Business management(pom) unit 1

PRINCIPLES OF
MANAGEMENT
UNIT-1

PRINCIPLES OF MANAGEMENT
• HISTORY OF HENRI FAYOL
Henri Fayol Was born in France in 1841.
He started working as a mining engineer in a coal mining
company in 1860.
In 1888,he was promoted as the MD of the company.
At that time the company was in the situation of insolvency.
He accepted the challenge and applied his managerial technique
and succeeded.
He is considered as the father of Modern management.
Book: Industrial and General Administration in French in 1916.
He also looked at the problems of managing an organization

CONTRIBUTIONS OF HENRI
FAYOL
• Functions of Management
• Division of Industrial Activities
• Qualities of an efficient manager
• Principles of Management

NATURE OF PRINCIPLES OF
MANAGEMENT
1. Universal applicability:They can be applied in all types of
organizations.
2. General Guidelines:They are general guidelines to action and
decision making however they do not provide readymade
solutions as the business environment is dynamic.
3. Formed by practice and experimentation:They are developed
after thorough research work on the basis of experiences of
managers.
4. Flexible:Which can be adapted and modified by the practicing
managers as per the demands of the situations as they are
man-made principles.
5. Cause and effect relationship:They intend to establish
relationship between cause& effect so that they can be used in
similar situations.
6. Contingent:Their applicability depends upon the prevailing
situation at a particular point of time.

PRINCIPLES OF MANAGEMENT
1) Division of work
2) Authority and responsibility
3) Discipline
4) Unity of command
5) Unity of direction
6) Subordination of individual interest to general interest
7) Remuneration
8) Centralization
9) Scalar chain
10) Order
11) Equity
12) Stability of tenure of personnel
13) Initiative
14) Espirit de corpse

1. DIVISION OF WORK
• According to this principle the whole work must be
divided into small tasks or units and instead of assigning
the whole work to one person one task or unit of work
should be assigned to one person according to the
capability,qualification and experience of the person.
• When the work is assigned to a specialist it leads to
grater efficiency specialization increased productivity and
reduction of unnecessary wastage and movements.
• Fayol said not only the factory work but
technical,managerial and skill jobs should also be
divided into small segments for specialisation.

POSITIVE EFFECTS OF
DIVISION OF WORK
 Specialisation: whenever work is divided according to
qualification then automatically it leads to specialisation.
Improves efficiency: when employee is performing only one
part of job then he becomes expert in that and results in
less wastage of resources.

CONSWQUENCES OF VIOLATION
OF THIS PRINCIPLES
1. Lack of efficiency.
2. There will be no specialisation.
3. Chances of duplication of work.

AUTHORITY AND RESPONSIBILITY
As we know management is the art of getting things
done through people, it implies that the management
should have the right to give orders and power to
exact obedience.
Authority means power to take decisions and
responsibility means obligation to complete the job
assigned on time.
Authority and responsibility should go hand in hand.
Mere responsibility without authority, makes an
executives less interested in discharging his duties.
Similarly giving authority without assigning
responsibility makes him arrogant and there is fear of
misuse of power.

POSITIVE EFFECT OF THIS
PRINCIPLES
• No misuse of authority.
• Helps in meeting responsibilities on time without any delay.

CONSEQUENCES OF VIOLATION
OF THIS PRINCIPLE
• Delay in work or in completion of work due to less
authority.
• Misuse of authority due to excess authority.
• Overburden with work with excess responsibility.

DISCIPLINE
 Discipline refers to following code of
conduct.
 Clear and fair agreements among
subordinate and superior.
 Fayol insists that discipline is required at
superior as well as subordinate level.
 If violation then penalties or punishment.

PRINCIPLE
I. Systematic working in the organisation.
II. Improves efficiency.

OF THIS PRINCIPLE
I. Disorder, confusion and chaos.
II. Wastage of resources in absence
of discipline.
III. Delay in work due to absence of
rules and regulations.

UNITY OF COMMAND
oAccording to this principle an
employee should receive order from
one boss only and should be
accountable to one superior only.

PRINCIPLE
•No confusion in the mind of
the subordinate.
•No ego clashes
•Improve effectiveness in
working

CONSEQUENCES OF
VIOLATION
• Confusion in the mind of employee.
• Subordinate will get chance to escape from
his responsibilities by giving excuses.
• Ego clashes among the different superiors.
• Difficulty in maintaining discipline in the
organization.

UNITY OF DIRECTION
According to this principles, 'one unit means one
plan', that is the effort of all the members and
employees of the organization must be directed
towards one direction.
It leads to coordination of efforts towards common
goal.

PRINCIPLE
Achievement of organizational
goal.
Increases coordination.

OF THIS PRINCIPLE
Lack of coordination
Wastage of efforts and resources by
working in different direction
Difficulty in achieving organizational
goals.

SUBORDINATION OF INDIVIDUAL
INTEREST TO GENERAL
INTEREST
oAccording to this principle the interest of
organization must supersede the interest of
individuals or employees.
oIn an organization all the employees are working
with some objectives and there is always an
objective of organization.
oIf the objective of individual are in the same
direction as that of organization then there is no
problem but if it differs then managers must try to
reconcile individual interest with organizational
interest.

POSITIVE EFFECTS OF THIS
PRINCIPLE
oAchievement of organizational
goal.
oCoordination between individual
and organization goals.

OF THIS PRINCIPLE
oNo achievement of organizational
goal.
oEven employees will also suffer in long
run.

RAMUNERATION
• According to this principle employees in the
organization must be paid fairly or adequately to
give them maximum satisfaction or which would
give atleast a reasonable standard of living.
• At the same time it should be within the paying
capacity of the organization.
It is determined according to-
i. Financial capacity of the concern.
ii. By keeping in mind the minimum wage act of
government.
iii. The wages and salaries paid by the competitors.

PRINCIPLES
• Employees get motivated.
• Devotion and commitment of
employees improves.

OF THIS PRINCIPLES
• Increase in turnover of employees.
• Dissatisfaction and demotivation of
employees.

CENTRALIZATION
Centralization refers to the concentration of
authority in few hands at the top level and the
subordinates need to follow the instructions of
their seniors.
Some factors that results in the centralization of
the organization are size, nature of work,
delegation ability of management,employees
ability etc.

PRINCIPLES
Uniformity in action
Achievement of organizational goal
Quick decisions

OF THIS PRINCIPLES
Over burden on the top management
Difficulty in the achievement of
organizational objective.
Delay in action

SCALAR CHAIN
Communication is a crucial aspect of any
organisation and the principle of scalar chain
revolves around the flow of communication
from management to the lowest rank in the
company .
Scalar chain is a chain of all supervisors from
the top management to the person working in
the lowest rank.
Fayol insisted that this chain must be followed
strictly in the organization.
According to the principle, any information
should follow a pre-defined path.

PRINCIPLE
Every employee knows whom to
approach.
It allows the top management to
communicate their message to the
entire organisation.
Better relation among employees.

OF THIS PRINCIPLE
Communication gap
No clarity in authority responsibility
relationship
Bitterness in the relation

ORDER
A. Here the word order does not mean any
command but it refers to orderly
arrangement of men and material.
B. There must be a fixed place to keep every
material and thing used in the organization
and fixed place or seat or cabin for every
employee of the organization so that no time
and energy is wasted in search of any
material or any person.

PRINCIPLE
A. No wastage of time and energy
B. Smooth and systematic working in
the organization
C. Increased productivity

OF THIS PRINCIPLE
A.Not able to contact the authorized person
B.Delayed operation
C.Wastage of time and energy
D.Wastage of resources

EQUITY
This principle is based on the basic thought that “all
employees of the organization are equal”.
It means the applicability of some rules and regulation for
all employees in the organization irrespective of their
religion, sex, caste, colour,language,nationality,position
etc.
This equal treatment will motivate the employees to give
their whole hearted and maximum contribution towards the
achievement of the organizational objective.
It does not mean equal salary to a peon and supervisor but
mean application of some disciplinary rules.
When the officers are unbiased in their dealing with the
employees. The employees will get satisfied and will
contribute to their fullest capacity.

PRINCIPLE
Employees fell satisfied
Ensures just and fair treatment to all
Motivate employees
Ensures loyalty of employees towards
organization
Ensures cordial relationship among
employees and management

OF THIS PRINCIPLE
Dissatisfaction
Increased in turnover
Unhealthy relation

STABILITY OF TENURE OF
PERSONNEL
• It refers to no frequent termination and transfer.
• According to this principle the management must
provide the feeling of job security among the
employees because with the feeling of insecurity
for the employees cannot contribute their
maximum.
• Frequent turnover of employees is bad for
organization and such decision must be taken
when they are almost unavoidable.
• Not only turnover but frequent transfer or rotation
should also be avoided.

PRINCIPLE
• Improves efficiency level of the
employees.
• No wastage of time and resources.

OF THIS PRINCIPLE
• Wastage of resources in learning the
new job.
• Frustration and dissatisfaction among
employees.

INITIATIVE
Initiative means doing something without
being asked to do.
It refers to freedom to think for oneself and
use of discretion in doing work.
Fayol says that employees at all levels in
the organization should be given the
opportunity to show initiative and exercise
judgement in the formulation and execution
of plans.
It encourages them to act in an efficient way.

PRINCIPLE
• Develops feeling of belongingness in
employees.
• Employees achieve the target on time
if they are set up with their
consultation.

OF THIS PRINCIPLE
• Employees will not work to the best
of their ability.
• Demotivation among employees.

ESPIRIT DE CORPSE
oIt implies that there should be spirit of
cooperation in the organization.
oManagement must encourages team spirit,
unity and harmony.
oThis will bring coordination in organization.
oA manager should replace ‘I’ with ‘We’.
oFayol stresses that only those organizations
can be successful which act as a team.

PRINCIPLE
oDevelops team spirit.
oAchievement of group goals.

OF THIS PRINCIPLE
oTeam goal may not achieved.
oNo team spirit and more stress
on individualism.

Business management(pom) unit 1

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