Principles of Management

Principles of Management. The principles of management define some of the ways the functions of management can be implemented. Some of these original principles need adjusting to remain effective in some modern organisations, but the most of the concepts are still valid: 

1. Division of work. This principle is the same as Adam Smith’s ‘division of labour’ and Taylor’s ‘scientific management’[1]. Specialisation increases output by making employees more efficient. Division is still important, but modern trends are towards teams and self-managed work groups.
2. Authority. Managers must be able to give orders. Authority gives them this right and flows from their position in the hierarchy. Responsibility arises wherever authority is exercised and effective leadership reinforces authority[2].
3. Discipline. Employees must obey and respect the rules that govern the organisation. Good discipline is the result of effective leadership, a clear understanding between management and workers regarding the organisation’s rules, and the judicious use of penalties for infractions of the rules.
4. Unity of command. Every employee should receive orders from only one superior, from top to bottom in an organisation. This is not practical in matrix organisations and allowance needs to be made for the increased complexity of the working environment[3].
5. Unity of direction. Each group of organisational activities that have the same objective should be directed by one manager using one plan
6. Subordination of individual interests to the general interest. The interests of any one employee or group of employees should not take precedence over the interests of the organisation as a whole. One outcome of effective leadership is the willingness of people to cooperate for the greater good.
7. Remuneration. Workers must be paid a fair wage for their services. This picks up one of the key tenets of Henry Gantt’s work [4] .
8. Centralisation. Centralisation refers to the degree to which subordinates are involved in decision making. Whether decision making is centralised (to management) or decentralised (to subordinates) is a question of proper proportion. The task is to find the optimum degree of centralisation for each situation.
9. Scalar chain. The line of authority from top management to the lowest ranks represents the scalar chain. Communications should follow this chain. However, if following the chain creates delays, cross communications can be allowed if agreed to by all parties and superiors are kept informed. This picks up the concepts of the bureaucratic school of management.
10. Order. People and materials should be in the right place at the right time. Another key tenet of Henry Gantt’s work.
11. Equity. Managers should be kind and fair to their subordinates. This picks up the concepts of the humanistic school of management.
12. Stability of tenure of personnel. High employee turnover is inefficient. Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies. 
13. Initiative. Employees who are allowed to originate and carry out plans will exert high levels of effort. The concept of ‘bounded initiative’ can be traced to concept of ‘auftragstaktik’, or directive command.
14. Esprit de corps. Promoting team spirit will build harmony and unity within the organisation. This picks up on Karol Adamiecki’s focus on harmonisation and team work.

[1] For a discussion on the different schools of management mentioned in this section see The Origins of Modern Project Management (p7 - p11): https://www.mosaicprojects.com.au/PDF_Papers/P050_Origins_of_Modern_PM.pdf

[2] The sources of management authority are discussed in WP1095 Understanding Power and Authority https://www.mosaicprojects.com.au/WhitePapers/WP1095_Understanding_Power_Authority.pdf

[3] Matrix organisations deliberately flout this convention, people in a matrix organisation have more than one manager and conflicting lines of authority. For a matrix organisations to function efficiently, establishing ‘unity of direction’ becomes critically important, which in turn requires effective governance, motivation and leadership by the executive, see: https://www.mosaicprojects.com.au/WhitePapers/WP1014_Leadership.pdf

[4] For more on the work of Henry Gantt see: https://www.mosaicprojects.com.au/PDF_Papers/P158_Henry_L_Gantt.pdf