The Importance and Application of Principles of Management in the Present Day Context

The aim of all good modern organizations is to reconcile the organizational purpose (whether this be profit for shareholders, or cost-effective services delivery, in the case of public services) with the needs and feelings of people (staff, customers, suppliers, local communities, stakeholders, etc) with proper consideration for the planet – the world we live in (in terms of sustainability, environment, wildlife, natural resources, our heritage, ‘fair trade’, other cultures and societies, etc) and at all times acting with probity – encompassing love, integrity, compassion, honesty, and truth.

Probity enables the other potentially conflicting aims to be harmonized so that the mix is sustainable, ethical and successful. Traditional inward-looking management and leadership skills (which historically considered only the purpose – typically profit – and the methods for achieving it) are no longer sufficient for sustainable organizational success. Organizations have a far wider agenda today. Management Management is the process of reaching organizational goals by working with people and other resources.

Or knowing what you want people to do, and then getting them to do it the best way. Managers must concentrate on reaching organizational goals, and they should use their resources to accomplish those goals. For many years the management process has been divided into principles, sometimes called functions. Some sources will state that there are five principles and others will say there are four. Here we will use four: planning, organizing, influencing, and controlling. Some people use decision making as a fifth principle, but we will use decision making as part of the planning process.

Also, some use leading instead of influencing, but we like the term influencing better. Management is a continuing process, and managers are always involved in some way with these principles. These principles are designed to help managers accomplish organizational objectives, and good managers will use them. These principles are not isolated but are interwoven throughout the manager’s thoughts and actions. Managers must combine and coordinate these principles and must maximize their value to achieve their goals.

Managers strive to be effective and efficient and these principles help them. These management principles are universal and applicable to all types of businesses and organizations The basic ideas regarding scientific management developed. They include the following:

• Developing new standard methods for doing each job
• Selecting, training, and developing workers instead of allowing them to choose their own tasks and train themselves
• Developing a spirit of cooperation between workers and management to ensure that work is carried out in accordance with devised procedures
• Dividing work between workers and management in almost equal shares, with each group taking over the work for which it is best fitted

Principles of Management

The principles of management derive their significance from their utility. They provide useful insights to managerial behavior and influence managerial practices. Managers may apply these principles to fulfill their tasks and responsibilities. Principles guide managers in taking and implementing decisions. It may be appreciated that everything worthwhile is governed by an underlying principle.

The quest of the management theorists has been and should be to unearth the underlying principles with a view to using these under repetitive circumstances as a matter of management habit.

The significance of principles of management can be discussed in terms of the following points:

• Providing managers with useful insights into reality: The principles of management provide the managers with useful insights into real world situations. Adherence to these principles will add to their knowledge, ability and understanding of managerial situations and circumstances.

It will also enable managers to learn from past mistakes and conserve time by solving recurring problems quickly. As such management principles increase managerial efficiency. For example, a manager can leave routine decision-making to his subordinates and deal with exceptional situations which require her/his expertise by following the principles of delegation.

• Optimum utilization of resources and effective administration: Resources both human and material available with the company are limited. They have to be put to optimum use.

By optimum use we mean that the resources should be put to use in such a manner that they should give maximum benefit with minimum cost. Principles equip the managers to foresee the cause and effect relationships of their decisions and actions. As such the wastages associated with a trial-and-error approach can be overcome. Principles of management limit the boundary of managerial discretion so that their decisions may be free from personal prejudices and biases

• Scientific decisions: Decisions must be based on facts, thoughtful and justifiable in terms of the intended purposes.

They must be timely, realistic and subject to measurement and evaluation. Management principles help in thoughtful decision-making. They emphasize logic rather than blind faith. Management decisions taken on the basis of principles are free from bias and prejudice. They are based on the objective assessment of the situation.

• Meeting changing environment requirements: Although the principles are in the nature of general guidelines but they are modified and as such help managers to meet changing requirements of the environment.

You have already studied that management principles are flexible to adapt to dynamic business environment. For example, management principles emphasize division of work and specialization. In modern times this principle has been extended to the entire business whereby companies are specializing in their core competency and divesting non-core businesses. In this context, one may cite the decision of Hindustan Lever Limited in divesting non-core businesses of chemicals and seeds. Some companies are outsourcing their non-core activities like share-transfer management and advertising to outside agencies.

So much so, that even core processes such as R&D, manufacturing and marketing are being outsourced today.

• Fulfilling social responsibility: The increased awareness of the public, forces businesses especially limited companies to fulfill their social responsibilities. Management theory and management principles have also evolved in response to these demands. Moreover, the interpretation of the principles also assumes newer and contemporary meanings with the change in time. So, if one were to talk of ‘equity’ today, it does not apply to wages alone. Value to the customer, care for the environment, and dealings with business associates would all come under the purview of this principle.

• Management training, education and research: Principles of management are at the core of management theory. As such these are used as a basis for management training, education and research. You must be aware that entrance to management institutes is preceded by management aptitude tests. Do you think that these tests could have been developed without an understanding of management principles and how they may be applied in different situations?

These principles provide basic groundwork for the development of management as a discipline. Principles of Scientific Management In the earlier days of the Industrial Revolution, in the absence of an established theory of factory organization, factory owners or managers relied on personal judgment in attending to the problems they confronted in the course of managing their work. This is what is referred to as ‘rule of thumb’. Managing factories by rule of thumb enabled them to handle the situations as they arose but suffered from the limitation of a trial and error approach.

For their experiences to be emulated, it was important to know what works and why does it work. For this, there was a need to follow an approach that was based on the method of science – Defining a problem, developing alternative solutions, anticipating consequences, measuring progress and drawing conclusions

The Main principles of management applied today are:

Division of Work

Work is divided into small tasks/jobs. A trained specialist who is competent is required to perform each job. Thus, division of work leads to specialization. Specialization produces more and better work with the same effort. Authority and responsibility: Authority is the right to give orders and the power to exact obedience. A manager has official authority because of her position, as well as personal authority based on individual personality, intelligence, and experience. Authority creates responsibility.

Discipline

Discipline is the obedience to organizational rules and employment agreement which are necessary for the working of the organization. According to Fayol, discipline requires good superiors at all levels, clear and fair agreements and judicious application of penalties. Unity of Command: An employee should receive orders from only one superior.

Unity of Direction

Organizational activities must have one central authority and one plan of action.

Subordination of Individual Interest to General Interest

The interests of one employee or group of employees are subordinate to the interests and goals of the organization.

Remuneration of personnel

Salaries – the price of services rendered by employees – should be fair and provide satisfaction both to the employee and employer. Centralization and Decentralization: The concentration of decision-making authority is called centralization whereas its dispersal among more than one person is known as decentralization. The objective of centralization is the best utilization of personnel. The degree of centralization varies according to the dynamics of each organization.

Scalar Chain

An organization consists of superiors and subordinates. The formal lines of authority from highest to lowest ranks are known as scalar chain.

Order

Organizational order for materials and personnel is essential.

The right materials and the right employees are necessary for each organizational function and activity.

Equity

In organizations, equity is a combination of kindliness and justice. Both equity and equality of treatment should be considered when dealing with employees.

Stability of tenure of personnel

To attain the maximum productivity of personnel, a stable work force is needed.

Initiative

Thinking out a plan and ensuring its success is an extremely strong motivator. Zeal, energy, and initiative are desired at all levels of the organizational ladder. Esprit de corps: Teamwork is fundamentally important to an organization. Work teams and extensive face-to-face verbal communication encourages teamwork. Change management is a basic skill in which most leaders and managers need to be competent. When leaders or managers are planning to manage change, there are five key principles that need to be kept in mind:

• Different people react differently to change
• Everyone has fundamental needs that have to be met
• Change often involves a loss, and people go through the “loss curve”
• Expectations need to be managed realistically
• Fears have to be dealt with

How to apply the above principles when managing change

• Give people choices to make, and be honest about the possible consequences of those choices.
• Where it is possible to do so, give individuals opportunity to express their concerns and provide reassurances – also to help assuage potential fears.
• Give people information – be open and honest about the facts, but don’t give overoptimistic speculation.
• For large groups, produce a communication strategy that ensures information is disseminated efficiently and comprehensively to everyone (don’t let the grapevine take over). Keep observing good management practice, such as making time for informal discussion and feedback (even though the pressure might seem that it is reasonable to let such things slip – during difficult change such practices are even more important).
• Give people time, to express their views, and support their decision making, providing coaching, counseling or information as appropriate, to help them through the loss curve.
• Where the change involves a loss, identifies what will or might replace that loss – loss is easier to cope with if there is something to replace it. This will help assuage potential fears.