Benefits of Management by Objectives

Benefits of Management by Objectives

1. Balanced Stress on Objectives
Management by Objectives forces managers to set objectives with balanced stress on key result areas. Thus, crisis conditions are avoided to take place in the organisation.

2. Better Managing
Management by Objectives forces managers to think about planning for results, rather than merely planning activities or work. Managers are required to ensure that the targets are realistic and needed resources are made available to subordinates to achieve the targets. Clearly set objectives for the subordinates serve as evaluation standards as well as motivators for them. Thus, Management by Objectives results in improvement in managing.

3. Better Organizing
The positions in the enterprise can be built around the key result areas. Managers are required clarifying organizational roles and structures. Hence better organizing.

4. Greater Employee Involvement and Commitment
If Management by Objectives programme is installed in an organization, people are not just doing work, following instructions and waiting for guidance and decisions from “above” and the superiors do not dictate things. They are now individuals with clearly defined goals, which have been formalized through their own participation in the process. Moreover, they fully well understand the areas of their discretion – their authority. They are also confident of getting needed help from their superiors. There is clarity of roles. These elements together make for a feeling of greater personal commitment on the part of the subordinates. They become more enthusiastic in attaining the targets. There is high motivation; there is high morale too.

5. Orderly Growth of Organization
Management by Objectives provides for the maintenance and orderly growth organization by means of predetermined set of objectives for everyone involved. It is also provides in measurement of what is actually achieved. The progress and even the tenure of all responsible managers are dependent upon their producing the results. Management by Objectives emphasizes the ability, skill and achievement of managers rather than their personality. Thus, the orderly growth and development of the organisation is ensured.

6. Development of Effective Controls
Management by Objectives not only sharpens the planning, but also develops effective controls. It specifically provides for periodic reviews and annual performance appraisals serving as the needed feedback for further streamlining the objectives or targets. It makes possible for a manager to control his own performance, high degree of self-control resulting in stronger motivation. Control from “above” is substituted by control from “self” Management by Objectives facilitates coordinated effort and teamwork.

7. Generating of an Ideal Atmosphere
Douglas McGregor says. “The motivation, the potential for development, the capacity for assuming responsibility, the readiness to direct behaviour toward organisation goals are all present in people. Management does not put them there. The essential task of management is to arrange organizational conditions and methods of operations so that people can achieve their own goals best by directing their own efforts towards organizational objectives.” This is an ideal atmosphere suitable for better industrial relations and ensured success of the enterprise.

8. Objective Appraisal
Management by Objectives provides a scientific basis for evaluating a subordinate’s performance, because goals (standards) are jointly set by the superior and the subordinates.

Management by Objectives

Define Management by Objectives. Explain the Management by Objectives Cycle.

Meaning and Definition of Management by Objectives (MBO)

Management by Objectives (MBO) has become a widely used slogan. It is a basic mentality that a high-performance manager brings to the job of managing. Peter Drucker coined the term “Management by Objectives” in 1954. He profounded Management by Objectives concept and emphasized it and than it developed as a management philosophy. Some authors has used the term “management by results” interchangeable with Management by Objectives.

Management by Objectives is an overall philosophy of management that concentrates on goals and end results. Management by Objectives is based on the presumption that people perform better when they know what is expected of them and can relate their personal goals to organisation goals. It also assumes that people are interested in the goal setting process and in evaluating their performances against the target.

Some important definitions of Management by Objectives may be given as follows:

George S. Odiorne
The system of management by objectives can be described as a process whereby the superior and subordinate managers of an organisation jointly identify its common goals, define each individual’s major ares of responsibility in terms of the results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members.

Peter Drucker
He says that management by objectives and self-control is a philosophy of management, resting on a concept of human action, human behaviour and human motivation. Management by objectives applies to every manager at any level and to all business enterprises whether large or small. He says the Management by Objectives “ensures performance by converting objective needs into personal goals”

Heinz Weihrich and Harold Koontz
“Management by objectives is a comprehensive managerial system that integrates many key managerial activities in a systematic manner and that is consciously directed toward the effective and efficient achievement of organizational and individual objectives.”

Essential Characteristics of Features of Management by Objectives

A careful study of the above definitions bring out the following features of Management by Objectives:

1. Management by Objectives is a philosophy or a system and not merely a technique.

2. It emphasizes participative goal setting.

3.It clearly defines each individual’s responsibilities in terms of results.

4. It focuses attention on what must be accomplished (goals), rather than on how it is to be accomplished (methods).

5. It converts objectives needs into personal goals at every level in the organisation.

6. It establishes standards or yardsticks (goals) as operating guides and also as basis of performance evaluation.

7. It is a system intentionally directed toward effective and efficient attainment of organizational and personal goals.

Management by Objectives Process

There are four important and essential steps or elements in the Management by Objectives process as follows:

1. Setting Objectives
Goal setting or objective-setting is a multistage process. It starts with the examining of the current state of affairs, level of efficiency, threats and opportunities. Then the key result areas are identified, such as product markets, improved services, lowered costs, work simplification, employee motivation, profitability, innovation and social responsibility. The performance of these areas is critical for organisation in the sense that failure in these areas my result in failure of the organisation and this is why they are known as “key” results areas. Peter Drucker says, “Objectives are important in every area where performance and results directly affect the survival and prosperity of business.”

Therefore interacting or joint goal setting takes place. Subordinates are actively involved in formulating goals at every level is the organisation. Such goals are finished with reference to the overall objectives of the organisation. Care is to taken establish goals that are measurable and contribute to the accomplishment of corporate objectives. Proper attention is given to “time” element also. Such goals may be long-range, medium-range or short-range. Further, resources availability also becomes an important consideration in goal setting. There is always need to decided priorities among the different objectives keeping in view the environment which business operates as well s possible future changes in it.

2. Developing Action Plans
Set objectives must be translated into action plans. It requires assignment of specific responsibilities to different departments, divisions and individuals. It also requires allocation of necessary resources needed to perform the assigned responsibilities. Time dimensions are also to be decided in order that targets are reached without any unwarranted delays.

3. Periodic Review Or Monitoring the Progress
After setting objectives and developing action plans, it is necessary to establish a proper monitoring system with a view to regularly keeping the activities and efforts on a prescribed path leading to the ultimate objectives. The progress is monitored without day-to-day interference in subordinates functioning. At agreed intervals, results are measured in terms of quantity, quality, time and cost against the set objectives. It is ensured that the deviations found, if any are thoroughly discussed and immediate corrective actions are taken to set them right on the course. Such a regular monitoring and periodic review not only provide feedback, which is essential for completion of work in time, but also motivates the managers accountable for performance. Periodic review and monitoring are done at departmental levels generally.

4. Performance Appraisal
This is the last phase of Management by Objectives programme that evaluates performance annually. The annual review or appraisal is comprehensive and is done at the organizational level. The actual annual results are evaluated against the set objectives. Such assessment is also used for determining targets for next year for modification in standards (goals) if needed and for taking corrective actions in order to avoid deviations from predetermined objectives.

Management by Objectives Cycle and Recycling Objectives

When all the four steps or phases in the Management by Objectives as mentioned above are completed then one Management by Objectives cycle is said to be over. The last phase or the fourth step in the Management by Objectives cycle is used as an input for recycling objectives and other actions. Objectives are changed or modified in the light of the environmental changes and the experiences gained over the year. Then, revised action plans are developed as per needs, periodic review is done. And performance is gain evaluated. Thus goes on the recycling.

Stages or Steps in Marketing Research Process

Stages or Steps in Marketing Research Process

Marketing research exercise may take many forms but systematic enquiry is a feature common to all such forms. Being a systematic process. Though it is not necessary that all research processes would invariably follow a given sequence, yet marketing research aften follows a generalized pattern, which can be broken down and studied as sequential stages stages. The various stages or steps in the marketing research process may be discussed as follows:

1. Identification and Defining of the Problem
The market research process begins with the identification of a problem faced by the company. The clear cut statement of problem may not be possible at the very outset of research process because often only the symptoms of the problems are apparent at that stage. Then, after some explanatory research, clear definition of the problem is of crucial importance in marketing research because such research is a costly process involving time, energy and money. Clear definition of the problem helps the researcher in all subsequent research efforts including setting of proper research objectives, the determination of the techniques to be used and the extent of information to be collected. It may be noted that the methods of explanatory research popularly in use are : survey of secondary data, experience survey or pilot studies i.e. studies of a small initial sample. All this is also known as preliminary investigation.

2. Statement of Research Objectives
After identifying and defining the problem with or without explanatory research, the researcher must make a formal statement of researcher objectives. Such objectives may be stated in qualitative or quantitative terms and expressed as research questions, statement or hypothesis. For example, the research objective. “To find out the extent to which sales promotion schemes affected the sales volume” is a research objective expressed as a statement. On the other hand, a hypothesis is a statement that can be refuted or supported by empirical findings. The same research objective could be stated, “To test the proposition that sales are positively affected by the sales promotion schemes undertaken this winter.” Example of another hypothesis may be. “The new packaging pattern has resulted in increase in sales and profit.” Once the objective or the hypothesis are developed, the researcher is ready to choose the research design.

3. Planning the Research Design or Designing the Research Study
After defining the research problem and deciding the objectives, the research design must be developed. A research design is a master plan specifying the procedure for collecting and analyzing the needed information. It represents a framework for the research plan of action. The objectives of the study are included in the research design to ensure that data collected are relevant to the objectives. At this stage, the researcher should also determine the type of sources of information needed, the data collection method (e.g. survey or interview), the sampling methodology and the timing and possible costs of research.

4. Planning the Sample
Sampling involves procedures that use a small number of items or parts of the population (total items) to take conclusion regarding the population. Important questions in this regard are; who is to be sampled as a rightly representative lot? Which is the target – population? What should be the sample size – how large or how small? How to select the various units to make up the sample?

5. Data Collection
The collection of data relates to the gathering of facts to be used in solving the problem. Hence, methods of marketing research are essentially methods of data collection. Data can be secondary, i.e. collected from concerned reports, magazines and other periodicals, especially written articles, government publications, company publications, books etc. Data can be primary i.e. collected from the original base through empirical research by means of various tools. There can be broadly two types of sources – (i) Internal sources – existing within the firm itself, such as accounting data, salesmen’s reports etc. (ii) External sources – outside the firm.

6. Data Processing and Analysis
Once data have been collected these have to be converted into a format that will suggest answer to the initially identified and defined problem. Data processing begins with the editing of data and its coding. Editing involves inspecting the data collection – forms for omission, legibility and consistency in classification. Before tabulation, responses need to be classified into meaningful categories. The rules for categorizing, recording and transferring the data to “date storage media” are called codes. This coding process facilities the manual or computer tabulation. If computer analysis is being used the data can be key-product and verified.

7. Formulating Conclusions, Preparing and Processing the Report
The final stage in the marketing research process is that of interpreting the information and drawing conclusion for use in managerial decision. The research report should clearly and effectively communicate the research findings and need not include complicated statement about the technical aspect of the study and research methods. Often the management is not interested in details of research design and statistical analysis but instead in the concrete findings of the research. If need to the researcher may bring out his appropriate recommendation or suggestions in the matter. Researchers must make the presentation technically accurate, understandable and useful.

Basic Functions of Marketing

Basic Functions of Marketing

The marketing process performs certain activities as the goods or services move from producer to consumer. Every firm does not perform all these activities or jobs. However, any company that wants to operate its marketing system successfully must carry them out. The following marketing tasks have been recognized for a long time.

1. Selling
It is core of marketing. It is concerned with the persuasion of prospective buyers to actually complete the purchase of an article. Setting pays an important part in realizing the ultimate aim of earning profit. Selling is enhanced by means of personal selling, advertising, publicity and sales promotion.

2. Buying
It involves what to buy, what quality, how much, from whom, when and at, what price. People in business buy to increase sales or to decrease costs. Purchasing agents are much influenced by quality, service and price. The products that the retailers buy for resale are determined by the need and preferences of their customers.

3. Transportation
Transport is the physical means whereby goods are moved from the places where they are produced to those they are needed for consumption. Transportation is essential from the procurement of raw materials to the delivery of finished products to the customers places. Marketing relies mainly on railroads, tracks, waterways, pipelines and air transport. The type of transportation is chosen on several consideration such as suitability, speed and cost.

4. Storage
It involves the holding of goods in proper condition from the time they are produced until they are needed by consumers (in case of finished products) or by the production department (in case of raw materials and stores). Storing protects the goods from deterioration and helps in carrying over surplus for feature consumption or use in production. Goods may be stored in various warehouses situated at different places. Storing assumes greater importance when production is seasonal or consumption may be seasonal. Retail firms are called “stores”.

5. Standardization and Grading
The other activities that facilitate marketing are standardization and grading. Standardization means establishment of certain standards or specifications for products based on intrinsic physical qualities of any commodity. This may involved quantity (weight or size) or it may involve quality (colour, shape, appearance, material, taste, sweetness etc). Government may also set some standards e.g., in case of agricultural products. A standard conveys a uniformity of the products.

“Grading means classification of standardized products into certain well-defined classes or groups.” It involves the division of products into clauses made up of unit processing similar characteristics of size and quality. Grading is very important for “raw material” (such as fruits and cerials), mining products” (such as coal, iron-ore and mangenese) and “forest products” (such as timber). Branded consumer products may bear grade levels, – A B C.

6. Financing
It involves the use of capital to meet financial requirements of the agencies dealing with various activities of marketing. The services of providing the credit and money needed to meet the cost of getting merchandise into the hands of the final user is commonly referred to as finance, function in marketing. In marketing, finances are needed for working capital and fixed capital, which may be secured from three sources – onward capital, bank loans and advances, and trade credit (provided by the manufactures to wholesaler and by the wholesaler to the retailers).

7. Risk Taking
Risk means lose due to some unforeseen circumstances in future. Risk-bearing in marketing refers to the financial risk inherent in the ownership of goods held for an anticipated demand, including the possible losses due to a fall in price and the losses from spoilage, depreciation, obsolescence, fire and floods or any other loss that may occur with the passage of time. From production of goods to its selling stage, many risks are involved due to changes in marker conditions, natural causes and human factors. Changes in fashions or interventions also cause risks. Legislative measures of the government may also cause risks.

8. Market Information
The only sound foundation, on which marketing decisions may be based, is correct and timely market information. Right facts and information reduce the aforesaid risks and thereby result in cost reduction. Business firms collect, analyze and interpret facts and information from internal sources, such as records, sales people and findings of the market research department. They also seek facts and information from external sources, such as business publications, government reports and commercial research firms. Retailers need to know about sources of supply and also about customers buying motives and buying habits. Manufacturers need to know about retailers and about advertising media. Firms in both these groups need information about competitors activities and about their markets. Even ultimate consumers need market information about availability of products, their quality standards, their prices, and also about the after-sale service facility Common sources for consumers are sales people, media advertisements, colleagues etc.

It may be noted that in addition to the mentioned jobs, the marketing manager is also involved in product planning, pricing of products, selection of distribution channels, framing of marketing objectives, environmental scanning, target market selection, market programming and developing marketing strategy.

Advantages of Production Planning & Control

Advantages of Production Planning and Control

Production planning and control yields the following main advantages,

1. Avoidance of Rush Orders
Production is well planned and its time aspects are well controlled. Therefore, production control reduces the number of risk-orders and overtime work on plant.

2. Avoidance of Bottlenecks
The incomplete work does not get accumulated because production control maintains an even flow of work.

3. Cost Reduction
Production control programmes minimizes the idleness of men and machines, keeps in process inventories at a satisfactory level, leads to a better control of raw materials inventory, reduces costs of storage and materials handling, helps in maintaining quality and containing rejection and thus reduces unit cost of production.

4. Effective Utilization of Resources
It reduces the loss of time by the workers waiting for materials and makes most effective use of equipments.

5. Co-Ordination
It serves to co-ordinate the activities of plant and results in a concerted effort by workmen.

6. Benefits to Workers
Adequate wages, stable employment, job Security, improved working conditions, increased personal satisfaction, high morale.

7. Efficient Service to Customers
It ensures better service to the customers by enabling production to be conducted in accordance with the time schedules and therefore deliveries are made on promised dates.

Nature & Importance of Production Management

Nature and Importance of Production Management

Production management has become an important now a day that it is treated to be a separate, independent functional area of management.

Production management has assumed its importance because of the following reason:

1. It is the foundation for earning profits – by producing goods or services and selling them into the market.

2. It ensures that produced goods or services are of desired quality, in required quantity and according to time-schedules.

3. It facilitates optimum inventory level.

4. It ensures proper co-ordination and necessary control, which are required for adequate, time and cost-conscious production.

5. It ensures coping with the changes in demands in the market and maintains stability in the production department.

Production Planning and Control

Production Planning, Planning is deciding in advance what to do, how to do it, when to do it, who is to do it. Then, production planning involves decision making in various production aspects, such as designing of production plans, programmes and goals, selection of production process, plant layout, provision of physical facilities (like material, tools, machines, equipments etc.) and preparation of time-schedules.

“Lawrence Bethel Observes” Production planning takes a given product or line of products and organizes in advance the manpower materials, machines and money required for a predetermined output in a given period of time. It starts with a product concept capable of being manufactured, a general idea of the process by which it can be made and a sales forecast for the descernible future.

Production Control
Control means ensuring that actual performance meets the predetermined standards. Then, “production control” refers to a set of steps for verifying whether production operations occur in conformity with the production plan adopted. It guides and directs the flow of production so that the goods of desired quality are manufactured at the right time and it maximum possible economic manner. It may be noted that “production control” is frequently used synonymously with “production planning and control” with planning being implied.

Spriegel and Lansburgh define production control as
the process of planning production in advance of operations, establishing the exact route of each individual item, part or assembly, setting, starting and finishing dates for each important item, assembly, and the finished products and releasing the necessary orders as well as initiating the required follow-up to effective the smooth functioning of the enterprise.

James Lundy says
Basically, the production control function involves the co-ordination and integration of the factors of production for optimum efficiency. The principal objective of production control is to facilitate the task of manufacturing and see that everything is being done strictly in accordance with the plan. It co-ordinates and integrates the factors of production for optimism and directs and checks the course and progress of work.

Production Management

Definition of Production Management

In modern competitive world, if an enterprise and master its production and marketing, it will be able to acquire and maintain a considerable market share.

Production may be define as the conversation of the raw material into finished goods are services through transforming process for purposes of supplying them into the market. Thus, it is process of creation of goods and services. The terms “production and manufacturing” are generally used as synonyms. Production activities are vital for the survival, growth and development of every enterprise.

Production to be successful has to be managed. Hence production management assumed great importance in every organisation.

Some important definition of production management may be given as follows:

Elwood Buffa
Production management deals with decision-making related to production process so that the resulting goods and services are produced according to the specifications in the amounts and by the schedule demanded and at minimum cost.

A.W.Field
Production management is the process of planning and regulating the operations of that part of enterprise which is responsible for actual transformation of materials into finished products.

Major Activities of Production Management

Production management deals with manpower and physical resources and facilities for transforming inputs into outputs. Production Management involves three major activities or fucntions:

1. Planning of Production Inputs
It includes determining of necessary inputs including raw materials, labour, electrical power, machines and equipments, facilities etc., required for production work.

2. Installation of the Necessary Inputs
It includes taking decisions with regard to designing of the plant, choice of the best machines and arrangement of other necessary facilities so that the production work can be started.

3. Co-Ordination and Control of the Production Process
An effective production system involves co-ordination among the various activities and affairs within the production department itself and also integration of its activities and decisions with other departments of the enterprise, such as finance, marketing, purchases, personnel, according and research and development. It also includes determining the necessary sequence of operations, preparing work schedules and assigning work to specific employees, so as to ensure smooth production operations. Control includes ensuring that the actual production performance meets the predetermined production plans and goals and also providing for proper feedback for taking corrective action.

Management science approache to Management

Management Science Or Operations Research Or Approach

Quantitative Approach
A quantitative approach to management thought is known as management science or operations approach.

“C.West Churchman. Russell Adoff and E.Leonard Arnoff” define the management science or operations research OR approach as an application of the scientific method to problems arising in the operation of a system and a solving of these problems by the solving of mathematical equations representing the system. (Introduction to Operations Research. New York Willey. 1957).

The management science approach suggests that managers can best improve their organisation by using the scientific method and mathematical techniques to solve operational problems.

The Beginning of the Management Science Approach

During the World War II, in Great Britain and in America, some mathematicians, physicists and other scientists were called to help solve complex, operational problems that existing in the military. They were able to achieve significant technological and tactical breakthroughs. The scientists were organized into teams that eventually became known as operations research or groups. When the war was over the applicability of or to problems industry gradually became apparent, particularly in the wake of new industrial technologies being put into use or specialists were called to help managers come up with answers to the new problems. With the invention of electronic computer system or procedures were formalized into what is now called “management science school” or “quantitative school”.

The early or groups typically included physicists and other “hard” scientists, who used the problem solving method known as scientific method which involves.

(i) Observing the problem system.
(ii) Constructing a model, i.e. a generalized framework from which consequences of changing the system can be predicted.
(iii) Deducting (inferring) from the model how the system will behave it changes were made in existing conditions.
(iv) Testing the model by performing an experiment on the actual system to see whether the effects of changes predicted using the model, actually occur when the changes are made.

The Operations Research groups were very successful in using the scientific method to solve their operational problems.

Now, the management science approach is being used in many companies in India and other countries and applied to many diverse management problems, such as production scheduling, plant location product packaging etc.

Characteristics of Management Science Applications

Four primary characteristics are usually present in situations in which management science techniques are applied. These are as follows:

1. Large Number of Variables
The management problems studied is so complicated that managers need help in analyzing a large number of variables.

2. Use of Mathematical Model
The use of mathematical models the investigate the decision situation in typical in management science applications. Models are constructed to represent reality and then used to determine how the real world situation might be improved.

3. Use of a Computer
A management science application makes use of computers. There are two factors that make computers extremely valuable to the management science analyst.

Today, managers are using such management science tools as inventory control methods, network models and probability models as aid in decision making process. Since management science thought is still evolving, more and more sophisticated analytical techniques can be expected.

Critical Evaluation of Management Science Approach

Management science team presents management with an objective basis for making a decision. Management science techniques increase the effectiveness of the managers decision making. They are best suited analyzing quantifiable factors, such as expenses, sales and units of production. They are used in such activities as capital budgeting management, cash flow management, production scheduling, development of product strategies, planning for human resource development programmes, maintenance of optional inventory levels and aircraft scheduling.

However, is special widespread use for many problems, management science of today has not developed to a point where it can effectively deal with an important aspect of the organization, that is the human side of an enterprise. But no doubt that it has marvelously contributed to the solving of planning and control problems and to the progress in the areas of organizing, staffing and the leading the organisation. Anyhow some managers complain about the complicated nature of the concepts, language and techniques of management science, which are not readily understandable and not easily implemental. Some other managers indicate about the drawback of management science in that if fails to address to the psychological and Behavioural components of workplace activities because the managers are not sufficiently involved with management scientists at the initial level of developing decision making techniques and as a result the later implementation of these techniques remain often unsuccessful. There exits a lack of awareness among the management scientist regarding the problems and constraints actually faced by the managers in orgnanization, particularly because of their remoteness from the actual some of the workplace activities.

Characteristics of Management Principles

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.

Nature of Management Principles

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.

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.

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.