Principles and functions of management – UGC NET Commerce Notes

Stuti Mishra

5 months ago

Principles and functions of management are the secret ingredients that make an organization tick and grow. Imagine them as the playbook for every manager: the principles of management are the golden rules that guide decision-making, like the four pillar: planning, organizing, leading, and controlling that keep the ship sailing smoothly. The functions of management are the actions managers take to make these principles a reality, like a conductor guiding an orchestra to perform in perfect harmony. For UGC NET Commerce students, these principles and functions aren’t just textbook theories—they are the powerful tools that unlock the art of turning ideas into action and driving success in the business world.

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Understanding Principles and Functions of Management

Principles of management is the fundamental truths and guidelines that provide a framework for management practices, such as planning, organizing, leading, and controlling.
Functions of management is the specific tasks that managers perform to implement these principles effectively.
For UGC NET Commerce students, understanding the principles and functions of management is essential as these concepts form a significant part of the business management syllabus.
They helps in enhancing managerial efficiency, decision-making, and organizational performance.

What Are the Principles of Management?

The principles of management are foundational guidelines that help managers make effective decisions, organize resources efficiently, and lead organizations successfully. These principles, developed by Henri Fayol, serve as a framework for managing organizations and applying management practices. Let’s explore the core principles of management in detail.

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1. Division of Work

Meaning: Dividing tasks into smaller, specialized tasks and assigning them to individuals or teams based on their expertise. Specialization leads to greater efficiency, as workers become experts in specific tasks.
Why It’s Important: Specialization improves productivity and helps employees focus on their strengths, leading to faster and better results.
Example: In a manufacturing plant, workers may be assigned different tasks like assembling parts, packaging, or quality control, instead of doing all tasks themselves.

2. Authority and Responsibility

Meaning: Authority refers to the power given to managers to make decisions, give orders, and enforce rules. Responsibility is the obligation to complete the assigned tasks. There should be a balance between authority and responsibility for effective management.
Why It’s Important: When authority is given, responsibility must follow to ensure accountability. Without responsibility, authority can lead to misuse or confusion.
Example: A manager is given the authority to make decisions for their team, but they are also responsible for the outcomes of those decisions.

3. Unity of Command

Meaning: An employee should receive instructions from only one superior to avoid confusion and conflicting orders.
Why It’s Important: When employees receive conflicting instructions from multiple superiors, it leads to confusion, inefficiency, and a lack of accountability.
Example: A worker should report to one manager for instructions, rather than two different managers giving contradictory tasks.

4. Unity of Direction

Meaning: All employees and departments should work towards a common goal or objective. This creates focus and ensures that all efforts align with the organization’s mission.
Why It’s Important: When all parts of the organization are working towards a single objective, there is less confusion and more collaboration, leading to better results.
Example: In a marketing campaign, all team members, from designers to copywriters, should work toward the same goal of promoting a product effectively.

5. Subordination of Individual Interest to General Interest

Meaning: The interests of the organization as a whole should take precedence over individual interests. Employees should align their personal goals with the organizational goals for overall success.
Why It’s Important: When individual interests conflict with the organization’s goals, it can cause inefficiency and affect overall performance.
Example: If an employee wants to take an extended vacation during a busy period, their personal interest should be subordinated to the company’s need for continued operation.

6. Remuneration

Meaning: Employees should be fairly compensated for their work. Proper remuneration motivates employees and encourages loyalty.
Why It’s Important: Competitive and fair compensation helps retain employees, boosts morale, and increases overall job satisfaction.
Example: Offering fair wages, bonuses, and benefits to employees based on their performance and contribution.

7. Centralization and Decentralization

Meaning: Centralization refers to decision-making being concentrated at the top levels of management, while decentralization involves delegating decision-making power to lower levels.
Why It’s Important: The degree of centralization or decentralization should be chosen based on the size of the organization and the nature of decisions.
Example: In a small company, decisions may be made by the CEO (centralization), while in a larger company, regional managers may have decision-making authority (decentralization).

8. Scalar Chain

Meaning: The scalar chain refers to the hierarchy or chain of command in an organization, showing who reports to whom.
Why It’s Important: A clear hierarchy helps in maintaining order, ensuring accountability, and facilitating communication across levels.
Example: An employee reports to a supervisor, who reports to a manager, who in turn reports to senior management, creating a clear path for communication and authority.

9. Order

Meaning: This principle emphasizes that both human and material resources should be in the right place at the right time to ensure efficiency.
Why It’s Important: A well-organized workspace leads to greater efficiency, reduces time wasted, and helps employees focus on tasks.
Example: Keeping the office or factory organized with materials and equipment in their designated areas.

10. Equity

Meaning: Managers should treat employees with fairness and justice, ensuring that everyone has equal opportunities and is treated with respect.
Why It’s Important: Fair treatment boosts morale, fosters loyalty, and enhances teamwork, leading to a more positive work environment.
Example: Treating all employees equally in terms of promotions, rewards, and recognition.

11. Stability of Tenure of Personnel

Meaning: Employees should have job security, as frequent turnover can affect the stability and growth of the organization.
Why It’s Important: Stable employees help develop expertise, increase productivity, and contribute to the company’s long-term success.
Example: Providing career development opportunities, training, and a supportive environment to retain employees.

12. Esprit de Corps (Team Spirit)

Meaning: Promoting teamwork and unity within the organization. A spirit of cooperation fosters harmony, reduces conflicts, and helps achieve common goals.
Why It’s Important: Strong team spirit leads to a positive work environment, improves collaboration, and enhances overall productivity.
Example: Organizing team-building activities or promoting a culture of mutual support and respect among employees.

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Functions of Management

The functions of management are the essential tasks that managers perform to ensure the smooth running of an organization. There are four main functions of management:

1. Planning

Planning is the process of setting goals and deciding how to achieve them. It involves analyzing the future, setting objectives, and determining the actions needed to reach them.
Without a clear plan, organizations can become directionless. Planning helps managers prioritize tasks, allocate resources, and set a roadmap for success.
Example: A company plans for the next year by setting sales targets, developing marketing strategies, and planning new product launches.

2. Organizing

Organizing is the function of arranging tasks, people, and resources in an efficient manner to achieve the organization’s goals. It involves defining roles, delegating responsibilities, and creating a structure.
A well-organized team and resource allocation ensure smooth operations and prevent confusion.
Example: A manager assigns specific roles to employees and organizes resources like funds and materials to execute a marketing campaign.

3. Leading (Directing)

Leading is the process of motivating, guiding, and supervising employees to achieve the organization’s objectives. It involves communication, leadership, and decision-making.
Effective leadership inspires employees, boosts morale, and ensures tasks are completed efficiently.
Example: A team leader motivates their team, provides feedback, resolves conflicts, and ensures everyone is working towards common objectives.

4. Controlling

It is the process of monitoring performance, comparing it with the set goals, and making adjustments if necessary to stay on track.
Control ensures that the organization is moving in the right direction and allows managers to make adjustments to improve performance.
Example: A manager tracks the budget, monitors project progress, and compares actual performance with the planned objectives, taking corrective actions if needed.

5. Coordinating

It is about ensuring that all departments and individuals are working together harmoniously towards the organization’s goals.
Without coordination, there can be confusion and inefficiency. It ensures that tasks are carried out in sync and no resources are wasted.
Example: The finance team works with the marketing team to allocate the budget for an upcoming campaign, ensuring everyone is aligned.

Challenges in Implementing Management Principles and Functions

Here are the challenges in implementing management principles in single lines:

Resistance to Change: Employees may resist new methods.
Lack of Skilled Personnel: Unskilled staff may hinder progress.
Poor Communication: Miscommunication leads to confusion.
Resource Constraints: Limited resources affect planning.
Conflict Between Goals: Individual goals may clash with organizational ones.
External Environmental Factors: Market changes can disrupt operations.
Over-centralization or Decentralization: Imbalance in decision-making causes inefficiency.
Inadequate Technology: Lack of modern tools slows down processes.
Managing Diversity: Diverse teams may struggle to align.
Monitoring and Evaluation Issues: Poor tracking hinders performance assessment.

Principles and Functions of Management Conclusion

The principles and functions of management serve as the foundation for achieving organizational success. By applying principles like division of work, authority, and unity of direction, managers can streamline operations and guide teams effectively. Similarly, the key functions—planning, organizing, leading, controlling, and coordinating—ensure that resources are utilized efficiently, goals are met, and progress is maintained. While challenges such as resistance to change and resource constraints may arise, a proactive and adaptable approach allows managers to overcome these hurdles and drive organizational growth. Understanding and implementing these principles and functions is essential for aspiring managers and UGC NET Commerce students aiming to succeed in the competitive business world.

UGC NET MCQ based on Principles and Functions of Management

Q1. According to Henri Fayol, which of the following principles of management is most likely to lead to a clear understanding of who is accountable for specific tasks and decisions?
A) Scalar Chain
B) Unity of Direction
C) Division of Work
D) Authority and Responsibility

Answer: D) Authority and Responsibility

Q2. Which of the following is NOT an element of the ‘organizing’ function of management?
A) Division of labor
B) Coordination of activities
C) Allocation of resources
D) Setting up goals and objectives

Answer: D) Setting up goals and objectives

Q3. According to Fayol, the principle of ‘Esprit de Corps’ in management suggests that:
A) Employees should be encouraged to take initiatives.
B) There should be teamwork and harmony in the organization.
C) A manager should have the power to give orders.
D) Employees must work independently to achieve goals.

Answer: B) There should be teamwork and harmony in the organization.