Principles of Management

Category: Bank
Posted on: Monday, September 18, 2017


Management principles are those fundamental truths or statements of facts which serve as guide to managers in thinking and doing their job of managing. Management principles may be derived in any of the following ways :-

 (i)  By observation and analysis of managerial practices.

(ii)   By conducting studies through system enjury, collection and analysis and testing of facts.

 Some Important Principles of Management : 

  1. W. Taylor, Henry Fayol, Mary Parkeer Follett, Urwick, Koontz O’ Donnel, George R. Terry etc. are the leading thinkers who have listed and described certain management principles :-

 (1) Fayol’s Principles of Management : Henri Fayol, who is recognized as the father of modern theory of management formulated a set of 14 principles.

 (i) Division of Work : Division of work states that the total work should be subdivided into small components / parts and each part of the work should be allocated to the worker who specializes in that part of the work.

(ii) Authority and Responsibility : Authority creates responsibility whenever a person exercises authority, responsibility arises. Responsibility is the essential counter part of authority.

(iii) Discipline : According to Fayol, discipline is absolutely essential for the smooth running of business. Without it no business can prosper.

(iv) Unity of Command : The principle of unity of command states that each subordinate should receive orders from only one boss or superior.

(v) Unity of Direction : The principle of unity of direction states that there should be “one head and one plan” for a group of similar activities having the same objective. In other words, the activities that have same objective should be directed by only one manager under one plan.

(vi) Subordination of Individual Interest to General Interest : Interest of organisation as a whole must prevail over the individual interest wherever individual interest and the common interest differ, efforts must be made to reconcile them.

(vii) Remuneration : Fayol stressed that the remuneration or compensation for work done should be fair to both employers and the firm. It should neither be low nor high.

(viii) Centralization : Decreasing the role of subordinates in decision making is centralization of authority and increasing their role in it is decentralization of authority. Fayol believed that managers should retain final responsibility but should at the same time give their subordinates enough authority to do their job properly.

(ix) Scalar Chain or Hierarchy of Authority : Scalar chain or hierarchy of authority refers to the unbroken chain or line of authority running from the top management to the lowest levels of the organisation.

(x) Order : The principle of order states that there should be a place for every think and for every person. Material and people should be in the right place at the right time. People should be assigned the jobs that are best suited to them.

(xi) Equity : According to this principle, the manager must install equity in the organisation. To ensure this, manager should be friendly, fair and kind in dealing with their subordinates.

(xii) Stability of Personnel : This principle states that there should be reasonable stability of the tenure of personnel in the firm. No employee must be removed from his position within a short period of time.

(xiii) Initiative : This principle states that subordinates should be given the freedom to develop and carry out their plans. But managers should do so within the limits of authority and discipline.

(xiv) Esprit de Corps : This principle states that managers should promote esprit crops or team spirit and a sense of unity among the employees.

 Other Important Principles :

(xv) Principle of Objective : Koontz and O’Donnel suggest that “The organisation as a whole and every part of it must contribute to the attainment of enterprise objectives.

(xvi) Principle of Planning : The principle of planning states that good planning is a prerequisite for good management. Therefore managers should accurately plan the activities of their organisation keeping in view the environmental factors.

(xvii) Principle of Span of Control : Span of control means the number of subordinates under the direct supervision of the superior. According to this principle, a superior should supervise only that number of subordinates which be can properly supervise directly under his control.

(xviii) Principle of Balance : This principle states that different parts or units of an organisation should be in balance. This is essential in order to ensure proper development of business and its efficiency.

(xix) Principle of Coordination : This principle states that human efforts and other resources should be co-ordinated in order to achieve organisational goals effectively.

(xx) Principle of exception : The principle of exception states that every superior should set the objectives and plan for their subordinates and delegate them appropriate amount of authority to take all decisions to carry out the plans.

(xxi) Principle of Participation : This principle states that managers must encourage participation of their subordinates in taking decisions on matters directly affecting them.