Principles of Business Management

 

Henri Fayol, a French industrialist, discovered 14 principles of management that lay the ground for proper business management. They are applied to organize jobs, enhance productivity, and create a sense of discipline in the workplace by the manager.

These principles address a particular management aspect and help businesses function better. Below, we detail each principle.

1. Division of Work Principle of Management

Management’s division of work principle says that all work tasks should be separated among employees according to their expertise and skills. By specializing, the employees specialize in one task. Therefore, when they do this particular task, they do it much more efficiently and complete their work much sooner than usual.

For example, a manufacturing company has employees who perform tasks like assembling, packaging, and checking for quality. This division promotes efficiency and helps each employee work on what they do best. This also minimizes errors and boosts productivity.

2. Authority and Responsibility

Any organization has both authority and responsibility. Managers are expected to give orders, but at the same time, they should be ready to take responsibility for their decisions.

A business operates efficiently when there is an apparent balance between authority and responsibility. The manager with authority who would not accept responsibility produced inefficient decision-making while giving responsibility without authority created confusion and delay.

3. Principle of Discipline of Management

Discipline Principle The management stresses the fact that an employee needs to follow company rules and regulations. Discipline leads to a friction-free work environment where workers respect their work and work responsibly.

Discipline can be sustained through fair policies, proper training, and good leadership. Disciplined employees complete their work on time, avoid conflicts, and contribute to the organization’s success. A business that lacks discipline experiences delays, low productivity, and mismanagement.

4. Unity of Command

The unity of command principle says an employee must receive instructions from only one manager. Confusion does not arise, and proper communication occurs within the workplace.

When different managers issue orders to the same employee, the situation gets messed up, leading to inefficiency. The employee will have one reporting manager so that the decisions become smoother, and employees need not get disturbed by other managerial orders.

5. Unity of Direction

According to the unity of direction principle, every employee engaged in a specific project or activity has the same purpose and single course of action, allowing coordination and not conflicts with other departments in the company.

For instance, if a particular company is establishing a new product, the direction of marketing sales should match the direction of production. Therefore, businesses need a common direction to work better towards organizational goals.

6. Subjugation of Personal Interest to Collective Interest

The organization’s interest must always take precedence over the individual. Staff and their superiors must subdue personal desires for the organization’s objective.

For example, when a manager has a personal bias toward a specific employee, but their performance is low, the business loses. The most successful business operations occur once all personal ties are removed, and what suits the organization is considered.

7. Remuneration

A worker should get a fair wage and rewards for his work. Proper remuneration allows employees’ satisfaction and motivation, resulting in higher productivity.

The companies should give wages equal to those offered in the market, show performance rewards and promote efforts. Fair structures of payment keep the skilled workers and a happy working force.

8. Centralization and Decentralization

A top management system controls centralization, while decentralization enables the lower management to make all the decisions themselves. A perfect business establishes a balance in both.

To illustrate, when a multinational has its headquarters control significant policies, regional managers manage daily operations for the company; this ensures efficient management and gives employees some levels of independence.

9. Scalar Chain

According to the scalar chain principle, businesses should have clear command lines. Everyone should know where to report and how communication flows within an organization.

An orderly hierarchy keeps communication smooth and free from conflicts and enhances coordination between different rungs of the management.

10. Order Principle of Management

The order principle of management provides that everything is in its place. Both physical and human perfects should be in their places.

For example, an office with organized files, proper seating arrangements, and well-defined workspaces increases efficiency. Similarly, productivity improves when employees are assigned tasks according to their skills.

11. Equity Principle of Management

The equity principle of management states that all employees should have clear lines of command and not discriminate against employees based on personal preferences, gender, or background.

Fair treatment ensures a pleasant working environment because employees feel valued and motivated to work better. It also minimizes conflict and boosts the satisfaction levels of the employees.

12. Tenure Stability

Employees function best when they are secure about their jobs. Constant changes in the workforce make it unstable and decrease productivity.

Organizations must ensure job security and career growth opportunities. A stable workforce enhances efficiency levels while the employees feel loyal to them.

13. Initiative Principle of Management

The initiative principle of management promotes employee responsibility and contributes new ideas. Businesses thrive when employees feel empowered to suggest and make decisions.

For instance, the company should adopt the idea if an employee suggests that customer complaints could be handled more efficiently. Initiating employees fosters innovation and business prosperity at large.

14. Esprit de Corps

Esprit de corps means team spirit and unity amongst employees. A workplace that encourages teamwork and cooperation performs better.

Managers should promote a good culture at work, appreciate teamwork, and instil mutual respect. Whenever employees work together, businesses are more efficient and successful.