GSEB Class 12 Organization of Commerce and Management Solutions Chapter 2 Principles of Management

1. Select the correct alternative and write answer to the following questions:

 

Question 1. What is principles of management?
(a) Result of experience
(b) Management decide it
(c) Decided by experiments
(d) Managers decide it
Answer: (a) Result of experience
In simple words: The principles of management come from what people have learned over time, not from direct rules or experiments.

Exam Tip: Remember that management principles often develop from observing successful practices and past outcomes, making experience a key factor.

 

Question 2. Why does need arise to make changes in principles of management?
(a) Change in assets
(b) Change in capital
(c) Change in technology
(d) Change in managers
Answer: (c) Change in technology
In simple words: Principles of management need to change because new technology constantly alters how businesses operate.

Exam Tip: Modern management is dynamic; keep in mind that external factors like technological advancements frequently require updates to established principles.

 

Question 3. Who is the promoter of scientific management?
(a) Luther Gulick
(b) Fredrick Taylor
(c) Henri Fayol
(d) Peter Drucker
Answer: (b) Fredrick Taylor
In simple words: Fredrick Taylor is widely recognized for starting and promoting the idea of scientific management.

Exam Tip: Associate Fredrick Taylor directly with "scientific management" and Henri Fayol with "general management principles" to avoid confusion.

 

Question 4. Which thoughts were presented till the end of 19th century?
(a) Neo classical
(b) Pre-classical
(c) Classical
(d) Modern
Answer: (c) Classical
In simple words: The ideas about management that were common until the end of the 1800s are called classical thoughts.

Exam Tip: Understand the historical timeline of management theories; classical thoughts formed the early foundation, preceding neo-classical and modern approaches.

 

Question 5. Who was the promoter of neo classical thought?
(a) Harzburg
(b) Henri Fayol
(c) Fredrick Taylor
(d) Elton Mayo
Answer: (d) Elton Mayo
In simple words: Elton Mayo was the person who helped start and spread the neo-classical way of thinking about management.

Exam Tip: Elton Mayo is a key figure in the Human Relations Movement, which is central to neo-classical management theory.

 

Question 6. Who said that 'you save your employees, your employees will save yours' everything?
(a) C. K. Prahlad
(b) Prof. Urvik
(c) Aargris
(d) Peter. F. Drucker
Answer: (b) Prof. Urvik
In simple words: Prof. Urvik stated that if a company takes care of its workers, those workers will, in return, protect all the company's interests.

Exam Tip: Recognizing key quotes and their authors helps demonstrate a deeper understanding of management thinkers and their philosophies.

 

Question 7. Which management gurus given below have contributed to modern thought?
(a) C. K. Prahlad
(b) Elton Mayo
(c) Max Weber
(d) Henry Gentt
Answer: (a) C. K. Prahlad
In simple words: Among the choices provided, C. K. Prahlad has made significant contributions to modern management ideas.

Exam Tip: Be able to distinguish between classical, neo-classical, and modern management thinkers to correctly identify contributions to each era.

 

Question 8. Who had given general principles of management?
(a) Fredrick Taylor
(b) Peter. F. Drucker
(c) Henri Fayol
(d) Chester Barnard
Answer: (c) Henri Fayol
In simple words: Henri Fayol is famous for outlining the general principles that guide effective management.

Exam Tip: Differentiate Henri Fayol's general principles (e.g., unity of command, division of work) from Fredrick Taylor's scientific management principles (e.g., time study, motion study).

 

Question 9. Method of removing waste generated from unnecessary movement done in wrong directions from any work?
(a) Time study
(b) Motion study
(c) Different wage rates
(d) Employee observation
Answer: (b) Motion study
In simple words: Motion study is the way we analyze and get rid of wasted movements that happen during a task, making work more efficient.

Exam Tip: Understand that motion study focuses on optimizing physical movements in a task, while time study measures the standard time required for tasks.

 

Question 10. Who was the founder of principle of management by objective?
(a) Peter F. Drucker
(b) Fredrick Taylor
(c) Henri Fayol
(d) Max Weber
Answer: (a) Peter F. Drucker
In simple words: Peter F. Drucker developed the idea of Management by Objective (MBO), where goals are set jointly by managers and employees.

Exam Tip: Peter F. Drucker is a central figure in modern management, known for concepts like MBO and his broad insights into management effectiveness.

 

Question 11. Which activity from the following is possible by implementing labour division?
(a) Aggregation
(b) Specialization
(c) Simplification
(d) Integration
Answer: (b) Specialization
In simple words: When work is divided among people, each person can focus on a smaller part, leading them to become experts in that specific area.

Exam Tip: Division of labor directly fosters specialization, as individuals become more skilled and efficient by focusing on a limited set of tasks.

 

Question 12. If employee does not get appropriate compensation then what arises?
(a) Labour turnover
(b) Promotion of labour
(c) Absence of labour
(d) Decline of labour
Answer: (a) Labour turnover
In simple words: If workers do not receive fair pay, they are more likely to leave their jobs, causing a high rate of employee turnover.

Exam Tip: Inadequate compensation is a primary cause of high labor turnover, leading to increased recruitment and training costs for businesses.

2. Answer the following questions in one sentence each:

 

Question 1. What is 'Principle of management'?
Answer: Principles are general guidelines formed based on human behavior, which help in easily achieving organizational goals and objectives.
In simple words: Management principles are basic rules based on how people act, designed to help achieve business goals smoothly.

Exam Tip: Emphasize that management principles are guiding statements, not strict laws, and are rooted in human behavior to make goal attainment easier.

 

Question 2. What is time Study?
Answer: Time study involves a careful examination to determine the required duration to complete a specific part of a task. The time set to finish this work under normal conditions is known as standard time.
In simple words: Time study is measuring how long it takes to do a specific part of a job, and the normal time set for it is called standard time.

Exam Tip: Clearly define both "time study" and "standard time" when answering, as they are closely related concepts in scientific management.

 

Question 3. What is unity of command?
Answer: Unity of command means that employees should receive orders from only one superior, rather than multiple bosses. This suggests that workers ought to get directions from a single person for any job or task.
In simple words: Unity of command means an employee should only get orders from one manager, not many, for any given task.

Exam Tip: Highlight that unity of command prevents confusion and conflicts by ensuring a single reporting line, which is crucial for organizational clarity.

 

Question 4. What is management thoughts?
Answer: The principles, ideas, and views provided by various management experts are collectively referred to as management thoughts.
In simple words: Management thoughts are all the ideas and rules shared by different management experts.

Exam Tip: Use terms like "principles," "ideas," and "views" to convey the comprehensive nature of management thoughts, acknowledging their origin from multiple gurus.

 

Question 5. Which concepts are included in behavior related thoughts?
Answer: Ideas such as inter-human relations, employee motivation, leadership styles, communication processes, and resolving industrial disputes are part of behavior-related thoughts.
In simple words: Behavior-related thoughts include how people interact, how they are motivated, leadership, communication, and solving workplace problems.

Exam Tip: When discussing behavior-related thoughts, focus on the human element and interpersonal dynamics within an organization.

 

Question 6. In modem thoughts which other subject are related with management?
Answer: Psychology, social studies, statistics, mathematics, computer science, and information technology are other fields connected to modern management thinking.
In simple words: Modern management ideas connect with subjects like psychology, social studies, statistics, math, computers, and IT.

Exam Tip: Modern management is interdisciplinary; remember that it integrates insights from various fields to address complex organizational challenges.

3. Answer the following questions in short:

 

Question 1. What is scientific management?
Answer:

• F. W. Taylor defined scientific management as “Knowing exactly what you want your man to do, and then see to it that they do it in the best and the cheapest way”
• Scientific Management is a mental change that helps factory employees. It mainly focuses on the tasks and responsibilities of workers, their colleagues, and the owners.

In simple words: Scientific management is about figuring out the best and cheapest way for people to do their jobs, and it focuses on improving work through careful study rather than old methods.

Exam Tip: For definitions, try to quote the core concept accurately, and then briefly explain its practical implications or focus areas.

 

Question 2. What does the principle of equality?
Answer: Equality:

• Employees are a crucial component of the managerial system.
• Workers are human beings, so management should use a practical and humane approach when dealing with them.
• Superiors should act fairly and consistently while assigning work to their subordinates.
• Management should work to create equality in the unit, doing it informally rather than through legal rules or traditional methods.
• This principle holds that employee behavior depends on loyalty, attitude, consistency, and fairness within the unit.

In simple words: The principle of equality means treating all employees fairly and consistently as human beings, adopting a humane approach, and ensuring justice in the workplace.

Exam Tip: When explaining equality, emphasize both fair treatment in task assignment and the adoption of a humanitarian approach towards employees.

 

Question 3. 'Principles - Suggest.
Answer: The principles of management are not rigid; they can be adjusted. Managers may change them according to the business's needs. For example, in large companies, the principle of division of work might be applied consistently, but in smaller units, it may not be used in the same way. Therefore, the manager of a small unit might need to adjust the principle based on the firm's specific requirements.
In simple words: Management principles are flexible, not strict rules. Managers can change them to fit what the business needs, especially depending on the size of the company.

Exam Tip: Stress the adaptability of management principles; they are dynamic guidelines that managers must customize to their specific organizational context.

 

Question 4. In to which six parts, Henry Fayol divided his entrepreneur activities - Explain.
Answer:

• Henri Fayol was a French engineer and an industrialist. He contributed significantly to management thoughts and principles.
• In 1961, he introduced 14 principles of management, which he presented in his book 'Industrial and General Management'.
• For improved management, clarity, and ease, he categorized the activities of industrial units into 6 parts. The six parts are:

In simple words: Henry Fayol divided a company's actions into six main types: technical (like making things), commercial (like buying and selling), financial (money matters), safety (keeping things safe), accounting (keeping records), and management (planning and organizing).

Exam Tip: When asked about Fayol's activities, remember the six categories and provide a brief example for each to show comprehensive understanding.

 

Question 5. What is 'Rule of Thumb'?
Answer:

• Under the traditional management system, the owners controlled the workers.
• Workers were instructed to perform the maximum amount of work without receiving any major benefits.
• Workers had no say in decisions. They simply had to follow whatever they were told to do, regardless of the method.
• The orders given by the owners and managers were the "rule of thumb," which workers had to accept without question.

In simple words: 'Rule of Thumb' refers to a traditional management style where owners simply gave orders, workers had to obey without questioning, and they often got few benefits for their hard work.

Exam Tip: Highlight that "rule of thumb" management is characterized by arbitrary decisions, lack of worker input, and minimal benefits, contrasting it with more systematic approaches.

 

Question 6. Explain the principle of unity of command.
Answer: Unity of command:

• The idea of getting instructions from only one superior is called Unity of Command.
• Employees cannot follow orders from multiple superiors. Therefore, this principle suggests that each employee should receive orders from only one superior for any job or task.
• According to this principle, an employee should be accountable to just one superior or department for a specific job.
• This principle helps prevent any confusion that might arise among employees regarding whose orders to follow. If instructions come from more than one superior, it creates disorder among employees and negatively impacts industrial discipline.

In simple words: Unity of command means each employee takes orders from only one boss to avoid confusion and maintain discipline.

Exam Tip: Stress that unity of command is vital for preventing conflicting instructions, reducing ambiguity, and ensuring clear accountability within an organization.

 

Question 7. Explain Taylor's differential wage rate study.
Answer: Differential wage-rate study:

• A reference wage-rate system is a method of payment where, after tests, a standard time for any task is established. Workers receive a higher wage rate for completing the job within the allotted time and a lower wage rate for finishing the job beyond the allotted time.
• Frederick Taylor supported this motivational wage system.
• Each worker in a factory has different levels of work efficiency. Considering this, efficient workers should get more pay, while less efficient workers should receive lower wages.

In simple words: Taylor's differential wage rate study suggests paying workers more if they finish tasks quickly and efficiently, and less if they take too long, to encourage productivity.

Exam Tip: Remember that Taylor's differential wage system directly links pay to performance, aiming to incentivize efficient workers and discourage inefficiency.

4. Answer the following questions in brief:

 

Question 1. Discuss about importance of the principles of management.
Answer: Importance of principles of management:

• Management principles provide insight into the behavior and approach of managers. This, in turn, greatly influences overall management.
• Managers utilize these principles to achieve business goals.

The importance of management principles is discussed below:

1. Increases managerial efficiency:
   • Management principles offer guidelines to managers for performing various tasks in different situations.
   • This improves the operation of a business unit and also boosts the effectiveness of managers.
2. Maximum usage and effective administration of resources:
   • In most business units, human and physical resources are available in limited quantities. Thus, there is a need for optimal use of these limited resources.
   • Management principles assist in improving the usefulness and effectiveness of resources while keeping cost inputs minimal.
3. Helps to take scientific and logical decisions:
   • Decisions should always be based on facts, sound reasoning, and clear objectives. They should be justifiable and made promptly to ensure they are effective.
   • Management principles help in making appropriate decisions in a timely manner without being influenced by bias.
4. To cope up with the changing business environment:
   • Management principles are essential for adapting to the business environment amid changing circumstances.
5. To fulfill social responsibility:
   • Profit is considered the main objective of a business, but it is not the only aim. The development and progress of society are also objectives of a business unit.
   • By effectively implementing management principles, a business unit can easily achieve its social responsibility goals.
6. Useful for research, training and development:
   • Management principles are the primary components of management ideas.
   • Training, education, and skill development are only possible through the proper application of management principles.
   • For example, in current times, aptitude tests are administered for hiring employees in various business units. These aptitude tests are created through research and by applying management principles.

In simple words: Management principles are important because they help managers work better, use resources wisely, make good decisions, adapt to changes, fulfill social duties, and support staff training and growth.

Exam Tip: For comprehensive answers on importance, structure your points clearly (e.g., using numbers or headings) and provide a brief explanation for each, linking it directly to improved management practice.

 

Question 2. Write a short-note on modem thoughts.
Answer: Thoughts of modern management:

• The structure of industries and business units changed again after 1960. This demanded a new, specific approach to management.
• Management was not limited to just business and industrial units but also included professional individuals and units that offered specialized services, such as taxation, law, and medicine. These professions led to a new category of managers.
• In addition to traditional management ideas, thoughts from psychology, social studies, statistics, mathematics, and computer information technology also became significant.
• Management Gurus like Koontz O'Donnell, George R. Terry, Peter F. Drucker, William Ouchi, and C. K. Prahlad have all contributed to the ideas of modern management.

In simple words: Modern management thoughts emerged after 1960 due to changing industries, expanding beyond factories to professional services, and incorporating ideas from various fields like psychology and IT, with many new experts contributing to these flexible approaches.

Exam Tip: When describing modern management, highlight its interdisciplinary nature, its broader scope beyond traditional industry, and the contributions of contemporary gurus.

 

Question 3. 'Principles of management are based on human behavior.' - Explain the statement.
Answer: Based on human behaviour:

• Humans are at the core of management. Therefore, management principles greatly influence human behavior.
• Human behavior is a psychological phenomenon, so applying management principles to humans will impact their conduct in the industry.
• Thus, it is crucial to keep this in mind when implementing these principles.

In simple words: Management principles are built around human behavior because people are central to any organization, meaning these principles must consider how they affect and are affected by human psychology and actions.

Exam Tip: Emphasize the psychological aspect of human behavior and its direct relevance to the effectiveness and ethical implementation of management principles.

 

Question 4. Explain behavior related thoughts.
Answer: Thoughts related to Human Behaviour:

• Management is the skill of getting tasks done through others, specifically humans. With this in mind, these thoughts consider human behavior as the main part of management.
• Prof. Urvik stated, “You manage your men, your men will manage rest of all". A business unit is run by people. Hence, it is extremely important to study the relationships between humans in the workplace.
• Since managing people occurs continuously, ideas related to human behavior focus on studying factors that affect human behavior in the workplace and their approach to work. Thus, these thoughts emphasize concepts like job satisfaction, improving employee efficiency, and ways to keep them motivated. All this is accomplished by conducting psychological observations on employees.
• Ideas such as inter-human relations, motivation, leadership, information communication processes, and resolving industrial disputes are included in behavior-related thoughts.
• One of the major downsides of this approach is that it only concentrates on psychological factors and does not consider the financial aspects of the business unit. Hence, some believe that good human relations cannot be maintained at the expense of productivity.

In simple words: Behavior-related thoughts focus on understanding how people act in a business. It looks at things like teamwork, motivation, and leadership, based on psychology. While it helps improve staff happiness and efficiency, some criticize it for sometimes ignoring financial concerns.

Exam Tip: When explaining behavior-related thoughts, ensure you cover key aspects like human relations, motivation, and communication, and also mention any identified limitations of this approach.

 

Question 5. Discuss about Peter F. Drucker's contribution in management field.
Answer: Contribution of Peter F. Drucker in the field of management:

• Peter F. Drucker (1909-2005) was a well-known management expert. He was also a famous author, philosopher, and teacher.
• When globalization happened globally, business management changed significantly. This demanded the creation of new management approaches.
• Peter F. Drucker gave greater importance to humans as valuable assets of a business unit.
• He introduced the concept of 'Management by Objective (MBO)' and the principles of 'Self-regulation'.
• Under Management by Objective, Peter stated that there should be consistency in the goals of employees and managers for achieving overall objectives.
• Management by Objective is highly effective for a wide range of business units with different structures. Drucker also contributed greatly to human resources management, marketing management, and stress management.
• Due to his many contributions to modern management, Peter F. Drucker is also known as the Father of Modern Management.

In simple words: Peter F. Drucker, a key management thinker, greatly influenced modern management by emphasizing people as assets, introducing Management by Objective (MBO) for goal alignment, and contributing broadly to various management areas, earning him the title 'Father of Modern Management'.

Exam Tip: When discussing Drucker, always mention MBO and his view of humans as assets, as these are central to his significant contributions to modern management theory.

5. Answer the following questions in detail:

 

Question 1. Describe the principles of scientific management.
Answer: Principles of Scientific Management as given by Fredrick Taylor:

1. Scientific method:
   • Traditional approaches should be discarded, and scientific methods should be adopted for work. Managers should determine the best way to perform tasks by analyzing them scientifically.
2. Planning and Implementation:
   • Instead of leaving planning and implementation to workers, experts should prepare the plans, and workers should follow them.
3. Job analysis:
   • An analysis of the job to be done should occur before starting it. This is the most effective way to complete work quickly and at a lower cost.
   • Under job analysis, time and motion study, along with fatigue study, should be conducted. This will reduce production costs and boost productivity.
4. Standardization:
   • Products and processes should be standardized and simplified. Doing so will lessen rework and ensure all products or services meet the same desired specifications. Standardization and simplification can be applied to equipment, time, work environment, resources, etc.
5. Scientific selection and training:
   • Workers should be chosen using appropriate and scientific methods.
   • Standards or benchmarks should be established for employee education, skills, courage, physical strength, and training before selection.
   • Moreover, an employee should be assigned work that matches their education, study, and skills.
   • Training should be provided to workers regularly to enhance their efficiency.
   • Various scientific tests should be designed and used to understand their work interests.
6. Financial motivation:
   • Skilled and effective workers should receive financial and other incentives. Several wage plans have been suggested to motivate employees.
   • The wage system must be based on the individual productivity of each employee.
   • Wage rates should not be set based on guesswork or randomness, but only after performing a scientific study.
7. Economical measures:
   • When applying scientific management, emphasis should also be placed on cost-effective management methods, rather than just scientific and technical approaches. The unit should also prioritize low-cost production.
   • Cost estimation and control methods should be considered well in advance. Furthermore, if there are differences in estimates and their execution, corrective action should be taken.
8. Mental revolution:
   • A mental shift should occur between owners and workers to achieve objectives.
   • Mental revolution reduces tension between owners and workers and makes achieving goals easier.

In simple words: Scientific management involves using scientific methods to find the best way to work, separating planning from doing, analyzing jobs, standardizing tasks, carefully selecting and training workers, offering financial rewards for good performance, focusing on cost-effective methods, and encouraging a positive mental shift between management and employees.

Exam Tip: For scientific management, remember Taylor's core principles: scientific methods, separation of planning, job analysis (time/motion study), standardization, scientific selection/training, financial incentives, economical measures, and mental revolution. Detail each point with clear examples or explanations.

 

Question 2. Describe in detail about classical thoughts.
Answer: Thoughts of Classical Theory:

1. The management ideas presented up to the end of the 19th century are known as classical theory thoughts. Frederick Taylor, Max Weber, Gilbreath, Henry Gantt, and Henri Fayol were the main proponents of classical theory ideas.
2. Among these, Taylor's contribution is quite important.
3. The principles of scientific management introduced by Frederick Taylor still influence management theory today.
4. The scientific management method favors scientific principles through 'time and motion study' rather than relying on traditional methods. Scientific management has made significant contributions to management specialization, progressive wage systems, responsibility, and the scientific distribution of tasks.
5. Henri Fayol's contribution to classical theory thoughts is also very significant. He introduced several general principles of management.
6. He established various task levels within a business unit and aimed to set limits for each task.
7. He also provided universal principles of management as guidelines for performing managerial duties at different levels.
8. Max Weber also contributed to classical theory thoughts. By the close of the 19th century, industrial structures and sizes began to grow due to the industrial revolution. Classical theory proved less effective for these large industries, prompting a need for changes in these principles. There arose a need to prioritize financial motivation, and less importance was given to human factors and informal relations.

In simple words: Classical management thoughts, popular until the late 1800s, were developed by thinkers like Taylor and Fayol. They focused on scientific methods, efficiency through time and motion studies, task specialization, and general management principles. However, with bigger industries, these ideas struggled with human factors, leading to a focus on money over people.

Exam Tip: To describe classical thoughts, list the prominent contributors and highlight their key ideas (e.g., Taylor's scientific management, Fayol's general principles). Also, include the historical context and the limitations that led to newer theories.

 

Question 3. Describe Henry Fayol's principles of management.
Answer: Henri Fayol's Principles of management: With his extensive experience and knowledge, Henri Fayol presented 14 important principles of Management. They are:

1. Division of work:
   • Management emphasizes higher efficiency for employees and managers. Dividing work is one way to achieve this.

In simple words: Henri Fayol, using his vast experience, laid out 14 key management principles. One main principle is the 'division of work', which means splitting tasks among employees and managers to boost their efficiency.

Exam Tip: When discussing Fayol's principles, ensure you list and briefly explain each one, emphasizing how they contribute to overall organizational effectiveness and structure.

 

Question 3. Describe Henry Fayol's principles of management.
Answer: Henri Fayol's principles of management are based on his extensive experience and understanding. He introduced 14 significant principles of Management. These include:
1. Division of work:

• Management places more emphasis on the greater efficiency of employees and managers. Dividing work is one way to achieve this.
• Henri emphasized the division of labor, as it can also lead to specialization and increased output. Work division should happen at both the managerial and factory levels to benefit from specialization.

2. Authority (power) and responsibility:

• Power and responsibility are two sides of the same coin. Power without accountability and accountability without power are incomplete.
• When a person receives responsibility for a certain job, they should also get some power to oversee that job.
• When assigning power, various factors like the employee's position, knowledge, qualifications, experience, leadership skills, maturity, and more should be considered. This will boost employee enthusiasm, which will, in turn, make it simpler to achieve business goals.

3. Discipline:

• Proper discipline should be maintained to successfully achieve business objectives.
• Discipline creates a harmonious environment at the workplace.
• To maintain discipline in the industry, it is very important to make optimal use of equipment and ensure activities are done consistently.
• Industrial discipline can be established by setting specific rules and a code of conduct. This then leads to the proper administration of the unit.
• It becomes easy to manage and control a unit with more employees if a proper code of conduct is established.
• It also increases employees' work interest and makes the work easier for managers.
• Supervision, clear and appropriate contracts between workers and owners, and suitable implementation of punishments at every level are important aspects of discipline.

4. Unity of command:

• The idea of receiving orders from only one superior is called Unity of Command.
• Employees cannot follow orders from more than one superior. Hence, this principle suggests that an employee should get orders from only one superior for any task or activity.
• As per this principle, an employee should be accountable to only one superior or department for a particular job.
• This principle prevents any confusion that might arise among employees regarding whose orders to follow. If orders come from more than one superior, it creates confusion among employees and harms industrial discipline.

5. Unity of direction:

• Planning shapes the business's future. However, if activities do not go as planned, they are then re-directed and brought back onto the planned path.
• The instructions for these things should be given by a higher authority. By doing this, activities can be well co-ordinated, and all tasks can be done easily.
• According to this principle, there should be only one superior employee leading a particular group of employees. This group should focus on one specific objective at a time.

6. Subordination of individual interest to the general interest:

• This principle states that 'general interest' is more important than 'individual interest'.
• This principle indicates that the entire unit's interest should be prioritized rather than the interest of an individual or a group of employees.
• The manager must try to combine individual goals with organizational goals in a way that both objectives are achieved with efficiency and effectiveness.

7. Remuneration of personnel:

• The compensation or reward given to employees for their service is called remuneration.
• Fayol believes that company employees should be paid fair and suitable wages. This strengthens the owner-employee relationship.
• In a unit, not all employees work with the same efficiency. Some employees show greater efficiency than others. Such employees should receive higher wages or rewards compared to others. This will keep employees loyal to the unit and prevent them from leaving the job.
• The unit should also implement promotional schemes like bonuses, profit-sharing, and representation in the management committee, among others.

8. Centralization:

• The business unit should decide the extent of centralization or decentralization it wants to adopt for proper management.
• Not delegating powers to subordinates and keeping them only with owners or top personnel is called centralization.
• Centralization is adopted when the business unit is small. This helps in making the best use of employees' strengths and capabilities.
• If the unit is large, it is highly advisable to move away from centralization and adopt decentralization of power.

9. Scalar chain:

• The scalar chain is the formal line of authority that moves from the highest to the lowest rank in a direct line. This chain specifies the path through which information is to be communicated to the required location or person.
• Fayol emphasized that every piece of information in the organization must flow according to this chain to facilitate clear communication of orders from superiors and the feelings of subordinates.
• This chain must be strictly followed in the organization.
• This principle emphasizes creating a chain from top-level management to bottom-level employees.
• The chain of power from higher administrative officers to lower-level employees should not be broken.
• There should be proper delegation of powers and responsibilities at each level. Moreover, employees in the unit should know who is responsible for what.

10. Order:

• Here, the word 'order' does not mean a command but signifies the correct arrangement of things and activities.
• This principle states that there should be a proper order for everything. Fayol's view is that every organization should have a fixed place for everything to ensure smooth operations and prevent resource waste.

Fayol suggested two types of orders in a unit:
(A) Material order:
This order specifies that there should be a proper place for all physical resources of the unit.
(B) Social order:

• This order specifies that there should be a proper place for all human resources according to their job titles. It states, "An assigned place for every employee and each employee at their assigned place."
• Skilled employees should be placed in the right position within the unit.

11. Equality:

• Employees are part of the managerial system.
• Employees are human beings, so management should adopt a practical and humane approach to handle them.
• Superiors should behave appropriately and consistently when assigning tasks to their subordinates.
• Management should strive to establish equality in the unit informally, rather than through legal or traditional methods.
• This principle believes that employees' behavior is based on loyalty, attitude, consistency, and fairness within the unit.

12. Stability of tenure of personnel:

• 'Stability' means no frequent changes, terminations, or transfers.
• This principle states that in an organization, once an employee is hired for a job, they should not be removed or transferred from that position often.
• Permanent and stable employees are a valuable asset to any business unit.
• An employee can grow by staying in the unit and contributing to the achievement of the business unit's goals.
• Moreover, as an employee stays with the unit for a long time, their knowledge of the work system leads to greater productivity. This also helps reduce the labor turnover rate.

13. Initiative:

• 'Initiative' means to begin, start, or instruct a project.
• Here, in this principle, Fayol suggested that each employee should get an opportunity to take some initiative in creating the functional plan and determining the steps for proper execution at each level.
• Industrialists should provide an environment where employees can eagerly participate in initiating tasks.
• Initiative improves an employee's ability to work independently and develops their leadership qualities.

14. Esprit de Corps (Feeling of Oneness):

• Esprit de Corps means team spirit and teamwork, fostering a feeling of unity.
• The success of an industrial unit depends on the mutual relationships between managers and employees.
• Due to this fact, there should be harmony between both groups.
• Managers should foster a group feeling among employees. They should instill in employees' minds that by working together, they can achieve the goal easily and quickly.
• Henri Fayol said that "The above list is not the final list of management principles. Managers can add new principles based on their experience, research, and knowledge. These principles can be applied to all types of activities like business, economic, political, and social."

In simple words: Henri Fayol created 14 rules for management based on his experience. These rules cover things like dividing work, giving managers power and responsibility, keeping things orderly, treating everyone fairly, and encouraging teamwork. He believed these rules help organizations run smoothly and achieve their goals.

Exam Tip: When describing Fayol's principles, ensure you list all 14 and briefly explain what each principle means, providing examples where helpful.

 

Question 4. Describe in detail about Nature of management.
Answer: Principles of management are not strict rules and are quite practical. These principles provide guidance for performing tasks. For example, these principles guide managers in making various decisions during the implementation of different management tasks like planning, organizing, and directing.
Experts believe that even though management principles are mostly true, they are not absolute truths because there are also exceptions to these principles.
We can derive the following conclusions from the principles of management:
1. Universal acceptance:

• Principles of management can be applied to most business units; they are universally applicable.
• These principles are needed whenever there is a need for the collective efforts of humans. However, their application and method of implementation may change depending on the type, form, activity, and size of the business unit.

2. Flexibility:
The principles of management are not rigid. The manager may change them as per the business's needs. For example, in large units, the principle of division of work may be applied uniformly, but in small units, the principle of division of work may not be applied in the same proportion. Therefore, the manager of a small unit may have to change the principle according to the firm's requirements.
3. General guidelines:

• Principles of management are developed based on experiences gained by different experts in various situations.
• While managing the unit, several different types of simple and complex problems arise. These issues may vary from unit to unit. So, regarding these, the principles of management might work well for one unit but might not work for another.
• Hence, it should be noted that the principles of management are general guidelines. They cannot be followed strictly in the same way by every business unit.

4. Based on human behavior:

• Humans are at the center of management. So, the principles of management greatly affect human behavior.
• Human behavior is a psychological occurrence, so implementing management principles on humans will affect their behavior in the industry.
• Hence, it is important to keep this in mind while implementing the principles.

5. Contingency:

• Contingency is one of the elements applicable to the principles of management. Units can use these principles and achieve their business goals easily.
• For example, decisions related to issues like appropriate and reasonable wages for employees depend on the need and the affecting factors' contingency.

In simple words: Management principles are not fixed rules but adaptable guides. They are used everywhere, but how they are used can change based on the company's size and type. These principles act as general guides, focusing on human behavior, and their application depends on specific situations.

Exam Tip: When discussing the nature of management, emphasize that principles are guidelines, not rigid laws, and explain how their application can vary depending on context and human factors.