NCERT Textbook - Principles of Management | Business Studies (BST) Class 12 - Commerce PDF Download

 Page 1


2
PRINCIPLES OF 
MANAGEMENT
CHAPTER
LEARNING 
OBJECTIVES
T oyota follows certain well-defined business principles guiding 
its functioning. These are:
1. Honour the language and spirit of law of every nation and 
undertake open and fair corporate activities to be a good 
corporate citizen around the world.
2. Respect the culture and customs of every nation and 
contribute to economic and social development through 
corporate activities in local communities.
3. To provide clean and safe products and to enhance the 
quality of life everywhere.
4. Create and develop advanced technologies and provide 
outstanding products and services that fulfil the needs of 
customers worldwide.
5. Foster a corporate culture that enhances individual creativity 
and teamwork value, while honouring mutual trust and 
respect between management and labour.
6. Pursue growth and harmony with global community through 
innovative management.
7. Work with business partners in research and creativity to 
achieve stable, long-term growth and mutual benefits and be 
open to new partnerships. These principles, will guide the 
company in its global vision 2010. This global vision envisages 
continuous innovations in future, use of environment friendly 
technologies, respecting and working with different sections of 
society and establishing an interactive relationship with society.
After studying this 
chapter, you should 
be able to:
n State the 
meaning, nature 
and significance 
of principles of 
management;
n	 Explain Taylor’s 
principles and 
techniques 
of Scientific 
Management; and
n Explain Fayol’s 
principles of 
management.
http://www.toyotaglobal.com/company/history of toyota/ 
75years/data/conditions/philosophy/guiding principles.html/
It is clear from the foregoing case that 
managerial pursuits at Toyota Motor 
Corporation are driven by principles 
that serve as broad guidelines for 
stating the vision as well as the ways 
to achieve it. Similarly, many other 
business enterprises have followed 
various principles in their working 
Guiding Principles of T oyota Motor Corporation
Ch_02.indd   30 24-09-2019   12:05:00 PM
Rationalised 2023-24
Page 2


2
PRINCIPLES OF 
MANAGEMENT
CHAPTER
LEARNING 
OBJECTIVES
T oyota follows certain well-defined business principles guiding 
its functioning. These are:
1. Honour the language and spirit of law of every nation and 
undertake open and fair corporate activities to be a good 
corporate citizen around the world.
2. Respect the culture and customs of every nation and 
contribute to economic and social development through 
corporate activities in local communities.
3. To provide clean and safe products and to enhance the 
quality of life everywhere.
4. Create and develop advanced technologies and provide 
outstanding products and services that fulfil the needs of 
customers worldwide.
5. Foster a corporate culture that enhances individual creativity 
and teamwork value, while honouring mutual trust and 
respect between management and labour.
6. Pursue growth and harmony with global community through 
innovative management.
7. Work with business partners in research and creativity to 
achieve stable, long-term growth and mutual benefits and be 
open to new partnerships. These principles, will guide the 
company in its global vision 2010. This global vision envisages 
continuous innovations in future, use of environment friendly 
technologies, respecting and working with different sections of 
society and establishing an interactive relationship with society.
After studying this 
chapter, you should 
be able to:
n State the 
meaning, nature 
and significance 
of principles of 
management;
n	 Explain Taylor’s 
principles and 
techniques 
of Scientific 
Management; and
n Explain Fayol’s 
principles of 
management.
http://www.toyotaglobal.com/company/history of toyota/ 
75years/data/conditions/philosophy/guiding principles.html/
It is clear from the foregoing case that 
managerial pursuits at Toyota Motor 
Corporation are driven by principles 
that serve as broad guidelines for 
stating the vision as well as the ways 
to achieve it. Similarly, many other 
business enterprises have followed 
various principles in their working 
Guiding Principles of T oyota Motor Corporation
Ch_02.indd   30 24-09-2019   12:05:00 PM
Rationalised 2023-24
Principles of Management 31
over a period of time. A number of 
management thinkers, and writers 
have also studied principles of 
management from time-to-time. 
In fact, there is a long history of 
management thought. Management 
principles have evolved and are in 
the continuous process of evolution. 
(see box.)
You can see that the evolution of 
management thought has been very 
fascinating. In this chapter we will 
study the contributions of Fredrick 
Winslow Taylor and Henri Fayol who 
as you have read are associated with 
the classical management theory. 
Both of them contributed immensely 
towards the study of management as 
a discipline. Whereas F.W. Taylor was 
an American mechanical engineer, 
Henri Fayol was a French mining 
engineer. Taylor gave the concept 
In tracing the history of management, one comes across various schools of thought 
that have outlined principles to guide management practices. These schools of 
thought may be divided into 6 distinctive phases: 1 . Early Perspectives; 2. Classical 
Management Theory; 3. Neo Classical Theory — Human Relations Approach;  
4. Behavioural Science Approach — Organisational Humanism; 5. Management 
Science/Operational Research; 6. Modern Management.
EARLY PERSPECTIVES
 The first known management ideas were recorded in 3000-4000 B.C. One 
Pyramid built by Egyptian ruler Cheops required work to be done by 100,000 
men for over twenty years in 2900 B.C. It covered 13 acres of land and measured 
481 meters in height. The stone slabs had to be moved thousands of kilometres 
of distance. As folklore goes, even the sound of a hammer was not heard in the 
villages in the vicinity of the site of these pyramids. Such monumental work could 
not be completed without adherence to principles of sound management.
CLASSICAL MANAGEMENT THEORY
 Rational economic view, scientific management, administrative principles, and 
bureaucratic organisation characterise this phase. While the rational economic 
view assumed that people are motivated by economic gains primarily; scientific 
management of F .W . Taylor and others emphasised one best way of production 
etc; administrative theorists personified by Henri Fayol etc looked at the best 
way to combine jobs and people into an efficient organisation; bureaucratic 
organisation theorists led by Max Weber looked at ways to eliminate managerial 
inconsistencies due to abuse of power which contributed to ineffectiveness. 
This was the era of the industrial revolution and factory system of production. 
Large scale production would not have been possible without adherence to 
the principles governing organising production based on division of labour and 
specialisation, relationship between man and the machine, managing people 
and so on.
Evolution of Management Principles
Ch_02.indd   31 24-09-2019   12:05:00 PM
Rationalised 2023-24
Page 3


2
PRINCIPLES OF 
MANAGEMENT
CHAPTER
LEARNING 
OBJECTIVES
T oyota follows certain well-defined business principles guiding 
its functioning. These are:
1. Honour the language and spirit of law of every nation and 
undertake open and fair corporate activities to be a good 
corporate citizen around the world.
2. Respect the culture and customs of every nation and 
contribute to economic and social development through 
corporate activities in local communities.
3. To provide clean and safe products and to enhance the 
quality of life everywhere.
4. Create and develop advanced technologies and provide 
outstanding products and services that fulfil the needs of 
customers worldwide.
5. Foster a corporate culture that enhances individual creativity 
and teamwork value, while honouring mutual trust and 
respect between management and labour.
6. Pursue growth and harmony with global community through 
innovative management.
7. Work with business partners in research and creativity to 
achieve stable, long-term growth and mutual benefits and be 
open to new partnerships. These principles, will guide the 
company in its global vision 2010. This global vision envisages 
continuous innovations in future, use of environment friendly 
technologies, respecting and working with different sections of 
society and establishing an interactive relationship with society.
After studying this 
chapter, you should 
be able to:
n State the 
meaning, nature 
and significance 
of principles of 
management;
n	 Explain Taylor’s 
principles and 
techniques 
of Scientific 
Management; and
n Explain Fayol’s 
principles of 
management.
http://www.toyotaglobal.com/company/history of toyota/ 
75years/data/conditions/philosophy/guiding principles.html/
It is clear from the foregoing case that 
managerial pursuits at Toyota Motor 
Corporation are driven by principles 
that serve as broad guidelines for 
stating the vision as well as the ways 
to achieve it. Similarly, many other 
business enterprises have followed 
various principles in their working 
Guiding Principles of T oyota Motor Corporation
Ch_02.indd   30 24-09-2019   12:05:00 PM
Rationalised 2023-24
Principles of Management 31
over a period of time. A number of 
management thinkers, and writers 
have also studied principles of 
management from time-to-time. 
In fact, there is a long history of 
management thought. Management 
principles have evolved and are in 
the continuous process of evolution. 
(see box.)
You can see that the evolution of 
management thought has been very 
fascinating. In this chapter we will 
study the contributions of Fredrick 
Winslow Taylor and Henri Fayol who 
as you have read are associated with 
the classical management theory. 
Both of them contributed immensely 
towards the study of management as 
a discipline. Whereas F.W. Taylor was 
an American mechanical engineer, 
Henri Fayol was a French mining 
engineer. Taylor gave the concept 
In tracing the history of management, one comes across various schools of thought 
that have outlined principles to guide management practices. These schools of 
thought may be divided into 6 distinctive phases: 1 . Early Perspectives; 2. Classical 
Management Theory; 3. Neo Classical Theory — Human Relations Approach;  
4. Behavioural Science Approach — Organisational Humanism; 5. Management 
Science/Operational Research; 6. Modern Management.
EARLY PERSPECTIVES
 The first known management ideas were recorded in 3000-4000 B.C. One 
Pyramid built by Egyptian ruler Cheops required work to be done by 100,000 
men for over twenty years in 2900 B.C. It covered 13 acres of land and measured 
481 meters in height. The stone slabs had to be moved thousands of kilometres 
of distance. As folklore goes, even the sound of a hammer was not heard in the 
villages in the vicinity of the site of these pyramids. Such monumental work could 
not be completed without adherence to principles of sound management.
CLASSICAL MANAGEMENT THEORY
 Rational economic view, scientific management, administrative principles, and 
bureaucratic organisation characterise this phase. While the rational economic 
view assumed that people are motivated by economic gains primarily; scientific 
management of F .W . Taylor and others emphasised one best way of production 
etc; administrative theorists personified by Henri Fayol etc looked at the best 
way to combine jobs and people into an efficient organisation; bureaucratic 
organisation theorists led by Max Weber looked at ways to eliminate managerial 
inconsistencies due to abuse of power which contributed to ineffectiveness. 
This was the era of the industrial revolution and factory system of production. 
Large scale production would not have been possible without adherence to 
the principles governing organising production based on division of labour and 
specialisation, relationship between man and the machine, managing people 
and so on.
Evolution of Management Principles
Ch_02.indd   31 24-09-2019   12:05:00 PM
Rationalised 2023-24
32 Business Studies
of ‘Scientific Management’ whereas 
Fayol emphasised ‘Administrative 
Principles’.
But before we go into the details 
of their contributions let us study 
the meaning of the principles of 
management.
PrinciPles of ManageMent : 
t he c oncePt A managerial principle is a broad 
and general guideline for decision-
making and behaviour. For example 
while deciding about promotion of an 
employee one manager may consider 
seniority, whereas the other may 
follow the principle of merit.
One may distinguish principles 
of management from those of pure 
science. Management principles are 
not as rigid as principles of pure 
science. They deal with human 
behaviour and, thus, are to be 
applied creatively given the demands 
of the situation. Human behaviour is 
never static and so also technology, 
which affects business. Hence all 
the principles have to keep pace 
with these changes. For example, 
in the absence of Information and 
NEO CLASSICAL THEORY — HUMAN RELATIONS APPROACH
 This school of thought developed between 1920s to 1950s felt that employees 
simply do not respond rationally to rules, chains of authority and economic 
incentives alone but are also guided by social needs, drives and attitudes. 
Hawthorne Studies at GEC etc., were conducted then. It was quite natural that 
in the early phases of the industrial revolution, the emphasis was on development 
of techniques and technology. The attention to the human factor was the salient 
aspect of this school of thought. This attention was to serve as a precursor to the 
development of behavioural sciences. 
BEHAVIOURAL SCIENCE APPROACH — ORGANISATIONAL HUMANISM 
 Organisational behaviourists like Chris Argyris; Douglas McGregor, Abraham 
Maslow and Fredrick Herzberg used the knowledge of psychology, sociology 
and anthropology to develop this approach. The underlying philosophy of 
organisational humanism is that individuals need to use all of their capacities and 
creative skills at work as well as at home. 
MANAGEMENT SCIENCE/OPERATIONAL RESEARCH
 It emphasises research on operations and use of quantitative techniques to aid 
managers to take decisions.
MODERN MANAGEMENT 
 It sees modern organisations as complex systems and underlies contingency 
approach and use of modern techniques to solve organisational and human 
problems.
Source: Adapted from Internet modern history source book on www.fordham.edu
Ch_02.indd   32 24-09-2019   12:05:00 PM
Rationalised 2023-24
Page 4


2
PRINCIPLES OF 
MANAGEMENT
CHAPTER
LEARNING 
OBJECTIVES
T oyota follows certain well-defined business principles guiding 
its functioning. These are:
1. Honour the language and spirit of law of every nation and 
undertake open and fair corporate activities to be a good 
corporate citizen around the world.
2. Respect the culture and customs of every nation and 
contribute to economic and social development through 
corporate activities in local communities.
3. To provide clean and safe products and to enhance the 
quality of life everywhere.
4. Create and develop advanced technologies and provide 
outstanding products and services that fulfil the needs of 
customers worldwide.
5. Foster a corporate culture that enhances individual creativity 
and teamwork value, while honouring mutual trust and 
respect between management and labour.
6. Pursue growth and harmony with global community through 
innovative management.
7. Work with business partners in research and creativity to 
achieve stable, long-term growth and mutual benefits and be 
open to new partnerships. These principles, will guide the 
company in its global vision 2010. This global vision envisages 
continuous innovations in future, use of environment friendly 
technologies, respecting and working with different sections of 
society and establishing an interactive relationship with society.
After studying this 
chapter, you should 
be able to:
n State the 
meaning, nature 
and significance 
of principles of 
management;
n	 Explain Taylor’s 
principles and 
techniques 
of Scientific 
Management; and
n Explain Fayol’s 
principles of 
management.
http://www.toyotaglobal.com/company/history of toyota/ 
75years/data/conditions/philosophy/guiding principles.html/
It is clear from the foregoing case that 
managerial pursuits at Toyota Motor 
Corporation are driven by principles 
that serve as broad guidelines for 
stating the vision as well as the ways 
to achieve it. Similarly, many other 
business enterprises have followed 
various principles in their working 
Guiding Principles of T oyota Motor Corporation
Ch_02.indd   30 24-09-2019   12:05:00 PM
Rationalised 2023-24
Principles of Management 31
over a period of time. A number of 
management thinkers, and writers 
have also studied principles of 
management from time-to-time. 
In fact, there is a long history of 
management thought. Management 
principles have evolved and are in 
the continuous process of evolution. 
(see box.)
You can see that the evolution of 
management thought has been very 
fascinating. In this chapter we will 
study the contributions of Fredrick 
Winslow Taylor and Henri Fayol who 
as you have read are associated with 
the classical management theory. 
Both of them contributed immensely 
towards the study of management as 
a discipline. Whereas F.W. Taylor was 
an American mechanical engineer, 
Henri Fayol was a French mining 
engineer. Taylor gave the concept 
In tracing the history of management, one comes across various schools of thought 
that have outlined principles to guide management practices. These schools of 
thought may be divided into 6 distinctive phases: 1 . Early Perspectives; 2. Classical 
Management Theory; 3. Neo Classical Theory — Human Relations Approach;  
4. Behavioural Science Approach — Organisational Humanism; 5. Management 
Science/Operational Research; 6. Modern Management.
EARLY PERSPECTIVES
 The first known management ideas were recorded in 3000-4000 B.C. One 
Pyramid built by Egyptian ruler Cheops required work to be done by 100,000 
men for over twenty years in 2900 B.C. It covered 13 acres of land and measured 
481 meters in height. The stone slabs had to be moved thousands of kilometres 
of distance. As folklore goes, even the sound of a hammer was not heard in the 
villages in the vicinity of the site of these pyramids. Such monumental work could 
not be completed without adherence to principles of sound management.
CLASSICAL MANAGEMENT THEORY
 Rational economic view, scientific management, administrative principles, and 
bureaucratic organisation characterise this phase. While the rational economic 
view assumed that people are motivated by economic gains primarily; scientific 
management of F .W . Taylor and others emphasised one best way of production 
etc; administrative theorists personified by Henri Fayol etc looked at the best 
way to combine jobs and people into an efficient organisation; bureaucratic 
organisation theorists led by Max Weber looked at ways to eliminate managerial 
inconsistencies due to abuse of power which contributed to ineffectiveness. 
This was the era of the industrial revolution and factory system of production. 
Large scale production would not have been possible without adherence to 
the principles governing organising production based on division of labour and 
specialisation, relationship between man and the machine, managing people 
and so on.
Evolution of Management Principles
Ch_02.indd   31 24-09-2019   12:05:00 PM
Rationalised 2023-24
32 Business Studies
of ‘Scientific Management’ whereas 
Fayol emphasised ‘Administrative 
Principles’.
But before we go into the details 
of their contributions let us study 
the meaning of the principles of 
management.
PrinciPles of ManageMent : 
t he c oncePt A managerial principle is a broad 
and general guideline for decision-
making and behaviour. For example 
while deciding about promotion of an 
employee one manager may consider 
seniority, whereas the other may 
follow the principle of merit.
One may distinguish principles 
of management from those of pure 
science. Management principles are 
not as rigid as principles of pure 
science. They deal with human 
behaviour and, thus, are to be 
applied creatively given the demands 
of the situation. Human behaviour is 
never static and so also technology, 
which affects business. Hence all 
the principles have to keep pace 
with these changes. For example, 
in the absence of Information and 
NEO CLASSICAL THEORY — HUMAN RELATIONS APPROACH
 This school of thought developed between 1920s to 1950s felt that employees 
simply do not respond rationally to rules, chains of authority and economic 
incentives alone but are also guided by social needs, drives and attitudes. 
Hawthorne Studies at GEC etc., were conducted then. It was quite natural that 
in the early phases of the industrial revolution, the emphasis was on development 
of techniques and technology. The attention to the human factor was the salient 
aspect of this school of thought. This attention was to serve as a precursor to the 
development of behavioural sciences. 
BEHAVIOURAL SCIENCE APPROACH — ORGANISATIONAL HUMANISM 
 Organisational behaviourists like Chris Argyris; Douglas McGregor, Abraham 
Maslow and Fredrick Herzberg used the knowledge of psychology, sociology 
and anthropology to develop this approach. The underlying philosophy of 
organisational humanism is that individuals need to use all of their capacities and 
creative skills at work as well as at home. 
MANAGEMENT SCIENCE/OPERATIONAL RESEARCH
 It emphasises research on operations and use of quantitative techniques to aid 
managers to take decisions.
MODERN MANAGEMENT 
 It sees modern organisations as complex systems and underlies contingency 
approach and use of modern techniques to solve organisational and human 
problems.
Source: Adapted from Internet modern history source book on www.fordham.edu
Ch_02.indd   32 24-09-2019   12:05:00 PM
Rationalised 2023-24
Principles of Management 33
Communications Technology (ICT), a 
manager could oversee only a small 
work force that too within a narrow 
geographical space. The advent of 
ICT has expanded the capability of 
the managers to preside over large 
business empires spread across 
the globe. Infosys headquarters in 
Bangalore boast of the Asia’s largest 
flat screen in their conference room 
from where their managers can 
interact with their employees and 
customers in all parts of the world. 
In developing an understanding 
of the meaning of principles of 
management, it is also useful to 
know what these are not. The 
principles of management should 
be distinguished from techniques 
of management. Techniques are 
procedures or methods, which 
involve a series of steps to be taken to 
accomplish desired goals. Principles 
are guidelines to take decisions or 
actions while practicing techniques. 
Likewise, principles should also be 
understood as being distinct from 
values. Values are something, which 
are acceptable or desirable. They 
have moral connotations. Principles 
are basic truths or guidelines for 
behaviour. Values are general rules 
for behaviour of individuals in society 
formed through common practice 
whereas principles of management 
are formed after research in work 
situations, which are technical in 
nature. However, while practicing 
principles of management values 
cannot be neglected, as businesses 
have to fulfil social and ethical 
responsibilities towards society.
n ature of PrinciPles of 
ManageMent By nature is meant qualities and 
characteristics of anything. Principles 
are general propositions, which are 
applicable when certain conditions 
are present. These have been 
developed on the basis of observation 
and experimentation as well as 
personal experiences of the managers. 
Depending upon how they are 
derived and how effective they are in 
explaining and predicting managerial 
behaviour, they contribute towards 
the development of management both 
as a science and as an art. Derivation 
of these principles may be said to be 
a matter of science and their creative 
application may be regarded as an 
art. These principles lend credibility 
of a learnable and teachable discipline 
to the practice of management. As 
such, ascent to managerial position 
may not be a matter of birth, but a 
matter of requisite qualifications. 
Clearly, management principles have 
gained importance with increasing 
professionalisation of management. 
These principles are guidelines 
to action. They denote a cause and 
effect relationship. While functions 
of management viz., Planning, 
Organising, Staffing, Directing and 
Controlling are the actions to be 
Ch_02.indd   33 24-09-2019   12:05:00 PM
Rationalised 2023-24
Page 5


2
PRINCIPLES OF 
MANAGEMENT
CHAPTER
LEARNING 
OBJECTIVES
T oyota follows certain well-defined business principles guiding 
its functioning. These are:
1. Honour the language and spirit of law of every nation and 
undertake open and fair corporate activities to be a good 
corporate citizen around the world.
2. Respect the culture and customs of every nation and 
contribute to economic and social development through 
corporate activities in local communities.
3. To provide clean and safe products and to enhance the 
quality of life everywhere.
4. Create and develop advanced technologies and provide 
outstanding products and services that fulfil the needs of 
customers worldwide.
5. Foster a corporate culture that enhances individual creativity 
and teamwork value, while honouring mutual trust and 
respect between management and labour.
6. Pursue growth and harmony with global community through 
innovative management.
7. Work with business partners in research and creativity to 
achieve stable, long-term growth and mutual benefits and be 
open to new partnerships. These principles, will guide the 
company in its global vision 2010. This global vision envisages 
continuous innovations in future, use of environment friendly 
technologies, respecting and working with different sections of 
society and establishing an interactive relationship with society.
After studying this 
chapter, you should 
be able to:
n State the 
meaning, nature 
and significance 
of principles of 
management;
n	 Explain Taylor’s 
principles and 
techniques 
of Scientific 
Management; and
n Explain Fayol’s 
principles of 
management.
http://www.toyotaglobal.com/company/history of toyota/ 
75years/data/conditions/philosophy/guiding principles.html/
It is clear from the foregoing case that 
managerial pursuits at Toyota Motor 
Corporation are driven by principles 
that serve as broad guidelines for 
stating the vision as well as the ways 
to achieve it. Similarly, many other 
business enterprises have followed 
various principles in their working 
Guiding Principles of T oyota Motor Corporation
Ch_02.indd   30 24-09-2019   12:05:00 PM
Rationalised 2023-24
Principles of Management 31
over a period of time. A number of 
management thinkers, and writers 
have also studied principles of 
management from time-to-time. 
In fact, there is a long history of 
management thought. Management 
principles have evolved and are in 
the continuous process of evolution. 
(see box.)
You can see that the evolution of 
management thought has been very 
fascinating. In this chapter we will 
study the contributions of Fredrick 
Winslow Taylor and Henri Fayol who 
as you have read are associated with 
the classical management theory. 
Both of them contributed immensely 
towards the study of management as 
a discipline. Whereas F.W. Taylor was 
an American mechanical engineer, 
Henri Fayol was a French mining 
engineer. Taylor gave the concept 
In tracing the history of management, one comes across various schools of thought 
that have outlined principles to guide management practices. These schools of 
thought may be divided into 6 distinctive phases: 1 . Early Perspectives; 2. Classical 
Management Theory; 3. Neo Classical Theory — Human Relations Approach;  
4. Behavioural Science Approach — Organisational Humanism; 5. Management 
Science/Operational Research; 6. Modern Management.
EARLY PERSPECTIVES
 The first known management ideas were recorded in 3000-4000 B.C. One 
Pyramid built by Egyptian ruler Cheops required work to be done by 100,000 
men for over twenty years in 2900 B.C. It covered 13 acres of land and measured 
481 meters in height. The stone slabs had to be moved thousands of kilometres 
of distance. As folklore goes, even the sound of a hammer was not heard in the 
villages in the vicinity of the site of these pyramids. Such monumental work could 
not be completed without adherence to principles of sound management.
CLASSICAL MANAGEMENT THEORY
 Rational economic view, scientific management, administrative principles, and 
bureaucratic organisation characterise this phase. While the rational economic 
view assumed that people are motivated by economic gains primarily; scientific 
management of F .W . Taylor and others emphasised one best way of production 
etc; administrative theorists personified by Henri Fayol etc looked at the best 
way to combine jobs and people into an efficient organisation; bureaucratic 
organisation theorists led by Max Weber looked at ways to eliminate managerial 
inconsistencies due to abuse of power which contributed to ineffectiveness. 
This was the era of the industrial revolution and factory system of production. 
Large scale production would not have been possible without adherence to 
the principles governing organising production based on division of labour and 
specialisation, relationship between man and the machine, managing people 
and so on.
Evolution of Management Principles
Ch_02.indd   31 24-09-2019   12:05:00 PM
Rationalised 2023-24
32 Business Studies
of ‘Scientific Management’ whereas 
Fayol emphasised ‘Administrative 
Principles’.
But before we go into the details 
of their contributions let us study 
the meaning of the principles of 
management.
PrinciPles of ManageMent : 
t he c oncePt A managerial principle is a broad 
and general guideline for decision-
making and behaviour. For example 
while deciding about promotion of an 
employee one manager may consider 
seniority, whereas the other may 
follow the principle of merit.
One may distinguish principles 
of management from those of pure 
science. Management principles are 
not as rigid as principles of pure 
science. They deal with human 
behaviour and, thus, are to be 
applied creatively given the demands 
of the situation. Human behaviour is 
never static and so also technology, 
which affects business. Hence all 
the principles have to keep pace 
with these changes. For example, 
in the absence of Information and 
NEO CLASSICAL THEORY — HUMAN RELATIONS APPROACH
 This school of thought developed between 1920s to 1950s felt that employees 
simply do not respond rationally to rules, chains of authority and economic 
incentives alone but are also guided by social needs, drives and attitudes. 
Hawthorne Studies at GEC etc., were conducted then. It was quite natural that 
in the early phases of the industrial revolution, the emphasis was on development 
of techniques and technology. The attention to the human factor was the salient 
aspect of this school of thought. This attention was to serve as a precursor to the 
development of behavioural sciences. 
BEHAVIOURAL SCIENCE APPROACH — ORGANISATIONAL HUMANISM 
 Organisational behaviourists like Chris Argyris; Douglas McGregor, Abraham 
Maslow and Fredrick Herzberg used the knowledge of psychology, sociology 
and anthropology to develop this approach. The underlying philosophy of 
organisational humanism is that individuals need to use all of their capacities and 
creative skills at work as well as at home. 
MANAGEMENT SCIENCE/OPERATIONAL RESEARCH
 It emphasises research on operations and use of quantitative techniques to aid 
managers to take decisions.
MODERN MANAGEMENT 
 It sees modern organisations as complex systems and underlies contingency 
approach and use of modern techniques to solve organisational and human 
problems.
Source: Adapted from Internet modern history source book on www.fordham.edu
Ch_02.indd   32 24-09-2019   12:05:00 PM
Rationalised 2023-24
Principles of Management 33
Communications Technology (ICT), a 
manager could oversee only a small 
work force that too within a narrow 
geographical space. The advent of 
ICT has expanded the capability of 
the managers to preside over large 
business empires spread across 
the globe. Infosys headquarters in 
Bangalore boast of the Asia’s largest 
flat screen in their conference room 
from where their managers can 
interact with their employees and 
customers in all parts of the world. 
In developing an understanding 
of the meaning of principles of 
management, it is also useful to 
know what these are not. The 
principles of management should 
be distinguished from techniques 
of management. Techniques are 
procedures or methods, which 
involve a series of steps to be taken to 
accomplish desired goals. Principles 
are guidelines to take decisions or 
actions while practicing techniques. 
Likewise, principles should also be 
understood as being distinct from 
values. Values are something, which 
are acceptable or desirable. They 
have moral connotations. Principles 
are basic truths or guidelines for 
behaviour. Values are general rules 
for behaviour of individuals in society 
formed through common practice 
whereas principles of management 
are formed after research in work 
situations, which are technical in 
nature. However, while practicing 
principles of management values 
cannot be neglected, as businesses 
have to fulfil social and ethical 
responsibilities towards society.
n ature of PrinciPles of 
ManageMent By nature is meant qualities and 
characteristics of anything. Principles 
are general propositions, which are 
applicable when certain conditions 
are present. These have been 
developed on the basis of observation 
and experimentation as well as 
personal experiences of the managers. 
Depending upon how they are 
derived and how effective they are in 
explaining and predicting managerial 
behaviour, they contribute towards 
the development of management both 
as a science and as an art. Derivation 
of these principles may be said to be 
a matter of science and their creative 
application may be regarded as an 
art. These principles lend credibility 
of a learnable and teachable discipline 
to the practice of management. As 
such, ascent to managerial position 
may not be a matter of birth, but a 
matter of requisite qualifications. 
Clearly, management principles have 
gained importance with increasing 
professionalisation of management. 
These principles are guidelines 
to action. They denote a cause and 
effect relationship. While functions 
of management viz., Planning, 
Organising, Staffing, Directing and 
Controlling are the actions to be 
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34 Business Studies
taken while practising management, 
Principles help managers to take 
decisions while performing these 
functions. The following points 
summarise the nature of principles 
of management. 
 (i) Universal applicability: The 
principles of management are 
intended to apply to all types of 
organisations, business as well as 
non-business, small as well large, 
public sector as well as private 
sector, manufacturing as well as 
the services sectors. However, 
the extent of their applicability 
would vary with the nature of the 
organisation, business activity, 
scale of operations and the like. For 
example, for greater productivity, 
work should be divided into small 
tasks and each employee should 
be trained to perform his/her 
specialised job. This principle is 
applicable to a government office 
where there is a diary/despatch 
clerk whose job is to receive and 
send mail or documents, a data 
entry operator whose task is to 
input data on the computer, a peon 
and an officer etc. This principle 
is also applicable to a limited 
company where there are separate 
departments like Production, 
Finance, Marketing and Research 
and Development etc. Extent of 
division of work, however, may 
vary from case to case. 
 (ii) General guidelines: The prin-
ciples are guidelines to action 
but do not provide readymade, 
straitjacket solutions to all 
managerial problems. This 
is so because real business 
situations are very complex 
and dynamic and are a result 
of many factors. However, the 
importance of principles cannot 
be underestimated because even 
a small guideline helps to solve 
a given problem. For example,  
in dealing with a situation  
of conflict between two 
departments, a manager may 
emphasise the primacy of the 
overall goals of the organisation. 
 (iii) Formed by practice and experi­
mentation: The principles 
of management are formed 
by experience and collective 
wisdom of managers as well as 
experimentation. For example, it 
is a matter of common experience 
that discipline is indispensable 
for accomplishing any purpose. 
This principle finds mention 
in management theory. On the 
other hand, in order to remedy 
the problem of fatigue of workers 
in the factory, an experiment 
may be conducted to see the 
effect of improvement of physical 
conditions to reduce stress.
 (iv) Flexibile: The principles of 
management are not rigid 
prescriptions, which have to be 
followed absolutely. They are 
flexible and can be modified by 
the manager when the situation 
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