CBSE Class 12 Business Studies, Principles of Management


Chapter 2: Notes on Principles of Management

Meaning of principles of Management: They are the general guidelines for decision making and behavior.

Nature of Principles of Management

  1. Universal Applicability
  2. General Guidelines
  3. Formed by Practice and Experimentation
  4. Flexible
  5. Mainly Behavioral
  6. Cause & Effect Relationship
  7. Contingent

Significance of Principles of Management

  1. Providing Managers with Useful Insights into Reality
  2. Optimum utilization of resources & Effective Administration
  3. Scientific Decision
  4. Meeting changing Environment Requirements
  5. Fulfilling Social Responsibility
  6. Management Training, Education & Research

Henri Fayol's Principles of Management

  1. Division of Work: Work is divided into small tasks or jobs and these jobs should be given to competitive persons.
  2. Authority and Responsibility: Authority means right to take decisions and responsibility means being responsible to perform the job.
  3. Discipline: According to this principle there should be clear & fair agreements.
  4. Unity of Command: According to this principle, every employee should get orders from one superior only & he should be responsible to only on superior.
  5. Unity of Direction: All the related activities of the business organisation should be grouped in one department & each department should have one head for one plan.
  6. Subordination of Individual Interest to General Interest: The interest of an organisation should get priority over the interest of an individual.
  7. Remuneration of Employees: Pay and compensation plans should be fair to both employees and the organisation.
  8. Centralisation and decentralisation: Centralisation refers to concentration of authority at one level whereas decentralisation refers to distribution of authority among more than one person.
  9. Scalar Chain: An organisation consists of superiors and subordinates.
  10. Order: According to this principle people and Material must be in their appropriate place at appropriate time.
  11. Equity: All the employees of an organisation should be treated equally and fairly.
  12. Stability of personnel: Personnel should be appointed after due procedure and once they are selected they should be kept at their position for sufficient time.
  13. Initiative: Initiative means taking the first step with self-motivation.
  14. Espirit-De-Corps: Management should promote a team spirit of unity amongst the employees.

Scientific Management

Meaning of Scientific Management: Scientific Management means application of science to the management.

Principles of Scientific Management

  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

Techniques of Scientific Management

  1. Method Study: The objective of method study is to find out one best way of doing the job.
  2. Time Study: It determines the standard time taken to perform a job.
  3. Motion Study: Motion study refers to the study of movements while doing a job like setting.
  4. Fatigue Study: While doing work if a person doesn't rest she/he feels tired physically as well as mentally.
  5. Differential piece wage system: Taylor introduces different rate of wage payment for those who performed above standard and for those who performed below standard.
  6. Standardization and Simplification of Work: Standardization refers to the process of setting standard for every business activity.
  7. Functional Foremanship: Taylor suggested separation of planning and execution functions.