Class 12-commerce NCERT Solutions Business Studies Chapter 2 - Principles of Management

Mr. Rathore violated the management principle of 'Subordination of individual interest to general interest'. This principle states that organisational goals should have priority over the personal interests of any individual. The individuals of an organisation should make sure that their personal interests do not affect the organisational interests in any manner. The stated principle has the following positive impacts:

• Increased productivity
• Harmonious work culture
• Sense of belongingness to the organisation among employees
• Achievement of organisational goals

Principles of management were developed over the years by experiences and observations of managers. Every manager faces varying situations in real business organisations. Based on these experiences, they draw general conclusions and inferences which guide them in their action and decision making in similar situations. That is, the experiences of managers form the basis of the principles of management. Therefore, it is correctly said that the Management principles are not rigid, they are the prescribed guidelines which can be used by the managers as per the situations. They are flexible enough to be used and moulded by the manager as per the need of the hour. 

Managementprinciplesarenotrigid,theyaretheprescribedguidelineswhichcanbeusedbythemanagersasper thesituations.Theyareflexibleenoughtobeusedandmouldedbythemanageraspertheneedofthehour.

Moreover, individual principles are like different tools serving different purposes, the manager has to decide which tool to use under different circumstances.

Setting a standard time limit for completing a particular job is the main objective of Time Study. The time taken for completing the job is measured for setting the standard time limit. This helps in deciding the number of workers to be employed for a particular task, determine their wages, etc.

The principle of "Cooperation, not individualism" is the extension of the principle 'harmony, not discord'. This principle stresses cooperation among the managers and the workers rather than their individual interests. The managers should take care of the workers and, similarly, the workers should work willingly, making their best contribution to the company.

Causes of Fatigue that may create hindrance in the employee's performance are:

1.   Long working hours

2.   Uncordial relationship with the superior

'Stability of Personnel' is the principle of management followed by Wales Limited. This principle means that the management should follow a rigorous procedure for the selection of potential candidates and should work towards retaining employees for the maximum period. They should be given a reasonable time to show results. This principle ensures the stability of personnel over a longer period.

The technique used by Taylor for distinguishing efficient and inefficient workers was Differential Piece Wage System. Under this technique, wages are decided according to a set standard. The workers who perform better than the set standards get higher wages than the workers who perform below the standards.

According to the principle of unity of command, one subordinate should receive instructions/commands from only one superior. The principle is said to be violated if the subordinate is answerable to more than one superior. Following this principle is important for the organisation as its violation leads to confusion and chaos, which in turn leads to instability and disturbance. For example, suppose A (subordinate) receives instructions from B (team manager) to complete a task in 10 days. At the same time, he receives another instruction from C (project coordinator) to complete the same task in 8 days. Thus, A will be confused with respect to targets.

Fredrick Taylor coined the term 'Scientific Management' in 1911. According to Taylor, a scientific analysis of the wok must be done so as to find the best method of doing it so as to increase the effectiveness and efficiency of work. It involves working according to standardised techniques and tools. It calls for specialisation such that both quality and quantity of the product are improved while reducing the cost. The three principles of scientific management are

1. Harmony, Not Discord: According to this principle, workers and managers must be in harmony with each other. Both should value each other. Both must change their attitude and realise that performance can be improved only if they work with unity. In this regard, he emphasised on complete mental revolution. While managers must share the benefits with workers, employees must also work to the best of their capabilities and must willingly accept the changes which are required.
2. Science, Not Rule of Thumb: According to Taylor, instead of rule of thumb, scientific management practices should be followed. Under rule of thumb, a trial and error method is used wherein each manager handles a situation in his own manner as and when it arises. According to Taylor, scientific management practices should be used. The best method of doing a task which would maximise efficiency should be developed. It would then replace the rule of thumb method. This would help in reducing the cost and improving efficiency.
3. Personnel Development: According to Taylor, the overall efficiency and productivity in an organisation depends on how competent the individual employees are. Accordingly, to improve the overall productivity and efficiency, the working capabilities of employees must be improved. For this, they must be given proper training and education.  

In the given situation, the Principle of Order is violated. According to this principle, for efficiency to improve, there must be proper arrangement of things in the organisation. In other words, material things and people should be at the right place. This helps in smooth operations. For instance, files and other data must be arranged in proper order so that they can be easily located and used when required.

The following point describes the importance of Principles of Management:

1. Insights to Reality: Principles of Management were developed over years on the basis of continuous observation and experimentation of managers in real business situations. Accordingly, these principles act as a guide to managers in dealing with the various business problems. They can be used by managers to deal with recurring business situations.
2. Logistic Decisions: As the Principles of Management are developed on the basis of continuous observation and experimentation of managers, they are based on logic and reasoning. Thus, by following the principles of management, managers are able to take logical and rational decisions.
3. Basic Education of Management: These principles form the base for management education. They form the most important part of management studies. Moreover, they form the base for further research on management.
4. Optimal Use of Resources: One of the basic aims of management is the optimum utilisation of resources. The principles of management help in predicting the exact cause and effect relationship of a decision. Accordingly, they eliminate the need for trial and error and thereby minimise wastage of resources.  

Scalar chain refers to the formal line of authority (in the order of rank) as followed in the organisation. Formal communication in an organisation follows the scalar chain:

A scalar chain refers to a pre-defined, formal path of authority and communication in the order of highest to the lowest. For example, A is the project manager in an organisation and he further has a project lead (B) and a team member (C) under him. So, the chain of communication would be A-B-C. Suppose there is another hierarchical order wherein he has a team manager (D) and a team member (E), i.e. the chain of communication is A-D-E. Now, if C wants to communicate with E, then he would follow the communication path . That is, C would first contact the higher authoritieswho would then send the message to E.

However, in case of an emergency situation, C may directly communicate with E through 'Gang Plank'.

Gang plank refers to a shorter emergency route through which workers can communicate with each other.

Scientific management implies knowing exactly what is to be done and devising the best ways of doing it. This term was given by Frederick Taylor (1856-1915) in 1911. It suggests that work should be done according to standardised techniques and tools and with the help of specialised personnel so as to improve the quantity and quality of the product and at the same time reducing costs. That is, scientific management improves the effectiveness and efficiency of work. Principles of scientific management:

1. Science, not Rule of Thumb: Before Taylor developed the Principles of Management; the Rule of Thumb was a widely used concept. Under rule of thumb, each manager handled a situation or problem as and when it arose using the trial and error method. It was an easily applicable process but was a very vague and inaccurate technique of determining solutions to problems. Taylor fostered the introduction of scientific methods. He believed that for every work there is only one best method of doing it. He wanted managers to take decisions on the basis of logic and science rather than rule of thumb. He proposed that various traditional methods used by managers should be studied and the best method/solution among them should be adopted and followed by all managers in the organisation. With such scientific management, he was able to increase efficiency to a large extent.
2. Harmony, not Discord: Taylor emphasised that managers and workers should maintain a harmonious work environment. They should realise their interdependence and work in amity. He was well acquainted with the fact that a friendly working environment will help in developing the relations between them. He introduced this principle to maintain a peaceful kinship between people. Often it is found that if workers are deprived of their wishes or demands, they generally go on strike. This affects the productivity and the working environment. To dismiss such a situation, Taylor was ardent about a mental revolution. It implies a change in the thinking of both workers and managers. For example, if a worker is having a problem with the working hours, he should talk to the manager about it, instead of letting it effect production (by going on a strike). Similarly, managers should listen to the worker's suggestions and demands rather than ignoring them.
3. Cooperation, not Individualism: This principle emphasised cooperation among managers and workers over individualism. This principle was an elongation of the principle of 'Harmony, not Discord'. According to it, workers and the manager should work with mutual understanding of each other. The manager should take care of the labourers. He should share the company gains with workers, awarding them with sufficient incentives to work. Similarly, the labourers should willingly work, giving their best contribution to the company. This will build up mutual trust and belongingness within both. Work and responsibility should be equally divided and a sense of cooperation and coordination should be established.
4. Personnel Development: Any organisation should focus on the development of its workers along with the company's growth. This is because if workers will have higher proficiency, then they will be able to increase their contribution to the organisation's development. They should introduce ways and incentives to build up their competitiveness. Efforts towards increasing efficiency should begin at the very first step, i.e. while hiring workers. Employees should be recruited in a scientific manner. They should be assigned work according to their mental/physical qualities. For increasing efficiency, workers should be given proper training. 

1. Unity of Direction: According to this principle, there must be a common direction of work in the organisation. This direction of work is provided by the common objectives of the organisation. According to the objective, each unit should have a head and a defined plan which must be followed. Following this principle helps in avoiding overlapping of tasks and activities. For example, if an organisation deals in manufacturing more than one product, then various activities related to each product should be handled by separate departments.
2. Equity: According to this principle, there must be equal and fair treatment of various employees in an organisation. There must not be any discrimination on grounds such as religion, gender and caste. Force or kindliness in behaviour as required may be used equally for all employees. Such equality in treatment promotes in building a healthy and friendly work environment.
3. Esprit de Corps: According to this principle, the management must work towards promoting team spirit among employees. In other words, there must be unity in work. The employees must have a feeling of belongingness and mutual trust towards each other. Following this principle is specifically important for large organisations where team work is essential for the achievement of objectives. Working together as a team helps in building mutual understanding, which in turn helps in improving efficiency.
4. Order: According to this principle, for efficiency to improve, there must be proper arrangement of things in the organisation. In other words, material things and people should be at the right place. This helps in smooth operations. For instance, files and other data must be arranged in the proper order so that they can be easily located and used when required.
5. Centralisation and Decentralisation: Centralisation means that the power and authority in an organisation is concentrated in only a few hands. On the other hand, decentralisation means that the authority is delegated to lower levels as well. According to Fayol, in any organisation, there must be a balance between centralisation and decentralisation of authority.
6. Initiative: According to this principle, there must be motivation and an incentive among employees to work. They must be encouraged to come up with new ideas and suggestions. However, it must be ensured that the new initiatives and ideas are in accordance with the generally followed rules and practices in the organisation. In addition, good initiatives can be suitably rewarded by managers. For example, employees can be asked to provide inputs regarding how to improve sales.  

Functional Foremanship 

A foreman refers to the one who is in charge of workers at the operational level. He forms the link between managers and workers. According to Taylor, it is necessary to improve the performance of the foreman to improve the overall performance in the factory. Taylor observed a few qualities which a good foreman must have such as intelligence, tact, judgement and knowledge. However, he observed that no single person can have all the qualities. So, he suggested that there must be eight persons who would accomplish the work of the foreman. This technique was named Functional Foremanship. Taylor suggested that the planning and production functions should be separated from each other, each having a separate in-charge. Both production in-charge and planning in-charge in turn would have four personnel under them.

Four persons who work under the planning in-charge:

1. Instruction Card Clerk: Providing instructions to workers
2. Route Clerk: Determining the route to be followed in production
3. Time and Cost Clerk: Preparing sheets about time and costs so as to minimise wastage
4. Disciplinarian: To ensure that discipline is being maintained

Four persons who work under the production in-charge:

1. Speed Boss: To ensure that the task is completed in the stipulated time
2. Gang Boss: To ensure that various machines and tools are in place and ready for workers
3. Repair Boss: To ensure that tools and machines are in the proper working condition
4. Inspector: To ensure that the quality of work is up to the mark 

Mental Revolution 

Mental Revolution implies a change in the attitude of workers and managers so as to create a better working environment. While managers must share the benefits with workers, employees must work to the best of their capabilities and must willingly accept the changes which are required. 

1. Time Study: According to this technique, there must be a standard time limit for the completion of a task. With repeated observations with regard to time taken in completing a task, a standard limit is set. This helps in deciding the number of employees which would be required in completing a task. For example, if it is observed that one person can manufacture one unit of a commodity in two hours, then in a working day of 8 hours, each worker can manufacture 4 units of the commodity.
2. Motion Study: Under motion study, various motions or movements involved in a particular task are studied. These movements can be classified as productive, incidental and unproductive. According to Taylor, unnecessary movements must be avoided while doing a task so that efficiency increases.
3. Fatigue Study: This technique focuses on rest or break as required during work. It is natural that if a worker works continuously, then fatigue sets in. This leads to reduction in efficiency. Every worker requires regular rests or breaks. According to Taylor, standard break timings must be provided to workers for improving performance. 
4. Method Study: According to method study, one must determine the best way of doing a particular task. The method so determined must aim at minimising the cost and maximising the quality. One of the popular examples of this study is the assembly line production used by Ford Motors.
5. Simplification and Standardisation of Work: Standardisation refers to a process wherein standards are set for any production activity. The standard is then used as a benchmark for evaluating the tasks done. In simplification, on the other hand, unnecessary varieties in design, size etc. which add to the cost should be avoided. This technique aims at full and efficient utilisation of resources, reducing inventories and increasing the turnover. 

The principles of management given by Taylor and Fayol are helpful in today's business environment. They act as guidelines to decision making by managers. Although the principles cannot be applied as they are, they act as guidelines in taking actions and decisions in real world business situations. Decisions taken by using these principles as the base proves to be more appropriate as they are based on logic. Decisions taken on the basis of these principles are based on facts and logic and are thereby more appropriate. These principles were developed over time by exhaustive observations and experimentation by managers in different situations. Thus, they help in successfully predicting the business environment and business situations.

Moreover, these principles have universal applicability, i.e. they can be applied to all organisations irrespective of their size, nature, geographical location etc. Moreover, these principles are formed on the basis of human behaviour in different situations. So, this helps in getting a clear picture with regard to the relationship between human and material resources in an organisation. Following these principles helps in increasing the overall efficiency and productivity in the organisation. 

1. Principles of management being violated in the given situation:

   1. Quote 1: Sometimes the subordinates had to work for more than one superior resulting in declining efficiency.

      Principle: Unity of command: In the given situation, employees work for more than one superior at a time.

   2. Quote 2: The divisions which were previously working on one product were also made to work on two or more products.

      Principle: Division of work: In the given situation, one division works on more than one product.

   3. Quote 3: The workers were becoming undisciplined.

      Principle: Discipline: In the given situation, employees were becoming undisciplined.

   4. Quote 4: The spirit of teamwork which had characterised the company previously was beginning to wane.

      Principle: Esprit de corps: In the given situation, the spirit of team work is declining in the organisation.

   5. Quote 5: Workers were feeling cheated and initiative was declining.

      Principle: Initiative: In the given situation, initiative is declining and employees are discouraged.

2. 
   
   1. Unity of Command: According to the principle of unity of command, one subordinate should receive instructions/commands from only one superior. If this principle is violated, it leads to confusion and chaos.
   2. Division of work: Division of work: According to the principle of division of work, the entire work must be divided into small pieces such that each piece of work is being done by specialists.
   3. Discipline: According to the principle of discipline, employees in the organisation must follow the rules the regulations as defined in the organisation.
   4. Esprit de corps: According to this principle, the management must work towards promoting team spirit among employees. The employees must have a feeling of belongingness and mutual trust towards each other.
   5. Initiative: According to this principle, employees should be motivated and encouraged to work. Incentives can be provided to them to come up with new ideas and suggestions. However, it must be ensured that the initiatives are in line with the policies and rules of the organisation.

3. Steps which can be taken by the organisation with regard to the above-mentioned principles:

   1. Scientific management must be followed.
   2. It must be ensured that employees are answerable to only one superior at a time.
   3. Specialisation in work should be promoted such that each division specialises in a particular activity. This must be done so as to avoid overlapping of work.
   4. Various incentives can be given to workers through measures such as differential piece wage system.
   5. Team work must be promoted in the organisation.

1. Yes, the scientific management techniques would prove to be helpful because the company would work according to standardised techniques. This in turn would help in improving the quantity and quality of the product. Moreover, it would help in reducing the costs.

2. Following precautions can be taken by Mukti Consultants:

   1.  New trained and specialised personnel can be recruited. In addition, the existing staff can be given proper training.
   2.  There must be proper and careful planning of production.
   3.  While introducing functional foremanship, it must be ensured that there are enough incentives and motivation for work.
   4.  Besides work study, other studies such as method study, motion study, time study and fatigue study should be  undertaken.
   5. Technique of standardisation can be used for different aspects of production.
   6. Monetary incentives can also be given to motivate employees to work more and with better efficiency.