Chapter 2 Principles of Management

1

Principle

Rules , Regulation but not technique or methods.

2

Broad and General

Broad means wide in extent or scope, whereas general means including or involving every part  or activity or member of a given entity

3

Guideline

(दिशा निर्देशों)  to provide direction.

4

Guideline for   decision making:

Example: How to make Promotion in the company

Age or merit , or gender or Look.

5

Is management  Principle rigid as pure science

No .Management principle is not rigid as pure science.

Management principles are not as rigid as principles of pure science. Management  principles deals with human behavior, therefore management principle are to be applied creatively according to the demands of the situation.

Because of Globalization and change in technology  human behavior is changing at very high pace .Hence even  

Hence all the principles have to keep pace  with these changes.

7

Observation

8

Experimentation

9

Is Principle of management  same as technique or methods?

Techniques are procedures or methods, which involve a

series of steps to be taken to accomplish desired goals

Principles are guidelines to take decisions or actions while practicing techniques

10

Is value of the company is equal to principle of the company

Values are something, which are acceptable or desirable. They have moral connotations.

Values are general rules for behavior of individuals in society formed through common practice

Principles are basic truths or guidelines for behavior.

Principles of management are formed after research in work situations, which are technical in nature.

1

Honour the language and spirit of law of every nation

Honour the language and spirit of law of every nation and undertake open and fair corporate activities to be a good corporate citizen around the world.

2

Respect the culture and customs of every nation

Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in local communities.

3

Best Product Quality and quality of life

To provide clean and safe products and to enhance the quality of life everywhere.

4

Technological development

Create and develop advanced technologies and provide outstanding products and services that organize the needs of customers worldwide

5

Corporate culture

Foster a corporate culture that enhances individual creativity and teamwork value, while honouring mutual trust and respect between management and labour.

6

Harmony

Pursue growth and harmony with global community through innovative management.

7

Research and development

Be updated with change of technology : Qualis vs INNOVA VS Furtuner vs Crysta

1

Early Perspectives

The first known management ideas were recorded in 3000-4000 B.C. in Egypt.

2

Classical Management Theory

 The rational economic view assumed that people are motivated by economic gains primarily; 1.Scientific management of F.W. Taylor and others organize one best way of production etc; 2.Administrative theorists personified by Henri Fayol etc looked at the best way to combine jobs and people into an efficient organization; 3.Bureaucratic organization theorists led by Max Weber looked at ways to eliminate managerial inconsistencies due to abuse of power which contributed to ineffectiveness.

This was the era of the industrial revolution and factory system of production. Large scale production would not have been possible without adherence to the principles governing organization production based on division of labour and organization, relationship between man and the machine, managing people and so on.

3

Neo Classical Theory — Human Relations Approach;

This school of thought developed between 1920s to 1950s felt that employees simply do not respond rationally to rules, chains of authority and economic incentives alone but are also guided by social needs, drives and attitudes. Hawthorne Studies at GEC etc., were conducted then. It was quite natural that in the early phases of the industrial revolution, the emphasis was on development of techniques and technology. The attention to the human factor was the salient aspect of this school of thought. This attention was to serve as a precursor to the development of behavioral sciences

4

Behavioural Science Approach:

Organisational Humanism;

BEHAVIOURAL SCIENCE APPROACH — ORGANISATIONAL HUMANISM

Organizational behaviorists like Chris Argyris; Douglas McGregor, Abraham Maslow and Fredrick Herzberg used the knowledge of psychology, sociology and anthropology to develop this approach. The underlying philosophy of organization humanism is that individuals need to use all of their capacities and creative skills at work as well as at home

5

Management Science/Operational Research;

It  organizational research on operations and use of quantitative techniques to aid managers to take decisions.

6

Modern Management

It sees modern organizations as complex systems and underlies contingency approach and use of modern techniques to solve organizational and human problems.

1.U

Universal applicability:

2.G

General guidelines:

3.C

Cause and effect relationships:

4.C

Contingent:

5.F

Flexibile:

6.E

Experimentation based formation

7.B

behavioural:

1

Universal applicability:

The principles of management are intended to apply to all types of organisations, business as well as non-business, small as well large, public sector as well as private sector, manufacturing as well as the services sectors.

The extent of their applicability would vary with the nature of the organization, business activity, scale of operations and the like. For example, for greater productivity, work should be divided into small tasks and each employee should be trained to perform his/her organization job.

2

 General guidelines:

The principles are guidelines to action but do not provide readymade, strait jacket solutions to all managerial problems.

This is so because real business situations are very complex and dynamic and are a result of many factors.

3

Cause and effect relationships:

The principles of management are intended to establish relationship between cause and effect so that they can be used in similar situations in a large number of cases.

As such, they tell us if a particular principle was applied in a particular situation, what would be its likely effect.

In real life, situations are not identical. So, accurate cause and effect relationships may be difficult to establish.

4

Contingent:

The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time. The application of principles has to be changed as per requirements.

For example, employees deserve fair and just remuneration. But what is just and fair is determined by multiple factors. They include contribution of the employee, paying capacity of the employer and also prevailing wage rate for the occupation under consideration.

5

Experimentation based formation

The principles of management are formed by experience and collective wisdom of managers as well as experimentation.

For example, it is a matter of common experience that discipline is indispensable for accomplishing any purpose.

6

Flexibile:

The principles of management are not rigid prescriptions, which have to be

followed absolutely. They are flexible and can be modified by the manager when the situation so demands.

For example, the degree of concentration of authority or its dispersal will depend upon the situations and circumstances of each enterprise.

7

Behavioral:

Management principles aim at influencing  organization of human beings.

Therefore, principles of management are mainly behavioral in nature.

Moreover, principles enable a better understanding of the relationship between human and material resources in accomplishing  organization purposes.

Meeting changing environment requirement

2. P

Providing managers with useful insight into reality

3. S

Scientific decision

4. O

Optimum utilization of resources and effective administration:

Fulfilling social responsibility

Training, education and research Management

Meeting changing environment requirements:

Although the principles are in the nature of general guidelines but they are modified and as such help managers to meet changing requirements of the environment. You have already studied that management principles are flexible to adapt to dynamic business environment.

Providing managers with useful insights into reality:

The principles of management provide the managers with useful insights into real world situations. Adherence to these principles will add to their knowledge, ability and understanding of managerial situations and circumstances.

It will also enable managers to learn from past mistakes and conserve time by solving recurring problems quickly.

Scientific decisions:

Decisions must be based on facts, thoughtful and justifiable in terms of the intended purposes.

They must be timely, realistic and subject to measurement and evaluation.

Management help in thoughtful decision-making.

Management decisions taken on the basis of principles are free from bias and prejudice.

Optimum organization of resources and effective administration:

Resources both human and material available with the company are limited. They have to be put to optimum use.

By optimum use we mean that the resources should be put to use in such a manner that they should give maximum benefit with minimum cost.

Principles equip the managers to foresee the cause and effect relationships of their decisions and actions. As such the wastages associated with a trial-and-error approach can be overcome.

Fulfilling social responsibility:

The increased awareness of the public, forces businesses especially limited companies to fulfill their social responsibilities.

Management theory and management principles have also evolved in response to these demands.

Moreover, the interpretation of the principles also assumes newer and contemporary meanings with the change in time.

So, if one were to talk of ‘equity’ today, it does not apply to wages alone. Value to the customer, care for the environment, dealings with business associates would all come under the purview of this principle.

Training, education and research Management

Principles of management are at the core of management theory.

As such these are used as a basis for management training, education and research.

The principles provide basic groundwork for the development of management as a discipline.

Professional courses such as MBA (Master of Business Administration), BBA (Bachelor of Business Administration) also teach these principles as part of their curriculum at the beginner’s level.

1

LIFE TIME

March 20,1856 to March 21, 1915

2

PROFESSION:

American mechanical engineer

3

EDUCATION:

Degree in Mechanical Engineering from Stevens Institute of Technology in 1883.

4

POSITIONS HELD—

Different position :

i

Apprentice Machinist in 1874

ii

Executive at Midville Steel Company in 1884.

Iii

At Bethlehem Iron Company in 1898, which later became Bethlehem Steel Company.(PIC)

iv

Professor at ‘Tuck School of Business’ founded in 1900.

v

President of ‘American Society of Mechanical Engineers’ from 1906 to 1907.

5

WRITINGS:

Different articles and finally a book ; Scientific management System

i

 ‘The Principles of Scientific Management’ series of articles published in ‘The American Magazine’ During march-may 1911, later published in book form.

ii

‘Concrete, Plain and Reinforced’ in 1906.

iii

 ‘Notes on Belting’ in 1893

iv

‘On the Art of Cutting Metals’ December 1906.

v

‘A Piece Rate System’ in June 1895.

vi

 ‘The making of a putting green’ a series of articles published in 1915.

vii

‘Not for the genius but for the average man’ published in ‘The American Magazine’ in March 1918

1

Science not Rule of Thumb:

2

Harmony, Not Discord:

3

Cooperation, Not Individualism:

4

Development of Each and Every Person to His or Her

 Greatest Efficiency and Prosperity:

Science not Rule of Thumb:

Meaning of rule of thumb

Basic principle principles of management.

It refers to an easily learned and easily applied procedure or standard, based on practical experience rather than theory.

Based on assumption and belief without data.

Mela ka scene gubbara untrained hit and miss trial and error methods . trained and untrained.

Study and analysis

Taylor believed that there was only one best method to maximise efficiency. This method can be developed through study and analysis. The method so developed should substitute ‘Rule of Thumb’ throughout the organisation.

Work study required

Scientific method involved investigation of traditional methods through work-study, unifying the best practices and developing a standard method, which would be followed throughout the organization.

Harmony, Not Discord:

There must harmony not discord between workers and owners

Love and affection between Workers and owners

Factory system of production implied that managers served as a link between the owners and the workers.

There should be love and affection not discord between them.

Conflict between managers and workers

Managers have the mandate to ‘get work done’ from the workers, it should not be difficult for managers to appreciate that there always existed the possibility of a kind of class-conflict, the

mangers versus workers.

Conflict is not good for any body

Taylor recognised that this conflict helped none, the workers, the managers or the factory owners. He emphasised that there should be complete harmony between the management and workers. Both should realise that each one is important.

Mantel Revolution:

All three stake holder : owners, mangers and workers should be completely mentally aligned

Taylor called for complete mental revolution on the part of both management and workers.

It means that management and workers should transform their thinking. In such a situation even trade unions will not think of going on strike etc.

Management should share the gains of the company, if any, with the workers. At the same time workers should work hard and be willing to embrace change for the good of the company. Both should be part of the family.

Japnese way of strike

Japanese work culture is a classic example of such a situation. In Japanese companies, paternalistic style of management is in practice. There is complete openness between the management and workers.

If at all workers go to strike they wear a black badge but work more than normal working hours to gain the sympathy of the management.

Cooperation, Not Individualism:

Both workers and management should co-operate with each other

Owners and Management need each other

There should be complete cooperation between the labour and the management instead of individualism. This principle is an extension of principle of ‘Harmony not discord’. Competition should be replaced by cooperation. Both should realise that they need each other.

Management must listen to workers suggestion

Management should not close its ears to any constructive suggestions made by the employees. They should be rewarded for their suggestions which results in substantial reduction in costs.

They should be part of management and, if any important decisions are taken, workers should be taken into confidence

Workers should desist strike

At the same time workers should desist from going on strike and making unreasonable demands on the management. In fact when there will be open communication system and goodwill there will be no need for even a trade union.

Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity:

Every person should be developed to his highest potential.

Industry efficiency depends on personnel competency

Industrial efficiency depends to a large extent on personnel competencies. As such, scientific management also stood for worker development.

Workers training

Worker training was essential also to learn the ‘best method’ developed as a consequence of the scientific approach.

Efficiency should be focused from recruitment of workers

Taylor was of the view that the concern for efficiency could be built in right from the process of employee selection. Each person should be scientifically selected.

Assignment of work according to capabilities

Work assigned should suit her/his physical, mental and intellectual capabilities. To increase efficiency, they should be given the required training.

Efficient workers should be paid more

Efficient employees would produce more and earn more. This will ensure their greatest efficiency and prosperity for both company and workers.

6. unctional  foremanship

Standardization of Working condition & Simplification

Work study: (i) Method Study (ii) Motion Study (iii) Time Study (iv) Fatigue Study

Differential Piece Wage System

Mental revolution

Sn

Points

Explanation

1

Functional foremanship: Case studies : STAR PAPER MILLS:

i

In factory system – Lowest managerial person

Foreman is the lowest ranking manager. In the factory system, the foreman represents the managerial figure with whom the workers are in face-to-face contact on a daily basis.

Taylor concentrated on improving the performance of this role in the factory set-up.

In fact, he identified a list of qualities of a good foreman or supervisor and found that no single person could fit them all.

II

Qualities of foreman

Foremen should have (1)Intelligence

 (2)Tact,(3)Grit (DHARYA ), (4)judgment,(NIRNAY)(6)Special Knowledge,(7)Manual dexterity (निपुणता),

 and (8)  Energy, honesty and good health.

III

8 Specialist recommendation

Since all these qualities could not be found in a single person so Taylor proposed eight specialists. Each specialist is to be assigned work according to her/his qualities.

IV

Separate planning and execution function

Taylor advocated separation of planning and execution functions. This concept was extended to the lowest level of the shop floor.

It was known as functional foremanship.

example, those with technical mastery, intelligence and grit may be given planning work. Those with energy and good health may be assigned execution work.

V

Four personnel under planning in charge

1.Instruction Card Clerk: Providing instructions to workers.

2. Route Clerk Determining the route to be followed in production. 

3.Time and Cost Clerk: Time and Cost Clerk fixes the time for starting and completing the work and prepares the cost sheet for each job.

4.Disciplinarian He is responsible to maintain discipline among workers.

VI

Four personnel under Execution in charge

Four personnel under personnel in charge

1. Speed boss He is responsible for timely completion of job.

2.  Gang-boss He is responsible for keeping machines and tools ready for work.

3. Repair boss He is responsible to keep machines and tools in proper working ...

4. Inspector He is responsible to maintain quality of work.

VI

Functional foremanship is an extension of the principle of division of work and specialisation to the shop floor.

Functional foremanship is an extension of the principle of division of work and specialisation to the shop floor. Each worker will have to take orders from these eight foremen in the related process or function of production.

2

Standardisation  and Simplification of Work

Taylor was supporter of setting standardistion and simplification

i

Standardization

Scientifically a set standard must be formed for every activity

Standardisation refers to the process of setting standards for every business activity; it can be standardisation of process, raw material, time, product, machinery, methods or working conditions. Taylor was an ardent supporter of standardisation. According to him scientific method should be used to analyse methods of production prevalent under the rule of thumb.

These standards are the benchmarks, which must be adhered to during production. The objectives of standardisation are:

To reduce a given line or product to fixed types, sizes and characteristics.

To establish interchange ability of manufactured parts and products

 To establish standards of excellence and quality in materials.

To establish standards of performance of men and machines.

This can be done through work-study techniques which include time study, motion study, fatigue study and method study, and which are discussed further in this chapter. It may be pointed out that even the contemporary techniques of business process including reengineering, kaizen (continuous improvement) and benchmarking are aimed at standardising the work.

ii

Simplification

Simplification aims at eliminating superfecious ,     varieties, sizes and dimensions while standardisation implies devising new varieties instead of the existing ones.

Simplification aims at eliminating unnecessary diversity of products.

It results in savings of cost of labour, machines and tools. It implies reduced inventories, fuller utilisation of equipment and increasing turnover.

Most large companies like Nokia, Toyota and Microsoft, etc. have successfully implemented standardisation and simplification. This is evident from their large share in their respective markets.

3

Work study

Work study have four elements :

Method study , motion study , Time study , Fatigue study :

Methods –( The main objective of method study is to find out the best way of doing the job

Motion: The objective of motion study is to eliminate unnecessary and wasteful motions so that it takes less time to complete the job efficiently.

Time : The main objective of time study is to determine the standard time required to perform a job.

Fatigue : The objective of fatigue study is to maintain the efficiency level of workers by determining the amount and frequency of rest intervals in completing a task.

(i)

Method Study

The objective of method study is to find out one best way of doing the job. There are various methods of doing the job.

To determine the best way there are several parameters. Right from procurement of raw materials till the final product is delivered to the customer every activity is part of method study.

Taylor devised the concept of assembly line by using method study. Ford Motor Company used this concept very successfully. Even now auto companies are using it.

The objective of the whole exercise is to minimise the cost of production and maximise the quality and satisfaction of the customer.

For this purpose many techniques like process charts and operations research etc are used.

For designing a car, the assembly line production would entail deciding the sequence of operations, place for men, machines and raw materials etc. All this is part of method study.

ii

Motion Study

Motion study refers to the study of movements like lifting, putting objects, sitting and changing positions, etc., which are undertaken while doing a typical job.

Unnecessary movements are sought to be eliminated so that it takes less time to complete the job efficiently.

On close examination of body motions, for example, it is possible to find out:

Motions which are productive

 Motions which are incidental (e.g., going to stores)

Motions which are unproductive.

Taylor used stopwatches and various symbols and colours to identify different motions.

Through motion studies

Taylor was able to design suitable equipment and tools to educate workers on their use. The results achieved by him were truly remarkable.

iii

Time Study

It determines the standard time taken to perform a well-defined job. Time measuring devices are used for each element of task.

The standard time is fixed for the whole of the task by taking several readings.

The method of time study will depend upon volume and frequency of the task, the cycle time of the operation and time measurement costs.

The objective of time study is to determine the number of workers to be employed; frame suitable incentive schemes and determine labour costs.

For example, on the basis of several observations it is determined that standard time taken by the worker to make one cardboard box is 20 minutes. So in one hour she/he will make 3 boxes. Assuming that a worker has to put in 8 hours of work in a shift and deducting one hour for rest and lunch, it is determined that in 7 hours a worker makes 21 boxes @ 3 boxes per hour.

Now this is the standard task a worker has to do.

Iv

Fatigue Study

A person is bound to feel tired physically and mentally if she/he does not rest while working.

The rest intervals will help one to regain stamina and work again with the same capacity.

This will result in increased productivity.

Fatigue study seeks to determine the amount and frequency of rest intervals in completing a task. (There can be many causes for fatigue like long working hours, doing unsuitable work, having uncordial relations with the boss or bad working conditions etc. Such hindrances in good performance should be removed.

4

Differential Piece Wage System

Taylor was a strong advocate of piece wage system

He wanted to differentiate between efficient and inefficient workers. The standard time and other parameters should be determined on the basis of the work study discussed above.

The workers can then be classified as efficient or inefficient on the basis of these standards.

He wanted to reward efficient workers. So he introduced different rate of wage payment for those who performed above standard and for those who performed below standard.

5

Mental revolution

Mental revolution involves a change in the attitude of workers and management towards one another from competition to cooperation.

Both should realise that they require one another.

Both should aim to increase the size of surplus. This would eliminate the need for any agitation.

Management should share a part of surplus with workers.

Workers should also contribute their might.

This attitude will be good for both of them and also for the company.

In the long run only worker’s well-being will ensure prosperity of the business.

Henri Fayol (1841-1925) was a French management theorist

He graduated from of in 1860 in mining engineering.

The 19 year old engineer  started  at the mining company ‘Compagnie de commentary-Fourchambean- Decazeville,  ultimately acting as its managing director from 1888 to 1918.

• was the first to identify four functions of management – Planning, Organising, Directing and Controlling

According to Fayol, all  activities of  an  industrial  undertaking could be divided into: Technical; Commercial; Financial; Security; Accounting and Managerial

He also suggested that qualities a manager must  possess  should be — Physical, Moral, Education, Knowledge and experience.

He believed that the number of management principles that might help to improve an organisation’s operation is potentially limitless. Based largely on his own experience, he developed his concept    of    administration.

The 14 principles of management propounded by him were discussed in detail in his book published in 1917, ‘Administration industrielle et  generale’.  It  was  published in English as ‘General and Industrial Management’ in 1949 and is widely considered a foundational work in classical management theory. For his contribution he is also known as the ‘Father of General Management’

1.D

Division of Work

2.A

Authority and Responsibility:

3.D

Discipline:

4.U

Unity of Command