Principles of
Management
One French mining engineer. One American mechanical engineer. Together, Henri Fayol and F.W. Taylor transformed guesswork into a science and gave managers a roadmap that still works today. This chapter covers all 14 principles of Fayol, all 4 principles and 7 techniques of Taylor, and the key differences between their contributions — with real case examples throughout.
From Guesswork to Science: The Birth of Management Principles
Before Fayol and Taylor, management was entirely based on intuition and "rule of thumb." Every manager did whatever felt right. There were no principles, no standards, no science. A French mining engineer and an American mechanical engineer changed all that — independently, from opposite ends of the organisational hierarchy — and gave the world a systematic foundation for managing people, work and organisations. Their principles, developed over 100 years ago, are still taught in every business school on earth.
2.2 Principles of Management: Meaning
What is a Principle of Management?
A principle of management is a general statement or fundamental truth that serves as a guide for managerial decision-making and action. It establishes a relationship between cause and effect and helps managers understand what to do and what not to do in specific situations. Unlike rules (which are rigid), principles are flexible guidelines that can be adapted to specific circumstances.
Principles vs Techniques vs Values
| Basis | Principles | Techniques | Values |
|---|---|---|---|
| Meaning | General guidelines for managerial behaviour | Specific methods of applying principles | Ethical/moral standards guiding management |
| Nature | Descriptive — what should be done | Procedural — how to do it | Normative — what is right or wrong |
| Flexibility | Flexible — adapted to situation | Specific — applied as defined | Constant — ethical standards don't change |
| Example | Unity of Command | Time Study, Motion Study | Integrity, fairness, transparency |
2.5 Nature / Characteristics of Principles of Management
Universal Applicability
Principles of management apply to ALL types of organisations — manufacturing, service, government, NGO, hospital, army, school — irrespective of size, type or location. They are not exclusive to any one industry or country.
General Guidelines (Not Rigid Rules)
Unlike laws in physical sciences, management principles are not rigid. They provide general direction but must be applied with judgment. Two situations may require different applications of the same principle.
Formed by Practice and Experimentation
These principles were not invented in a laboratory. They emerged from the practical experiences of managers over decades and were then validated through systematic observation and experimentation.
Flexible
Principles can and must be adapted to suit the specific circumstances of each organisation — its size, culture, goals, industry and the personalities of its people. What works in one factory may not work in another.
Mainly Behavioural
Management principles are primarily concerned with regulating human behaviour — how managers should treat workers, how authority should be exercised, how conflict should be resolved. They deal with people, not machines.
Cause and Effect Relationship
Each principle establishes a clear link between a cause and its expected effect. Example: If authority is given without corresponding responsibility (cause), managers will misuse power and workers will suffer (effect).
Contingent (Situation-Dependent)
The application of a principle depends on the prevailing situation. The same principle may be applied differently in a crisis vs a stable environment, in a large company vs a startup, in a creative agency vs a factory.
2.7 Significance / Importance of Principles of Management
Provide Useful Insights
Principles provide ready-made knowledge and tested wisdom from the experience of great managers. A new manager does not have to learn everything from their own mistakes — principles give them a head start.
Optimal Utilisation of Resources
By following principles like Division of Work and Order, managers ensure that every resource — human, material, financial — is used to its fullest potential, minimising waste and maximising output.
Scientific Decisions
Principles replace trial-and-error and gut-feel with systematic, evidence-based decision making. Managers know what has worked in the past and can apply it with greater confidence and precision.
Meeting Changing Requirements
Because principles are flexible guidelines rather than rigid rules, they can be adapted as the business environment changes — helping organisations survive and grow through economic shifts, technological changes and competitive pressures.
Training and Education
Management principles form the syllabus of every MBA programme, management training course and business book worldwide. They make management teachable, learnable and transmissible across generations.
2.6 Henri Fayol: Father of Management (14 Principles)
Who Was Henri Fayol?
Henri Fayol (1841–1925) was a French mining engineer and managing director who transformed a nearly bankrupt mining company into a highly successful operation through his management insights. He is called the "Father of General Management" or "Father of Modern Management." He documented his principles in his famous book "General and Industrial Administration" (1916). Unlike Taylor who worked at the shop floor level, Fayol worked at the top management level and focused on the overall administration of the organisation.
All 14 Principles of Fayol — in Detail
Division of Work
Specialisation of work leads to increased output and better quality. When employees repeatedly do the same specific task, they develop expertise and speed. Example: In Tata Motors assembly line, one worker only fits doors, another only installs dashboards — each becomes an expert at their specific task, making production faster and error-free.
Authority and Responsibility
Authority is the right to give orders; Responsibility is the obligation to perform. These two must always be EQUAL. If authority exceeds responsibility — the manager will abuse power. If responsibility exceeds authority — the manager cannot get the work done. Example: A Purchase Manager given the responsibility to source raw materials MUST also be given the authority to negotiate contracts and select vendors.
Discipline
Employees must obey and respect the rules of the organisation. Discipline requires: good supervisors at all levels, fair and clear agreements between management and workers, and judicious application of penalties. Example: Infosys requires all employees to follow dress code, attendance and confidentiality policies. Breach is addressed through a clear, fair disciplinary process.
Unity of Command
Each employee should receive orders from ONE and only one superior. Receiving conflicting instructions from multiple bosses leads to confusion, divided loyalty and poor performance. Example: If Ravi, a salesman at Amazon, reports to both the Regional Sales Head and the Product Head, and both give him different targets — he will be confused, stressed and ineffective. Fix: he must report to ONE boss.
Unity of Direction
Each group of activities having the same objective should have ONE plan and ONE head. While Unity of Command relates to individuals (one boss per employee), Unity of Direction relates to activities (one plan per group of related activities). Example: All marketing activities — digital ads, TV commercials, influencer campaigns — should be under ONE marketing director with ONE unified marketing plan.
Subordination of Individual Interest to General Interest
The interest of the organisation as a whole must always take precedence over the personal interests of any individual employee. When these conflict, management must find a solution that brings them into harmony — or the organisational interest must prevail. Example: An employee wants a week off during peak production season. The organisational interest (meeting delivery deadlines) must prevail over the individual desire for leave.
Remuneration of Personnel
The compensation paid to employees must be fair and satisfying to both — the employees (who want fair pay for their effort) and the organisation (which wants value for money). Remuneration should be based on a fair assessment of effort, skill and market rates. Example: Reliance Industries benchmarks its salaries to the industry median and provides performance bonuses to ensure both fair compensation and productivity incentives.
Centralisation
Centralisation refers to the concentration of decision-making authority at the top management level. Decentralisation means distributing authority downward. There is no ideal degree — the right balance depends on the size of the organisation, the nature of work and the ability of employees. Example: A small startup may have all decisions made by the founder (centralised); a large conglomerate like ITC delegates heavily to division heads (decentralised).
Scalar Chain
The formal line of authority from the highest to the lowest in the organisation — the chain of command. Every instruction should ideally flow through this chain. However, Fayol recognised that following the full scalar chain in emergencies wastes time, so he introduced the concept of "Gang Plank" — a direct horizontal communication between two employees at the same level (bypassing the chain) with permission of their superiors, used only for urgent matters. Example: A Production Head can directly contact the Purchase Head in an emergency (Gang Plank) rather than going up to the CEO and back down — provided both supervisors are informed.
Order
There should be "a place for everything and everything in its place". This applies to both material order (physical things like tools, files and inventory in designated places) and social order (right person in the right job). Disorder wastes time, causes errors and frustrates employees. Example: In a hospital, medicines must be stored in their designated cabinets (material order) and a surgeon must not be asked to do administrative work (social order).
Equity
Managers should treat all subordinates with kindness and justice — equally and without favouritism. Equity is a combination of fairness (justice) and warmth (kindliness). Employees who feel they are treated equitably are more motivated, loyal and productive. Example: A school principal who gives the same type of feedback — firm but encouraging — to all teachers regardless of their personal relationships with the principal, demonstrates equity.
Stability of Tenure of Personnel
Unnecessary employee turnover should be avoided. A new employee takes time to learn the job; frequent recruitment and retraining is wasteful and expensive. Managers should provide job security and stable working conditions to retain experienced employees. Example: HDFC Bank has one of the lowest attrition rates in Indian banking — employees stay for decades. The bank benefits from experienced staff who know customers and processes deeply.
Initiative
Employees should be encouraged and allowed to think independently, plan and execute tasks on their own initiative — within the policies of the organisation. This increases enthusiasm, involvement and innovation. Managers who suppress all employee initiative end up with a passive, disengaged workforce. Example: Google's famous "20% time" policy lets engineers spend 20% of their work week on projects of their own choosing — Gmail, Google Maps and Google News all emerged from this initiative policy.
Esprit de Corps (Team Spirit)
"In union there is strength" — this is the spirit of this principle. Management should promote team harmony, mutual trust and a sense of belonging. Conflicts between team members should be resolved quickly. Small personal rivalries can destroy team performance. Example: The Indian cricket team's transformation under MS Dhoni was attributed partly to his remarkable ability to build team spirit and camaraderie — players performed for the team, not just themselves.
2.8 Principles of Scientific Management: F.W. Taylor
Who Was Frederick Winslow Taylor?
Frederick Winslow Taylor (1856–1915) was an American mechanical engineer who worked his way up from a worker to a chief engineer at the Midvale Steel Company in Philadelphia. He is known as the "Father of Scientific Management." Taylor observed that workers were deliberately working well below their capacity (which he called "soldiering") and that management used outdated "rule of thumb" methods. He developed scientific management to address both problems. His key idea: replace guesswork with science to find the ONE BEST WAY to perform any job.
4 Principles of Scientific Management
Science, Not Rule of Thumb
Every aspect of work must be studied scientifically to find the optimal method. Do NOT rely on intuition, guesswork or "we have always done it this way." Use observation, measurement and experimentation to develop the one best way to do each job. Example: Instead of asking workers to shovel coal however they like, Taylor scientifically determined the optimal shovel size (21 lbs of load per shovel) that maximised daily output per worker.
Harmony, Not Discord
Management and workers must work in mental revolution — a complete change of mindset from conflict and suspicion to genuine cooperation and mutual prosperity. Both must understand that their success is linked. Workers getting higher wages and management getting higher profits are NOT opposed — they come from the same source: increased productivity. Example: Taylor proposed that when productivity increases, the gains should be shared between the company and workers rather than contested.
Cooperation, Not Individualism
Scientific management works only when management and workers COOPERATE fully. Workers should not compete with management for a fixed pie; management should not be autocratic. Both should realise that cooperation — not confrontation — makes the pie bigger for everyone. Example: In a factory where Taylor introduced scientific management, output per worker doubled because workers cooperated with the new time-studied methods instead of resisting them.
Development of Each Person to Their Greatest Efficiency
Workers should be scientifically selected, trained and developed to perform the tasks they are best suited for — reaching their maximum potential. This benefits both the worker (higher earnings, job satisfaction) and the organisation (better output). Example: Taylor insisted that instead of hiring anyone and expecting them to learn on the job, the right person should be selected through scientific assessment and then systematically trained.
2.9 Scientific Techniques Developed by F.W. Taylor
Time Study
Using a stopwatch to determine the standard time required to complete each specific element of a job by an average worker working at a normal pace. This standard time is then used to set fair workday targets and payment rates. Example: Taylor studied how long it should take a steel worker to shovel material — element by element — and set the standard at a level achievable by a normal worker, not an exceptionally fast one.
Motion Study
Eliminating ALL unnecessary body movements while performing a task. By carefully observing every motion made by a worker and removing the unnecessary ones, the job can be done faster with less fatigue. Only the motions that are essential for the task are retained. Example: Taylor and Frank Gilbreth found that bricklayers made 18 motions per brick. By eliminating unnecessary movements, they reduced it to 5 — tripling the bricklaying speed.
Fatigue Study
Determining the amount of rest an average worker needs to recover between tasks, and building these rest intervals into the work schedule. Workers who are exhausted make more errors and slow down. Scientifically timed rest periods actually INCREASE total daily output. Example: Taylor found that pig iron handlers who rested for 57% of the time produced MORE than workers who never stopped — because they were fresh when working.
Method Study
Finding the ONE BEST WAY to perform a specific task by studying the sequence of operations. Using charts (process flow charts, operation charts) to document current methods and identify improvements. Example: A hospital studies the exact steps nurses take to prepare a patient for surgery and redesigns the procedure to eliminate unnecessary steps, saving critical time.
Standardisation and Simplification of Work
Standardisation: Establishing uniform standards for tools, equipment, materials, processes and output quality so that every product meets the same specification. Simplification: Reducing the variety of products or components to those that are absolutely necessary, eliminating unnecessary complexity. Example: An automobile manufacturer standardises the screw sizes used across all models so only one type of screwdriver is needed on the assembly line.
Differential Piece Wage System
Taylor's revolutionary payment system: Workers who meet or exceed the standard output receive a HIGHER piece rate; workers who produce below standard receive a LOWER piece rate. This powerfully incentivises efficiency. Unlike flat piece rates, the difference between the two rates is large — creating strong motivation to perform above standard. Example: If standard output is 10 units/hour, efficient workers (10+ units) earn Rs 50/unit but inefficient workers (<10 units) earn only Rs 30/unit. The difference motivates workers to hit the standard.
Functional Foremanship
Taylor replaced the traditional single foreman with eight specialised supervisors — each an expert in one aspect of production management. This extended the principle of specialisation to management itself. The 8 specialists are divided between planning and production departments:
Planning Department (4):
• Route Clerk: decides the path the work will take
• Instruction Card Clerk: prepares instruction cards for workers
• Time and Cost Clerk: fixes time and cost of work
• Disciplinarian: enforces discipline and resolves disputes
Production Department (4):
• Speed Boss: ensures proper speed and tools
• Inspector: checks quality of output
• Gang Boss: keeps machines and tools ready
• Repair Boss: maintains machines and equipment
2.10 Advantages of Scientific Management
(i) Higher productivity through scientifically determined optimal methods. (ii) Reduced costs by eliminating wasteful motions and standardising processes. (iii) Better quality through standardisation and inspection. (iv) Fair wages through differential piece wage system. (v) Improved working conditions through fatigue study and rest periods. (vi) Worker development through scientific selection and training. (vii) Efficient use of resources through method study and standardisation.
2.11 Similarities and Differences: Fayol vs Taylor
Similarities
(i) Both aimed at increasing organisational efficiency. (ii) Both recognised the importance of training and developing workers. (iii) Both worked to improve the relationship between management and workers. (iv) Both contributed to making management a systematic, scientific discipline. (v) Both found their principles through practical experience and observation.
Differences
| Basis | Henri Fayol | F.W. Taylor |
|---|---|---|
| Level of focus | Top management level — overall organisation | Shop floor / operational level — production workers |
| Approach | Top-down: principles flow from top to bottom | Bottom-up: improvements start at the worker level |
| Main concern | Administration — managing people and functions | Efficiency — how work should be scientifically performed |
| Perspective | Managerial / administrative | Technical / engineering |
| Title given | Father of General Management / Modern Management | Father of Scientific Management |
| Country / Background | France — mining engineer turned manager | USA — mechanical engineer turned consultant |
| Key contribution | 14 Principles of Management | 4 Principles + 7 Scientific Techniques |
| Major work | "General and Industrial Administration" (1916) | "Principles of Scientific Management" (1911) |
| Unity of Command | Each worker reports to ONE boss only | Functional Foremanship — worker reports to 8 specialists |
| Test | Observation and experience | Scientific experimentation |
2.12 Modern Scientific Techniques of Management
Building on Taylor's scientific foundation, modern management has developed advanced quantitative tools: Operations Research (mathematical modelling for decisions), Linear Programming (optimising resource allocation), Network Analysis — PERT/CPM (planning and scheduling complex projects), Total Quality Management (TQM) (continuous improvement of quality at every stage), and Six Sigma (reducing defects to 3.4 per million opportunities). These tools apply the scientific spirit of Taylor at a much more sophisticated level.
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30 MCQs — Principles of Management
Fayol principles, Taylor principles and techniques, comparisons — with heavy emphasis on case-based and application questions. Q25–Q30 are CUET-level.
Reason (R): Both Taylor and Fayol actually aimed at the SAME goal of cooperation and team harmony; Cooperation not Individualism and Esprit de Corps are complementary principles addressing the same need from different angles.
Reason (R): Functional Foremanship requires one worker to report to eight specialist supervisors simultaneously, while Unity of Command requires each worker to have only one boss.
Chapter 2 — Live Quiz
30 questions · Principles of Management · Heavy case-based focus · Instant feedback
