Class 12 Principles of Management

The nature and significance of principles of management, Fayol’s 14 principles, and Taylor’s scientific management: its principles and its techniques.

Key ideas

Principles of management are broad, flexible guidelines for decisions: universal, formed by practice, mainly behavioural, showing cause and effect, and contingent on the situation.

Henri Fayol gave 14 principles from a top management view, meant for every kind of organisation.

Unity of command means one employee, one boss; unity of direction means one head and one plan for activities with the same objective.

The scalar chain is the formal line of authority from top to bottom; a gang plank lets people at the same level talk directly in an emergency.

F. W. Taylor, the father of scientific management, gave four principles: science, not rule of thumb; harmony, not discord; cooperation, not individualism; development of each person to greatest efficiency.

Harmony needs a mental revolution: managers and workers change their attitude to each other and share the gains of higher output.

Taylor’s techniques: functional foremanship, standardisation and simplification, method, motion, time and fatigue study, and the differential piece wage system.

Remember

Fayol’s 14 principles

division of work; authority and responsibility; discipline; unity of command; unity of direction; subordination of individual interest; remuneration; centralisation and decentralisation; scalar chain; order; equity; stability of personnel; initiative; esprit de corps

Functional foremanship

planning in-charge: instruction card clerk, route clerk, time and cost clerk, disciplinarian; production in-charge: speed boss, gang boss, repair boss, inspector

Differential piece wage

output ≥ standard: output × higher rate; below standard: output × lower rate

Standard output (time study)

hours × 60 ÷ minutes per unit

With rest (fatigue study)

(hours × 60 − rest minutes) ÷ minutes per unit

Standardisation vs simplification

setting standards for every activity vs removing needless varieties, sizes and grades

Watch out

Mixing up unity of command (one boss) and unity of direction (one plan).

Paying the higher rate only on the units above the standard: a worker who reaches the standard gets it on every unit.

Saying functional foremanship follows unity of command: a worker takes orders from eight foremen, so it breaks it.

Confusing motion study (removing needless movements) with time study (fixing the standard time).

Worked example

Brightway Toys Ltd pays by Taylor’s differential piece wage system: standard 25 units a day, ₹60 a unit at or above standard and ₹40 below. Sana makes 29 units, Tanvi 25 and Dev 24. (a) Find each worker’s wage. (b) By how much would Dev gain by reaching the standard? (c) What is the aim of this system?

Working: 29 × 60; 25 × 60; 24 × 40; 25 × 60 − 960

Answer: (a) Sana ₹1,740, Tanvi ₹1,500, Dev ₹960 (b) ₹540 (c) to reward efficient workers and push others to improve