This MCQ module is based on: Principles of Management — Concept & Fayol’s 14 Principles
TOPIC 4 OF 24
Principles of Management — Concept & Fayol’s 14 Principles
🎓 Class 12
Social Science
CBSE
Theory
Chapter 2 — Principles of Management
⏱ ~28 min
🌐 Language: [gtranslate]
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2.1 Opening Case — The Seven Guiding Principles of Toyota Motor Corporation
How does a company that began making automatic looms in pre-war Japan transform itself into the world's largest carmaker, operating across continents, languages and cultures? The answer the NCERT chapter offers is not "luck" or "low cost" — it is principles. Long before each financial year begins, Toyota Motor Corporation? reminds every manager and worker — from Aichi to Bengaluru — of seven well-defined business principles that guide every decision made in the company.
🚗 NCERT Opening Case — Toyota's 7 Guiding Principles
Toyota's managerial pursuits are driven by broad guidelines for stating the vision as well as the ways to achieve it. These seven principles guide the company's Global Vision 2010 — continuous innovations, environment-friendly technologies, respect for diverse sections of society and an interactive relationship with the community.
- Honour the language and spirit of law of every nation — undertake open and fair corporate activities to be a good corporate citizen worldwide.
- Respect the culture and customs of every nation; contribute to economic and social development through corporate activities in local communities.
- Provide clean and safe products and enhance the quality of life everywhere.
- Create and develop advanced technologies and provide outstanding products and services that fulfil the needs of customers worldwide.
- Foster a corporate culture that enhances individual creativity and teamwork value, while honouring mutual trust and respect between management and labour.
- Pursue growth and harmony with the global community through innovative management.
- Work with business partners in research and creativity to achieve stable, long-term growth and mutual benefits — and be open to new partnerships.
Source: toyotaglobal.com — Guiding Principles, History of Toyota.
From this opening case the chapter draws a single insight: every successful enterprise is steered by management principles. Many other firms — Tata, Infosys, BHEL — have followed similar codes. Indeed there is a long history of management thought, and principles continue to evolve. In this chapter we focus on the two giants of the classical school — Henri Fayol? (a French mining engineer who gave the world Administrative Principles) and F. W. Taylor? (an American mechanical engineer who fathered Scientific Management). They are complementary thinkers whose ideas continue to shape boardrooms a century later.
🎯 Learning Objectives (NCERT)
After studying this chapter, you should be able to: (i) state the meaning, nature and significance of principles of management; (ii) explain Taylor's principles and techniques of Scientific Management; and (iii) explain Fayol's 14 principles of management.
2.2 Principles of Management — The Concept
A managerial principle? is a broad and general guideline for decision-making and behaviour. For example, while deciding the promotion of an employee, one manager may follow the principle of seniority while another may follow the principle of merit. Each is a guideline; neither is a rigid law of nature.
📜 Working Definition
A managerial principle is a broad and general guideline for managerial decision-making and behaviour — derived from observation, experimentation and the personal experience of managers, applied creatively to situations.
— Adapted from NCERT, Class 12 Business Studies
Principles of management must be distinguished from three related ideas:
| Concept | What it is | How principles differ |
|---|---|---|
| Pure-science principles | Rigid laws (e.g., gravity) that hold under fixed conditions. | Management principles deal with human behaviour — never static — so they are flexible, applied creatively to situations. |
| Techniques | Procedures or methods — a series of steps to accomplish a goal. | Principles are guidelines for taking decisions; techniques are the way the work is actually done. |
| Values | Acceptable or desirable rules of behaviour with moral connotations, formed by common practice. | Principles are formed by research in technical work situations, although they cannot ignore values (social and ethical responsibilities). |
Information and Communications Technology (ICT) shows why principles must keep pace with change. Without ICT, a manager could supervise only a small workforce in a narrow geography. With ICT, Infosys's Bangalore headquarters runs Asia's largest flat screen in its conference room — managers there can interact with employees and customers anywhere in the world. The principle of "span of management" had to expand with the technology.
2.3 Nature of Principles of Management
By "nature" we mean the qualities and characteristics of management principles. Principles are general propositions developed on the basis of observation, experimentation and personal experience. Their derivation is a matter of science; their creative application a matter of art. NCERT lists seven characteristics.
2.3.1 Universal Applicability
The principles apply to all kinds of organisations — business and non-business, small and large, public sector and private, manufacturing and services. The extent of application varies. The principle of division of work, for instance, applies to a government office (with a despatch clerk, data-entry operator, peon and officer) just as much as to a limited company with separate Production, Finance, Marketing and R&D departments.
2.3.2 General Guidelines
The principles are guidelines to action — they do not provide ready-made, straitjacket solutions. Real business situations are complex and dynamic. Yet even a small guideline helps. In a conflict between two departments, a manager may invoke the primacy of overall organisational goals to resolve it.
2.3.3 Formed by Practice and Experimentation
The principles are formed by experience, the collective wisdom of managers and experimentation. That discipline is indispensable for accomplishing any purpose is a matter of common experience — and a recognised principle. To remedy worker fatigue, an experiment may be conducted on the effect of better physical conditions on stress.
2.3.4 Flexible
The principles are not rigid prescriptions. They give the manager enough discretion to modify them as the situation demands. The degree of centralisation or decentralisation varies with each enterprise. Individual principles are like different tools serving different purposes — the manager decides which tool to use under what circumstances.
2.3.5 Mainly Behavioural
Management principles aim at influencing the behaviour of human beings. They are not exclusively about people — they also relate to material things — but the emphasis is behavioural. While planning a factory layout, for example, orderliness requires that workflows be matched by the flow of materials and movement of men.
2.3.6 Cause and Effect Relationship
Principles are intended to establish relationships between cause and effect, so they can be used in similar situations on a large scale. They are less than perfect because real-life situations are not identical, yet they assist managers in establishing useful patterns. In emergencies someone takes charge and others follow; in cross-functional projects (a new factory) participative decision-making is preferable.
2.3.7 Contingent
The application of principles is contingent or situation-dependent. Employees deserve fair and just remuneration — but what is fair is determined by multiple factors: the employee's contribution, the employer's paying capacity, and the prevailing wage rate for the occupation.
2.4 Significance of Principles of Management
Principles derive their significance from their utility. They provide useful insights, guide decisions, and enable managers to fulfil their tasks. NCERT lists six points of significance.
(i) Useful Insights into Reality
Principles add to a manager's knowledge and understanding of real-world situations, enable learning from past mistakes, and conserve time by solving recurring problems quickly. By following the principles of delegation, a manager can leave routine decisions to subordinates and focus on exceptional situations.
(ii) Optimum Utilisation of Resources
Resources — human and material — are limited and must give maximum benefit at minimum cost. Principles equip managers to foresee cause-and-effect relationships of decisions, reducing trial-and-error wastages. They also limit managerial discretion, freeing decisions from personal bias.
(iii) Scientific Decisions
Decisions must be timely, realistic, and based on facts — measurable and evaluable. Principles emphasise logic over blind faith, free decisions from prejudice, and rest them on objective assessment of the situation.
(iv) Meeting Changing Environment
Principles are flexible and so help managers meet changing environmental demands. Modern firms specialise in their core competency and divest non-core businesses (Hindustan Lever divesting chemicals and seeds; the rise of BPO and KPO are extensions of "division of work").
(v) Fulfilling Social Responsibility
Public awareness forces firms — especially large ones — to honour social duties. Today "equity" extends beyond wages — it includes value for customers, environmental care and fair dealings with associates. BHEL's development of Ranipur township in Hardwar exemplifies this.
(vi) Management Training, Education & Research
Principles are at the core of management theory and form the basis of training, education and research. Management aptitude tests, MBA and BBA curricula all rest on them. Modern techniques like Operations Research, Just-in-Time, Kanban and Kaizen developed through further research on these principles.
👩💼 NCERT Case — Dr Kiran Mazumdar Shaw & Biocon
Dr Shaw started Biocon India in her garage with just Rs 10,000 in collaboration with Biocon Bio Chemicals Ltd of Ireland. Today Biocon is India's largest fully-integrated biopharmaceutical company — the world's fourth largest insulins producer — making affordable biologics and biosimilars for diabetes, cancer and autoimmune diseases. Her success was no chance — it was a sincere application of principles such as foresight (insight into reality), optimum resource use, scientific decisions and adapting to a changing environment.
🥖 NCERT Case — Shri Mahila Griha Udyog Lijjat Papad
Started in 1959 with a modest loan of Rs 80, Lijjat is now worth around Rs 650 crores with exports of over Rs 60 crores to UK, USA, Middle East, Thailand, Singapore, Hong Kong, Holland, Japan and Australia. It synthesises three core values — business, family, devotion — and demonstrates how Gandhian values, social responsibility and management principles combine. Lijjat awards scholarships to children of papad-roller members who pass classes 10 and 12, supporting education across over 45,000 women stakeholders.
2.5 Henri Fayol's 14 Principles of Management
Henri Fayol (1841–1925), a French mining engineer, became managing director of Compagnie de Commentry-Fourchambeau-Decazeville from 1888 to 1918. His book Administration industrielle et générale (1917) — translated into English as General and Industrial Management in 1949 — is a foundational text of classical management theory. Fayol identified four functions of management — Plan, Organise, Command, Coordinate, Control — and proposed 14 principles based on his own administrative experience. He is rightly called the "Father of General Management".
① Division of Work
Work is divided into small tasks; a trained specialist performs each. Specialisation produces more and better work for the same effort. Fayol applies this to all kinds of work — technical and managerial alike. Positive example: a company has separate departments for Finance, Marketing, Production and HR — each with specialised staff — and collectively achieves production and sales targets. Violation: rotating untrained staff across departments leads to errors and lower output.
② Authority and Responsibility
"Authority is the right to give orders and obtain obedience; responsibility is the corollary of authority." Authority is both official (right to command) and personal (the manager's individual influence). There must be a balance between authority and responsibility. Violation example: a sales manager is responsible for clinching a Rs 50-crore deal that needs a 60-day credit window, but is permitted only 40 days — authority is less than responsibility, so the deal is lost. Positive example: firms safeguard against abuse by setting authority equal to responsibility, with checks and balances.
③ Discipline
Discipline is obedience to organisational rules and employment agreements. Fayol said it requires good superiors at all levels, clear and fair agreements and judicious application of penalties. Example: management and the labour union sign that workers will put in extra hours without extra pay to help the company recover from a loss; in return management will raise wages once the firm recovers. Discipline means both sides honour these commitments without prejudice.
④ Unity of Command
Each employee should receive orders from one and only one superior. If two bosses give conflicting orders, "authority is undermined, discipline is in jeopardy, order disturbed and stability threatened." Violation example: a salesperson is told by Marketing she may give a 10% discount, but Finance restricts her to 5% — confusion paralyses action. Positive example: coordinated authority where one functional head sets the discount limit avoids dual subordination.
⑤ Unity of Direction
"Each group of activities having the same objective must have one head and one plan." If a company makes both motorcycles and cars, the two should be separate divisions, each with its own incharge, plan and execution resources — never overlapping. The principle ensures unity of action and coordination across the organisation.
| Basis | Unity of Command | Unity of Direction |
|---|---|---|
| Meaning | One subordinate receives orders from and is responsible to only one superior. | Each group of activities having the same objective has one head and one plan. |
| Aim | Prevents dual subordination. | Prevents overlapping of activities. |
| Implication | Affects the individual employee. | Affects the entire organisation. |
⑥ Subordination of Individual Interest to General Interest
Where they conflict, the interests of the organisation outweigh those of any one employee. The company wants maximum output at competitive cost; an employee may want maximum salary for least effort. Larger interests of the workers and stakeholders outweigh personal demands. Positive example: a manager refusing to misuse her position for family benefit raises her stature and inspires similar behaviour in workers.
⑦ Remuneration of Employees
Pay should be fair to both employees and the organisation — high enough to give workers a reasonable standard of living, yet within the company's paying capacity. Just and equitable remuneration creates a congenial atmosphere and sound worker–management relations.
⑧ Centralisation and Decentralisation
Centralisation is concentration of decision-making authority; decentralisation is its dispersal. Fayol said: "There is a need to balance subordinate involvement through decentralisation with managers' retention of final authority through centralisation." The right degree depends on circumstances. Large organisations are typically more decentralised; small firms more centralised. Indian panchayats, given more powers to decide and spend funds for village welfare, illustrate decentralisation at the national level.
⑨ Scalar Chain (with Gangplank)
Formal lines of authority from highest to lowest rank form the scalar chain?. According to Fayol, "Organisations should have a chain of authority and communication that runs from top to bottom and should be followed by managers and subordinates." If 'E' wishes to communicate with 'O' (same level, different branch), the route is E→D→C→B→A→L→M→N→O. In emergencies, however, 'E' may use the gangplank? — a short-cut directly to 'O' — so communication is not delayed.
⑩ Order
"People and materials must be in suitable places at appropriate time for maximum efficiency." A place for everything (everyone) and everything (everyone) in its place. Orderliness reduces hindrance, increasing productivity and efficiency. Violation: tools missing from a workshop, files missing from a registry — operations halt. Positive example: well-arranged warehouses where every SKU has a fixed bay.
⑪ Equity
"Good sense and experience are needed to ensure fairness to all employees, who should be treated as fairly as possible." Kindliness and justice in managerial behaviour earn loyalty and devotion. Discrimination on grounds of gender, religion, language, caste, belief or nationality must be avoided. Yet Fayol allowed firmness — "lazy personnel should be dealt with sternly to send the message that everyone is equal in the eyes of the management." Modern multinationals are good examples of equity in action.
⑫ Stability of Personnel
"Employee turnover should be minimised to maintain organisational efficiency." After rigorous selection, personnel should be given a minimum fixed tenure to show results. Adhocism creates insecurity, raises recruitment, selection and training costs, and erodes efficiency. NCERT exercise example: Wales Limited gave SanakLal and Gagan one year to prove themselves — that is the principle of Stability of Personnel at work.
⑬ Initiative
Workers should be encouraged to develop and execute their plans for improvement. Initiative is taking the first step with self-motivation. A good company has an employee suggestion system rewarding ideas that bring substantial cost or time savings. Initiative does not mean breaking established practices for the sake of being different.
⑭ Esprit de Corps
"Management should promote a team spirit of unity and harmony among employees." Especially in large organisations, teamwork is essential — a manager should replace "I" with "We" in all communication, fostering mutual trust and belongingness. Strong esprit de corps? reduces the need for penalties.
🕰 Fayol — Then and Now (Carl A. Rodrigues, 2001)
Modern interpretations of Fayol's principles in service-based, high-tech economies: Authority & Responsibility — managers were empowered THEN; employees are empowered NOW. Unity of Command — one boss THEN; multiple bosses (matrix structures) NOW. Equity — commitment through kindness THEN; through a sense of ownership NOW. Initiative — managers conceived ideas THEN; workers do NOW. The names of the principles remain — their interpretation has evolved.
Activity 2.1 — Decode Toyota's 7 Guiding Principles
Toyota's seven principles in the opening case overlap heavily with Fayol's 14 principles. Map each Toyota principle (1–7) to one or two of Fayol's 14 principles, and justify your answer.
- Toyota #1 (honour law of every nation) → Fayol's Discipline (obey rules) + Equity (fair behaviour worldwide).
- Toyota #2 (respect culture) → Equity (no discrimination) + Subordination of individual to general interest (community welfare).
- Toyota #3 (clean & safe products) → Order (right things in right place) + Initiative (new safety ideas).
- Toyota #4 (advanced technology) → Initiative + Division of work (specialisation in R&D).
- Toyota #5 (corporate culture, mutual trust) → Esprit de Corps + Equity.
- Toyota #6 (harmony with global community) → Subordination of individual interest + Stability of personnel.
- Toyota #7 (work with partners) → Cooperation theme — links to Fayol's Esprit de Corps.
Activity 2.2 — Identify the Principle Violated
Read each scenario and name the Fayol principle violated and the principle that should be applied.
- (a) A salesperson is asked by Marketing to give 10% discount and by Finance to limit it to 5%.
- (b) A manager Mr. Rathore orders raw material from his cousin at higher prices instead of the firm's usual cheaper supplier.
- (c) A workshop has no fixed place for tools — workers waste 30 minutes daily searching.
- (a) Unity of Command violated → fix by routing instructions through one channel.
- (b) Subordination of Individual Interest to General Interest violated (personal/family gain over company gain) → apply this principle to ensure cost-efficient procurement.
- (c) Order violated → assign every tool a fixed location ("place for everything").
Activity 2.3 — Source Reading: Define Discipline (Fayol)
Fayol said discipline requires (i) good superiors at all levels, (ii) clear and fair agreements, (iii) judicious application of penalties. Using the union–management example in NCERT, explain how each of the three requirements is met.
- Good superiors: Senior managers who model commitment and refuse personal favours set the example.
- Clear and fair agreements: The signed pact (extra hours now, wage rise later) is explicit, documented and balanced.
- Judicious penalties: Apply only where genuine breach occurs, not arbitrarily — preserves trust on both sides.
📝 Competency-Based Questions — Meaning, Nature, Significance & Fayol's Principles
Source-based scenario: Toyota's seven guiding principles drive its Global Vision; Biocon began with Rs 10,000 in a garage and is now the world's 4th-largest insulins producer; Lijjat Papad began with Rs 80 and now exports Rs 60 crores. Fayol's 14 principles were published in 1917 (in French) and translated to English in 1949.
Q1. The chairman of an Indian PSU has been transferred every six months. Recruitment, selection and training costs are mounting and decisions are postponed. Which Fayol principle is being violated?
L3 ApplyAnswer: (b) Stability of Personnel — Fayol said employee turnover must be minimised. Frequent transfers create insecurity, raise costs of recruitment and training, and erode efficiency. NCERT's Wales Limited case (one-year tenure to prove worth) is the inverse positive example.
Q2. A subordinate 'E' urgently needs to coordinate with peer 'O' in a different branch. The normal scalar route is E→D→C→B→A→L→M→N→O. Which device permits direct E↔O contact, and what is its limitation?
L4 AnalyseAnswer: The device is the Gangplank — a short-cut across the scalar chain permitted only in emergencies. Limitation: it must not be used in the normal course of formal communication; superiors must be informed afterwards. The principle is Scalar Chain; the gangplank is the exception that prevents emergency delay.
Q3. Carl Rodrigues (2001) noted that "Authority & Responsibility" THEN meant managers are empowered, NOW means employees are empowered. Which feature of management principles is this evolution best evidence of?
L5 EvaluateAnswer: The evolution best illustrates that principles of management are flexible and contingent — their names persist but their interpretation shifts with the environment (flat organisations, knowledge work, ICT). It also shows the cause-and-effect nature: as work-design changed, the meaning of authority changed too. Together these demonstrate that principles are general guidelines, not rigid pure-science laws.
Q4. (HOT) Toyota's Principle 5 calls for "individual creativity AND teamwork value, while honouring mutual trust." Design a 3-step managerial action plan a Toyota plant manager in Bengaluru could follow this quarter — and link each step to one of Fayol's 14 principles.
L6 CreateSample answer: Step 1 — Launch an employee suggestion box with monthly cash rewards for cost-saving ideas (Fayol: Initiative). Step 2 — Organise weekly cross-shift huddles using "We" language and shared KRAs (Fayol: Esprit de Corps). Step 3 — Publish a transparent grievance-redressal SOP signed by both shop-floor union and management (Fayol: Equity + Discipline). Link to Toyota Principle 5: creativity flows from Initiative; teamwork from Esprit de Corps; mutual trust from Equity and Discipline.
🔗 Assertion–Reason Questions (Class 12 Format)
Options: (A) Both A & R true, R correctly explains A · (B) Both true, R does not explain A · (C) A true, R false · (D) A false, R true.
Assertion (A): Principles of management are flexible and contingent on the situation.
Reason (R): Management principles deal with human behaviour, which is never static, and they are influenced by changes in technology and environment.
Answer: (A) — Both true; R correctly explains A. NCERT clearly states that human behaviour is "never static and so also technology" — therefore principles must be flexible and contingent. The cause (changing humans/technology) explains the property (flexibility).
Assertion (A): Unity of Command and Unity of Direction mean the same thing.
Reason (R): Both principles aim to prevent confusion in the organisation.
Answer: (D) — A is false: Unity of Command (one subordinate–one boss, prevents dual subordination) is different from Unity of Direction (one head–one plan per group of activities, prevents overlap). R is true — both aim to reduce confusion, but they target different problems.
Assertion (A): The gangplank can be used routinely by employees as an alternative to the scalar chain.
Reason (R): Fayol designed the gangplank to speed up day-to-day communication across branches.
Answer: (D) — A is false: gangplank is for emergencies only; routine use undermines the chain. R is also misleading — Fayol designed it as an emergency exception, not a daily route. Although the prompt's R says "designed to speed up communication", that is true only in emergencies, so as written R is correct in spirit while A is clearly false. Hence (D).
Frequently Asked Questions
Who proposed the 14 principles of management?
Henri Fayol, a French industrialist, proposed the 14 principles of management based on his decades of experience as managing director of a large mining and metallurgical company. He published them in 1916 in his book General and Industrial Management. NCERT places Fayol alongside Taylor as a founding figure of modern management thought.
What is the nature of management principles?
Management principles are universal applicability, general guidelines, formed by practice and experimentation, flexible, mainly behavioural, cause-and-effect relationships, and contingent on the situation. They are not rigid laws — a manager applies them with judgement, adapting them to the specific organisation and context.
Why are management principles significant?
Principles provide useful insight to managers, optimum use of resources, scientific decisions, meeting changing environment, fulfilling social responsibility and management training and education. They convert experience into transferable knowledge so that new managers do not have to rediscover the basics through trial and error.
What is Fayol's principle of unity of command?
Unity of command means an employee should receive orders from only one boss. If two bosses give conflicting instructions, the worker is confused, discipline collapses and authority is undermined. Fayol considered this principle so important that he warned violation of unity of command leads to confusion and inefficiency.
What does esprit de corps mean in management?
Esprit de corps is French for team spirit. Fayol urged managers to replace I with we in everyday speech, build pride in shared work and avoid divide-and-rule tactics. A united team produces results greater than the sum of individual efforts and is more resilient when problems arise.
What is Fayol's gangplank concept?
The gangplank is an exception to the strict scalar chain. It allows two employees at the same level in different departments to communicate directly during emergencies, bypassing their bosses, instead of going up and down the chain. Fayol stressed the gangplank is for emergencies only — routine use would undermine the chain.
Are Fayol's 14 principles still relevant today?
Yes. Although workplaces have changed, the underlying ideas — clear authority, discipline, fair pay, team spirit, scalar communication — remain useful. Modern firms apply them flexibly: tech companies use cross-functional teams (gangplank-like), but they still uphold unity of command for accountability and esprit de corps for culture.
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