Principles of Management – Complete Guide For Class 12 Business Studies Chapter 2

Our learning resources for the Business Studies Class 12 Chapter 2 Principles of Management are designed to ensure that you grasp this concept with clarity and perfection. Whether you’re studying for an upcoming exam or strengthening your concepts, our engaging animated videos, practice questions and notes offer you the best of integrated learning with interesting explanations and examples.

When it comes to the success of companies like Tata, principles of management play a vital role. These principles not only guide their operations but also ensure a safe, healthy, and efficient working environment. Many business enterprises follow various principles for smooth functioning, and these have evolved over the years through the insights of numerous management thinkers.

Meaning of Principles Of Management

Principles of management are the guidelines that help managers make decisions and take action to achieve their goals. 

Nature of Principles Of Management

To truly understand the principles of management, it’s essential to know their nature. Here are the key characteristics:

So, those were the various characteristics that define the nature of the principles of management. Now, let’s explore why these principles are so important.

Importance

Understanding the importance of these principles can highlight their role in enhancing organizational efficiency and achieving objectives.

Now that we have understood the importance of these principles, let’s delve into the contributions of Henry Fayol, the Father of General Management.

Father of General Management – Henry Fayol

Henry Fayol, often referred to as the Father of General Management, made significant contributions to the field of management.

• Born in France in 1841
• Graduated in 1860 as a mining engineer
• Worked as General Manager and Chief Executive
• Published ‘General and Industrial Administration’ in 1929

His principles have laid the foundation for modern management practices. Let’s take a closer look at Fayol’s Principles of Management.

Fayol’s Principles of Management

Division of Work

Division of work involves breaking down tasks into smaller parts and assigning each task to the most suited person. The distribution of work within Fayol’s principles of management can also be understood with the help of the image given below. 

Authority and Responsibility

The right of command must come with an equal responsibility.

Discipline

Obedient, applied, and respectful employees are necessary for the organization to function effectively.

Unity of Command

A subordinate should receive orders from one boss only.

Unity of Direction

A single plan of action should guide the organization.

Subordination of Individual Interest to General Interest

Whenever there is a conflict between individual goals and organizational goals, the latter should be given preference.

Remuneration of Personnel

The method of employee remuneration should be just and fair to everyone.

Centralization & Decentralization

Finding the right balance between centralization and decentralization is crucial for optimal decision-making.

Scalar Chain

The organization should have a clear chain of authority and communication from top to bottom.

Order

Employees should be arranged in a manner where they are most valuable to the organization.

Equity

Justice and fair treatment should be provided to all employees.

Stability of Personnel

Long-term employment is important for the development of skills and the improvement of organizational performance.

Initiative

Encouraging creativity and innovation by allowing employees to act on their own.

Espirit De Corps

Fostering team spirit and devotion to a common cause within the organization.

So, those were the principles laid down by Henry Fayol. Understanding these principles is crucial for effective management. Now, let’s move on to another important aspect of management: Scientific Management.

Scientific Management

Scientific Management involves the systematic study of relationships between people and tasks to redesign the work process for higher efficiency. These principles were introduced by F.W. Taylor.

Principles Of Scientific Management

1. Science, not rule of thumb: This principle advocates for a scientific approach to all elements of management, replacing old methods based on tradition and guesswork.
2. Harmony, not discord: Emphasizes the importance of teamwork and cooperation among employees, reducing conflict and enhancing collective effort.
3. Cooperation, not individualism: Stresses mutual collaboration between workers and management, ensuring both sides work towards common goals.
4. Development of each person to their greatest efficiency and prosperity: Encourages assigning jobs based on individual capabilities and providing proper training to maximize efficiency and career growth.

These principles guide the approach to managing tasks and people in an organization. Taylor also introduced various techniques to implement these principles effectively.

Techniques Of Scientific Management

1. Work Study: This technique involves breaking down each job into its components to find better and more efficient ways to perform tasks.
2. Standardization: Ensuring consistent quality standards across all aspects of production and work processes.
3. Differential Piece Rate System: Implementing a wage system based on worker efficiency, rewarding those who produce more with higher pay rates.

4. Functional Foremanship: This approach involves appointing eight functional experts to guide, instruct, and supervise workers, ensuring specialized and effective management. Let’s understand this better with the help of the image given below. 

Advantages of Scientific Management

Scientific Management offers several advantages:

1. Improves efficiency: Enhances overall productivity and performance.
2. Reduces cost of production: Lowers expenses associated with manufacturing and operations.
3. Increases market share: Boosts the company’s competitive position.
4. Creates peaceful relations between workers and management: Fosters a collaborative and harmonious workplace environment.
5. Higher wages for workers: Ensures fair compensation for employees.
6. Provides better working conditions: Enhances the overall work environment.
7. Offers free training: Provides employees with opportunities for professional development.
8. Increases living standard: Improves the quality of life for employees.
9. Leads to economic progress: Contributes to broader economic development.

Despite its advantages, Scientific Management also has some limitations. next in the chapter Principles of management, let’s explore these limitations.

Limitations of Scientific Management

Within the chapter Principles of Management, it is clear that Scientific Management is not without its drawbacks:

1. Increases in unemployment: Scientific Management may lead to job losses due to automation and efficiency improvements.
2. Encourages exploitation of workers: Scientific Management may result in unfair treatment of employees.
3. Reduces scope for initiative: Scientific Management limits employees’ ability to be creative and innovative.
4. Reduces the role of Trade Unions: Scientific Management minimizes the influence of trade unions or as we usually call those- labor unions.
5. Affects physical and mental well-being of workers: Scientific Management may negatively impact workers’ health.
6. Huge investment to establish: Scientific Management involves significant initial costs.
7. Requires a lot of time for work study: Scientific Management demands substantial time for analyzing and optimizing work processes.
8. Ignores workers’ aspect: Scientific Management often overlooks the human element in favor of efficiency.
9. Increases frustration among workers: Scientific Management can lead to dissatisfaction and demotivation among employees.

With an understanding of both the advantages and limitations of Scientific Management, we can appreciate the complexities involved in managing an organization. These insights help us navigate the challenges and leverage the benefits for optimal performance.