Class 12 Business Studies Chapter 2 Notes (Principles of Management)
Principles of Management
Principles of Management are broad and general guidelines for the decision-making and behavior of managers. In other words, a principle refers to a statement which reflects the fundamental truth about some phenomena based on cause and effect relationship.
Nature/Characteristics/Features of Management
- Universal (Pervasive) - The Principles of Management are universal in nature which means that these principles can be applied to all types of organizations irrespective of their size and nature. Business as well as non-business, small as well as large, public and private sector. For example: The Principle of division of work is applied in government offices, hospitals, schools, etc.
- General Guidelines - Management principles are guidelines for actions, but these principles do not provide ready-made solutions for any problem. For example: The Principle of stability of tenure insists on giving a stable time period to employees to settle down, but how much time to be given (6 months, 1 year, etc.) varies from organization to organization.
- Formed by Practice and Experimentation - The management principles are developed only after deep and thorough research work. They are not developed overnight. Proper observations and experiments are conducted before developing them. Therefore, they are evolutionary in nature. For example: The Principle of division of work was developed when it was observed that dividing the work results in improved performance, and then this was tried and tested in different organizations.
- Flexibility / Flexible - Management principles can be applied differently under different conditions. Changes can be made in the application of principles according to the requirement of the company. These are not a set of rigid statements; they can be modified by managers according to the situation. For example: The degree of centralization and decentralization will depend upon the situations and circumstances of each enterprise.
- Behavioral in Nature - Management principles are formed to guide and influence the behavior of employees. They also establish a relationship between human and material resources. These principles insist on improving relationships between superiors, subordinates, and all members of the organization. For example: While planning the layout of a factory, orderliness requires that workflows match the flow of materials and movement of personnel.
- Based on Cause and Effect Relationship - Management principles state that if a particular principle is applied in a situation, what might be the effect. Although these principles cannot state perfectly absolute results because they are applied to human beings, they provide reasonable foresight. For example: When setting up a new factory, a participative approach to decision-making is advisable.
- Contingent - Management principles are contingent or dependent upon the prevailing situations in the organization at a particular point in time. For example: The principle of team spirit is important where work is carried out by a group of people, whereas it is less applicable where work is performed strictly by individuals.
Importance of Management Principles
- Providing Managers with Useful Insight into Reality - Management principles act as guidelines for managers. These principles improve the knowledge, ability, and understanding of managers in various managerial situations and guide them to make the right decisions at the right time.
- Optimum Utilization of Resources - Management principles insist on planned activities and systematic arrangements of men and materials to derive maximum benefit from human efforts and physical resources.
- Scientific Decisions - Management principles enable managers to approach organizational problems systematically and scientifically.
- Meeting Changing Environment Requirements - Principles train managers in implementing environmental changes in the right direction and at the right level within the organization.
- Effective Administration - Top-level management uses these principles as guidelines to frame administrative plans and policies for systematic functioning.
- Fulfilling Social Responsibilities - Principles guide managers in achieving organizational goals while simultaneously fulfilling social responsibilities toward society.
- Management Training, Education, and Research - These principles serve as the foundation for management studies, research, and development by providing an organized body of knowledge.
Fayol's Principles of Management
1. Division of Work
- According to this principle, the whole work must be divided into small tasks or units instead of assigning the whole work to one person.
- Work should be assigned to a person according to their capability, qualification, and experience.
- When a person performs a part of a job repeatedly, they become specialized, improving efficiency.
- For example: In a furniture manufacturing company, tasks are divided into cutting wood pieces, joining them, polishing them, and giving a finishing touch.
2. Authority and Responsibility
- Authority means the power to take decisions. Responsibility means the obligation to complete the assigned job on time.
- There must be balance or parity between authority and responsibility.
- Excess authority without matching responsibility may bring negative results, while excess responsibility without authority hinders completing the job on time.
- For example: If a person is given responsibility to produce 100 units in one week but lacks authority to purchase raw materials, they cannot be blamed if stock is unavailable.
3. Discipline
- Discipline means obedience, observance of rules, and respect of authority within organizational agreements.
- Requires good superiors at all levels, clear and fair agreements, and judicious application of penalties.
- Applies to superiors as well as subordinates.
4. Unity of Command
- An employee should receive orders from one boss only to prevent confusion and conflict.
- For example: If a production worker receives conflicting instructions regarding speed and quality from both production and sales in-charges, confusion results.
5. Unity of Direction
- Emphasizes "One Head and One Plan"—all efforts within an organization must be directed toward a common goal to achieve coordination.
| Difference between Unity of Command & Unity of Direction | ||
|---|---|---|
| Basis | Unity of Command | Unity of Direction |
| Meaning | One subordinate should receive orders directly from one boss and he should be responsible to one superior only. | Each group of activities having the same objective must have one head and one plan. |
| Aim | It prevents dual subordination. | It prevents overlapping of activities. |
| Implications | It affects an individual employee. | It affects the entire organization. |
6. Subordination of Individual Interest to General Interest
- The interest of the organization must supersede the interest of individual employees.
- Managers must reconcile individual goals with organizational goals, sacrificing individual goals if a conflict arises.
- For example: Managers must compare prices and qualities of suppliers and place orders objectively rather than favoring relatives.
7. Remuneration of Employees
- Employees must be paid fairly and adequately to ensure reasonable standards of living and satisfaction.
- Fair wages depend on company financial capacity, competitive industry standards, and individual employee skills.
8. Centralization and Decentralization
- Centralization refers to concentration of authority at top levels; Decentralization means distribution of power across levels.
- A company must maintain an optimal balance between authority retention and subordinate empowerment based on size and nature.
- For example: Empowering Panchayats with funds and decision-making powers for village welfare reflects decentralization at a national scale.
9. Principle of Scalar Chain
- Scalar chain represents the formal line of authority from highest to lowest rank.
- Communication should follow every link strictly, but in emergencies, a shortcut called Gangplank permits direct contact between equal levels.
10. Principle of Order
- Refers to orderly arrangement of resources and personnel ("A fixed place for everything and everyone").
- Eliminates wasted movement and helps achieve objectives efficiently.
11. Principle of Equity
Equity refers to kind, fair, and just treatment of employees without discrimination based on sex, religion, language, caste, belief, or nationality. It ensures equal growth opportunities and standard application of rules across all ranks.
12. Initiative
Initiative means taking the first step with self-motivation. Employees should be encouraged to conceive and carry out plans for improvement within prescribed limits of authority.
13. Stability of Tenure of Personnel
Management must provide job security and avoid frequent terminations or transfers, allowing employees to settle in and deliver their maximum contribution.
14. Esprit De Corps
Management should promote team spirit, unity, and harmony by replacing individual "I" thinking with collective "We" perspective, fostering mutual trust and reducing penalties.
Scientific Management
Scientific management refers to the application of science to every element of management. According to F.W. Taylor, "Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and cheapest way."
Scientific Principles of Management
1. Science, Not Rule of Thumb: Taylor insisted that each job performed should be based on scientific inquiry and cause-and-effect decisions rather than manager intuition or trial-and-error ("Hit and Miss").
2. Harmony, Not Discord: Workers and management must work in harmony with mutual consent. Both groups require a Mental Revolution to transform their attitudes toward each other.
Mental Revolution: Aimed at transforming mental attitudes, eliminating suspicion, and replacing grievances with active cooperation between management and labor.
3. Cooperation, Not Individualism: An extension of harmony, emphasizing equal division of work and responsibility where management works side-by-side with workers, replacing competition with cooperation.
4. Development of Workers to Their Greatest Efficiency and Prosperity: Selecting workers scientifically based on qualification and providing systematic training to update skills for mutual prosperity.
Scientific Techniques of Taylor
Functional Foremanship
Aims to improve shop floor supervision by placing workers under eight specialist foremen across two distinct departments:
- Planning Department:
- Route Clerk: Fixes the sequence of operational steps.
- Instruction Card Clerk: Drafts general instructions for workers.
- Time and Cost Clerk: Sets timelines and prepares cost sheets.
- Disciplinarian: Maintains systemic discipline.
- Production Department:
- Gang Boss: Arranges machines, tools, and resources.
- Speed Boss: Assures timely completion of jobs.
- Repair Boss: Keeps machinery in working condition.
- Inspector: Checks output quality control.
Standardization & Simplification of Work
Standardization sets standards for process, product size, type, weight, and quality. Simplification eliminates unnecessary product variations, sizes, and types to lower inventory costs and improve operational efficiency.
Work Study
Includes four core studies:
- Fatigue Study: Conducted scientifically to determine the duration and frequency of rest intervals.
- Method Study: Finds the single best way of performing a job to minimize cost and maximize quality.
- Time Study: Determines standard time required by an average skilled worker to complete a job.
- Motion Study: Eliminates wasteful, unproductive physical movements during tasks.
Differential Piece Wage System
Rewards efficient workers by paying higher piece-rates for standard or above-standard production, while paying lower rates to below-standard producers to motivate improvement.
Differences Between Henri Fayol and F.W. Taylor
| Basis for Comparison | Henry Fayol | F.W. Taylor |
|---|---|---|
| Meaning | Henry Fayol is a father of modern management who laid down fourteen principles of management, for improving overall administration. | F.W. Taylor is a father of scientific management who introduced four principles of management, for increasing overall productivity. |
| Concept | The general theory of administration. | Scientific Management. |
| Emphasis | Top-level management. | Lower-level / Floor-level Management. |
| Applicability | Universally applicable. | Applies to specialized organizations only. |
| Basis of Formation | Personal Experience. | Observation and Experimentation. |
| Orientation | Managerial function. | Production and Engineering. |
| System of Wage Payment | Sharing of profit with managers. | Differential Payment System. |
| Approach | Manager's approach. | Engineer's approach. |
The End
A List of Notes:
Chapter 1 |
Chapter 2 |
Chapter 3 |
Chapter 4 |
Chapter 5 |
Chapter 6 |
Chapter 7 |
Chapter 8 |
Chapter 9 |
Chapter 10 |
Chapter 11 |
Chapter 12
See More:
Click here to access more Business Studies Class 12 educational content (worksheets, case studies, MCQs, sample papers, and more).
These revision notes were very helpfull especially in the break days of exams just go through it and you are ready with chapter very helpfull
ReplyDeleteThankyou to Ma'am for preparing these notes and providing them for free Thanksalott❤️
Thank you dear for the appreciation 💕
DeleteThankyou ma'am these notes are very helpful for me
ReplyDelete