CBSE Class 12 Business Studies Principles Of Management Notes Set 02

Taylor s Scientific Management:
F.W. Taylor (1856-1915) was an American mechanical engineer who believed in analysing the work scientifically and finds one best way to do any work.
His book Principles of Scientific Management was published in 1911.

Principles of Scientific Management:
Taylor gave the following principles of scientific management:
(1) Science and not the rule of thumb: which implies developing one standard method through work study unifying the best practices globally which would result in optimum resource utilization.
(2) Harmony, Not discord: which implies that there should be mental revolution on part of managers, workers and owners to respect each other’s role and eliminate any class conflict to realize organizational objectives.
(3) Cooperation not individualism: It is an extension of the Principle of Harmony, Not discord whereby constructive suggestions of workers should be adopted and they should not go on strike as both management and workers share responsibility and perform together. In fact there should be complete cooperation between the labour and the management instead of individualism.
(4) Development of Each and Every Person to His or Her greatest Efficiency and Prosperity: Which implies development of competencies of all persons of an organization after their scientific selection and assigning work suited to their temperament and abilities.
Techniques of Scientific Management
(1) Functional Foremanship: Functional foremanship is a technique in which planning and execution are separated. There are 8 types of specialized professionals 4 each under planning and execution who keep a watch on all workers to extract optimum performance.

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(2) Standardisation and Simplification of work: Standardization refers to developing standards for every business activity whereas Simplification refers to eliminating superfluous varieties of product or service. It results in savings of cost of labour, machines and tools. It leads to fuller utilization of equipment and increase in turnover.
(3) Method Study: The objective of method study is to final out one best way of doing the job to maximise efficiency in the use of materials, machinery, manpower and capital.
(4) Motion Study: Motion study seeks to eliminate unnecessary motions in the execution of a job to enable it to be completed in less time efficiently.
(5) Time study: It determines 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 & determine labour costs.
(6) Fatigue study: Fatigue study seeks to determine amount and frequency or rest intervals in completing a task.
(7) Differential Piece Wage system: Differential Piece Wage system seeks to reward a more efficient worker by giving him/her more wages for more quantity of standard production achieved.
(8) Mental Revolution: It involves a change in the attitude of workers and management towards one another from competition to cooperation.

Foyol s Principles of Management: Henri Fayol (1841-1925) was a French
Mechanical engineer who gave 14 general principles of Management which are as under:
(1) Division of Work: Work is divided into small tasks / jobs and each one is done by a trained specialist which leads to greater efficiency.
(2) Authority and Responsibility: Managers are empowered with authority to give orders and obtain obedience and responsible for the accomplishment of task for which they are granted authority.
(3) Discipline: it is the obedience to organizational rules and employment agreement which are necessary for working of the organization.
(4) Unity of Command: There should be only one boss for every employee. If an employee gets orders from two superiors at the save time the principle of unity of command is violated.
(5) Unity of Direction: Each group of activities having the same objective must have one head and one plan. This ensures unity of action and coordination.
(6) Subordination of Individual Interest to General Interest: The Interest of an organization should take priority over the interests of any one individual employee.
(7) Remuneration of Employees: The overall pay and compensation should be fair to both employees and the organization.
(8) Centralization and Decentralization: The concentration of decision-making authority is called centralization whereas its dispersal among more than one person is known as decentralization. Both should be balanced.
(9) Scalar Chain: The formal lines of authority between superiors and subordinates from the highest to the lowest ranks is known as scalar chain. This chain should not be violated but in emergency employees at same level can contact through Gang Plank.

(10) Order: A place for everything (everyone) and everything (everyone) in its place. People & materials must be in suitable places at appropriate time for maximum efficiency.
(11) Equity: The working environment of any organization should be free from all form of discrimination and the principles of Justice and fair play should be followed.
(12) Stability of Personnel: After being selected and appointed after due and rigorous procedure the selected person should be kept at the post for a minimum period decided to show result.
(13) Initiative: Workers should be encouraged to develop and carry out their plans for improvements. Initiative means taking the first step with self-motivation It is thinking out and executing the plan.
(14) Esprit De Corps: Management should promote team spirit, unity and harmony among employees. Management should promote a team work.