Importance of Management Principles

Importance of Management Principles

Following are the main importance of the Principles of Management.

Improves Understanding.
Direction for Training of Managers.
Role of Management.
Guide to Research in Management.

Improves Understanding - From the knowledge of principles managers get indication on how to manage an organization. The principles enable managers to decide what should be done to accomplish given tasks and to handle situations which may arise in management. These principles make managers more efficient.

Direction for Training of Managers - Principles of management provide understanding of management process what managers would do to accomplish what. Thus, these are helpful in identifying the areas of management in which existing & future managers should be trained.

Role of Management - Management principles makes the role of managers concrete. Therefore these principles act as ready reference to the managers to check whether their decisions are appropriate. Besides these principles define managerial activities in practical terms. They tell what a manager is expected to do in specific situation.

Guide to Research in Management - The body of management principles indicate lines along which research should be undertaken to make management practical and more effective. The principles guide managers in decision making and action. The researchers can examine whether the guidelines are useful or not. Anything which makes management research more exact & pointed will help improve management practice.

Features of Principles of Management

Features of Principles of Management

Principles of Management are Universal

Management principles are applicable to all kinds of organizations - business & non business.
They are applicable to all levels of management.
Every organization must make best possible use by the use of management principles.
Therefore, they are universal or all pervasive.

Principles of Management are Flexible

Management principles are dynamic guidelines and not static rules.
There is sufficient room for managerial discretion i.e. they can be modified as per the requirements of the situation.
Modification & improvement is a continuous phenomenon in case of principles of management.

Principles of Management have a Cause & Effect Relationship

Principles of management indicate cause and effect relationship between related variables.
They indicate what will be the consequence or result of certain actions. Therefore, if one is known, the other can be traced.

Principles of Management - Aims at Influencing Human Behavior

Human behavior is complex and unpredictable.
Management principles are directed towards regulating human behavior so that people can give their best to the organization.
Management is concerned with integrating efforts and harmonizing them towards a goal.
But in certain situations even these principles fail to understand human behavior.

Principles of Management are of Equal Importance

All management principles are equally important.
No particular principle has greater importance than the other.
They are all required together for the achievement of organizational goals.

Principles of Management

Principles of Management

A principle refers to a fundamental truth. It establishes cause and effect relationship between two or more variables under given situation. They serve as a guide to thought & actions. Therefore, management principles are the statements of fundamental truth based on logic which provides guidelines for managerial decision making and actions. These principles are derived: -

On the basis of observation and analysis i.e. practical experience of managers.

By conducting experimental studies.

There are 14 Principles of Management described by Henri Fayol.

Division of Labor

Henry Fayol has stressed on the specialization of jobs.
He recommended that work of all kinds must be divided & subdivided and allotted to various persons according to their expertise in a particular area.
Subdivision of work makes it simpler and results in efficiency.
It also helps the individual in acquiring speed, accuracy in his performance.
Specialization leads to efficiency & economy in spheres of business.

Party of Authority & Responsibility

Authority & responsibility are co-existing.
If authority is given to a person, he should also be made responsible.
In a same way, if anyone is made responsible for any job, he should also have concerned authority.
Authority refers to the right of superiors to get exactness from their sub-ordinates whereas responsibility means obligation for the performance of the job assigned.
There should be a balance between the two i.e. they must go hand in hand.
Authority without responsibility leads to irresponsible behavior whereas responsibility without authority makes the person ineffective.

Principle of One Boss

A sub-ordinate should receive orders and be accountable to one and only one boss at a time.
In other words, a sub-ordinate should not receive instructions from more than one person because -
- It undermines authority
- Weakens discipline
- Divides loyalty
- Creates confusion
- Delays and chaos
- Escaping responsibilities
- Duplication of work
- Overlapping of efforts
Therefore, dual sub-ordination should be avoided unless and until it is absolutely essential.
Unity of command provides the enterprise a disciplined, stable & orderly existence.
It creates harmonious relationship between superiors and sub-ordinates.

Unity of Direction

Fayol advocates one head one plan which means that there should be one plan for a group of activities having similar objectives.
Related activities should be grouped together. There should be one plan of action for them and they should be under the charge of a particular manager.
According to this principle, efforts of all the members of the organization should be directed towards common goal.
Without unity of direction, unity of action cannot be achieved.
In fact, unity of command is not possible without unity of direction.

Basis	Unity of command	Unity of direction
Meaning	It implies that a sub-ordinate should receive orders & instructions from only one boss.	It means one head, one plan for a group of activities having similar objectives.
Nature	It is related to the functioning of personnel’s.	It is related to the functioning of departments, or organization as a whole.
Necessity	It is necessary for fixing responsibility of each subordinates.	It is necessary for sound organization.
Advantage	It avoids conflicts, confusion & chaos.	It avoids duplication of efforts and wastage of resources.
Result	It leads to better superior sub-ordinate relationship.	It leads to smooth running of the enterprise.

Therefore it is obvious that they are different from each other but they are dependent on each other i.e. unity of direction is a pre-requisite for unity of command. But it does not automatically comes from the unity of direction.

Equity

Equity means combination of fairness, kindness & justice.
The employees should be treated with kindness & equity if devotion is expected of them.
It implies that managers should be fair and impartial while dealing with the subordinates.
They should give similar treatment to people of similar position.
They should not discriminate with respect to age, caste, sex, religion, relation etc.
Equity is essential to create and maintain cordial relations between the managers and sub-ordinate.
But equity does not mean total absence of harshness.
Fayol was of opinion that, “at times force and harshness might become necessary for the sake of equity”.

Order

This principle is concerned with proper & systematic arrangement of things and people.
Arrangement of things is called material order and placement of people is called social order.
Material order- There should be safe, appropriate and specific place for every article and every place to be effectively used for specific activity and commodity.
Social order- Selection and appointment of most suitable person on the suitable job. There should be a specific place for every one and everyone should have a specific place so that they can easily be contacted whenever need arises.

Discipline

According to Fayol, “Discipline means sincerity, obedience, respect of authority & observance of rules and regulations of the enterprise”.
This principle applies that subordinate should respect their superiors and obey their order.
It is an important requisite for smooth running of the enterprise.
Discipline is not only required on path of subordinates but also on the part of management.
Discipline can be enforced if -
- There are good superiors at all levels.
- There are clear & fair agreements with workers.
- Sanctions (punishments) are judiciously applied.

Initiative

Workers should be encouraged to take initiative in the work assigned to them.
It means eagerness to initiate actions without being asked to do so.
Fayol advised that management should provide opportunity to its employees to suggest ideas, experiences& new method of work.
It helps in developing an atmosphere of trust and understanding.
People then enjoy working in the organization because it adds to their zeal and energy.
To suggest improvement in formulation & implementation of place.
They can be encouraged with the help of monetary & non-monetary incentives.

Fair Remuneration

The quantum and method of remuneration to be paid to the workers should be fair, reasonable, satisfactory & rewarding of the efforts.
As far as possible it should accord satisfaction to both employer and the employees.
Wages should be determined on the basis of cost of living, work assigned, financial position of the business, wage rate prevailing etc.
Logical & appropriate wage rates and methods of their payment reduce tension & differences between workers & management creates harmonious relationship and pleasing atmosphere of work.
Fayol also recommended provision of other benefits such as free education, medical & residential facilities to workers.

Stability of Tenure

Fayol emphasized that employees should not be moved frequently from one job position to another i.e. the period of service in a job should be fixed.
Therefore employees should be appointed after keeping in view principles of recruitment & selection but once they are appointed their services should be served.
According to Fayol. “Time is required for an employee to get used to a new work & succeed to doing it well but if he is removed before that he will not be able to render worthwhile services”.
As a result, the time, effort and money spent on training the worker will go waste.
Stability of job creates team spirit and a sense of belongingness among workers which ultimately increase the quality as well as quantity of work.

Scalar Chain

Fayol defines scalar chain as ’The chain of superiors ranging from the ultimate authority to the lowest”.
Every orders, instructions, messages, requests, explanation etc. has to pass through Scalar chain.
But, for the sake of convenience & urgency, this path can be cut shirt and this short cut is known as Gang Plank.
A Gang Plank is a temporary arrangement between two different points to facilitate quick & easy communication as explained below:

In the figure given, if D has to communicate with G he will first send the communication upwards with the help of C, B to A and then downwards with the help of E and F to G which will take quite some time and by that time, it may not be worth therefore a gang plank has been developed between the two.
Gang Plank clarifies that management principles are not rigid rather they are very flexible. They can be moulded and modified as per the requirements of situations

Sub-Ordination of Individual Interest to General Interest

An organization is much bigger than the individual it constitutes therefore interest of the undertaking should prevail in all circumstances.
As far as possible, reconciliation should be achieved between individual and group interests.
But in case of conflict, individual must sacrifice for bigger interests.
In order to achieve this attitude, it is essential that -
- Employees should be honest & sincere.
- Proper & regular supervision of work.
- Reconciliation of mutual differences and clashes by mutual agreement. For example, for change of location of plant, for change of profit sharing ratio, etc.

Espirit De’ Corps (can be achieved through unity of command)

It refers to team spirit i.e. harmony in the work groups and mutual understanding among the members.
Spirit De’ Corps inspires workers to work harder.
Fayol cautioned the managers against dividing the employees into competing groups because it might damage the moral of the workers and interest of the undertaking in the long run.
To inculcate Espirit De’ Corps following steps should be undertaken -
There should be proper co-ordination of work at all levels
Subordinates should be encouraged to develop informal relations among themselves.
Efforts should be made to create enthusiasm and keenness among subordinates so that they can work to the maximum ability.
Efficient employees should be rewarded and those who are not up to the mark should be given a chance to improve their performance.
Subordinates should be made conscious of that whatever they are doing is of great importance to the business & society.
He also cautioned against the more use of Britain communication to the subordinates i.e. face to face communication should be developed. The managers should infuse team spirit & belongingness. There should be no place for misunderstanding. People then enjoy working in the organization & offer their best towards the organization.

Centralization & De-Centralization

Centralization means concentration of authority at the top level. In other words, centralization is a situation in which top management retains most of the decision making authority.
Decentralization means disposal of decision making authority to all the levels of the organization. In other words, sharing authority downwards is decentralization.
According to Fayol, “Degree of centralization or decentralization depends on no. of factors like size of business, experience of superiors, dependability & ability of subordinates etc.
Anything which increases the role of subordinate is decentralization & anything which decreases it is centralization.
Fayol suggested that absolute centralization or decentralization is not feasible. An organization should strike to achieve a lot between the two.

Coordination and Cooperation

Coordination and Cooperation

Co-ordination is an orderly arrangement of efforts to provide unity of action in the fulfillment of common objective whereas co-operation denotes collective efforts of persons working in an enterprise voluntarily for the achievement of a particular purpose. It is the willingness of individuals to help each other.

Co-ordination is an effort to integrate effectively energies of different groups whereas co-operation is sort to achieve general objectives of business.

Though these two are synonymous but they are different as below:

Differences between Co-ordination and Co-operation

Basis	Co-ordination	Co-operation
Meaning	It is an orderly arrangement of group efforts in pursuit of common goals.	It means mutual help willingly.
Scope	It is broader than co-operation which includes as well because it harmonizes the group efforts.	It is termed as a part of co-ordination.
Process	The function of co-ordination is performed by top management.	The functions of co-operation are prepared by persons at any level.
Requirements	Co-ordination is required by employees and departments at work irrespective of their work.	Co-operation is emotional in nature because it depends on the willingness of people working together.
Relationship	It establishes formal and informal relationships.	It establishes informal relationship.
Freedom	It is planned and entrusted by the central authority & it is essential.	It depends upon the sweet will of the individuals and therefore it is not necessary.
Support	It seeks wholehearted support from various people working at various levels.	Co-operation without co-ordination is fruitless & therefore it may lead to unbalanced developments.

Therefore, existence of co-operation may prove to be effective condition or requisite for co-ordination. But it does not mean that co-ordination originates automatically from the voluntary efforts of the group of members. It has to be achieved through conscious & deliberate efforts of managers, therefore to conclude we can say that co-operation without co-ordination has no fruit and co-ordination without co-operation has no root.

Definition of Coordination

Definition of Coordination

Co-ordination is the unification, integration, synchronization of the efforts of group members so as to provide unity of action in the pursuit of common goals. It is a hidden force which binds all the other functions of management. According to Mooney and Reelay, “Co-ordination is orderly arrangement of group efforts to provide unity of action in the pursuit of common goals”. According to Charles Worth, “Co-ordination is the integration of several parts into an orderly hole to achieve the purpose of understanding”.

Management seeks to achieve co-ordination through its basic functions of planning, organizing, staffing, directing and controlling. That is why, co-ordination is not a separate function of management because achieving of harmony between individuals efforts towards achievement of group goals is a key to success of management. Co-ordination is the essence of management and is implicit and inherent in all functions of management.

A manager can be compared to an orchestra conductor since both of them have to create rhythm and unity in the activities of group members. Co-ordination is an integral element or ingredient of all the managerial functions as discussed below: -


Co-ordination through Planning - Planning facilitates co-ordination by integrating the various plans through mutual discussion, exchange of ideas. e.g. - co-ordination between finance budget and purchases budget.

Co-ordination through Organizing - Mooney considers co-ordination as the very essence of organizing. In fact when a manager groups and assigns various activities to subordinates, and when he creates department’s co-ordination uppermost in his mind.

Co-ordination through Staffing - A manager should bear in mind that the right no. of personnel in various positions with right type of education and skills are taken which will ensure right men on the right job.

Co-ordination through Directing - The purpose of giving orders, instructions & guidance to the subordinates is served only when there is a harmony between superiors & subordinates.

Co-ordination through Controlling - Manager ensures that there should be co-ordination between actual performance & standard performance to achieve organizational goals.

Functions of Management

Functions of Management

Management has been described as a social process involving responsibility for economical and effective planning & regulation of operation of an enterprise in the fulfillment of given purposes. It is a dynamic process consisting of various elements and activities. These activities are different from operative functions like marketing, finance, purchase etc. Rather these activities are common to each and every manger irrespective of his level or status.

Different experts have classified functions of management. According to George & Jerry, “There are four fundamental functions of management i.e. planning, organizing, actuating and controlling”. According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to control”. Whereas Luther Gullick has given a keyword ’POSDCORB’ where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. But the most widely accepted are functions of management given by KOONTZ and O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.

For theoretical purposes, it may be convenient to separate the function of management but practically these functions are overlapping in nature i.e. they are highly inseparable. Each function blends into the other & each affects the performance of others.

Functions of Management

Planning

It is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of pre-determined goals. According to KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from where we are & where we want to be”. A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.

Organizing

It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, “To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnel’s”. To organize a business involves determining & providing human and non-human resources to the organizational structure. Organizing as a process involves:

Identification of activities.
Classification of grouping of activities.
Assignment of duties.
Delegation of authority and creation of responsibility.
Coordinating authority and responsibility relationships.

Staffing

It is the function of manning the organization structure and keeping it manned. Staffing has assumed greater importance in the recent years due to advancement of technology, increase in size of business, complexity of human behavior etc. The main purpose o staffing is to put right man on right job i.e. square pegs in square holes and round pegs in round holes. According to Kootz & O’Donell, “Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed un the structure”. Staffing involves:

Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place).
Recruitment, selection & placement.
Training & development.
Remuneration.
Performance appraisal.
Promotions & transfer.

Directing

It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following elements:

Supervision
Motivation
Leadership
Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding.

Controlling

It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur. According to Theo Haimann, “Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”. According to Koontz & O’Donell “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”. Therefore controlling has following steps:

Establishment of standard performance.
Measurement of actual performance.
Comparison of actual performance with the standards and finding out deviation if any.
Corrective action.

Management and Administration

Management and Administration

According to Theo Haimann, “Administration means overall determination of policies, setting of major objectives, the identification of general purposes and laying down of broad programmes and projects”. It refers to the activities of higher level. It lays down basic principles of the enterprise. According to Newman, “Administration means guidance, leadership & control of the efforts of the groups towards some common goals”.

Whereas, management involves conceiving, initiating and bringing together the various elements; coordinating, actuating, integrating the diverse organizational components while sustaining the viability of the organization towards some pre-determined goals. In other words, it is an art of getting things done through & with the people in formally organized groups.

According to Theo Haimann, “Administration means overall determination of policies, setting of major objectives, the identification of general purposes and laying down of broad programmes and projects”. It refers to the activities of higher level. It lays down basic principles of the enterprise. According to Newman, “Administration means guidance, leadership & control of the efforts of the groups towards some common goals”.

Whereas, management involves conceiving, initiating and bringing together the various elements; coordinating, actuating, integrating the diverse organizational components while sustaining the viability of the organization towards some pre-determined goals. In other words, it is an art of getting things done through & with the people in formally organized groups.

The difference between Management and Administration can be summarized under 2 categories: -

Functions
Usage / Applicability

On the Basis of Functions: -

On the Basis of Functions: -

Basis	Management	Administration
Meaning	Management is an art of getting things done through others by directing their efforts towards achievement of pre-determined goals.	It is concerned with formulation of broad objectives, plans & policies.
Nature	Management is an executing function.	Administration is a decision-making function.
Process	Management decides who should as it & how should he dot it.	Administration decides what is to be done & when it is to be done.
Function	Management is a doing function because managers get work done under their supervision.	Administration is a thinking function because plans & policies are determined under it.
Skills	Technical and Human skills	Conceptual and Human skills
Level	Middle & lower level function	Top level function

On the Basis of Usage: -

Basis	Management	Administration
Applicability	It is applicable to business concerns i.e. profit-making organization.	It is applicable to non-business concerns i.e. clubs, schools, hospitals etc.
Influence	The management decisions are influenced by the values, opinions, beliefs & decisions of the managers.	The administration is influenced by public opinion, govt. policies, religious organizations, customs etc.
Status	Management constitutes the employees of the organization who are paid remuneration (in the form of salaries & wages).	Administration represents owners of the enterprise who earn return on their capital invested & profits in the form of dividend.

Practically, there is no difference between management & administration. Every manager is concerned with both - administrative management function and operative management function as shown in the figure. However, the managers who are higher up in the hierarchy denote more time on administrative function & the lower level denote more time on directing and controlling worker’s performance i.e. management.