Chapter 2 (Part 3) Principles of Management , CBSE, Class 12, Business Studies PDF Download

Chapter 2 (Part 3) Principle of Management

F.W Taylor Principle

F.W. TAYLOR (HISTORY)
F.W. Taylor was born in 1856 in U.S.A. In 1878 he joined Midvale Steel Company as a Mechanical Engineer. Using his engineering background Tayol set out scientific studies and techniques. He was primarily concerned about the efficiency of workers and optimum utilization of resources. Taylor’s principles and techniques were based on the observations he conducted in factories.
F.W. Taylor became Famous as a Father of Scientific management. His main contribution which made him so popular were: (i) Taylor published books and research papers explaining his scientific view on industrial organization and management. (ii) His major contribution was publishing of ‘’Shop Management’’, Piece Rate System’’ and ‘’ Principle of Scientific Management’’.
Scientific Management “Scientific Management is the art of knowing exactly what you want your men to do and then seeing that they do it in the best and cheapest way’’.
 

Principles of Scientific Management
1. Science not rule of thumb Taylor has emphasized that each performed in the organization should be based on scientific inquiry are not on intuition, experience, and hit and miss methods. Rule of thumb does not involve think before doing. Scientific method requires cause effect as well as the exact measures of effort and output to be kept in view for any work to be performed.

2. Harmony not discord Taylor advocated a complete mental revolution on the part of both managers and workers. Managers should adopt an enlightened attitude and share the gains of productivity with workers. Workers on their part should work with discipline and loyalty.

3. Cooperation nor individualism This principle is an extension of principle of harmony. Competition should be replaced by cooperation. Managers and workers can develop understanding and thus, secure mutual cooperation.
Taylor has suggested that while setting standards, employees who are supposed to perform be involved in that process and management should entertain the constructive suggestions of employees and at the same time, workers should also cooperate with management. This will enhance their involvement and commitment to such standards

4. Development  of  Each  and  Every  Person  to  His  or  Her  Greatest  Efficiency  and  Prosperit y Industrial  efficiency  depends to  a  large  extent  on  personnel  competencies.  Worker  training  was  essential  also  to  learn  the  'best  method' developed  as  a  consequence  of the  scientific  approach.  Taylor  was  of  the  view  that  the  concern  for  efficiency  could  be  built  in  right  from  the  process  of  employee  selection.  Each  person  should  be  scientifically  selected.  Then  work  assigned  should  suit  her  /his physical,  mental  and  intellectual  capabilities.  To  increase  efficiency,  they  should  be  given  the  required  training.  Efficient  employees would  produce  more  and  earn  more.  This  will  ensure  their  greatest  efficiency  and  prosperity  for  both  company  and  workers.
Techniques of Scientific Management
Work Study or Task Study It defined as the systematic, objective and critical examination of all the factors governing the operational efficiency of any specific activity in order to effect improvement’’.
1. Time study The technique of time study is conducted to determine or the objective of time study are:-

• The standard time required to perform a job. • Setting up the standard target for workers. • Determining the number of workers required to perform a job. • Categorizing the workers in efficient and inefficient employee.
2. Fatigue study “A fair task is one that an average man can perform for a long period of year without injury to his health and happiness.’’
3. Motion study The scientific technique of motion study is conducted or the objectives of motion study are: • To determine the movements of workers when they are performing the job. • To differentiate between productive and unproductive movements. • For cutting down unproductive and wasteful movements o To design suitable equipment’s and tools to minimize the unproductive movements of workers.
4. Method study The method study technique of scientific management is conducted to find out the one best method or way of performing the job which keeps production cost minimum and makes maximum uses of resources of the organization. 5. Standardization and simplification of work Scientific management always emphasizes on maintaining standard relating to every step of business operations. Standardization of output is possible if standard is maintained right from • selection of tools, • equipment and • machine to use, o maximize the output by keeping in mind the quality standards. Simplification emphasizes on elimination of unnecessary diversity of • products, • size and • types o as more varieties means ▪ more inventory, ▪ more type of machinery, ▪ more labor cost etc.
6. Differential Piece Wage System The scientific technique of differential piece rate system emphasizes on paying different rate of wage for efficient and inefficient employees. the technique of differential wage rate system insists on: a. Paying different rate of wage to efficient and inefficient employees. b. Extra wages paid to efficient employees will motivate them to remain efficient. c. Extra wages paid to efficient employees will motivate inefficient employees to come in the category of efficient employees. d. When payment is given according to no. of units produced automatically the production will be maximized.
7. Mental Revolution Change in mental attitudes of workers and management towards each other.
Co-operation between workers and management 8. Functional foremanship In this technique suggested that division of factory in two departments: i. planning dept., ii. production dept. as Taylor felt that workers must be free from the burden of planning and they must concentrate on work on production. Under Planning Department: i. Route Clerk: This foreman is responsible to fix up the sequence of steps for performing mechanical or manual job.

ii. Instruction Card Clerk: this foreman is responsible for giving general instructions necessary to carry on the job in a specified manner. iii. Time and Cost clerk: This foreman is responsible to fix up the time for starting and completion of job. He also prepares the cost sheet for every job. iv. Disciplinarian: This foreman is responsible for performance of job in orderly and systematic way.
Under Production Department: i. Gang Boss: He arranges all the machines, tools and other resources required for performance of the job so that there is no delay. ii. Speed Boss: This foreman assures timely completion of job. iii. Repair Boss: This boss ensures that machines and tools are kept in working conditions. iv. Inspector: This boss keeps a check on quality control of the output.

Relevance of Taylor and Fayol’s Principles (Similarities between Taylor and Fayol) Taylor and Fayol’s principles are complementary to each other because both have relevance in the business due to following reasons. i. The main aim of Taylor’s as well as Fayol’s principles is maximizing the efficiency. ii. Both insist on cooperation between employees and employers. iii. Both give more importance to organizational interest over the individual interest. iv. Both suggested division of work for specialization. v. The principles of both are used as basis for research in the field of management studies.

Similarities and Dissimilarities between Taylor and Fayol Similarities 1. Both stressed on good industrial relations 2. Give solution to managerial problems
Dissimilarities: 1. Their perception is different, i.e., general management by Fayol and scientific management by Taylor. 2. Their concern is different i.e. managers are the concern of Fayol and workers are the main concern of Taylor

CASE STUDIES
 Question 1: Rahul is working as a Production Manager in CFL Ltd. which manufactures CFL bulbs. There is no class-conflict between the management and workers. The working conditions are very good. The company is earning huge profits. As a policy, the management shares the profits earned with the workers because they believe in the prosperity of the employees. a. State the principle of management described in the above paragraph. b. Identify any two values which the company wants to communicate to society.

Answer: a. The principle of management described in the above paragraph is 'Harmony, not Discord'. Taylor emphasised that there should be complete harmony between the management and workers instead of a kind of class-conflict, the managers versus workers. To achieve this state, Taylor called for complete mental revolution on the part of both management and workers. The prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice versa. He advocated paternalistic style of management should be in practice. b. The two values that the company wants to communicate to the society are: I. Prosperity II. Sharing

Question 2: COMVIL Ltd. is engaged in producing electricity from domestic garbage. There is almost equal division of work and responsibilities between workers and the management. The management even takes workers into confidence before taking important decisions. All the workers are satisfied as the behaviour of the management is very good. a. State the principle of management described in the above paragraph. b. Identify any two values which the company wants to communicate to society.

Answer: a. The principle of management described in the above paragraph is 'Cooperation, Not Individualism'.
This principle is an extension of principle of 'Harmony, Not Discord'. There should be complete cooperation between the labour and the management instead of individualism. Competition should be replaced by cooperation and there should be an almost equal division of work and responsibility between workers and management. Also, management should reward workers for their suggestions which results in substantial reduction in costs. At the same time, workers should desist from going on strike and making unreasonable demands on the management b. The two values that the company wants to communicate to the society are: I. Participation II. Sustainable development

Question 3: Rahul is desirous of setting up a small factory to manufacture different kinds of eco friendly packaging materials. He proposes to adopt a logical approach to his business rather than hit and trial method as he knows that this can result in tremendous saving of human energy as well as wastage of time and materials. He plans to adopt paternalistic style of management in practice in order to avoid any kind of class-conflict that may emerge between him and the workers. Moreover, he plans to seek the opinion of his workers before taking any important decisions and also offers incentives to them for providing valuable suggestions for the business.
In context of the above case: a. Identify and explain the various principle of scientific management that Rahul plans to apply in his business. b. List any two values that he wants to communicate to the society by offering eco friendly packaging material.

Answer: a. The various principle of scientific management that Rahul plans to apply in his business are described below: I. Science, not Rule of Thumb: Taylor believed that there was only one best method to maximise efficiency and it could be developed through scientific study and analysis. This is because if the managers rely on personal judgment in attending to the work related problems, it may suffer from the limitation of a trial and error approach. Therefore, it is important for them to know what works and why does it work. For this, they should adopt scientific method to substitute the 'Rule of Thumb or hit and trial method' throughout the organisation.
II. Harmony, Not Discord: In the paternalistic style of management, the employer takes care of the needs of employees like a father. Taylor said that any kind of class conflicts between the workers and the managers were not good; rather they must realise that each one is important. Therefore, he emphasised that there should be complete harmony between the management and workers. To achieve this, Taylor called for complete mental revolution on the part of both management and workers by transforming their thinking. The management should share the gains  

of the company, if any, with the workers and at the same time, workers should work hard.
III. Cooperation, Not Individualism: Through this principle, Taylor suggests that there should be complete cooperation between the workers and the management instead of individualism. This principle is an extension of principle of 'Harmony, Not Discord'. Both should realise the importance of each other. In order to replace the feeling of competition with cooperation, the management should not close its ears to any constructive suggestions made by the employees. Rather, the workers should be rewarded for any of their valuable suggestions which results in substantial saving in costs. Also, the workers should be taken into confidence by the management whenever any important decisions are to be taken. b. The two values that Rahul wants to communicate to the society by offering eco friendly packaging material are: I. Concern for environment II. Sense of responsibility
 

Question 4: Anjali has been appointed as the chief organizer of a week long cultural event. Being a staunch follower of scientific management, she decides to execute her wesk by putting several observations, she is able to determine that the standard time taken by the security officer at the gate to check the credentials of each visitor is 30 seconds. So she decides to employ two persons on this job for every function along with the other necessary support staff. She considers the fact that every day, the functions will take place in three shifts of four hours each, therefore it is important to give breaks to the support staff even in a single shift to take her/his lunch etc.
Moreover, on introspection, she determines that the best way to distribute refreshment boxes to the visitors will be to hand it over to them at the exit gate as it would help to save time and eliminate any kind of confusion.
In the context of the above case: a. Identify and explain the various techniques of work study which have been put into practice by Anjali. b. List any two values that Anjali wants to communicate to the society.
Answer: a. The various techniques of work study which have been put into practice by Anjali are outlined below: I. Time Study: It seeks to determine the standard time taken to perform a well defined job. The objective of time study is to determine the number of workers to be employed, frame suitable incentive schemes and determine labour costs. By using time measuring devices for each element of task, the standard time is fixed for the whole of the task by taking several readings.
II. Fatigue Study: It seeks to determine the amount and frequency of rest intervals that should be provided to the workers for completing a task. This technique helps in increasing productivity as the rest intervals will help a person to regain stamina and work again with the same capacity.
III. Method Study: The objective of method study is to find out one best way of doing the job among the various methods available of doing the job. This can be done by taking into consideration several related parameters. b. The two values that Anjali wants to communicate to the society are: I. Optimum utilisation of resources II. Concern for employees
 

Question 5. ‘COMVIL Ltd.' is company dealing in stationery items. In order to establish standards of excellence and quality in materials and in the performance of men and machines, the company adheres to benchmarks during production. Moreover, its products are available in limited varieties, sizes and dimensions thereby eliminating superfluous diversity of products.
Identify the technique of scientific management which has been adopted by ‘COMVIL Ltd.'

Answer: I. Standardisation Standardisation implies devising new varieties instead of the existing ones. It refers to the process of setting standards for every business activity; it can be standardisation of process, raw material, time, product, machinery, methods or working conditions. These standards are the benchmarks which must be adhered to during production. It helps to reduce a given line or product to fixed types, sizes and characteristics, establish interchange ability of manufactured parts and products, determine standards of excellence and quality in materials and of performance of men and machines.
II. Simplification of Work Simplification aims at eliminating superfluous diversity of products in terms of varieties, sizes and dimensions. It not only helps to reduce inventories but also to save cost of labour, machines and tools. Thus it helps to increase turnover by ensuring optimum utilisation of resources. Most large companies like Samsung, Toyota and Microsoft etc. have 

Question 6.
COMVIL is running an office furniture showroom. Most of his clients are businessmen and they prefer to buy goods on credit. Keeping this in mind, he has given the power to the sales manager, Mr. Rahul, to offer a credit period of only 20 days, while negotiating a deal with a buyer. On a specific day, Mr. Rahul finds that if he can offer a credit period of 30 days as an exception to a prospective buyer, he is likely to finalise a highly profitable deal for the business. So Mr. Rahul requests COMVIL to grant him additional authority for offering a credit period of 30 days in the interest of the business. But COMVIL refuses to extend his authority and as a result, the deal is not finalized.
In context of the above case: a. Can Mr. Rahul be held responsible for loss of the deal ? Why or why not? Give a suitable reason in support of your answer. b. Also, explain the related principle.
Answer: a. No, Mr. Rahul cannot be held responsible for loss of the deal in the above case as he was not given the necessary authority to carry out his responsibility. There is an imbalance in authority and responsibility. b. The name of the related principle is Authority and Responsibility.
Authority is the right to give orders and obtain obedience by the virtue of one's position in the organization. Responsibility is the obligation of a person to carry out the assigned task to the best of one's abilities and skills. There are two types of authorities, namely: I. the official authority, which is the authority to command, and II. personal authority, which is the authority of the individual manager. III. Authority is both formal and informal. According to Fayol, there should be balance between the authority given and responsibility entrusted to an employee so that he is able to carry out the assigned task. Any kind of imbalance in authority and responsibility is not good for the organisation. If the authority granted to an employee is less than what is required, he will ineffective in doing his work. On the other hand, if the authority delegated to an employee is more than what is required, he may tend to misuse it.
 

Question 7: The principles of Taylor and Fayol are mutually complementary. One believed that management should share the gains with the workers while the other suggested that employee’s compensation should depend on the earning capacity of the company and should give them a reasonable standard of living. Identify and explain the principles of Fayol and Taylor referred to in the above paragraph.
Answer: The principles of Fayol and Toylor referred to in the above paragraph are 'Remuneration of employees' and ‘Harmony, Not Discord'.
I. Remuneration of Employes: According to Fayol, the overall pay and compensation should be fair and equitable to both employees and the organisation. The employees should be paid fair wages so that they are able to maintain at least a reasonable standard of living. At the same time, it should be within the paying capacity of the company. This will ensure pleasant working atmosphere and good relations between workers and management.
II. Harmony, Not Discord: Taylor emphasised that there should be complete harmony between the management and workers instead of a kind of class-conflict, the managers versus workers. To achieve this state, Taylor called for complete mental revolution on the part of both management and workers. The prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice versa. He advocated paternalistic style of management should be in practice.
 

Question 8: The principles of Taylor and Fayol are mutually complementary. One believed that management should not close its ears to constructive suggestions made by the employees while the other suggested that a good company should have an employee suggestion system whereby suggestions which result in substantial time or cost reduction should be rewarded. Identify and explain the principles of Taylor and Fayol referred to in the above paragraph.
Answer: The principles of Fayol and Taylor referred to in the above paragraph respectively are 'Initiative' and 'Cooperation and Not Individualism'.
I. Initiative: Initiative means taking the first step with self-motivation. The workers should be encouraged to develop and carry out their plans for improvement. Suggestion system should be adopted in the organization.
II. Cooperation and Not Individualism:

This principle is an extension of principle of 'Harmony, Not Discord' .There should be complete cooperation between the labour and the management instead of individualism. Competition should be replaced by cooperation and there should be an almost equal division of work and responsibility between workers and management. Also, management should reward workers for their suggestions which result in substantial reduction in costs. At the same time, workers should desist from going on strike and making unreasonable demands on the management.