By going through these Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 1 Principles of Management students can recall all the concepts quickly.

Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 1 Principles of Management

→ Team spirit : Team spirit means willingness to cooperate with each other as a part of a team or a group of people. When the entire group of employees works as a team their efforts get directed towards realising the goals of the organisation.

→ Co-operation: In the context of management, co-operation is the attitude of helping each other to achieve organisational goals.

→ Co-ordination : Integrating or linking the activities of different units of an organisation. It is the result of deliberate or consistent efforts by the management to create unity of action to achieve its goals.

→ Productivity : The degree to which a person, company, firm, etc. is able to produce efficiently. From management point of view, productivity means output per unit of input employed.

→ Goal: The aim or object towards which efforts of an individual or a group are directed.

→ Management : The art or science of directing, organising, co-ordinating, conducting, administering and controlling the work of others to achieve defined objectives.

→ Professional management : Managing the affairs of the organisation by professionally qualified persons at all the levels of management. It also means application of professional approach to manage the organisation.

Maharashtra Board OCM 12th Commerce Notes Chapter 1 Principles of Management

→ Discrimination : Unfair treatment given to a person, a group, minority, etc.

→ Rule of Thumb : Unwritten but accepted operating practices that are considered to be average; practical and generally accepted business practices and principles. It also refers to a rough and practical approach based on experience, rather than theory.

→ Decision-making : The process of selecting from among possible alternatives. The process of decision-making involves five stages, viz. defining the problem, analysing the problem, developing of alternative solutions, selecting the best solution and converting the decision into action and its follow-up.

→ Division of labour : The specialisation of workers in particular parts or operations of production process. Application of division of labour increases skill and speed of operation, saves time and energy of the worker.

→ Remuneration : Payment of money for service or work done.

→ Moral: Of or relating to the principles of right conduct. Morals are nothing but principles and beliefs relating to right or wrong behaviour.

→ Centralisation : Imposing or placing of a high degree of control with officials at the centre or top level of an organisation, leaving little freedom of action to officials at lower levels.

→ Decentralisation : The placing of a large amount of responsibility with the officials at lower level and controlling of major and important issues rest with the top level executives.

→ Turnover : The amount of business done in a given time. It also means the rate at which workers are replaced.

→ Esprit de corps : ‘Union is Strength’. Strength of a business lies in the co-operation and harmony among its workers. It also means team work.

→ Piece rate system : It is a system of wage payment in which the wages paid to a worker are related to the result of his performance i.e. to his output rather than on the basis of time. Under this system, wages are calculated as Earnings of worker = No. of units produced x Rate per unit

→ Standard time : Amount of time it should take an average qualified worker (or group of workers) to complete a specified task.

Maharashtra Board OCM 12th Commerce Notes Chapter 1 Principles of Management

→ Time study : Systematic observation, analysis and measurement of the separate steps in the performance of a specific job for the purpose of establishing a standard time for each performance, improving procedures and increasing quantity of production or productivity.

→ Fatigue : Physical or mental exhaustion due to exertion, long working hours without sufficient breaks, poor working conditions, target pressure, heavy working tools, etc.

→ Social responsibility : An obligation (responsibility) of the business enterprise to take those actions which promote the welfare of the society. For this, business enterprises should adopt policies that fulfill expectations, values and interest of society.

→ Scalar Chain : The hierarchy of authority from the top level to the lower level for the purpose of communication.

Introduction :

Management is necessary in all types of business organisations, non-business organisations and social activities as it is key to success in achievement of goal. To establish co- ordination among all the resources of the organisation, one must understand all about the management. Various principles, theories and techniques of management introduced and developed by the management thinkers are useful in managing the business affairs of the organisations successfully.

However, its use varying from organisation to organisation, person to person and situation to situation. Thus, in every type of organisation or in group activity, one needs to apply management principles as per nature, size and requirement of that organisation. Management co-ordinates and harmonises all the functions of the business organisation like planning, organising, staffing, controlling, etc.

Meaning and Definition :

For achieving the goals of an individual or an organisation the system or techniques which are used, adopted and accepted universally are called principles. Principles can be defined as, “a fundamental truth or proposition that serves as the foundation for a system or belief or behaviour or for a chain of reasoning.”
Management principles are statements of fundamental truth of management which act as guidelines for managerial decision-making and action. They are both descriptive and prescriptive in nature. They are universal and applicable everywhere.

Nature of Principles of Management :

(1) Universal application ; Management principles are universal in nature. They apply to all types of organisation irrespective of their type, size or nature. Their application may have to be modified but they are suitable for all kinds of organisation and even an all levels at management of the organisation.

(2) General guidelines : Management principles provide general guidelines to tackle the organisational situation in sensible way and solve the problems systematically. They are not rigid I and their application depend upon the situation, size and nature of organisation.

(3) Principles are formed by practice and experiments : The management principles are developed slowly and gradually through experiments, systematic observations and complete research work. The results of such observations and experiments are developed through regular practice in the organisations.

(4) Flexibility : Management principles although fundamental but they are flexible. They can be changed, modified or adjusted to suit an organisation and as per its need and changing situations.

(5) Behavioural in nature : Management is a team work and a group activity. Management principles are aimed and designed to influence human beings and their efforts and directed to achieve the organisational objectives.

(6) Cause and effect relationship : The management principles provide base for decision-making. They first determine the cause for particular effect, e.g. effective advertisement leads to increase in the sales.

Maharashtra Board OCM 12th Commerce Notes Chapter 1 Principles of Management

(7) All principles are of equal importance : All principles of management have equal importance.
If any specific principle is given more importance than others, then working of the whole organisation
would affect adversely. Management principles are the principles of social science i.e. they can be applied with some modifications according to the requirements of an organisation.

Significance of Management Principles :

(1) Provides useful insight to managers : The management principles help the managers to understand and know the organisation, to improve the understanding of the situations and problems. The use and application of management principles help the managers about the manner in which they should act in different situations.

(2) Helpful in efficient utilisation of resources : The core function of management is to create and maintain proper balance between physical resources and human resources by putting them to optimum use and thereby control the wastage of resources. Through the use of different techniques and principles, management’ maintains discipline and healthy working environment to establish cordial relationship between management and employees which will increase efficiency level of employees.

(3) Scientific decisions : Management principles help the manager to handle critical situations tactfully. By using various management principles, managers learn to analyse the situations systematically, search alternative options and their results.

(4) Understanding social responsibility : Management principles guide the management in understanding social responsibility of organisation. It helps them to concentrate on providing quality products at affordable rate, avoiding unfair competition and artificial monopolistic situations in market, fair remuneration, change in environment, healthy working place, standard tools and machinery, etc.

(5) Encourages Research and Development : Management principles are dynamic as their nature changes with the changes in business world. Management principles can be modified according to the need of the organisation. Training helps to develop scientific approach towards research and development and growth and development of organisation. New techniques in the field of production, marketing, finance, human resources, etc. are discovered and developed through research and development.

(6) Helps to co-ordinate and control : Management principles serve as guidelines for the better co-ordination and control. They provide suitable systems to establish co-ordination and control.

Maharashtra Board OCM 12th Commerce Notes Chapter 1 Principles of Management

(7) Develops objective approach : By using various management principles, the manager can develop an objective approach. The manager can find out and identify opportunities, root causes of the problems in right direction and provide appropriate solutions to the problems.

Theories of Management:

The sets of general rules which provide guidelines to the managers to enable them to manage the organisation systematically are called management theories. Some management thinkers such as Fredrick Winslow Taylor, Elton Mayo, Henry Fayol, etc. have presented different theories based on different approaches. These theories are
more suited to all types of organisations. By modifying these theories, adding some innovative techniques and strategies, managers use them in an organisation more efficiently. Thus, old theories of management provide basis for modern ; management theories.

Management theories provide appropriate solutions to organisations, employees and society who are facing problems such as centralisation of authority, low motivation, stress, environmental issues, behavioural problems, health problem, work-like balance, accountability, etc.

Henry Fayol’s Administrative Theory of Management :

After conducting many experiments and observations in organisation, Henry Fayol introduced 14 principles of management. He was a French mining engineer, who became Chief Managing Director. On account of his contribution I in management, he is called as “Father of Modem Management.” His 14 principles of management are as follows :

(1) Principle of Division of Work : This principle suggests that entire work, job or task should be divided into different parts such as technical, financial, commercial, accounting management and security operations. Each part should be assigned to different groups of employees according to their qualifications, qualities, capabilities and experience. It gives benefits of specialisation and improves efficiency.

(2) Principle of Authority and Responsibility : According to this principle, manager should be given authority to get the work done from his subordinates. Authority should always go with corresponding responsibility. Manager should have proper authority to take managerial decisions and also responsibility to complete the job in time.

Maharashtra Board OCM 12th Commerce Notes Chapter 1 Principles of Management

(3) Principle of Discipline : This principle states that strict observance and respect for general rules, regulations, agreements, etc., at every level of organisation are essential for smooth working and achieving organisational goals.

(4) Principle of Unity of Command : As per this principle every employee should receive orders and instructions from only one superior (boss) and he should be accountable to same. If he receives orders from more than one superior, he will get confused.
Maharashtra Board OCM 12th Commerce Notes Chapter 1 Principles of Management Notes 1

(5) Principle of Unity of Direction : According to this principle, a group of employees working on similar activities should have common objectivesand must work under one head (senior) i.e. there should be one head and one plan. It leads to effective co-ordination of individual efforts and energies.

(6) Principle of Subordination of Individual Interest to Organisational Interest : According to this principle, organisational interest must be j given greater importance than individual interest. While taking the decision, the manager must consider the interest of whole group (or organisation) rather than the interest of a single
employee. This is because individuals will be able to achieve their objectives only when organisation makes profit.

(7) Principle of Centralisation : According to this principle, a company must not be completely centralised or decentralised. There must be a combination or proper balance between centralisation and decentralisation, depending upon the nature and size of the organisation. It leads to smooth functioning of am organisation.

(8) Principle of Remuneration : This principle states that the employees in the organisation must be paid just and fair remuneration to keep them satisfied financially and to retain them for long span of time. It boosts the morale of employees which results in greater efficiency and productivity.

(9) Principle of Scalar Chain : According to this principle, orders, information, instructions, messages, explanations, etc. must be passed \ through every key of the chain without skipping any one key in between. This is called Scalar Chain which is time consuming. However, in the case of emergency and to take quick decision, a short cut (Gang Plank) in the chain is permitted.
It means direct communication between the authorities working at same level of management.

Principle of scalar chain :
Maharashtra Board OCM 12th Commerce Notes Chapter 1 Principles of Management Notes 2

In the above diagram, the communication between ‘D’ and ‘G’ thorugh C, B, A, E and F is called Scalar Chain and direct communication between ‘D’ and ‘G’ without taking help of any one is called Gang Plank.

(10) Principle of Order : This principle suggests that in every organisation there should be proper, systematic and orderly arrangement of men and materials. The main purpose of this principle is that there should not be a wastage of time and energy for searching or finding out any material or any employee.

Maharashtra Board OCM 12th Commerce Notes Chapter 1 Principles of Management

(11) Principle of Equity : This principle states that management should be fair and friendly while allocating the work, delegating authority or deciding monetary term. The management should not make any discrimination among the employees. Employees working on the same level but in different departments should be paid equal remuneration. It helps to boost the morale of employees and develops a sense of belongingness among the employees.

(12) Principle of Stability of Tenure : This principle suggests that the management should guarantee stability of tenure to the employees. This minimises the turnover ratio of talented employees and wastage of resources.

(13) Principle of Initiative : This principle states that managers should give freedom to the subordinates to come up with new ideas. The | initiative taken by the employee should be welcomed by the manager with thorough discussion on those ideas. This ultimately leads to healthy organisational culture.

(14) Principle of Esprit de corpse (Team work) : Esprit de corpse implies Union is Strength.
According to this principle, leader or manager should create the feeling of team spirit and understanding among the employees. It integrates and coordinates the individual and group efforts to achieve goals.

Fredrick Winslow Taylor’s Scientific Management Theory :

F. W. Taylor was an American mechanical engineer. He experimented in the Midvale Steel j workers in USA in early 20th century. He formulated and developed his observations and experiments based on scientific data. His approach towards management is called the scientific management.

On account of his scientific approach towards management, he is called Father of Scientific Management. He was of the opinion that problems must be solved by scientific techniques rather than the rule of thumb and trial and error approach.

Principles of scientific management : F. W. Taylor’s principles of scientific management are summarised as follows :

(1) Science, Not Rule of Thumb : This principle states that to increase organisational efficiency, manager should not use personal judgements but should use the scientific method to determine every activity performed by the employee. This principle related with the selection of the best way to perform a job after scientific analysis and not be rule of thumb or trial and error methods. Taylor insisted upon scientific plan even for small production activity like loading iron sheets into box carts.

(2) Harmony, Not Discord : This principle states that in order to achieve goals of the organisation, there should be harmony and proper co-ordination between the employees and management. This helps in minimising conflicts between them. Perfect understanding between them will also be helpful in creating healthy work environment. At the same time, organisation should pay attention to maximum prosperity of employees.

(3) Mental revolution : This principle focuses attention on the complete change in the attitude of the management and employees towards each other. This change will help in achieving goals, increase in productivity and sense of belongingness among the employees.

Maharashtra Board OCM 12th Commerce Notes Chapter 1 Principles of Management

(4) Co-operation, not Individualism : This principle states that in every organisation there should be mutual cooperation between management and employees. Trust, team spirit, co-operation, etc. are essential to avoid internal competition and to create healthy working environment. Employees’ suggestions, new and innovative ideas should be appreciated and considered by the management in decision making process and treat them as an internal part of the organisation in all respects. At the same time, employees should not use actions like going on strike and making unacceptable demands from the management.

(5) Division of Responsibility : This principle states that while dividing the work between the management and employees, there should be corresponding division of responsibility as well.
Major planning should be done by the top and middle level of management authorities and these plans should be executed by the employees. It helps the management and the employees to perform their task in better manner.

(6) Development of employer and employees , for greater efficiency and maximum prosperity This principle states that profitability and best performance in any organisation depends upon the skill, intelligence and capabilities of its employees. This can only be possible by providing training and development programmes to the employees at regular interval. Each and every employee should be given proper opportunity to attain efficiency and maximum prosperity.

Techniques of Scientific Management :
The techniques of scientific management are explained below :

(1) Work Study : Before allotting the work among the available employees, systematic work study should be done by the management. This study includes an organised, systematic and critical assessment of the different functions or activities.

Work study based on different techniques are :

(a) Time Study : It is a method in which the management observes the employees on the work and determines the precise time required to complete the work. This technique is used to fix standard time needed to complete a specific task under given conditions. Manager can measure the efficiency of employees and control the cost of j work.

(b) Method Study : Under this method, management identifies and accepts best method of doing a job for best quality and cost effectiveness. It helps in reducing the wastage of time, raw material and improve the utility of all resources as per objectives determined in advance.

Maharashtra Board OCM 12th Commerce Notes Chapter 1 Principles of Management

(c) Motion Study : Under this method, the close study of the movement of employee and machine in completing a particular task or job is done to eliminate unnecessary movements and find out best method. It improves efficiency and productivity of the employees. This method is useful to know whether some elements of job can be eliminated or their sequence can be changed for better job performance.

(d) Fatigue Study : Usually, long working hours with insufficient breaks, heavy working tools, target pressure and poor working conditions lead to fatigue. It reduces efficiency and creates adverse effect on health. Management must take certain measures to reduce the level of fatigue.

(2) Standardisation of Tools and Equipment : On the basis of experiments conducted at work j place, Taylor recommended to provide standard tools and equipment, standard working environment and can suggest standard methods of production to reduce wastage and spoilage of materials, cost of production, fatigue. It ultimately helps to improve quality of work.

(3) Scientific Task Setting : The technique of scientific task setting is useful to restrain the employees from doing the work much below their strength and capacity. This technique helps the employees to complete the job according to the standards given. The management can keep control on the optimum use of available labour.

(4) Scientific Selection and Training : According to this technique as per requirement, job specifications need to be fixed and employees are selected as per predetermined standard in an impartial way. Proper training need to be arranged for employees to increase their efficiency.

(5) Functional Organisation : Taylor suggests that planning should be separated from implementation. He further suggested that planning of the work and actual work should be done by different sets of people. He recommended eight foremen to control various parts of the production.

(A) At planning level :

  • Route clerk : tells the employees how work moves from one machine to other.
  • Instruction clerk : records instruction to complete the work.
  • Time and cost clerk : determines time in which work should be completed and workout the cost.
  • Discipline : ensures that workers are working as per factory rules.

(B) At implementation level :

  1. Gang boss : Actually gets the work done.
  2. Speed boss : Ensures that work is completed in specified time.
  3. Repair boss : Handles security and maintenance of mechanism.
  4. Inspector : Ensure that the work is done as per specified standards.

Maharashtra Board OCM 12th Commerce Notes Chapter 1 Principles of Management

(6) Differential Piece – Rate Wage Plan : Under this technique, management fix the standard quantity of production. The employees who produce more than standard output are to be paid remuneration at higher rates and those who produce less than standard output are to be paid remuneration at lower rate. This technique is useful to encourage employees to attain higher standard performance to earn wages at higher scale.