Chapter 4 - Administrative Theory of Management/Principles of Management B.Com

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Chapter 4 - Administrative Theory of Management/Principles of Management


* Administrative theory of Management

* Principles of Management

* Nature of Management Principles

* Characteristics of Management Principles

Q.1. Describe in brief the administrative theory of Management?
OR
Briefly explain the Fayol's general principles of Management.
OR
To arrange is to forecast and plan, to organize, to command, to coordinate and to control, Discuss
OR
Discuss the contribution of Fayol to the science of Management.


Henri Fayol - Father of Mangement

Fayol was a French mining engineer in his early thirties, but after that he switched over to general management ans was Managing Director from 1888 to 1918. He wrote his book General and Industrial Management in 1916 in French, which was translated in English in 1949, only when American Management writers came to know about his ideas.
Fayol is known as the father of management or the founder of the classical management. Not because he was first to investigate managerial behaviour, but because he was the first to systematize it. He was contemporary to Taylor. Taylor was basically concerned with organizational fucntions, whereas Fayol was interested in the total organization. It may be noted that Taylor is known as the father of scientific management, i.e. supervisory or lower management, while Fayol is recognized as the father of management, i.e. the higher management or the general management.


Division of Business Activities

According to Fayol, business activities in any organization consist of six interdependent operations as follows:
1. Technical - activities concerning production.
2. Commercial - activities concerning buying, selling and exchange.
3. Financial - activities concerning optimum use of capital.
4. Security - activities concerning protection of property.
5. Accounting - activities concerning final accounts, costs and statistics. And
6. Managerial - activities concerning planning, organizing, commanding, coordinating and controlling.
According to him, the first five activities were well known and as such to devoted his attention to the description and explanation of the managerial activities. Also he analyzed the nature of such activities and skill requirements, which were so far given little scattered attention by thinkers.
Universality of Management: (Elements of Management)

Fayol considered the process of management to be of universal application and distinguished between five elements of the process. He regarded these elements of management as the function of management, which were being performed by all managers universally and at all the levels of organization. He divided management functions into five parts as follows:
Forecasting and planning
Organizing
Command
Coordination
Control
Thus, according to Fayol, management means to forecast and plan, to organize, to command, to co-ordinate and to control. The management was defined as the process of performing these functions. It may be noted that the present pattern of management functions follows broadly the lines set by Fayol.
Fayol emphasized that management involved the application of certain skills, which could be acquired by persons on the basis of systematic instructions and training. Once acquired the skills could be applied to all kinds of institutions including church, schools, political as well as industrial organization.

Q.2. Describe the basic principles of management?
Principles of Management

Fayol made a distinction between "elements of management" and "general principles of management". Besides a systematic analysis of the management process and management functions, Fayol formulated a set of fourteen principles as guidelines for implementing the process of management.
These principles may be listed as follows:

1. Division of Work
In any organized situation, work should be divided into compact jobs to be assigned to individuals. This applies to managerial work and non-managerial work. Division of labour facilities specialization and improves efficiency, if it is done within reasonable limits.

2. Authorities and Responsibility
The authority is the official right to a manager to manage people and things. Authority of a manager goes hand in hand with the responsibility for effective results. In other words, there should be parity or balance between authority and responsibiliy vested in a managerial position.

3. Discipline
Discipline is defined as observance of diligence and respect for seniors and rules and regulations. Managers as leaders of their work groups should enforce discipline throughout the organization. Fayol declares that discipline requires good superiors at all levels. He emphasized the need of discipline among the personnel for the smooth running of organization. He advocated penalties to prevent in violation.

4. Unity of Command
It means that a subordinate in an organization should be under direct supervision of a single from whom he should get instructions and to whom be should be accountable. In other words, every employee should have only one boss. If a subordinate has more than one boss, to that case conflict and condition in authority and instructions of general bosses would result.

5. Unity of Direction
Fayol advocates one head, one plan for a group of activities having same objective. In other words, a set of activities having the same objective should be under the direction of a single manager. Similarly, there should be one plan of action for such a set of activities because the objective is the same. This principle promotes smooth coordination of activities, efforts and resources.

6. Subordination of Individual Interest to Group Interest
The collective good and common interest of the organization should prevail over the narrow, sectional and self-interest of its members of an organization for the welfare of both the organization and the members.

7. Remuneration of Personnel
Remuneration as well the methods of payment in an organization should be fair so as to afford maximum satisfaction both to the organization and its employees.

8. Centralization
According to Fayol, every thing which reduces the importance of subordinates role is centralization and that which increases it, is decentralization. In his opinion, the question of centralization and optimum degree in particular case. There should be a proper combination and decentralization in an organization based on a consideration of several internal and external factors.

9. Scalar Chain
Fayol defines the scalar chain as the chain of superiors ranging from the ultimate authority (i.e. top authority) to the lowest ranks. It is also known as hierarchy of management. Every communication should follow the prescribed route, i.e. the proper channel. Authority relationships are said to be scalar when subordinates report to their immediate superiors and when their superiors, in turn, directly report as subordinates, to their superiors.
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10. Order
Order relates to both persons and things. It means a systematic arrangement of materials and systematic placement of people in the organization. In material order, everything should be in its proper place and there should be a place for everthing. For social order there should be a place assigned to each employee, and each employee should be in the place assigned. The right man in the right place is the ideal here.

11. Equity
Equity means combination of fairness, kindliness and justice. Equity motivates the workers to perform their duties. Besides, it promotes a friendly atmosphere between superiors and subordinates.

12. Stability of Tenure of Personnel
Management should strive to minimize employee turnover (i.e. changes in staff). In other words efforts should be made to achieve relative stability and continuity of tenure of the personnel. This could be achieved by attractive remuneration and honourable treatment of personnel. Stability and continuity of personnel promote teamwork, loyalty and economy.

13. Initiative
It refers to the freedom to propose a plan and execute it. Management should encourage subordinates to take desirable initiative in thinking out plans and executing them. Entending opportunities and freedom to contribute their best could do this.

14. Esprit de corps
Esprit de corps means the spirit of loyalty and devotion, which unites the members of a group or society. It is a sense of respect and belongingness to one's organisation. This principle stresses the need for team spirit, cordial relations, and co-operations among the personnel.
It is to be noted that Fayol made is clear that he had no intention to close the list of principles or make them inflexible.


Critical Evaluation

Fayol's administrative or process or functional theory of management may be evaluated as follows:

(A) Contribution of Fayol's Work
Fayol's major contribution was to identify management as a separate set of skill or functions performed by managers in the organizations. The skills and abilities required for effective management were stated to be dependent on the manager's positions at different levels of organization. Fayol pointed out that administrative or managerial skills were more essential for higher-level manager, whereas technical skills and abilities were required more of the lower levels.

Fayol was the first thinker who emphasized, for the first time the necessity of formal education and training in management. He was the person who provided a set of means (i.e. planning, organizing, commanding, coordinating and controlling) for understanding the management process. He also provided principles for implementing this process.
He provided conceptual framework for analyzing the management process and emphasized that management was a separate, distinct activity.
Management as a body of knowledge gained immediately from Fayol's analysis of management skills of universal relevance and the analysis of the principles of general management.

(B) Limitations or Weaknesses
Fayol's administrative theory of management is criticized on the following grounds.

1. It is too formal as Fayol divides "business activities" into six categories, and their management into five functions and the implementation of these functions with the help of fourteen principles.
2. Some critics call this theory as inconsistent, vague and inadequate.
3. It does not pay adequate attention to workers. It has pro-management bias.
4. Jernert Simon calls Fayol's principles as proverbs, comparable to folklore and folk wisdom.


Conclusion

Inspite of several criticisms of Fayol's work, his theory of managerial functions still exerts considerable influence on the practice of management as well as the teaching of this subject world over.
It may be also noted that when combined together the scientific management approach and the functional approach are called classical school or classical theory of management or classical approach to management.

Q.3. What are Management Principles? Explain the nature of Management Principles.
OR
Why Management Principles are needed? What are their limitations?


Meaning of Management Principles

Management principles may be defined as fundamental truths of general validity. They are helpful in predicting and understanding the results of managerial actions. The principles have been derived from the experience of managers in different fields of activity. Primarily members of the classical management school have developed them.
Management principles are intended to improve the practice of management by providing guidelines for managerial actions in the management process. They become the basis of scientific process of management.


Flexibility of Management Principles (Nature)

As indicated above, management principles are not rigid, absolute truths like rules and laws. In fact, they are flexible guides to managerial actions. Hence, while applying these principles, due attention must be given to varied and changing, circumstances because human beings who are subject of such principles are different and changeable and moreover other concerned factors are also not stable. At times it has been found in practice that the same principles is seldom applied twice in exactly the same way.
Like other social sciences, management science is also not very exact and rigid. Certain kind of flexibility is always necessary to accommodate new thinking, new demands and newly emerging circumstance. Hence the management principles are flexible and can should be adopted to meet the speciality of every situation. However as a precaution management principles should be guarded against unnecessary frequent modifications and alterations based on pure whims and frezies of individual user so that they are not distorted unwarrantedly.
In sum, it may be said that the nature of the principles of management suggests that they should be applied with fair judgement and interpretation of the available facts in a given situation.

Q.4. Describe the characteristics of management principles also explain it needs & importance?
Characteristics of Management Principles

The characteristics of management principles may be examined as follows:
1. Management principles are derived from analysis of management functions and processes.
2. There are two types of principles:
Descriptive which attempt to explain and predict the behaviour of organizational members and managerial decisions and their relationships.
Normative which attempts to prescribe and evaluate the bahaviour of organizational members including the managers. They prescribed what ought to be, what is good, right and desireable.
3. The principles known today have their origin in the works of classical writers and thinkers like Taylor, Fayol and Mooney and Reiley.
4. They are universal in the sense that they are valid for most organizational under most circumstances.
5. They are flexible in nature and change with the changes in the environment in which an organization exists. It is to be noted that nothing is permanent is the landslide of management, because of the complex and unpredictable nature of human behaviour.


Need and Importance of Management Principles

Proper use of management principles will probably improve organizational performance. According to George R. Terry, Principles of management are to a manager as a table of strengths of materials is to a civil engineer. The value of the principles lies in the foundation they provide for efficient conduct of management practice. By means of principles, a manager can avoid fundamental mistakes in his job and foretell the results of his actions with confidence.
Principles help in several ways - increasing the managerial efficiency, increasing the productivity of workers, enhancing managerial knowledge and thinking, improving research in management, serving as aid to training enhancing social welfare by helping in improving the quality of life of people and community resources to best advantage of organizational members, etc.
The main purpose of management principles is to make available useful elements of a systematic theory of management, so as to improve the management practice. They provide a means of organizing knowledge and experience in management.
The above discussion clearly brings out that it is due to all the above facts that management principles have become a permanent need in today's management world.


Various Management Principles

A number of management thinkers have formulated various management principles. Taylor and Fayol has enunciated the most important principles.