Revision: Principles and Functions of Management >> Principles of Management Business Studies Commerce (English Medium) Class 12 CBSE

Henry Fayol (1841-1925) was a French mining engineer who turned a leading industrialist and a successful manager. He started his career as a mining engineer in a French mining company and rose to the position of the Chief Managing Director. After conducting many experiments and observations in organization, Fayol proposed 14 principles of management which are explained in his famous book 'General and Industrial Administration'. Due to his contribution in development of managerial thoughts he is called as 'Father of Modern Management'. Fayol suggested 14 principles of management. These statements serve as a guideline for decision-making and management actions.

• Time study determines the standard time required to complete a specific job.
• It uses time-measuring devices and multiple observations to fix accurate standard time.
• It helps in deciding the number of workers required and fixing labour costs.
• It is useful for designing incentive wage schemes based on standard performance.
• Example: If one box takes 20 minutes, a worker makes 3 boxes per hour and 21 boxes in 7 working hours — this becomes the standard task.

• Scientific Management was introduced by F.W. Taylor to replace the old “rule of thumb” method.
• It uses scientific study and analysis to find the “one best way” of doing a job.
• The principle of “Science, not Rule of Thumb” means decisions should be based on research and standard methods.
• “Harmony, not Discord” stresses peaceful relations and mutual trust between workers and management.
• “Cooperation, not Individualism” means both workers and managers should work together instead of competing.
• Taylor supported equal division of work and responsibility between management and workers.
• He emphasised scientific selection, training and development of workers to increase efficiency and prosperity.

• The Differential Piece Wage System was introduced by Taylor to reward efficient workers.
• Workers are paid different wage rates based on their performance compared to the standard output.
• Those who meet or exceed the standard get a higher rate per unit, while others get a lower rate.
• The system aims to motivate inefficient workers to improve their performance.
• It is based on scientific work study, which fixes standard time and output.
• Taylor believed efficiency results from joint efforts of workers and management.
• The system promotes mental revolution, encouraging cooperation instead of conflict to increase productivity and profits.

• Scientific Management is a part of the Classical School of Management.
• It was developed by F.W. Taylor, an American mechanical engineer.
• Taylor aimed to improve industrial efficiency during the Industrial Revolution.
• He believed in finding the “one best way” to perform a job through scientific analysis.
• He is famous for time and motion studies to increase productivity.
• He supported cooperation between management and workers for better results.
• He introduced the term “Scientific Management” in his book The Principles of Scientific Management (1911).

• Principles of management are broad guidelines that help managers in decision-making and behaviour.
• They are flexible in nature because they deal with human behaviour, which keeps changing.
• Management principles are not as rigid as scientific principles and must be applied according to the situation.
• Principles are different from techniques. Principles are guidelines, while techniques are specific methods or steps to perform a task.
• Principles are also different from values. Values are moral beliefs, whereas principles are practical guidelines formed through research.
• While applying management principles, managers must consider social and ethical values.

• Method study aims to find the one best way of doing a job.
• It studies every activity from purchase of raw materials to delivery of the final product.
• It helps in reducing cost of production and improving quality and customer satisfaction.
• Techniques like process charts and operations research are used in method study.
• The assembly line system, used by Ford and modern automobile companies, is an example of method study.

• Principles of management are general guidelines developed through observation, experience and experimentation.
• They are universally applicable to all types of organisations, but their use may vary according to the situation.
• They provide general guidance, not fixed or ready-made solutions to problems.
• They are flexible and can be modified according to changing business conditions.
• They mainly deal with human behaviour and help in managing people effectively.
• They establish cause and effect relationships to guide managerial decisions.
• Their application is contingent, meaning they depend on the specific situation and circumstances.

• Principles of management provide useful guidance to managers in real business situations.
• They improve managerial efficiency by helping managers avoid repeated mistakes and save time.
• They ensure optimum use of resources by reducing waste and increasing benefits at minimum cost.
• They help managers take scientific and logical decisions based on facts, not personal bias.
• They assist managers in adapting to changes in the business environment.
• They encourage fulfilment of social responsibilities towards customers, employees and society.
• They form the basis of management education, training and research, helping develop management as a profession.

• Functional Foremanship was introduced by F.W. Taylor to improve supervision in factories.
• Taylor believed one foreman could not perform all duties effectively, so he divided the work among specialists.
• Planning and execution were separated. A Planning Incharge and a Production Incharge were appointed.
• Under planning, four specialists worked: Instruction Card Clerk, Route Clerk, Time and Cost Clerk, and Disciplinarian.
• Under production, four specialists worked: Speed Boss, Gang Boss, Repair Boss, and Inspector — each responsible for specific production tasks.

• Taylor supported standardisation, which means setting fixed standards for processes, materials, methods, machines and performance.
• Standardisation is done using scientific methods like time study, motion study, fatigue study and method study.
• The objectives of standardisation are to ensure uniform size, quality, interchangeability of parts, and better performance of workers and machines.
• Simplification means removing unnecessary varieties, sizes and types of products to reduce complexity.
• Simplification leads to cost savings, reduced inventory, better use of machines and higher production efficiency.

• Taylor determined the optimum load of 21 pounds per worker through scientific work-study, saving Bethlehem Steel about $75,000 to $80,000 per year.
• Pig iron handling increased from 12.5 tons to 47 tons per worker per day, raising workers’ wages by 60% and reducing the number of labourers required.
• Taylor published “The Art of Cutting Metals,” which helped make cutting processes more scientific.
• He introduced the Piece Rate Wage System with incentives to reward efficient workers.
• Frank Gilbreth applied scientific management to bricklaying by reducing unnecessary motions and improving tools, which increased efficiency.

• Just-in-Time (JIT) is an inventory system that reduces storage cost by producing or purchasing goods only when needed, often using Kanban signals.
• Lean Manufacturing focuses on eliminating waste such as overproduction, waiting time, excess inventory and defects to reduce cost and improve quality.
• Kaizen means continuous improvement. It encourages small, regular improvements in processes to increase productivity and reduce waste.
• Six Sigma is a data-based method that reduces defects and improves quality by controlling variations in processes.
• All these modern techniques aim to improve efficiency, reduce cost, save time and increase customer satisfaction.