Business is a means of action in an organized manner that performs according to some basic rules called principles of business management. This allows businesses to work systematically, including proper organization, discipline, and efficiency. Therefore, if managers apply these principles, they can improve productivity, teamwork, and work environment in an organized way.
The business management principles are vast, including the division of work principle of management, order principle of management, discipline principle of management, initiative principle of management, and equity principle of management. All such principles were propounded by a person named Henri Fayol. The 14 management principles were also followed, and Frederick Taylor’s management principles further facilitated refinements. Hence, businesses that maintain such principles facilitate effective decisions and increase outstanding leadership satisfaction. This article describes in detail all these principles and why they are crucial for managing businesses.
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.
Real-Life Business Examples of Principles of Business Management
Principles of business management are not theories but rather the way through which they come into real-life application through all forms in organizations in business. The practical applications are through companies, which then become efficient in decision-making and show long-term results. Below are some examples illustrating how firms apply several of these principles.
Division of work principle of management – McDonald’s
Example: the fast food restaurants worldwide McDonald’s use the division of work principle of management to have an efficient process.
- A McDonald’s store splits employees into different roles, such as taking orders, preparing burgers, and packaging.
- Division of work allows the employee to specialize, speed up and speed up, and prepare the food accurately.
- Standardized processes allow McDonald’s to serve taste, quality, and services as one all over the world in thousands of locations.
Impact: Grounded on this principle, McDonald’s has streamlined efficiency, shortened the time a customer takes to stand in a queue, and retained the brand identity.
Tata Group Equity Principle of Management
Tata Group is one of the biggest business houses in India, so it follows equity management. It provides equity to all employees and does not make partiality.
- Tata Group has an ethical work culture with gender diversity, equal pay, and career growth.
- The company’s policies, training programs, and promotion criteria are all employee-friendly and fair, so spending feels valued.
- Tata sustains equity since good human resources are retained, so job satisfaction is high and sustainable.
Effects: The Tata Group has maintained equity, enabling it to retain a comfortable working environment. Consequently, there is an enhancement in employee commitment, efficiency, and corporate reputation.
Discipline principle of Management – Infosys
Real-time Example: The best IT companies in India maintain sound discipline in their employees, making Infosys a classic example of a company dedicated to quality service delivery.
- Employees maintain strict timelines, professional work ethics, and performance standards that ensure efficiency.
- The company constantly conducts training, workshops, and quality checks to ensure discipline in the execution of projects.
- Infosys has well-defined policies regarding working hours, ethics, and professional behaviour that have made it easy for employees to maintain a disciplined work culture.
Impact: Through maintaining its respect for discipline, Infosys has achieved the status of delivering projects on time, maintaining high client satisfaction, and becoming the preferred employer for IT professionals.
Initiative Principle of Management -Google
For instance, Google implemented the initiative principle of management, which instils responsibility and creative thinking in its employees when they do their tasks.
- Google implemented the “20% rule.” Employees were given 20% of their working hours to do personal projects that may benefit the company.
- The 20% initiative rule triggered innovations like Gmail, Google Maps, and AdSense.
- The company provides an open working environment in which the employees are motivated to raise suggestions for improvement and experiment with new solutions.
Impact: Initiative promotion has enabled Google to remain at the technological forefront while attracting the best talent and continually innovating its products and services.
Tenure Stability- Toyota
Case: Toyota Company is the largest automobile manufacturing company that has ensured tenured stability by keeping the employees for a long time and developing them.
- Toyota has broad employee training programs and career development so that the employees remain in the company for a long time.
- The Kaizen philosophy of the company (continuous improvement) inspires the employees to raise their skills and contribute to innovation.
- Toyota minimizes frequent layoffs and gives job security for an extended period, hence winning loyalty from employees and giving maximum work efficiency to the employees.
Effect: With this stability in tenure, Toyota had a competent workforce, reduced employee turnover, and ensured the quality of products for decades.
Unity of Direction-Apple
Apple Inc. maintains the unity of direction principle because all teams work toward a shared vision and goal.
- Steve Jobs and later Tim Cook at Apple focused on excellence in the design of employee training programs
- Coordination of hardware, software, marketing, and customer service departments smooths the user experience.
- Company vision design, which is simple, innovative, and high-quality technology, is the guiding force of every employee in their work.
Effect: Because of its unity of direction, Apple can maintain its brand and out-of-the-box products and has topped the list of tech industries.
Usage in Present Business
The business management principles apply even today and guide organizations in operating their businesses. Let’s now see the opportunities in today’s business environment:
Usage in Start-ups
Startups base their initiative principle of management on encouraging a sense of personal responsibility products and trying out new concepts.
- Equa factor helps a startup attract the best talent since most members do not mind lower salaries if they achieve equal growth with others.
- A startup’s unity of direction principle ensures that all teams share a common vision for which to work.
Example: Zomato and Swiggy apply discipline divisions in food delivery to run an organization smoothly.
Large Corporations
The scalar chain principle is applied in large Corporations like Amazon, Google, and Microsoft because a smooth communication process is always maintained through a structured chain of command.
- The ordering principle of management is implemented by utilising ERP systems that keep all the resources in order.
- The remuneration principle has to be followed so that the employees will be motivated by competitive wages and bonuses.
Example: Amazon’s division of work is used in the warehouse, maximizing efficiency and reducing the delivery time in their warehouses.
Application in Government Departments
The ordering principle of management is used in government offices so that there will be structured appropriate documents and procedures.
- Law enforcement agencies use it for discipline principles so that rules are followed strictly.
- Tenure stability is used in public sector jobs to provide long-term job security and employee retention.
Indian RThe orders used the principle of unity of direction and ran the trains crossing the nation.
E-commerce and Digital Businesses
The e-commerce companies Flipkart and Amazon split the job to provide website management, logistics, and customer support work.
- The principles of supply chain management have applied Taylor’s management principles by attempting to maximize the speed of delivery and manage the storehouse.
- The initiative is applied in the management process to provide opportunities for employees in the digital marketing section to test new ideas.
For example, Instagram allows engineers to create new features; therefore, such companies are examples of applying the initiative principle.
Principles of Business Management FAQs
What is the principle of management?
The management principles guide organizations in properly structuring work, instilling team discipline, and increasing productivity. Among them are the distribution of work, responsibility, and equity.
What is order principle management?
The ordering principle of management insists that everything should be put in its proper place. It applies to placing things in a neat workplace environment and, in the initiative, the appropriate work.
Who invented the 14 principles of management?
Henri Fayol developed the 14 principles of management, which have been very structured regarding how businesses are managed.
What is the discipline principle of management?
The discipline principle of management is one where employees work according to company rules and work responsibly. It keeps professionalism and efficiency intact.
5. Who gave the principles of management?
Henry Fayol has given the 14 principles of business management.
