Principles of management are broad guidelines that help managers make decisions and shape organizational behavior. Companies like Toyota Motor Corporation follow well-defined principles to guide their global operations, such as respecting laws, cultures, and fostering innovation. This chapter explores the contributions of F.W. Taylor and Henri Fayol, key figures in classical management theory, and the evolution, nature, and significance of management principles.
Example: Toyota’s guiding principles emphasize fair corporate activities, respect for local cultures, and innovative technologies, aligning with their global vision for 2010.
Evolution of Management Principles
Management thought has evolved through various phases, each contributing unique perspectives:
Early Perspectives (3000-4000 B.C.): Large-scale projects like the Egyptian pyramids required organized management practices.
Classical Management Theory: Focused on rational economic views, scientific management (Taylor), administrative principles (Fayol), and bureaucracy (Weber).
Neo-Classical Theory (1920s-1950s): Emphasized human relations, with studies like Hawthorne highlighting social needs.
Behavioral Science Approach: Used psychology and sociology to understand worker motivation (e.g., Maslow, Herzberg).
Management Science: Applied quantitative techniques for decision-making.
Modern Management: Views organizations as complex systems, using contingency approaches and modern techniques.
Principles of Management: The Concept
A managerial principle is a broad, general guideline for decision-making and behavior. Unlike rigid scientific principles, management principles are flexible, dealing with dynamic human behavior and evolving technology.
Distinct from Techniques: Techniques are specific methods, while principles are guidelines for applying them.
Distinct from Values: Values have moral connotations, while principles are technical, derived from research.
Example: A manager deciding on employee promotions may consider seniority (principle), but the process involves specific steps (technique).
Nature of Principles of Management
Universal Applicability: Apply to all organizations, though the extent varies by size, sector, or activity.
General Guidelines: Offer guidance, not rigid solutions, due to complex business situations.
Formed by Practice and Experimentation: Derived from managers’ experiences and scientific studies.
Flexible: Can be adapted to specific situations, giving managers discretion.
Mainly Behavioral: Focus on influencing human behavior to achieve organizational goals.
Cause and Effect Relationships: Establish predictable outcomes, though less precise due to human factors.
Contingent: Application depends on the prevailing situation.
Significance of Principles of Management
Insights into Reality: Help managers understand situations, learn from mistakes, and improve efficiency.
Optimum Resource Utilization: Ensure resources yield maximum benefit with minimum cost.
Scientific Decisions: Promote logical, fact-based decisions free from bias.
Meeting Changing Environments: Allow adaptation to dynamic business conditions, e.g., outsourcing non-core activities.
Fulfilling Social Responsibility: Encourage ethical practices, e.g., BHEL’s township development.
Management Training and Research: Form the basis for management education and development of new techniques.
Example: Shri Mahila Griha Udyog Lijjat Papad combines business with social responsibility, empowering over 45,000 women through principled management.
Taylor’s Scientific Management
Frederick Winslow Taylor (1856-1915), an American mechanical engineer, introduced Scientific Management to improve industrial efficiency by finding the “one best way” to perform tasks. His work focused on the shop floor, emphasizing time and motion studies.
Principles of Scientific Management
Science, Not Rule of Thumb: Replace trial-and-error with scientific methods to maximize efficiency.
Harmony, Not Discord: Foster cooperation between management and workers through a mental revolution.
Cooperation, Not Individualism: Encourage teamwork, rewarding workers’ suggestions and sharing responsibilities.
Development of Each Person: Scientifically select and train workers to enhance efficiency and prosperity.
Techniques of Scientific Management
Functional Foremanship: Divide supervision into eight specialists (four for planning, four for production) to enhance efficiency.
Standardization and Simplification: Set standards for processes and reduce product variety to save costs.
Method Study: Find the best way to perform tasks, e.g., assembly line production.
Motion Study: Eliminate unnecessary movements to save time, e.g., reducing bricklaying motions from 18 to 5.
Time Study: Determine standard time for tasks to set work targets and wages.
Fatigue Study: Identify rest intervals to maintain worker productivity.
Differential Piece Wage System: Pay higher rates for workers exceeding standard output to motivate efficiency.
Example: At Bethlehem Steel, Taylor increased pig iron handling from 12.5 to 47 tons per worker per day, saving costs and increasing wages by 60%.
Fayol’s Principles of Management
Henri Fayol (1841-1925), a French mining engineer, developed 14 principles of management focusing on administrative efficiency and top-level management.
Division of Work: Specialize tasks to increase efficiency, e.g., separate departments for finance and marketing.
Authority and Responsibility: Balance authority with responsibility, e.g., a sales manager needs authority to negotiate deals.
Discipline: Ensure obedience to rules through fair agreements, e.g., honoring labor-management commitments.
Unity of Command: Each employee reports to one superior to avoid confusion, e.g., a salesperson receiving conflicting discount instructions.
Unity of Direction: Align activities with one plan and leader, e.g., separate divisions for motorcycles and cars.
Subordination of Individual Interest: Prioritize organizational goals, e.g., rejecting individual concessions that harm the company.
Remuneration: Pay fair wages within the company’s capacity to maintain harmony.
Centralization and Decentralization: Balance decision-making authority, e.g., decentralizing village welfare decisions to panchayats.
Scalar Chain: Follow a formal chain of authority, with a “gang plank” for emergencies, e.g., direct communication in urgent situations.
Order: Ensure proper placement of resources and people for efficiency.
Equity: Treat employees fairly to ensure loyalty, e.g., equal opportunities in multinational corporations.
Stability of Personnel: Minimize turnover through stable tenure, reducing recruitment costs.
Initiative: Encourage workers’ suggestions for improvements, rewarding cost-saving ideas.
Esprit de Corps: Foster team spirit to enhance coordination, e.g., using “we” instead of “I” in communication.
Example: Fayol’s unity of direction ensures a company’s car division operates independently from its motorcycle division, avoiding overlap.
Fayol vs. Taylor: A Comparison
While complementary, Taylor and Fayol’s contributions differ in focus and approach:
Basis
Henri Fayol
F.W. Taylor
Perspective
Top-level management
Shop floor level
Unity of Command
Strong proponent
Not emphasized; used functional foremanship
Applicability
Universally applicable
Specialized situations
Basis of Formation
Personal experience
Observations and experimentation
Focus
Overall administration
Increasing productivity
Personality
Practitioner
Scientist
Expression
General Theory of Administration
Scientific Management
Relevance in Contemporary Business
Taylor and Fayol’s principles remain relevant, though adapted to modern contexts. Taylor’s techniques like time study and standardization underpin lean manufacturing and Six Sigma. Fayol’s principles, such as decentralization and initiative, align with flat organizational structures and employee empowerment in high-tech economies.
Example: Companies like Toyota use lean manufacturing (inspired by Taylor) and employee suggestion systems (aligned with Fayol’s initiative) to stay competitive.
Key Terms
Functional Foremanship, Standardization, Time Study, Motion Study, Fatigue Study, Method Study, Differential Piece Wage System, Mental Revolution, Unity of Command, Unity of Direction, Scalar Chain, Gang Plank, Esprit de Corps
Summary
Principles of management are flexible guidelines for decision-making, formed by practice and experimentation. They are universal, behavioral, and contingent, aiding managers in achieving efficiency, adapting to changes, and fulfilling social responsibilities. Taylor’s Scientific Management focuses on shop-floor productivity through principles like science over rule of thumb and techniques like functional foremanship. Fayol’s 14 principles emphasize administrative efficiency, covering division of work, unity of command, and esprit de corps. Both contributions are complementary, with Taylor targeting workers and Fayol focusing on managers, remaining relevant in modern business through adaptations like lean manufacturing and employee empowerment.