and unity of direction compared
Basis | Unity of command | Unity of direction |
|---|---|---|
Meaning | One subordinate, one superior | One head, one plan for a group of activities with the same objective |
Aim | Prevents dual subordination | Prevents overlapping of activities |
Implication | Affects an individual employee | Affects the whole organisation (or division) |
6. Taylor and Fayol compared
Basis | Fayol | Taylor |
|---|---|---|
Perspective | Top-level management | Shop floor (supervisory) level |
Unity of command | Strong supporter | Did not follow it (eight bosses per worker) |
Applicability | Universal | Specific situations |
Basis of formation | Personal experience | Observation and experimentation |
Focus | Improving overall administration | Increasing productivity |
Personality | Practitioner | Scientist |
Expression | General theory of administration | Scientific management |
Their ideas are complementary: Taylor improved efficiency at the operative level and Fayol improved administration across the organisation.
A reliable approach to case-based questions
Look for the clue words: "one boss", "same objective", "gang plank", "team spirit", "fair pay", "best method", "rest intervals", "fewer varieties".
Decide whether the case is about a Taylor technique or a Fayol principle.
Name the principle, quote the line from the case and, if asked, state the consequence of violating it.
Connections that matter
Nature and significance of management explains why principles are needed.
Organising applies division of work, authority–responsibility, scalar chain and centralisation.
Directing applies unity of command, initiative and esprit de corps.
Common mistakes
Confusing unity of command with unity of direction. One boss per person, versus one plan per group of activities.
Saying functional foremanship follows unity of command. It violates it.
Mixing up motion study and time study. Motion study removes useless movements; time study sets the standard time.
Mixing up standardisation and simplification. Standardisation sets standards; simplification cuts unnecessary varieties.
Treating principles as rigid rules. They are flexible guidelines.
Revision checklist
I can explain the nature and significance of principles of management.
I can state Taylor's four principles and explain the mental revolution.
I can explain all Taylor's techniques and calculate wages under the differential piece wage system.
I can explain and identify all fourteen of Fayol's principles in a case.
I can compare Taylor and Fayol.