Principles of Management - Commerce PDF Download

Management Principle # 1. Division of Work:

This is nothing but the principles of specialisation needed for proper and efficient work performance in all spheres of activity, both technical and managerial.

Management Principle # 2. Authority and Responsibility:

“Authority is the right to give orders and the power to exact obedience.” Whenever a manager is allocated tasks, he should be given requisite authority so that the particular manager can exercise his own skill and initiative for performing the entrusted tasks. Delegation of authority to managers necessarily signifies that they have responsibility for the delegated tasks.

“Responsibility is the corollary of authority, it is its natural consequences and essential counterpart.” In order to discharge responsibility properly, authority must be commensurate with responsibility. If there is no parity between the two, there will be either wastage or misuse of authority.

Management Principle # 3. Discipline:

Discipline is absolutely essential for smooth running of business. Discipline must be maintained in all its levels for successful management. Fayol points out that for the maintenance of discipline, efficient and good managers are needed at the top level and there should be clear agreement between the employer and the employees. Discipline is of paramount importance for the smooth running of production.

Management Principle # 4. Unity of Command:

Management Principle # 5. Unity of Direction:

According to this principle, direction to work must come to the workers of each department or section from one authority. In other words; each group of activity with the same objective must have one head and one plan.

Unity of direction is different from unity of command in the sense that the former is concerned with functioning of the organisation in respect of its grouping of activities or planning, while the latter is concerned with functioning of the personnel at all levels in the organisation.

Management Principle # 6. Subordination of individual Interest to General Interest:

This principle demands that in management the common interest is considered to be over and above the individual interest. When there is any conflict between the two, the manager should reconcile them.

Management Principle # 7. Remuneration of Personnel:

Management Principle # 8. Centralisation:

In management, ‘centralisation’ means the centralised authority or leadership of an organisation and ‘decentralisation’ signifies the dispersal of such authority or leadership to different levels of an organisation. The principle of centralisation calls for that a balanced system of centralisation must be introduced to produce the best results taking into consideration the individual circumstances.

The objective to pursue is the optimum utilisation of all faculties of the personnel. So the question of centralisation and decentralisation is a matter of proportion. In small firms, there is absolute centralisation, but in large concerns, there are a series of intermediaries between the top and bottom level and, as such, decentralisation of authority is essential.

So the principle to be followed in this respect is to maintain a proper balance between the two.

Management Principle # 9. Scalar Chain:

Management Principle # 10. Order:

This principle refers to the arrangement of persons and things required in any organisation. Order is divided into material order and social order. In material order, there should be a “place for everything and everything in its place”, so that wastage of materials can be avoided.

Similarly, in social order, there should be a “place for everyone and everyone in his place” that is the placement of “right man in right job.” This kind of order demands precise knowledge of the human requirements and resources of the organisation and a constant balance between these requirements and resources.

Management Principle # 11. Equity:

This principle calls for the maintenance of an attitude of justice and generosity towards the working personnel and treating them equally and sympathetically. This is necessary to secure devotion and loyalty of the subordinates for good performance.

Management Principle # 12. Stability of Tenure of Personnel:

Management Principle # 13. Initiative:

Initiative is the power of thinking out and execution of a plan. It is one of the powerful stimulants of human endeavour. So to create zeal and energy, the managers should permit the employees to exercise as much initiative as possible.

Management Principle # 14. Team Spirit:

It means the unity of spirit or, in other words, team-spirit. This unity of spirit is the moving force which ensures maximum of co-ordinated efficiency in any undertaking. Collective effort is essential for the success of any enterprise.

So the managers should create a mentality of co-operation and team spirit among all the working personnel of the enterprise, so that they work as a team for its success. Besides these principles as enunciated by Henry Fayol, in modern management science a few more principles have been introduced.

Management Principle # 15. Flexibility:

Management should be flexible in nature. Its activities should be so planned, organised, directed and controlled that it can adjust with the changed time and circumstances. Market conditions are subject to constant changes. Price of commodities, tastes and fashions, demand for the products are also changing. New machinery and equipment are being found out newer varieties of products are now manufactured.

All these changes and technological advancements require supporting changes in the technique of production and business policies. Therefore, it becomes imperative that the management technique should be as flexible as possible to adjust with these changing conditions.

Management Principle # 16. Sound Organisation:

Organisation is the framework of management. For effective management of the different affairs of the business, a sound organisation is to be built up. The type of organisation depends on the nature of business, the nature of product and the technique of production.

In the cases of diversification of products and the production of standardised products in different places administrative authority is to be decentralised to a great extent. In the case of others, particularly production of a single item, centralised leadership is preferred.