1.
Ritika P. Rathod
FY BMS B
PRINCIPLES OF MANAGEMENT
MF Project
Project By
Roll No: HFBMS255

2.
FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255
What is Management?
In the words of L. A. Allen, “Management is what Manager does.”
Management sets strategic goals in accordance with the vision and mission of the
organization and makes decisions on how the overall organization will operate. It
is a dynamic process of getting things done by others with the aim of achieving
common goals effectively and efficiently.
For management to implement smoothly in an organization, all the functions
starting from planning to organizing then staffing to directing and ending up with
coordinating and controlling is essential.
Principles of Management
Principle is defined as a fundamental truth or preposition that serves as the
foundation for a system of belief or behavior or for a chain of reasoning. In simple
words, techniques or systems which give one directional result are called as
principles.
Henri Fayol, also regarded as ‘Father of Modern Management’ has suggested 14
principles of management in his book titled ‘Industrial and General
Administration’ in 1916. Fayol stated that all managers in all organizations,
whether large or small, need to follow the principles or guidelines in managing
business affairs.
According to Henri Fayol, “To manage is to Forecast
and to plan, to organize, to command, to coordinate
and to control.”
Who is Henri Fayol?
Henry Fayol (1841-1925) was a French mining engineer who turned a leading
industrialist and a successful manager. He started his career as a mining engineer in a
French mining company and rose to the position of the Chief Managing Director. After
conducting many experiments and observations in organization, he
proposed 14 principles of management. Due to his contribution in
development of managerial thoughts, he is called as
‘Father of Modern Management.’

3.
FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255
14 Principles are summarized as follows:
Principles of
Management
Principle of
Division of
Work Principle of
Authorityand
Responsibility
Principle of
Discipline
Principle of
Unity of
Command
Principle of
Unity of
Direction
Principle of
Subordination
of Interest
Principle of
Centralization
Principle of
Remuneration
Principle of
Scalar Chain
Principle of
Order
Principle of
Equity
Principle of
Stability of
Tenure
Principle of
Initiative
Principle of
Esprit De
Corpse

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FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255
Principle of Division of Work
According to this principle, the work must be divided into different kinds such as technical,
financial, commercial, security operations, accounting, managerial and must be assigned to
employees as per their qualities and capabilities to improve efficiency and expertise of
employees and increase the productivity level.
Eg; Tata Motors recruit for areas like-
• Accountant
• BPO/Telecaller
• Customer Care
• Sales and Marketing Executive
• IT-Software Engineers, etc.
Thus, work is divided and allocated to different employees thereby making them to build up
experience and continuously enhance their skills.
Principle of Authority and Responsibility
According to this principle, there must be proper balance between Authority and Responsibility.
If authority is more than responsibility, a manager may misuse it. If responsibility is more than
authority, a manager may feel frustrated. Authority always comes with Responsibility. If a
manager is given the authority to complete a task within a given time, he should be held
responsible if he does not complete the working given
time.
Eg; Finance Manager has the authority of keeping
confidentiality of all the finances of the company.
However, if any financial fraud or leak happens, he
must be held responsible for the same.

5.
FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255
Principle of Discipline
According to this principle, Discipline needs to be
followed at all the levels of organization. It not only
involves obedience of rules and regulations of the
organization, but also the
application and dedication on the part of management.
Eg; Changing the sanitizer after every two hours, washing hands after
every hour, update fries time-this all comes in discipline. How
employees fulfill all these responsibilities punctually matter a lot at
Burger King and while serving the customers the employee must be
very kind and polite to them.
Principle of Unity of Command
According to this principle each member of organization should receive orders from only one
superior. In return, the subordinate should report only to one superior. This principle helps in
managing conflict solving disputes and avoiding confusion among people in organization.
Eg; Suppose, In Pizza Hut, salesmen are told to give 10% discount
to customers by the marketing manager. But the finance manager
does not permit to give more than 5% of discount. This will lead to
confusion amongst the salesmen and dispute between the two
managers. Thus, Principle of Unity of Command holds due
importance in any organization.

6.
FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255
Principle of Unity of Direction
This principle states that ‘there should be one head and one plan’ in every organization.
According to this principle, managers must give same direction to all employees doing similar
activities. A particular activity must be directed with the help of a single plan. In absence of
unity of direction, there would be confusion among the employees.
Eg; In a store of Reliance Fresh, there are 3 departments-Operation, Training and Human
Resource Development (HRD). All the 3 departments are
headed by 3 different individuals. Each head plans and
regulates the activities and direct the employees working in the
department supervised by them.
Principle of Subordination of Interest
According to this principle every member must give
primary importance to the organizational interest rather
than his/her individual interest. While taking decisions,
manager must consider the interest of whole group
rather than the interest of a single employee.
Eg; The Code of Conduct of Tata Beverage Group clearly states that an employee or director of
the company must act in the interest of the company. He/ she should ensure that any business or
personal associations which he/she may have doesn't involve a conflict of interest with the
operations of the company and his/ her role therein. The code of conduct cites 3 areas of actual
or potential conflict of interests. One of the highlights warns employees that the interest of
company or group can't be compromised. Any personal interest that may potentially influence
companies’ interest should be disclosed. Failure to do so can lead to suitable disciplinary actions.

7.
FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255
Principle of Centralization
Centralization refers to the concentration of
powers and authorities. Fayol insisted that
there must be proper balance between
centralization and decentralization in the
organization which is to be done on the
basis of the nature, size of the organization. Centralization refers to decision making at top level
or at the head office level and decentralization involves decision making at lower levels or at
branch office level. Fayol also advised that extreme centralization or decentralization is to be
avoided, especially in large companies.
Eg; McDonald’s have several franchises all over the world. This is
an example of Decentralization. However, it uses centralization to
get a standardized menu everywhere. It means, they can’t make
changes in the flavors or menu as the rights are on the central level.
Principle of Remuneration
Appropriate remuneration to staff or
employees is the principle to keep them
satisfied financially as well as retain them for
long span of time within the organization.
Fair remuneration affects on the productivity
and efficiency level in total. The
remuneration should be fixed by taking into
consideration the skill, expertise, knowledge
tenure, cost of living, market trend,
profitability of the organization, etc.
Eg; Google has consistently been ranked top due to its incredible pay and distinctive business
procedures. One of India’s top workplaces, according to the firm, is India. According to some
reports, Google pays its employees a salary that is 40% more than that of other businesses.

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FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255
Principle of Scalar Chain
Scalar chain means the hierarchy of the authority from top level to the lower level for the
purpose of communication. According to the principle of scalar chain, organizational
information must flow in a particular hierarchy. But sometimes, in case of urgency, to avoid
longer chains or to take speedy decisions, there is a direct communication or cross
communication which is known as ‘Gangplank’. For direct communication, proper permission of
the authorities is necessary.
Eg; Amazon is an example of an organization with a hierarchical structure, largely due to its size.
Under Bezos, there are several levels of management across many departments. The hierarchical
organizational structure works for Amazon because the
company is organized into a number of small teams under
separate management. This structure allows managers to
work more closely with their team members and to
facilitate control over their department.
Principle of Order
This principle is based on ‘A place for everything and everything in its place’. This principle
requires orderly organization and placement of men, machines and other resources.
Misplacement would lead to misuse and wastage of resources.
Eg; In Starbucks, it can be seen that everything is properly arranged
which creates a good impression on customers. Also, the workers do
not face hassles in finding their tools and thus, the delivery is fast. In
this way, Principle of Order helps in efficient management in
Starbucks.

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FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255
Principle of Equity
According to this principle, all members of the organization should be
given fair and just treatment. There must not be any discrimination
regarding monetary terms, delegation of authorities, division of work, promotions etc. Fayol
stressed that managers must exercise justice and kindness while dealing with the subordinates.
Eg; Domino’s treat its employees as well as customers friendly and kindness can
be seen in their conduct. There is no discrimination among customers on the basis
of the extent of the order.
Principle of Stability of Tenure
According to this principle, at the time of
recruitment of employees, the management should
assure them about stability of tenure or job security.
It plays very important role in creating sense of
belongingness among the employees. Insecurity in
job always affect the efficiency of employees
adversely. Fayol also pointed out that managers as
well as non-managers need time to learn and
understand their jobs. If they leave or are removed
within a short period, then the learning time is
wasted.
Eg; ITC Limited or ITC, an Indian conglomerate headquatered in Kolkata, has a limited turnover
of personnel. It provides a stable job and honestly informs employees about the employment
prospects. Half of ITC’s 7000-odd managers have been with the tobacco, hotels and consumer
products enterprises for more than a quarter of century.

10.
FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255
Principle of Initiative
Initiative refers to volunteering to do work in an innovative way. In every organization, the
employees must be given freedom to take initiative while working on given task and work on
new ideas. Their initiative should be welcomed by the manager including thorough discussion.
This helps to create healthy organizational culture.
Eg; TCS Company is well recognized for its ability to
attract and retain work force, providing good
opportunities for learning and development and for
offering its employees challenging assignments,
including the opportunity to work for Fortune 500
companies.
Principle of Esprit De Corpse
Esprit De Corpse means ‘Union is Strength’. Through this principle, Fayol has given emphasis
on teamwork. Running any organization is a group activity. If all employees are working as a
union and with mutual trust, the difficulties can be solved quickly. Therefore, as a leader,
manager should create a spirit of teamwork and understanding among the employees to achieve
organizational goals efficiently.
Eg. In KFC, there is proper coordination amongst the kitchen staff, production staff, fire station
staff which helps the front station staff to satisfy the customers. All the employees work as a
union. Thus, best service is provided to the customers.

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FY BMS B Ritika Purshottam Rathod Roll no: HFBMS255
hese management principles provide general guidelines in
tackling the organizational situations wisely as well as in solving
the problems. They are the base for taking decisions. These
principles are universal and applicable everywhere. Due to the basis of
principles, management need not to work on trial-and-error basis as
these principles are formed after systematic observations, experiments
and thorough research work.
Bibliography
Fy BMS Notes
(Organisation of Commerce and Management Standard 12th, 2020)
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