Principles of Management
Principles of Management: Chapter 2 Learning Objectives
Toyota's business principles:
Honour laws, be a good corporate citizen.
Respect cultures, contribute to local economies.
Provide clean, safe products to enhance life quality.
Develop advanced technologies to meet customer needs.
Foster creativity, teamwork, trust, and respect.
Pursue global growth and harmony through innovation.
Work with partners for stable growth and mutual benefits.
These principles guide Toyota's Global Vision 2010, emphasizing innovation, eco-friendly tech, social responsibility, and interactive relationships.
Chapter learning objectives:
Define management principles and their significance.
Explain Taylor’s scientific management principles.
Explain Fayol’s management principles.
Guiding Principles of Toyota Motor Corporation
Managerial pursuits at Toyota are driven by principles that serve as broad guidelines for stating the vision and ways to achieve it.
Many other business enterprises have followed various principles in their working over a period of time.
Evolution of Management Principles
There is a long history of management thought, with principles evolving continuously.
Management thought phases:
Early Perspectives.
Classical Management Theory.
Neo Classical Theory – Human Relations Approach.
Behavioural Science Approach – Organisational Humanism.
Management Science/Operational Research.
Modern Management.
Early Perspectives
Management ideas date back to 3000-4000 B.C.
The Pyramid built by Egyptian ruler Cheops (2900 B.C.) required 100,000 men for over twenty years.
Monumental work could not be completed without adherence to principles of sound management.
Classical Management Theory
Characterized by rational economic view, scientific management, administrative principles, and bureaucratic organization.
Rational economic view: people are motivated by economic gains.
Scientific management (F.W. Taylor): emphasized one best way of production.
Administrative theorists (Henri Fayol): looked at combining jobs and people efficiently.
Bureaucratic organization theorists (Max Weber): sought to eliminate managerial inconsistencies due to abuse of power.
Era of the industrial revolution and factory system of production.
Large scale production required adherence to principles governing production organization, division of labour, specialization, and managing people.
F.W. Taylor was an American mechanical engineer.
Henri Fayol was a French mining engineer.
Taylor gave the concept of ‘Scientific Management’ whereas Fayol emphasised ‘Administrative Principles’.
Principles of Management: The Concept
A managerial principle is a broad and general guideline for decision-making and behaviour.
Management principles are not as rigid as pure science principles; they deal with human behaviour.
Principles must adapt to changes in human behaviour and technology.
NEO CLASSICAL THEORY — HUMAN RELATIONS APPROACH
Developed between 1920s to 1950s.
Employees are also guided by social needs, drives and attitudes.
Hawthorne Studies at GEC etc., were conducted then.
Attention to the human factor was the salient aspect of this school of thought.
This attention was to serve as a precursor to the development of behavioural sciences.
BEHAVIOURAL SCIENCE APPROACH — ORGANISATIONAL HUMANISM
Organizational behaviourists used the knowledge of psychology, sociology and anthropology to develop this approach.
The underlying philosophy of organisational humanism is that individuals need to use all of their capacities and creative skills at work as well as at home.
MANAGEMENT SCIENCE/OPERATIONAL RESEARCH
It emphasizes research on operations and use of quantitative techniques to aid managers to take decisions.
MODERN MANAGEMENT
It sees modern organisations as complex systems and underlies contingency approach and use of modern techniques to solve organisational and human problems.
Principles of Management vs. Techniques and Values
Principles of management should be distinguished from techniques of management.
Techniques are procedures or methods involving steps to achieve goals.
Principles are guidelines for decisions or actions when practicing techniques.
Principles should also be distinct from values.
Values are acceptable or desirable beliefs with moral connotations.
Principles are basic truths or guidelines for behaviour.
Values are general rules for individual behaviour in society formed through common practice.
Principles of management are formed after research in work situations, which are technical in nature.
While practicing principles of management, values cannot be neglected, as businesses have to fulfil social and ethical responsibilities towards society.
Nature of Principles of Management
Nature refers to qualities and characteristics.
Principles are general propositions applicable under certain conditions.
Developed through observation, experimentation, and managerial experiences.
Contribute to management as both a science and an art.
Derivation is a science; creative application is an art.
Principles lend credibility to management as a learnable discipline.
Ascent to managerial position may not be a matter of birth, but a matter of requisite qualifications.
Management principles have gained importance with increasing professionalization.
Principles are guidelines to action and denote cause-and-effect relationships.
Functions of management (Planning, Organizing, Staffing, Directing, Controlling) are actions, while principles help managers make decisions.
Summarizing the Nature of Management Principles:
(i) Universal applicability: Applicable to all types of organizations but extent varies with the organization's nature, activity, and scale.
(ii) General guidelines: Guidelines to action, not ready-made solutions due to complex business situations.
(iii) Formed by practice and experimentation: Developed through experience, collective wisdom, and experimentation.
(iv) Flexible: Can be modified by the manager based on the situation; discretion is allowed.
(v) Mainly behavioural: Aim at influencing human behaviour and understanding relationships between human and material resources.
(vi) Cause and effect relationships: Establish relationships between cause and effect for similar situations.
(vii) Contingent: Application depends on the prevailing situation at a particular time; principles should be changed as per requirements.
Significance of Principles of Management
Increase managerial efficiency.
Optimum utilisation of resources.
Effective administration.
Resources both human and material available with the company are limited.
Impersonalisation of managerial conduct so that managerial power is used with due discretion.
Principles of management limit the boundary of managerial discretion.
Free from personal prejudices and biases.
Scientific decisions
They must be based on facts, thoughtful and justifiable in terms of the intended purposes.
Management decisions taken on the basis of principles are free from bias and prejudice.
Meeting changing environment requirements
Management principles are flexible to adapt to dynamic business environment.
Fulfilling social responsibility
The increased awareness of the public, forces businesses especially limited companies to fulfill their social responsibilities.
Management training, education and research
Principles of management are at the core of management theory.
These principles provide basic groundwork for the development of management as a discipline.
Taylor’s Scientific Management
Scientific management is an important stream of the ‘Classical’ school of management thought.
Other streams include Fayol’s Administrative Theory and Max Weber’s Bureaucracy.
Fredrick Winslow Taylor (1856 – 1915):
American mechanical engineer who sought to improve industrial efficiency.
Broke a job into its component parts and measured each to the second.
Taylor believed that contemporary management was amateurish and should be studied as a discipline.
He also wanted that workers should cooperate with the management and thus there would be no need of trade unions.
Known for coining the term ‘Scientific Management’ in his 1911 article.
Principles of Scientific Management
In the past, factory owners relied on personal judgment ('rule of thumb') due to the absence of established theory.
Taylor proposed scientific management as opposed to rule of thumb.
In the words of Taylor, “Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and cheapest way.
It implies conducting business activities according to standardized tools, methods and trained personnel in order to increase the output, improve its quality and reduce costs and wastes.
(i) Science not Rule of Thumb:
Different managers would