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Nature and Significance of Principles of Management

Last Updated : 11 Jan, 2024
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The management principles are broad and general guidelines for decision-making and behaviour. These guide managers in taking actions and decisions. These principles are different from principles of science as they are not rigid. They are applied creatively to humans as per the needs and demands of the situation, so they are flexible. Management principles have to keep pace with the changing environment as humans and technology are not static.

Management is the art of getting things done through others. It is always required whenever human and non-human resources are used. So management has to perform various functions to achieve the goals of the organisation. Such management functions are performed effectively and efficiently through principles and techniques.

Derivation of Management Principles

The management principles are derived and developed through Observation and Experimentation.

  1.  Observation: Certain events and situations are observed and analysed by the management thinkers. These observations and analyses give certain guidelines, rules and methods for doing work, taking actions and decisions for achieving the organisational goals. 
  2. Experimentation: The guidelines developed by the management thinker are tested and experimented repeatedly to test their validity. These guidelines are tested in various situations and organisations. If they provide the same result in every situation, then they are designated as management principles.

Nature of Management Principles

  1. Universal Application: Management principles are applicable to all kinds of organisations, whether big or small, irrespective of the size and nature of the organisation. Although, the extent of application varies according to the situation and size and nature of the organisation.
  2. General Guidelines: These principles are not ready-to-use solutions. They are just general guidelines which need to be applied creatively by the manager depending upon the situation, as real business situations and environment is very complex and dynamic.
  3. Formed by Practice and Experimentation: These principles and techniques are formed by the collective observation and experimentation of all the managers over a period of time. For example, it is a matter of common experience that discipline is very important to achieve goals.
  4. Flexible: Principles of management are not rigid, as in the case of principles of science. These principles can be modified as per the need of the organisation. They are flexible and give managers enough discretion to modify and apply them as per the situation.
  5. Mainly behavioural: Managers have to deal with human behaviour because work in every organisation is performed by humans. As human behaviour is very complex and dynamic in nature, these principles aim at influencing the behaviour of humans to achieve organisational goals.
  6. Cause and effect relationships: Management principles are based on cause and effect relationship so that they can be used in similar cases in a large number of cases. Outcomes of the managerial actions are predicted using these principles.
  7. Contingent: These principles are dependent upon the prevailing conditions at a particular point of time. The application of these principles is changed as per the situation.

Significance of Principles of Management

  1.  Providing Managers with useful insights into reality: Knowledge, ability and understanding of managers are improved with the help of principles of management, as they provide guidance. These principles also help to improve the efficiency of managers as they avoid the hit and trial method. They provide useful insights into the real world situations. It also enables managers to learn from their past mistakes and take corrective actions in the future.
  2. Optimum utilisation of resources and effective administration: Physical, financial and human resources are utilised optimally with the help of principles of management. The cause and effect relationship avoids hit and trial method and reduces inefficiency and wastage of resources.
  3. Scientific decisions: Decisions taken with the help of principles of management are more realistic, practical and free from personal biases. They are made after repeated experimentation, therefore they minimize the chances of wastage of resources because the hit and trial method is not used. Thus, these principles facilitate scientific and balanced decisions. 
  4. Meeting changing environment requirements: Business environment is dynamic, and in order to survive in this fast changing environment, business should adapt to the changes. Management principles guide managers to take corrective actions and help organisations to implement the changes to survive in the dynamic environment. 
  5. Fulfilling social responsibility: As businesses use resources of society, it is the duty of the business to perform social responsibilities. Principles of management not only help in achieving organisational goals but also help managers in performing social responsibilities. For example, the Principle of Remuneration focuses on giving just and fair remuneration to the employees, irrespective of caste, religion, gender, etc. 
  6. Management training, education and research: As these principles are at the core of the management theory, they are used for training, education and research. These principles are also included in graduate and postgraduate courses, like B.Com, M.Com, BBA, MBA, etc. These principles help in the refinement of management practices by developing new techniques.

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