Nature and Significance of Principles of Management

Meaning of Management:

Management is required for an established life and essential to managing all types of management. Sound management is the fortitude of thriving companies. Managing life implies getting everything done to accomplish life’s aspirations and maintaining an establishment means getting everything done wh and by other people to deliver its objectives.

Nature of Principles of Management:

By nature is intended conditions and aspects. Principles are universal declarations, which are appropriate when specific circumstances are present. These have been explained on the principle of research and trial and error as well as the personal backgrounds of the managers. The following points sum the nature of the principles of management:

1. Universal relevance:

Principles of management are expected to employ to all types of establishments, the industry as well as non-industry, small as well large, private sector as well as the public sector, production as well as the services divisions. However, the scope of their applicability would diversify with the nature of the industry, business activity, scale of operations etc.,

Example: The whole work of an organisation is divided into smaller tasks and such tasks are assigned to different departments, groups and individuals. Such a system of division of work is applicable in all types of organisations.

2. General rules:

The laws are the regulations to work but do not give readymade, simple clarifications to all administrative issues. This is so because real-time business conditions are difficult and powerful and are a consequence of many factors.

Example: During the period of recession, the general manager may allow marketing departments to give a heavy discount to the customers without giving due attention to financial losses being raised by the financing department because the primacy of overall goals of the organisation is important.

3. Formed by practice and trial and error method:

The principles of management are determined by wisdom and accumulated knowledge of managers as well as experimentation. For instance, it is a subject of current knowledge that the system is necessary for achieving any goal. This principle gains name in the management system.

Example: Through collective practice, we can see that Fayol’s Principle-Discipline helps in increasing productivity.

Taylor’s Principle-Science, Not Rule of Thumb, brings out uniformity and standardization in the manufacturing process of a company. ( we can give the same example which we have given in the case study because at this stage Fayol’s principle and Taylor principle are not yet discussed)

4. Contingent:

As the application of principles of management depends upon prevailing situations and needs, so their results may not be uniform as expected.

Example: Remuneration of employees should be just and equitable yet it may vary from person to person depending upon various situations.

Remuneration can be dependent on:

• Industrial standard.
• Employer’s paying capacity.
• Contribution of employee etc.,

5. Flexible:

The principles of management are general prescriptions not rigid. The managers can make certain changes as per the convenience and requirement of a situation.

Example: Application of the principle of centralisation or decentralisation i.e. concentration or dispersal of authority to be delegated to employees depends upon the need, ability and competency of the employees. It also depends upon the nature of the organisation.

6. Based on Cause and Effect:

The principles of management are intended to establish cause and effect relationship so that the findings can be applied to such given situations frequently. The principles of management tell the likely effect if a certain principle is applied. The effect of such principles remains more or less the same due to their application on human.

Example: By applying the principle of subordination of individual interest to the general interest, the behaviour of employees may be influenced in such a way that the personal goals of employees may be directed towards goals of the organisation.

The significance of Principles of Management:

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 present the managers with valuable insights into real-world circumstances. Adherence to these policies will supplement their education, capability and perception of managerial conditions and circumstances.
• Optimum utilisation of resources and efficient management: Both material and human resources are obtainable with the firm are restricted. They have to be placed to best use. By the best utilisation, the resources must be put to utilisation in such a way that they should give the most profit with minimum cost. Principles provide the managers to predict and influence relationships of their choices and activities.

Importance of Principles of Management:

(1) Providing Managers With Useful Insights Into Reality

• The application of principles of management helps the managers to take right decisions at the right time.
• These principles of management help managers to tackle the diverse problems in a dynamic business environment.

(2) Optimum Utilization of Resources & Effective Administration

• Resources are always scarce and limited.
• By applying the management principles, the managers can focus on optimum use of available resources so as to achieve productive results at minimum cost and maximum profits.
• It results in effective administration by channelizing resources (human and material) into the best possible way.

(3) Scientific Decisions

• Application of principles of management makes the manager more realistic, thoughtful, justifiable and free from personal bias.
• The decisions taken on the basis of principles of management are subject to evaluation and objective assessment.

(4) Meeting Changing Business Environment

• Although the principles are in the nature of general guidelines, they are modified and help managers to meet the changing requirements of the environment.

Example: With the rapid rise of online market sellers, offline vendors have also started selling their goods on online platforms.

(5) Fulfilling Social Responsibility

• Principles of management not only help in achieving the goals of the organisation effectively and efficiently, but they also guide the managers to fulfil their commitment towards its employees and society.

Example: Principles of fair remuneration and equity ensure social justice to employees and compliance with government norms towards corporate social responsibility which improves the company’s image in the society.

(6) Management Training, Education and Research

• Proper understanding of principles is the base of training, research, and development in the field of management.
• Management is taught on the basis of these principles which help the management institutes prepare future managers.
• These Principles help managers to take decisions and actions in the right manner.
• Application of these principles by the managers brings innovation in the field of management.

Example: It is the result of such training, education, and research that Sunil Mittal could run Airtel in a successful way.

Related Read: Check Business Studies Syllabus For Class 12

The above mentioned is the concept, that is elucidated in detail about the Nature and Significance of Principles of Management for the class 12 Commerce students. To know more, stay tuned to BYJU’S.