Various Principles Of Management and How Modern Management differs from Traditional Management

Any principle of management is a universal and general concept for decision-making and execution. For example, while making a decision regarding the promotion of an employee, the manager may decide considering their age or rank. Whereas others may promote them based on their conduct and performance.

The principle of management is based on experience and changes in the business industry, therefore these principles may not be as firm as those of science. They involve human behavior and are used accordingly in the required situation. thus, these principles change with respect to time. The birth of ICT ( information and communications technology)has made it possible for managers to spread their business organization all over the world. For example, WIPRO, whose headquarter is situated in Bangalore, has now become a popular multinational IT consulting and system integration service company.

The principle of management should not be mistaken for techniques of management. Techniques of management are methods or approaches involving several steps to be followed to reach the desired goal. Principles on the other hand are a set of rules that needs to be taken care of while practicing technique in order to work efficiently. Similarly, principles should also be distinguished from values. Values are beliefs or morals that are based on human behavior and help individuals to behave morally in society. On the other hand, principles are formed on the basis of the work situation. However, the values and the morals cannot be ignored while practicing the principle of management in an organization as this organization has to fulfill all kinds of responsibilities whether they are social or ethical.

Henri Fayol

Father of the general principle of management, Henry Fayol was a French industrialist. He joined a French mining company in 1860 as an engineer and rose to the position of its managing director in 1888. At that time, his company was at the stage of bank insolvency. With broad administrative experience, ‘Fayol’ contributed a lot to his company. When he retired in the year 1918, the company was in excellent condition. Henri Fayol recognized the need for principles of management. He identified 14 principles of management. These principles are:

1. Division of Work-

Henri believed that segregating work in the workforce amongst the worker will enhance the quality of the product. Similarly, he also concluded that the division of work improves the productivity, efficiency, accuracy and speed of the workers. This principle is appropriate for both the managerial as well as a technical work level.

For example, a bank has several operations, like collection and payment of cash, issue of cheque books, etc. All those activities are divided and allocated to a different person in the bank. This method of doing work also improves their efficiency and makes them experts in their field.

2. Authority and Responsibility-

These are the two key aspects of management. Authority facilitates the management to work efficiently, and responsibility makes them responsible for the work done under their guidance or leadership.

For example, if a foreman is given the responsibility to produce 50 units per day, then he must be given the required authority to achieve this target. If he is not given authority to draw raw material from the stores, then he cannot be blamed

3. Discipline-

Without discipline, nothing can be accomplished. It is the core value for any project or any management. Good performance and sensible interrelation make the management job easy and comprehensive. Employees good behaviour also helps them smoothly build and progress in their professional careers.

For example, employees must be disciplined to work effectively and efficiently to meet their promises of bonuses, increments, and promotions. Its smoothness systemizes the functioning of an organization by providing  better relations between management and employees.

4. Unity of Command-

This means an employee should have only one boss and follow his command. If an employee has to follow more than one boss, there begins a conflict of interest and can create confusion.

For example, there is a salesperson who is asked to clinch a deal with a buyer and he is allowed to give a 12% discount by the marketing manager. But the finance department tells him not to offer more than a 6% discount. In this case, there is no unity of command, which will lead to confusion and delay.

5. Unity of Direction-

Whoever is engaged in the same activity should have a unified goal. This means all the person working in a company should have one goal and motive which will make the work easier and achieve the set goal easily.

For example, if an organization has four departments for different activities, then each department must be directed by one superior, and its employees should give their whole efforts to achieving the plan of the organization. Each division should

have its in charge, plans, and execution resources. There should not be an unnecessary duplication of efforts and a waste of resources.

6. Subordination of Individual Interest-

This indicates a company should work unitedly towards the interest of a company rather than personal interest. Be subordinate to the purposes of an organization. This refers to the whole chain of command in a company.

For example, there is a company that wants maximum output from its employees by providing less salaries. There are employees on the other hand who want to get the maximum salary while working the least. In both situations, the interests of the company will supersede the interest of any one individual. As the interests of the workers and stakeholders are more important than the interests of any one person.

7. Remuneration-

This plays an important role in motivating the workers of a company. Remuneration can be monetary or non-monetary. However, it should be according to an individual’s efforts they have made.

For example, if an organisation earns higher profits, then it should share some of its part with the employees in the form of bonus.

8. Centralization-

In any company, the management or any authority responsible for the decision-making process should be neutral. However, this depends on the size of an organization. Henri Fayol stressed on the point that there should be a balance between the hierarchy and division of power.

For example, Authority to take vital decisions must be given to the top management, whereas authority related to operational activities must be given to the middle and lower level.

9. Scalar Chain-

Fayol on this principle highlights that the hierarchy steps should be from the top to the lowest. This is necessary so that every employee knows their immediate senior also they should be able to contact any, if needed.

For example, E wants to communicate with I for some important work. The message should orderly move from E to D, then to C, B, A, and then down from A to F then to G, H and finally to I. This will take lots of time so to avoid this delay in work, Fayol suggested this concept of Gang Plank. In this concept ‘E’ can communicate directly with ‘I’ on an urgent matter, the gang plank allows two employees of the same level to communicate directly with each but each must enforce to its superior.

10. Order-

A company should maintain a well-defined work order to have a favourable work culture. The positive atmosphere in the workplace will boost more positive productivity.

11. Equity-

All employees should be treated equally and respectfully. It’s the responsibility of a manager that no employees face discrimination.

12. Stability-

An employee delivers the best if they feel secure in their job. It is the duty of the management to offer job security to their employees.

13. Initiative-

The management should support and encourage the employees to take initiatives in an organization. It will help them to increase their interest and make then worth.

14. Esprit de Corps-

It is the responsibility of the management to motivate their employees and be supportive of each other regularly. Developing trust and mutual understanding will lead to a positive outcome and work environment.

This 14 principles of management are used to manage an organization and are beneficial for prediction, planning, decision-making, organization and process management, control and coordination.

Traditional Management Model vs. Modern Management Model

The world economy increasing becomes globalization, which lead to broad mixture of local, national and global markets and organizations, due to different ethic, values and cultures, even both parties speak same language, there still could lead misunderstanding, therefore today’s managers face more challenges, such as understanding the changing trends in the market, how to maintain beneficial interpersonal relationship with employees and clients, concerning  about business ethics and corporate social responsibility surround managerial actions. And the turbulent global environment push managers spend more time crossing borders to conduct business, it is necessary to understand how to communicate effectively with people in different cultures to fulfill the organization’s missions and create values for the stakeholders.

Traditional top-bottom management model was successful in the 20th century, however managerial hierarchies and traditional approaches may impose heavy costs on the business that would become administrative burden in future. Moreover, business and environmental changes occurred at a slow pace in the past which was easy for managers to deal with, however today’s market changes at a fast rate,  the development of technologies also aggravate market competition, the traditional hierarchical management need a long time to response the market changes, which could not give managers enough freedom to plan and organize their works. Therefore, in order to adapt to ever changing business environment, it is critical to improve the structures of the company and global management approaches, come up with strategies which enable business cope with the changes in the external and internal environments.

Comparing Traditional Management Model and Modern Management Model      

                                                                                                                                               

The purpose of this section is through comparing the differences between traditional organization and modern organization to identify the problems in traditional management model, discuss why traditional management model cannot meet the needs of global business management.

Comparing Traditional and Modern Management models

The main difference between traditional organization and modern organization in several aspects.

Stability: Traditional organizations usually are stable in business activities and progress, while modern organizations are more dynamic with multiple business strategy, which need multiple process to deal with constant changes.

Flexibility: In traditional organization, its structure is usually fixed, the strategy is planned, and the management is inflexible. While the modern organization, they need always improve the workflow, update its competitive edges, and the employees are required to promote the skills and knowledge to connect with the market and changings.

Teamwork: The flow of traditional business is ‘tall hierarchy’, which focus on individual responsibility and obey to his superior, while modern one is ‘flat hierarchy’, which more focus on teamwork and cooperation, its collaborative working mode would more conducive to brainstorming and help the companies improve work efficiency and make marketing strategy.

Stimulate morale: Modern organization management enable employees give more freedom and flexibility to fulfill their works, which are beneficial to mobilize enthusiasm of the staffs.

Management policy: In traditional business, the management policies are conservative, which usually follow traditional rules and regulation, make static workflow model to maintain business strategy and employee management system. While modern management model would do modification such as rescheduling, flexible entity management, dynamic business strategy.

From above analysis, we can find the context of modern management emphasis on how individual contribute to the organization and corporate performance, the chief executives pay more attention on retaining control of organization, its performance of is decided by the financial returns and share price of the organization. Moreover, the modern organization reflects the principles related to total quality management, such as learning organization, high performance organization and balanced score cards, so it could be the challenge to traditional management model.

Through the comparing, it is clear traditional management model has its limitations and may not meet the needs of global economic development, in the perspective of modern management, due to the various social, legal, political, technical and economic factors, the effective coordination and cooperation depends on different organizational relationships. With globalization, in modern organization more and more managers are working with colleagues from around the world, the context of global management involves culture environment management, organizational environment management and situational contingencies, to build global management skills, which not only require the managerial competence such as planning, organizing, coordinating, controlling, but also need develop multicultural competence to understand and work effectively across culture, therefore it is necessary to understand the context of global management and improve cross-border effectiveness to accomplish global corporate objectives.