Principles of Management Question Answers: NCERT Class 12 Business Studies

Principles of management are not applied as it is in real life business because it needs to be modified as per the situations and requirements by the manager.

The main objective of time study is to determine the standard time to complete any task by measuring the quantum of time required to complete that task.

The principle that is an extension of the ‘harmony, not discord’ is Cooperation, Not Individualism.

The two causes of fatigue that may create hindrance in the employee’s performance are long working hours and having uncordial relations with the boss or bad working conditions.

In the above case the principle that is followed by the Wales Limited is Stability of Personnel. According to this principle employee turnover should be minimized to maintain organizational efficiency. In the above case Sanaklal and Gagan selected through a rigorous recruitment process and according to this principle once the personnel is hired then they should be given a reasonable amount of time to show their results.

The technique that is used by Taylor for distinguishing efficient and inefficient workers is the differential piece wage system.

Under the principle of unity of command an employee should receive orders from only one boss because if he receives orders from more than one boss then he will get confused and the employee may not understand whose orders should be executed first. And the employee may give excuses by saying that he was fulfilling the orders of the other boss if he receives orders from more than one boss. So to avoid these confusions and excuses of the employees there must be unity of command.

Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and cheapest way. In other words it means application of scientific tools, methods and trained personnel in order to increase the output.

Following are the three principle of management:

1. Science, not rule of thumb: Rule of thumb means a manager makes decisions and finds solutions to any problem on the basis of their personal judgment and experiences and that will be not equally effective. So in order to increase the efficiency of the organization the rule of thumb should be substituted by the scientific method which involves investigations of traditional methods through work and study. According to Taylor even doing any small activity of production should be done scientifically for saving manpower and wastage of time and materials.

2. Harmony, Not Discord: According to this principle there should be complete harmony among the workers and the management because if there is any conflict between workers and the manager then it will help none, the worker, the managers or the owners. Both should realize their importance in the organization for each other. And management should take care of the needs of the workers and at the same time the workers should work hard for the good of the company. And in order to achieve this Taylor called for complete mental revolution on both the part management and workers.

3. Cooperation, Not Individualism: There should be complete cooperation among the workers and the management instead of individualism. In this principle competition should be replaced by cooperation. Both of them understand that they need each other. And for this the workers should not strike and do not make any unreasonable demand by the management. And at the same time the management should not close their ears when the workers give any constructive suggestions and also be rewarded for their suggestions which is beneficial for the organization.

In the above case the principle that is violated is the principle of order. Principle of order doesn’t mean command, it actually means orderliness. According to this principle the right person should be at the right place and the right thing should be placed at the right place. If everything will be at the right place then there will be no hindrance in the activities of business. And this will increase efficiency and productivity.

The consequences of violation of this principles are:

1. Wastage of time and energy if the men and materials are not placed at the right place then in searching for the right men and materials give rise to wastage of time and energy.

2. If the men and material are not placed in an organized manner then not be able to contact the right person at the right time or when required.

The principles of management provide useful insights to managerial behavior and influence managerial practices. Managers may apply these principles to fulfill their task and responsibilities.

Following points highlight the significance of principle of management:

1. Providing managers with useful insights into reality: Principle of management provides the managers with useful insight into real world situations. And these principles guide the managers when they are facing real world problems. It also enables the managers to learn from past mistakes and conserve time by solving recurring problems quickly.

2. Optimum utilization of resources and effective administration: As the resources available with the company are limited so they have to be put to optimum use. Optimum use means that the resources should be used in such a manner that it provides maximum benefits with minimum cost. These principles provide the manager to foresee the cause and effect relationships of their decisions and actions. And the wastage associated with trial and error methods can be overcome.

3. Scientific decisions: Principles of management help in thoughtful decision making. The decisions must be based on facts. Principles of management emphasize on logic rather than blind faith. Management decisions taken on the basis of principles are free from bias and prejudice.

4. Meeting changing environment requirements: The principles of management are in the nature of general guidelines but they are modified and help the managers to meet requirements of the changing environment as the principles of management are flexible to adapt.

The formal lines of authority from highest to lowest ranks are known as scalar chains. Fayol insists that every organization should have a chain of authority and communication that runs from top to bottom and should be strictly followed by managers and the subordinates.

In the above diagram A is the head and under A there are two lines of authorities. One line consists of B and C and another line consists of D and E. And if C wants to communicate with E who is at the same level of authority then the chain of communication will be from C – B – A – D – E. This is due to the principle of the scalar chain being followed. And this process of communication is long and it should not be violated. But in case of emergency then C can communicate with E directly and this is called gang plank. As shown in the above diagram. And this is the shorter way of communication which is provided so that communication is not delayed.

Mr. Rathore had violated the principle of subordination of individual interest to general interest. By providing the supply order to his cousin at a higher price per unit rather than the firm’s usual supplier who was willing to provide the goods at lower rates for the order he was preferring his own interest instead of general interest. And as a result he was achieving his personal goal but not the organizational goal.

Following are the positive impacts of following the above principle are:

1. This principle helps in achieving the organizational goals.
2. This principle provides coordination between individual and organizational goals.
3. This principle also helps in maintaining harmony in the organization.
4. And if this principle is followed in the organization then it leads to increase the status of the manager and the organization in the eyes of the workers.

Scientific management refers to conducting business activities according to standardized tools and methods and trained personnel in order to increase the output, improve its quality and reduce cost and wastage. In other words scientific management means knowing exactly what you want men to do and seeing that they do in the best and cheapest way. Scientific management increases the effectiveness and efficiency of the organization.

Followings are the principles of scientific management :

1. Science not Rule of Thumb: Rule of thumb means a manager makes decisions and finds solutions to any problem on the basis of their personal judgment and experiences as different managers would follow their indigenous rules of thumb and that will be not equally effective. So in order to increase the efficiency of the organization the rule of thumb should be substituted by the scientific method which involved investigations of traditional methods through work and study. According to Taylor even doing any small activity of production should be done scientifically for saving manpower and wastage of time and materials.

2. Harmony, Not Discord: Factory system of production implied that the manager served as a link between the owner and workers. According to this principle there should be complete harmony among the workers and the management because if there is any conflict between workers and the manager then it will help none, the worker, the managers or the owners. Both should realize their importance in the organization for each other. And management should take care of the needs of the workers and at the same time the workers should work hard for the good of the company. And in order to achieve this Taylor called for complete mental revolution on both the part management and workers.

3. Cooperation, Not Individualism: There should be complete cooperation among the workers and the management instead of individualism. According to this principle everybody in the organization must work together in harmony and that is only possible by give and take and proper understanding. In this principle competition should be replaced by cooperation. Both of them understand that they need each other. And for this the workers should not strike and do not make any unreasonable demand by the management. And at the same time the management should not close their ears when the workers give any constructive suggestions and also be rewarded for their suggestions which is beneficial for the organization.

4. Development of each and every person to his or her greatest efficiency and prosperity: Industrial efficiency depends to a large extent on personnel competencies. Worker training was essential for their development and to learn the best method developed as a consequence of the scientific approach. According to Taylor each person should be selected scientifically and assign work according to their physical, mental and intellectual capabilities. And the workers should be given required training from time to time to increase their efficiency. Because an efficient worker produces more and earns more and this will raise efficiency and prosperity for both the company and the workers.

(a) Unity of direction: Unity of direction means all the units of an organization should be moving towards the same objectives with coordination. According to this principle each group of activities having the same objective must have one head and one plan. And the organization and its members must be directed towards the achievement of the same goal. For example, if my company is manufacturing both mobile and laptop then it should have two different divisions for both of them and each division should have their own incharge, plans and executive resources.

(b) Equity: This principle emphasizes kindness and justice in the behaviour of the manager toward workers. There should be no discrimination against anyone on account of sex, religion, language, caste, belief or nationality etc. there must be given equal opportunity to everyone in the organization without any discrimination and then the employee give their best in the betterment of the organization.

(c) Esprit de Corps: This means that the management should promote a team spirit of unity and harmony among employees. And the manager should replace ‘I’ with ‘WE’ in all his conversation with the workers. This will give rise to a spirit of mutual trust and belongingness between team members. And this will also minimize the need for using penalties.

(d) Order: Order doesn’t mean command it actually means orderliness. According to this principle the right person should be at the right place and the right thing should be placed at the right place. If everything will be at the right place then there will be no hindrance in the activities of business. And this will increase efficiency and productivity. And If the men and material are not placed in an organized manner then not be able to contact the right person at the right time or when required and this will delay work.

(e) Centralization and Decentralization: Centralization means concentration of decision making authority. Here decision making power is given to one or very few people and that is top level management. And decentralization means dispersal of decision making authority among more than one person. According to Fayol there should be a proper balance between centralization and decentralization in the organization. The involvement of the employees with higher authority should be balanced by decentralizing the authority to the managers. Any organization must not be completely centralized or decentralized. There should be a blend of both and this is decided on the basis of size, nature and location.

(f) Initiative: Initiative refers to taking the first step with self motivation. It means thinking out and executing the plans. According to Fayol in this principle workers should be encouraged to develop and carry out their plans for improvement. Initiative should be encouraged but it doesn’t mean going against the established practices and rules. A good company should have an employee suggestion system and any good suggestion should be rewarded.

The foreman represents the managerial figure with whom the workers are in direct contact on a daily basis. In this technique Taylor suggests the separation of planning and execution functions. And through this technique the workers are free from planning functions and are more focused on work and production. Functional foremanship is the extension of the principle of division of work and specialization to the shop floor. In the factory there was a planning incharge and a production incharge and each department had four functional experts to supervise and give orders to workers. Under planning incharge the four personnel are instruction card clerk, route clerk, time and cost clerk and a disciplinarian. And under production incharge the four personnel are speed boss, gang boss, repair boss and inspector. The foreman should have intelligence, education, tact, grit, special knowledge, manual dexterity, energy and honesty. But all these qualities could not be found in a single person so Taylor eight specialists and assigned them work according to their qualification and qualities.

Mental Revolution

Mental revolution means to change in the attitude of workers as well as the management towards one another from competition to cooperation. Both should realize that they require each one another. And both should work in the aim to achieve the goal of the organization by achieving more surpluses. And the management should share the surplus with the workers and they should also give their best for the betterment of the company and should not make any illegal demand with the management so that the company can achieve their goal and maximum profit. And this attitude will be good for both of them and for the company also. In this technique Taylor emphasizes drastically changing the attitude of both the groups for prosperity of the business.

(a) Time study: In this technique the standard time is decided to perform a well defined job. The standard time is fixed for a task by taking several readings. This method of time study is depending upon the volume and the frequency of the task. And once the standard time is set for any particular task then that task should be assigned to the workers and on the basis of standard time we can determine the efficiency of the workers. If any worker completes the particular task within the standard time then that worker should be considered as efficient and if any worker cannot accomplish the task within standard time then he will be considered as inefficient. The objectives of the time study are:

• To determine the number of workers/employees should be employed to do any particular task.
• To determine the suitable incentive schemes.
• And to determine the cost of labour.

(b) Motion study: Motion study means study of movements like lifting, putting objects, sitting and changing position etc. while doing any particular job. And under this study all the unnecessary movements are eliminated so that it takes less time to complete the job efficiently. Taylor used stopwatches and various symbols and colors to identify different motions. And by this study he designed suitable equipment and tools to educate workers on their use and to minimize the unproductive motions..

(c) Fatigue study: Fatigue study determines the amount and frequency of rest intervals is required for completing the task. A person is bound to feel tired physically and mentally if he/ she does not take rest while working. If the worker doesn’t take rest while working then it reduces his/her efficiency. The rest intervals help the worker to regain their stamina to work again and they can perform their job efficiently. And this will increase productivity.

(d) Method study: There are various methods to perform the job. The objective of method is to determine the best way of doing the job. To determine the best way there are various parameters. Each and every activity right from procurement of raw material to delivering the finished goods is a part of method study. And this will help in minimizing the cost of production and maximizing the quality and satisfaction of the customer.

(e) Simplification and standardization of work: Standardization refers to the process of setting standard for each and every business activity and that is standardization of process, raw materials, time, products, machinery, methods or working conditions. The main objective of this method is to establish standards for performance of men and machines.

Whereas simplification aims to eliminate superfluous/unnecessary varieties, size and dimensions. It eliminates all unnecessary diversity of products. And this will give rise in saving the cost of labour, machines and tools. This technique helps in fuller utilization of equipment and increasing turnover.

Both Fayol and Taylor have contributed immensely to the knowledge of management. And their contributions are complementary to each other because both have relevance in the business due to the following reasons:

1) The main aim of both Fayol and Taylor is to increase the efficiency of workers and management.
2) Both of them give more importance and preference to organizational interest over the individual interest.
3) Both of them give suggestions for division of work and specialization.
4) The principles of both of them are used as a basis for research and practice in the field of management studies.
5) Both of them are emphasis on cooperation among the workers and the managers or employers.

a. 

The following principles are violated by the company:

1. Division of work
2. Unity of command
3. Unity of direction
4. Discipline
5. Remuneration of personnel
6. Order
7. Initiative
8. Esprit de corps

b. 

1. Division of work: Division of work separates the work into a number of tasks, and each task is performed by the trained specialist which leads to specialization. According to Fayol, the intention of division of work is to produce more and better work for the same effort. If the work is divided into specialists then the work is performed more efficiently and effectively.

2. Unity of command: Under the principle of unity of command an employee should receive orders from only one boss because if he receives orders from more than one boss then he will get confused and the employee may not understand whose orders should be executed first. And the employee may give excuses by saying that he was fulfilling the orders of the other boss if he receives orders from more than one boss. So to avoid these confusions and excuses of the employees there must be unity of command.

3. Unity of direction: Unity of direction means all the units of an organization should be moving towards the same objectives with coordination. According to this principle each group of activities having the same objective must have one head and one plan. And the organization and its members must be directed towards the achievement of the same goal. For example, if my company is manufacturing both mobile and laptop then it should have two different divisions for both of them and each division should have their own incharge, plans and executive resources.

4. Discipline: Discipline means obedience of organizational rules and employment agreement which are necessary for the working of the organization. The workers and the management both should honour their commitments without any prejudice toward one another.

5. Remuneration of employees: The overall pay and compensation should be fair for both the employees and the organization. All the employees should be given fair wages which give them at least a reasonable living. And at same time the wages paid by the organization should be within the paying capacity of the organization.

6. Order: Order doesn’t mean command it actually means orderliness. According to this principle the right person should be at the right place and the right thing should be placed at the right place. If everything will be at the right place then there will be no hindrance in the activities of business. And this will increase efficiency and productivity. And If the men and material are not placed in an organized manner then not be able to contact the right person at the right time or when required and this will delay work.

7. Initiative: Initiative refers to taking the first step with self motivation. It means thinking out and executing the plans. According to Fayol in this principle workers should be encouraged to develop and carry out their plans for improvement. Initiative should be encouraged but it doesn’t mean going against the established practices and rules. A good company should have an employee suggestion system and any good suggestion should be rewarded.

8. Esprit de Corps: This means that the management should promote a team spirit of unity and harmony among employees. And the manager should replace ‘I’ with ‘WE’ in all his conversation with the workers. This will give rise to a spirit of mutual trust and belongingness between team members. And this will also minimize the need for using penalties.

c.

1. The company must increase its capital investment because the existing capacity of the company is not able to cooperate with the increased workload.
2. There must be unity of command, by making subordinates responsible to only one superior.
3. They should clearly define the authority responsibility relationships in context of expansion of production activity.
4. One division for one product should be followed to ensure unity of direction and division of work.
5. Employees should be motivated by giving them incentive and motivated employees will lead to restore discipline, initiative and esprit de corps.
6. Fair remuneration should be given, to increase the efficiency of the employees.

a. Yes, I think that introduction of scientific management as recommended by M consultants will be helpful for the organization. By implementation of scientific techniques the company can work according to standardized techniques and tools. By adopting scientific management the quality and quantity of their product will improve. And it will also increase the effectiveness and efficiency of the company and its work.

b. The following precautions can be taken by the company to implement the changes are:

1) They should provide proper training to their existing employee and should hire trained and specialised staff.
2) By introducing functional foremanship they should take care that there is incentive and motivation for the employees.
3) Not only work study but other studies like motion study, fatigue study and time study should be followed.
4) Monetary incentive can be given to employees to motivate them so that they provide efficient work.

c. The company should introduce the latest form of scientific management, with due consideration to human factors in mind and by obtaining their motivated willingness.

1) Production planning including routing, scheduling, dispatching and feedback should be implemented.
2) Functional foremanship will be good but it neglects unity of command. And it is not useful for the company, so it should be avoided.
3) Standardization should be implemented because it will improve productivity and also reduce quality variations. But right training and willingness must be obtained.
4) ‘Differential piece rate system’ if it is introduced then it should be done with extreme caution. It must not result in unhealthy competition. Hence monetary and non-monetary incentives can be introduced in place of differential piece rate systems.

The principles of scientific management, developed by F.W. Taylor, emphasize using scientific methods instead of a "rule of thumb" to improve productivity and efficiency. Key principles include: Science, Not Rule of Thumb; Cooperation, Not Individualism; Harmony, Not Discord; and the Development of Every Worker to Their Full Potential.

The Scalar Chain principle refers to the formal line of authority and communication in an organization, moving from top management to the lowest ranks. It ensures that communication flows in an orderly manner. However, in emergencies, the "gang plank" allows for direct communication between two employees at the same level.

This principle by Fayol states that organizational goals should always take precedence over personal interests. Employees and managers should prioritize the organization’s objectives for the collective good of the company.

The principle of Unity of Command states that each employee should receive orders from one superior only, to avoid confusion and ensure clarity in decision-making. This reduces conflict, improves efficiency, and ensures that instructions are clear. Without this, there may be conflicts in priorities, leading to inefficiency.

Mental Revolution involves a complete change in the mindset of both workers and managers. It calls for mutual understanding and cooperation rather than conflict. This mindset shift helps in increasing productivity and job satisfaction. In today's corporate environment, it promotes collaboration, reduces industrial disputes, and enhances team spirit, contributing to overall success.

Scientific management brought a structured approach to improving efficiency in industries by using data-driven methods. By focusing on optimizing work processes, it led to significant reductions in production time and costs. Today, industries benefit from Taylor’s methods in lean manufacturing and automation, aiming to eliminate waste and improve productivity.

Henri Fayol's 14 principles of management laid the foundation for modern-day management practices, and they continue to be influential in today's business world. These principles address both the operational and human aspects of management, aiming for efficiency and harmony within organizations. Here is an analysis of some of the key principles, along with their relevance and application in contemporary organizations:

1. Division of Work: Fayol’s principle of division of work suggests that specialization leads to increased efficiency and productivity. When work is divided among employees according to their skills, it not only reduces time wastage but also increases their expertise in particular tasks. In contemporary organizations, this principle is applied through departmentalization, where tasks are grouped, and experts are assigned specific roles. For instance, in large multinational corporations, departments like HR, marketing, finance, and IT have specialists in each field, ensuring a smooth workflow.
2. Authority and Responsibility: According to Fayol, there must be a balance between authority (the right to give orders) and responsibility (the obligation to complete tasks). In modern organizations, this principle manifests in role clarity and delegation, ensuring that individuals who hold authority are accountable for their actions. Clear job descriptions, reporting structures, and accountability mechanisms ensure that managers and employees know their responsibilities, which helps in maintaining discipline and achieving organizational objectives.
3. Unity of Command: Fayol’s principle of unity of command emphasizes that an employee should receive orders from only one superior to avoid confusion and conflicting instructions. This principle remains highly relevant in hierarchical organizations, where reporting to multiple managers can lead to miscommunication and inefficiency. However, modern matrix structures, often found in tech and consulting firms, challenge this principle by having employees report to multiple managers, which, while efficient in terms of project management, can create complexities in command structures.
4. Scalar Chain: The scalar chain refers to a clear line of authority within the organization, moving from top to bottom. Fayol suggested this hierarchy to ensure clear communication. Today, organizations have adopted a more flexible approach, with flatter structures and faster communication channels, including emails, intranets, and digital tools like Slack. The modern concept of “gang plank,” where peers communicate directly in emergencies, aligns with Fayol's idea of breaking the scalar chain when necessary to expedite decision-making.
5. Equity: Fayol's equity principle, which emphasizes fairness and equal treatment for all employees, has gained significant importance in modern HR practices. Organizations today are focused on promoting diversity and inclusion, ensuring that employees are treated without discrimination based on gender, race, or other factors. For example, global companies often have policies supporting equal pay for equal work and are actively working toward creating a diverse workforce. Equity is now not just a management principle but also a legal and ethical obligation.
6. Esprit de Corps: Fayol advocated for team spirit and unity within the workforce, stressing that management should foster camaraderie and mutual trust among employees. This principle is reflected in contemporary organizations that prioritize team-building activities, employee engagement programs, and collaborative work environments. With the rise of remote work and hybrid teams, fostering “esprit de corps” has become more challenging, yet it remains crucial for organizational success.
7. Order: Fayol’s principle of order insists on having the right person in the right job and ensuring that resources are appropriately allocated. This principle underpins modern inventory and human resource management systems, where companies use sophisticated software to optimize inventory levels, staff placement, and workflow efficiency. Today’s lean management practices and just-in-time (JIT) inventory systems reflect the importance of order in minimizing waste and maximizing productivity.
8. Subordination of Individual Interest to General Interest: This principle stresses that the organization’s goals should take precedence over personal interests. In today’s corporate culture, this principle is evident in the concept of corporate loyalty and the alignment of individual goals with organizational objectives. Employee performance reviews, goal-setting systems like OKRs (Objectives and Key Results), and incentive programs are used to align personal and organizational goals, ensuring that employees work towards the collective success of the organization.

While Taylor’s principles were primarily designed for manufacturing industries, they also hold relevance in the service sector. For instance, the principle of 'Science, Not Rule of Thumb' can be applied in areas such as customer service, where processes like handling customer queries can be standardized to improve response times and service quality. Similarly, ‘Development of Workers to Their Fullest Potential’ encourages continual employee training, a key factor in industries like healthcare, hospitality, and IT. However, the service sector requires a more flexible approach to adapt to rapidly changing customer needs, which Taylor’s somewhat rigid framework may not fully address.

Fayol’s principles of management are broader, focusing on the entire organization’s administrative management, while Taylor’s scientific management is more specialized, focusing on improving efficiency in labor-intensive industries. Fayol emphasizes coordination, equity, and a holistic view of management, advocating principles like Division of Work and Scalar Chain. Taylor, on the other hand, stresses work methods, worker-manager relationships, and operational efficiency through time studies and standardization. Both approaches have significantly influenced modern management practices, with Fayol being more relevant to managerial hierarchies and Taylor to operational efficiency. Today, their ideas are combined to balance human and technical resources.

While Fayol’s principles were introduced in the early 20th century, many of them remain applicable in today’s dynamic business environment. The need for clear authority, responsibility, and structured communication channels is universal. However, modern organizations are increasingly adopting flexible structures, emphasizing teamwork and collaborative decision-making, which may challenge traditional principles like unity of command and scalar chain. Organizations today focus heavily on equity, diversity, and inclusion, expanding Fayol’s principle of equity to encompass a broader range of social justice issues. Additionally, the digital transformation of workplaces, with increased reliance on technology for communication and operations, has necessitated a rethinking of principles like order and discipline, as digital tools allow for more fluid and agile approaches to work.