Principles of Management: Class 12 NCERT Guide

Nature and Significance of Management Principles

Management principles are the foundational guidelines that help managers make decisions and take action. Understanding their nature is key. First, they have universal applicability; they can be applied to all types of organisations, be it a business, a school, or a hospital, though their application might need to be adjusted to the situation. They are general guidelines, not rigid formulas. For example, the principle of 'division of work' suggests specialisation, but how much to divide the work is a manager's decision. These principles are formed by practice and experimentation over many years by management experts. They are also flexible and can be adapted to suit the specific needs of an organisation. Since they primarily deal with human behaviour, they are mainly behavioural in nature. Critically, they are based on a cause and effect relationship, helping predict the outcome of certain managerial actions. Finally, their application is contingent, meaning their effectiveness depends on the prevailing situation at a particular point in time. Their significance lies in providing managers with useful insights, enabling optimum utilisation of resources, facilitating scientific decision-making, and adapting to changing environments.

Henri Fayol's 14 Principles of Management

1. Division of Work

Work is divided into small tasks or jobs. This leads to specialisation as each worker becomes an expert in their specific task, increasing efficiency.

2. Authority and Responsibility

Authority is the right to give orders, and responsibility is the obligation to perform the duty. There should be a balance between the two.

3. Discipline

Obedience to organisational rules and the employment agreement. It requires good superiors at all levels, clear and fair agreements, and judicious application of penalties.

4. Unity of Command

An employee should receive orders from only one superior. Receiving orders from multiple superiors can cause confusion and conflict.

5. Unity of Direction

All units of an organisation should be moving towards the same objectives through coordinated and focused efforts. 'One head and one plan' for a group of activities having the same objective.

6. Subordination of Individual Interest to General Interest

The interests of an organisation should take priority over the interests of any one individual employee.

7. Remuneration of Employees

The overall pay and compensation should be fair to both employees and the organisation. It should give them a reasonable standard of living.

8. Centralisation and Decentralisation

Centralisation refers to the concentration of decision-making authority. Decentralisation means its dispersal. There must be a balance between the two depending on the size and nature of the organisation.

9. Scalar Chain

The formal line of authority from the highest to the lowest rank. Communication must follow this chain. A 'Gang Plank' can be used for direct communication between employees at the same level in emergencies, to avoid delays.

10. Order

A place for everything and everyone, and everything and everyone should be in its designated place (Material Order and Social Order).

11. Equity

Kindness and justice in the behaviour of managers towards workers. This will ensure loyalty and devotion.

12. Stability of Personnel

Minimising employee turnover. Personnel should be selected and appointed after a rigorous procedure and kept in their post for a minimum fixed tenure.

13. Initiative

Encouraging employees to take the first step in self-motivation. A good manager allows subordinates to develop and carry out their plans for improvement.

14. Esprit de Corps

Management should promote team spirit, unity, and harmony among employees. This can be achieved by replacing 'I' with 'We' in conversations.

Applying Taylor's Scientific Techniques: Worked Examples

• Scenario: A Car Assembly Plant
  Technique: Functional Foremanship
  Application: Instead of one foreman, Taylor suggested eight specialists. In our car plant, the planning in-charge would have four staff: the Route Clerk (defining the sequence of operations for assembling a car door), the Instruction Card Clerk (drafting instructions for workers), the Time and Cost Clerk (setting time targets and calculating costs), and the Disciplinarian (ensuring order). The production in-charge would also have four foremen: the Speed Boss (ensuring timely completion), the Gang Boss (keeping machines and tools ready), the Repair Boss (ensuring proper working condition of machines), and the Inspector (checking the quality of the assembled doors). This divides the mental and execution work for maximum efficiency.

• Scenario: A Shoe Manufacturing Company
  Technique: Differential Piece Wage System
  Application: The company sets a standard output of 10 pairs of shoes per day. The standard rate is ₹50 per pair. Those who produce the standard output or more get a higher rate of ₹60 per pair, while those who produce less get a lower rate of ₹40 per pair.

  • Worker A (Efficient): Produces 12 pairs of shoes. His wage will be 12 pairs x ₹60/pair = ₹720.
  • Worker B (Inefficient): Produces 8 pairs of shoes. His wage will be 8 pairs x ₹40/pair = ₹320.

  Result: This system financially rewards efficient workers and motivates inefficient workers to improve their performance. It automatically differentiates between efficient and inefficient workers.

• Scenario: A Biscuit Packaging Unit
  Technique: Method Study & Motion Study
  Application: The manager observes the entire process of packaging biscuits. Method Study is used to find the 'one best way'. Instead of workers running back and forth to collect boxes, wrappers, and biscuits, the manager redesigns the layout as a sequential assembly line. Motion Study is then used to eliminate wasteful movements. For instance, the manager observes that workers are making three unnecessary turns to seal a box. By redesigning the workstation, these motions are eliminated. The result is faster packaging, reduced worker fatigue, and increased output without extra effort.

Exam Tip: Distinguishing Fayol vs. Taylor

A very common question in board exams is to compare the contributions of Henri Fayol and F.W. Taylor. Avoid writing generic points. Focus on these specific distinctions:

1. Perspective: Fayol's principles are from the perspective of top-level management and focus on improving overall administration. Taylor's techniques are from the perspective of the shop floor (factory level) and focus on increasing worker productivity.
2. Focus: Fayol emphasized improving overall administration with his 14 general principles. Taylor focused on increasing productivity through scientific work-study, standardisation, and efficiency.
3. Applicability: Fayol's principles are considered universally applicable to all kinds of organisations. Taylor's techniques are more specialised and are most applicable to manufacturing and production organisations.
4. Expression: Fayol's contribution is known as 'General Theory of Administration'. Taylor's is known as 'Scientific Management'.
5. Personality: Fayol was a practitioner (a successful manager), and his principles are based on his personal experience. Taylor was a scientist, and his techniques are based on observation and experimentation.

Practice Questions with Solutions

• Q: In 'Fast Electricals Ltd.', a company manufacturing home appliances, the production department head asks a foreman to go slow in production to meet a deadline. Simultaneously, the sales department head insists on faster production to meet an urgent order. The foreman is confused. Which principle of management is being violated here? Explain.
  A: Step 1: Identify the core conflict. The foreman is receiving conflicting orders from two different superiors (Production Head and Sales Head).
  Step 2: Recall Fayol's principles. The principle that addresses receiving orders from a single superior is the 'Unity of Command'.
  Step 3: Explain the violation. The principle of Unity of Command is being violated. This principle states that an employee should receive orders from only one superior to avoid confusion, conflict of dual subordination, and instability.
  Final answer: The principle of Unity of Command is violated. The foreman is receiving orders from two bosses, which creates confusion and undermines authority.

• Q: A company producing solar panels has a policy where a manager at the production level can directly communicate with a manager at the marketing level in case of an urgent need for product specification changes, provided they inform their immediate superiors. Name and explain the principle and its concept highlighted here.
  A: Step 1: Identify the communication pattern. A manager is communicating directly with a manager at the same level in a different department, bypassing the usual long chain of command for speed.
  Step 2: Relate this to Fayol's principles. This relates to the principle of 'Scalar Chain', which is the formal line of authority.
  Step 3: Identify the specific concept. The direct communication link is a specific exception to the scalar chain, known as 'Gang Plank'.
  Final answer: The principle is the Scalar Chain. The concept highlighted is the 'Gang Plank'. The Scalar Chain is the formal line of authority from highest to lowest. A Gang Plank is a shorter route provided in the scalar chain to allow employees of the same level in different departments to communicate directly in emergencies to avoid delays, provided their superiors are kept informed.

• Q: 'Pawan Ltd.' is a company where the work of manufacturing, marketing, finance, and human resources is divided into separate departments, and within each department, jobs are assigned based on competence. What are the positive effects of this arrangement according to the principles of management?
  A: Step 1: Identify the management action. The company is dividing work into departments and jobs based on skills.
  Step 2: Name the principle. This action relates to Fayol's principle of 'Division of Work'.
  Step 3: List the positive effects. According to this principle, dividing work leads to specialisation.
  Final answer: The company is applying the principle of 'Division of Work'. The positive effects are:

  1. Specialisation: Repetitive performance of a particular task allows a worker to gain experience and expertise in that area.
  2. Increased Efficiency: Specialists work faster and more accurately, leading to less wastage of time and resources.
  3. Improved Productivity: Specialisation leads to higher output per worker, increasing the overall productivity of the organisation.

• Q: 'Zenith Tech' sets a standard output for its software developers at 1000 lines of code per week. Developers who write more than 1000 lines are paid ₹5 per line, while those who write less are paid ₹3 per line. Identify and explain the technique of scientific management being used.
  A: Step 1: Analyze the payment system. The company is using two different wage rates based on whether a performance standard is met.
  Step 2: Link it to Taylor's techniques. This is a clear application of F.W. Taylor's wage payment system.
  Step 3: Name and explain the technique. The technique is the 'Differential Piece Wage System'.
  Final answer: The technique of scientific management being used is the Differential Piece Wage System. This technique was developed by Taylor to differentiate between efficient and inefficient workers. It rewards efficient workers by paying them a higher wage rate for producing above the standard, and it motivates inefficient workers to improve by paying them at a lower rate. The goal is to maximize efficiency and productivity.

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