Principles of Management: Concept, Nature, Process and Significance

Principles of management is needed for every business planning for the future for a successful business and the person who is in the authority, has to take decisions and he will be responsible for the consequences of his decisions whether favorable and unfavorable.

What is the meaning of principles of management?

Meaning of Principles of Management: – Principles of management is what a manager does within the organization. All the activities whether related to decision making or implementation of such decisions are performed by the managers with the purpose of achieving common goals. Principles of Management is designed to meet the scope and sequence requirements of the introductory course on management. This is a traditional approach to management using the leading, planning, organizing, and controlling approach. 

Management is the process of getting things done from others to achieve goals effectively and efficiently.

1. Efficiently: –
   • To complete a task with minimum cost.
   • For example: – ‘A’ got a task of construction of the Flyover. The estimated target for the same is 1000 crores and ‘A’ completed the construction of flyover in 900 crores. In this case, ‘A’ worked efficiently.

2. Effectively: –
   • It is basically to complete the task on time.
   • For example: – Keeping in mind the above example, suppose, ‘A’ got two years’ time period for the construction of flyover. If ‘A’ completes his task within the span of two years. Here, in this case, we can say A’s management is effective.

What are 14 Principles of Management by Henri Fayol?

14 principles of management by Henri Fayol are universally accepted guidelines for managers to do their job according to their responsibility. They are as follows: –

1. Division of Work: – Dividing the full work of the organization among individuals and creating departments is called the division of work. Division of work leads to specialization, and specialization helps to increases efficiency and efficiency which results in improvements in the productivity and profitability of the organization.

2. Balancing Authority and Responsibility: – Authority must be equal to Responsibility. According to Henri Fayol, there should be a balance between Authority (Power) and Responsibility (Duties). The right to give orders should not be considered without reference to responsibility. If the authority is more than responsibility then chances are that a manager may misuse it. If responsibility is more than authority then he may feel frustrated.

3. Discipline: – Discipline means respect for the rules and regulations of the organization. Discipline may be Self-discipline, or it may be Enforced discipline. No slacking or bending of rules is allowed in any organization. The works must respect the rules that run the organization. To establish discipline, good supervision and impartial judgment are needed.

4. Unity of Command: – According to this principle, a subordinate (employee) must have and receive orders from only one superior (boss or manager). To put it another way, a subordinate must report to only one superior. It helps in preventing dual subordination. This decreases the possibilities of “Dual subordination” which creates a problem is a function of managers.

5. Unity of Direction: – Unity of direction means activities aimed at the same objective should be organized so that there are one plan and one person in charge. All activities which have the same objective must be directed by one manager, and he must use one plan. This is called the Unity of Direction. For example, all marketing activities such as advertising, sales promotion, pricing policy, etc., must be directed by only one manager.

6. Subordination of Individual Interests to the General Interest: – The interest of one individual or one group should not prevail over the general good. The individual interest should be given less importance, while the general interest should be given the most importance. If not, the organization will collapse. The interest of the organizational goal should not be sabotaged by the interest of an individual or on the group.

7. Remuneration: – Remuneration is the price for services received. Pay should be fair to both the employee and the firm. If an organization wants efficient employees and best performance, then it should have a good remuneration policy. This policy should give maximum satisfaction to both employers and employees. It should include both financial and non-financial incentives. Remuneration should be based on a systematic attempt to reward good performance.

8. Centralization: – In any company, the management or any authority responsible for the decision-making process should be neutral. However, this depends on the size of an organization. Henri Fayol stressed on the point that there should be a balance between the hierarchy and division of power.

9. Scalar Chain: – The chain of command, sometimes called the scalar chain, is the formal line of authority, communication, and responsibility within an organization. The chain of command is usually depicted on an organizational chart, which identifies the superior and subordinate relationships in the organizational structure. Or it is the line of authority from top to bottom of the organization. This chain implements the unity-of-command principle and allows the orderly flow of information. Under the unity of command principle, the instructions flow downward along the chain of command and accountability flows upward.

10. Order: – A company should maintain a well-defined work order to have a favourable work culture. The positive atmosphere in the workplace will boost more positive productivity. There must be an orderly placement of the resources such as Men and Women, Money, Materials, etc. Human and material resources must be in the right place at the right time. Misplacement will lead to misuse and disorder.

11. Equity: – All employees should be treated equally and respectfully. It’s the responsibility of a manager that no employees face discrimination. It creates loyalty and devotion in the employees toward the organization. The equity principle suggests that the managers must be kind as well as equally fair to the subordinates.

12. Stability of Tenure of Personnel: – An employee delivers the best if they feel secure in their job. It is the duty of the management to offer job security to their employees. The employees should have job security because instability leads to inefficiency. Successful firms usually had a stable group of employees.

13. Initiative: – The management should support and encourage the employees to take initiatives in an organization. It will help them to increase their interest and make then worth. Management should encourage initiative. That is, they should encourage the employees to make their own plans and to execute these plans. This is because an initiative gives satisfaction to the employees and brings success to the organization.

14. Esprit De Corps: – Esprit de Corps means “Team Spirit”. Therefore, the management should create unity, co-operation, and team-spirit among the employees. They should avoid dividing and rule policy. Harmony, cohesion among personnel. It’s a great source of strength in the organization. It is a quality in every successful business. It is the responsibility of the management to motivate their employees and be supportive of each other regularly. Developing trust and mutual understanding will lead to a positive outcome and work environment.

What are Fayol’s Five Functions of Management?

While Fayol’s 14 Principles look at the detail of day-to-day management, his Five Functions of Management provide the big picture of how managers should spend their time. They are: –

1. Planning: – Planning means thinking in advance. Planning relates to setting goals, objectives and targets and also describe a mechanism to achieve them at various levels throughout the organization.

2. Organizing: – It means the arrangement of resources to do different tasks in the organization. Organizing involves assigning tasks, grouping tasks into departments, delegating authority, and allocating resources across the organization. 

3. Staffing: – It means the appointment of the right person at the right place or job. Staffing is the process of finding the right worker with appropriate qualifications or experience and recruiting them to fill a job position or role.

4. Directing: – It includes the instructions, guidance and motivation given by the manager to their employees and manager adopt their leadership tasks.

5. Controlling: – Control is concerned with measuring and minimizing the difference between planned performance and actual performance, and monitoring performance as well as taking corrective actions wherever necessary. Thus management is a complex, integrated and ongoing dynamic process.

What is the nature of Principles of Management?

Following are the natures of principles of management: –

1. Goal-Oriented: –
   • The main task of management is to achieve the goals of the organisation. An organization has some goals, which are the basic reason for its existence. Goal means what the organisation wants to achieve.
   • For example: – Reliance Jio; It came up with a goal to capture whole telecommunication industry and to get the highest market share.
   • Here, in the above-mentioned example, the work of management is to achieve goals set by ‘Reliance Jio’ with effectiveness and efficiency.
   • The goal should be clear and simply stated to each member working for the organization.

2. Principles of Management is a Group Activity: –
   • Management is not a one-person activity.
   • It is a group activity and every individual working for the organization fully knows his responsibilities and duties which he/she is expected to achieve within the time allotted.
   • Every individual joins the organization with different and multiple needs known as personal objectives but works towards the achievement of organizational goals.
3. Management is an Intangible Force: –
   • Management cannot be touch or seen but its presence can be observed if its objectives are achieved as per the set goal.
   • The satisfaction of stakeholders is a guiding force of good management. The decision making of managers should be in the light of objectives to be achieved.
   • Secondly, the implementation of such decisions such target both efficiency and effectiveness.

4. Management is All-Pervasive: –
   • Management is a pervasive function as it is applied to all kinds of organization.
   • It is applied in all types of organization irrespective of the following factors: –
     • Size (small scale, medium scale or large scale)
     • Purpose (profit earning or non- profit earning organizations)
     • Level (top, middle or lower level of organizations)
   • For example: – The lower level does day to day planning, the middle level does departmental level planning and the top-level does organizational-level planning.

5. Management is Multi-Dimensional: – It is a complex activity with three main dimensions.
   • Management of work: – Management of work aims to manage the work i.e., which work to be performed at what time.
   • Management of people: – Management of people includes management of individuals or to group of people i.e., to allot authorities, responsibilities and their duties. Managing people has two dimensions: –
   • Management of operations: – It is interlinked with both management of work and management of people.
     • This has some basic products and services to provide in order to survive.
     • For example: – the main activity of banks is to provide loans and to take loans from the public but they are providing other activities as well as online banking, ATM services at no cost, etc.

6. Management is a Continuous Process: –
   • Management is a process of continuous activities, but separate functions i.e., planning, organizing, staffing, directing and controlling.
   • Management starts with the organization and ends with organization.

7. Management is a Dynamic Function: –
   • In order to survive, management should make changes according to the business environment. In order to ensure regular growth, managers should make changes in the policies as per the needs of the stakeholders.
   • For example: – Paytm is making the ventures with all types of business units such as schools, universities and other companies and professionals to provide a single platform for all payment solutions.

What is the importance of management principles?

The importance of principles of management are as follows: –

1. Optimal Use of Resources: – The manager eliminates wastage of resources that leads to efficiency in all business functions.
2. Effective Leadership and Motivation: – It helps employees to work in harmony and achieve goals in a coordinated manner. It provides effective leadership and motivation for employees to work hard.
3. Sound Industrial Relations: – A manager maintains a balance between employees’ demands and organizational needs, helping to reduce industrial disputes.
4. Achievement of Goals: – It helps in realizing goals with maximum efficiency by minimizing unnecessary deviations, overlapping efforts and waste motions.
5. Improvement in Living Standards: – It improves the standard of living of people by ensuring optimum utilization of scarce resources and survival of the firm in a dynamic environment.
6. Establishing a Sound Organization: – Managers help to establish a sound organization through effective authority and responsibility relationships.
7. Reduces Cost: – A manager uses cost-effective techniques to reduce production costs and increase production.