Principles of management has been developed by henry Fayol - Father of modern management.

Fayol grouped the activities of industrial enterprise into six categories

1. Technical (Production)
2. Commercial (Buying, Selling and exchange)
3. Financial (Optimum use of capital)
4. Security (Protection of property and assets)
5. Accounting
6. Managerial

However he devoted most of his attention to managerial activities. On the basis of which he developed following principles.

1.Authority and Responsibility

Managers who exercise authority over other should take responsibility for decisions as well as for the result. Fayol regarded authority as corollary to responsibility.

2.Unity of Command

This principle suggests that one employee should have only one boss and receive instructions from him only. This clears the direction of flow of command from higher authority to employees. It reduces the possible conflicts if there are multiple authority commanding a particular employee or sub-ordinate.

3.Unity of Direction

All the managerial and operational activities of the company should be directed by “One Head and One Plan”. According to Fayol, There should be “One head and One Plan” for group of activities having same objective. Violation of this principle will cause fragmentation of action and wastage of resources.

4.Scalar Chain of Command

This principle gives relationship between superior and sub-ordinates. Fayol explains it as chain of superiors and sub-ordinates running throughout the organization from top to bottom.

5.Division of work

This is principle of specialization which applies to all the kind of work, Managerial as well as technical.

In an organization, structure is so designed that all the tasks necessary to accomplish goals are assigned to people who can do it the best, i.e. according to specialization.

6.Discipline

Members of an organization are required to perform the functions and conduct themselves in accordance to rules, regulations, norms and customs established by organization.

Discipline can be maintained by - Having good superiors at all levels - Agreements - Penalties judicially imposed

7.Sub-ordination of individual interest to general interest

Interest of the organization is above the interest of the people or group of people working on it. However social and national interest should have precedence over organizational interest whenever two runs counter to each other.

8.Remuneration

• Employee should be paid fairly and equitably.
• Differentials in remuneration should be based on in terms of quality of employee, application, responsibility, difficulty of the job.
• Worker should be paid according to their merit and should be given reward or incentive for their performance.

9.Centralization

• He proposed centralization and decentralization is dependent on proportion.
• In Small firm, owner and manager can give orders directly to everyone.
• In larger organization there is a long scalar chain. Degree of centralization and decentralization also depends upon quality of manager.

10.Order

It means right person on right job and everything in its proper place. It requires precise knowledge of the requirement and resources and maintaining balance between requirement and resources.

11.Equity

It means sub-ordinates should be treated with justice and kindness. This is essential to gain their devotion and loyalty towards enterprise.

12.Stability of tenure of personnel

Managerial policies should provide sense of reasonable job security. Hiring and firing of personnel should not be depend upon whim of the superior but on well-conceived personnel policies.

13.Initiative

It focuses on ability, attitude and resourcefulness to act. Managers must create an atmosphere or environment which encourages the sub-ordinates to take initiative and responsibility. It provides sense of satisfaction to intelligent employee. Managers should sacrifice their vanity in order to encourage their sub-ordinates to show initiative.

14.Esprit de corps

Cohesiveness and team spirit should be encouraged among employees.