Notes on Principles of Management Business Studies Part I CBSE 12th Class

Principles of Management — The Concept

• Principles of management are broad, fundamental truths that act as guidelines for managerial decision-making and behaviour.
• These principles are based on observations of human behaviour and past managerial experiences, and they help managers in effective planning, organizing, staffing, directing, and controlling.
• They do not offer readymade solutions but guide managers in handling complex and dynamic business situations efficiently.

Principles of Management vs. Principles of Pure Science

Management principles focus on people and circumstances, unlike scientific laws which are universal and consistent.

Principles of Management vs. Techniques of Management

• Principles of Management: Fundamental guidelines for thinking and decision-making.
• Techniques of Management: Tools or methods to execute plans and tasks.
• Principles guide why and what to do, while techniques guide how to do.

Principles of Management vs. Values

Nature of Principles of Management:

1. Universal Applicability:
   Applicable to all types and sizes of organisations, though scope may vary.
2. General Guidelines:
   They offer direction, not fixed solutions, since business environments are complex and dynamic.
3. Formed by Practice and Experimentation:
   Derived from managerial experiences and scientific trials (e.g., experiments to reduce worker fatigue).
4. Flexible:
   They can be adapted to suit different situations (e.g., degree of centralisation may vary).
5. Mainly Behavioural:
   Primarily focused on influencing human behaviour within organisations.
6. Cause and Effect Relationships:
   Help understand the impact of applying certain principles in specific situations, though results may not always be perfectly predictable.
7. Contingent:
   Their application depends on the context (e.g., fair wages depend on several factors like performance and market standards).

Significance of Principles of Management

Management principles are important because they provide guidance and structure for managerial decision-making and behaviour. Their value lies in their practical utility and wide applicability in real-world situations.

Key Points of Significance:

1. Useful Insights into Reality:
   Help managers understand complex situations, avoid past mistakes, and handle recurring issues efficiently. For example, delegation allows managers to focus on strategic decisions.
2. Optimum Utilisation of Resources and Effective Administration:
   Enable managers to maximize benefits at minimum costs and maintain objectivity in decision-making (e.g., budget allocation based on goals, not bias).
3. Scientific Decision-Making:
   Encourage decisions based on logic, facts, and analysis rather than on guesswork or prejudice.
4. Adaptability to Changing Environment:
   Principles are flexible, allowing managers to respond to dynamic business needs (e.g., outsourcing non-core functions like HR or IT through BPO/KPO).
5. Fulfilling Social Responsibility:
   Guide businesses to act ethically and contribute to society (e.g., BHEL developing townships or Lijjat Papad empowering women).
6. Basis for Management Training, Education, and Research:
   Core to professional courses like MBA/BBA and management research. Help develop techniques like Operations Research, Kaizen, and Just in Time.

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Taylor’s Scientific Management

• Scientific Management is part of the Classical School of Management, alongside Fayol’s Administrative Theory and Weber’s Bureaucracy (though bureaucracy isn't discussed here).
• F.W. Taylor (1856–1915), an American mechanical engineer, is known as the Father of Scientific Management. He worked to improve industrial efficiency during the era of mass production.
• He believed in scientific analysis of work to find the "one best way" to perform a task, famously using time and motion studies.
• Taylor saw existing management practices as unscientific and wanted management to be treated as a formal discipline.
• He emphasized cooperation between workers and management, believing that a trained management and an innovative workforce must work in partnership for optimal results—eliminating the need for trade unions.
• His key work, The Principles of Scientific Management, was published in 1911.
• Taylor held executive roles in several companies:
• Midvale Steel: Rose to executive position by demonstrating leadership.
• Bethlehem Steel: Introduced piece-rate wage system and led innovations but was later fired after a change in ownership.
• He also served as president of ASME (1906–1907) and taught at the Tuck School of Business.
• He passed away in 1915 due to pneumonia.

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Techniques of Scientific Management

A. Functional Foremanship

• Division of planning and execution handled by different experts:
• Planning Incharge: Instruction Card Clerk, Route Clerk, Time & Cost Clerk, Disciplinarian
• Production Incharge: Gang Boss, Speed Boss, Repair Boss, Inspector

B. Standardisation of Work

• Setting standards in terms of process, quality, time, and resource use.

C. Simplification of Work

• Eliminating unnecessary product varieties and methods to reduce costs and increase productivity.

D. Work Study Techniques:

1. Method Study: Finds the best way of performing tasks.
2. Motion Study: Identifies and eliminates unproductive motions.
3. Time Study: Determines standard time to complete a task.
4. Fatigue Study: Identifies required rest intervals to maintain energy and efficiency.

E. Differential Piece Wage System

• Workers are paid differently based on their efficiency and output levels:
• Below standard: Lower rate
• At standard: Standard rate
• Above standard: Higher rate

Fayol’s Principles of General Management

Unity of Command vs. Unity of Direction

Centralisation vs. Decentralisation

Comparison of Contributions: Taylor vs. Fayol