Nature and Significance of Management: Features and Importance

Before we proceed to understand the Principles of Management, let us brush up on our knowledge about management concepts. Management, in its most basic form, refers to the processes of planning, organizing, making decisions, motivating, and leading human resources in an organization. Management also includes the control of a company's information, physical, and financial resources to achieve its objectives.

What are Principles of Management?

Principles of management encompass activities connected with organizing, planning and controlling of basic aspects of an organization, like materials, people, methods, machines as well as financial resources. 

It engages in coordinating and directing human efforts with a common objective of meeting established goals. 

Nature and Principles of Management 

The nature of principles of management is elaborated below.  

• Universal Application- These principles have universal nature due to which these are applicable for all kinds and sizes of organizations. However, the method of application for these principles can be modified, and the outcome may vary. For instance, a specialization degree will vary across an organization, but the principle of labor division remains the same. 

• Experiments and Practice- The development of management principles involves trial and error and extensive research. It includes experiments and observations before these principles are developed. Hence, management principles are understood to be evolutionary.

• General Guidelines- These principles have to be applied in an organization while keeping in mind the nature, size and objectives of that firm. Management principles are not absolute statements in themselves and cannot be implemented rigidly. It provides broad guidelines to resolute issues that may arise in the course of operations.

For instance, the salary amount that an employee receives is dependent on a host of factors, but the fair remuneration principle applies to all organizations.

• Flexibility- Management principles are flexible enough to be applied in different situations. Based on the requirements of an organization, the principles may be modified by administrators. It is this absence of rigidity that makes management principles effective.

For instance, the concentration of power is indicated at the apex level in an organization by the centralisation principle. However, the degree and extent of it will have to consider the nature of the organization as well. 

• Behavioral Aspect- The management principles influence employee behavior and have a strong bearing on interactions happening within an organization across different levels of hierarchy. It helps in improving relationships among the members of an organization.

For instance, even though the principle of discipline mandates a certain degree of commitment of employees extended towards a company, the Esprit de Corps principle leads to the building of team spirit. 

• Contingency- Application of management principles is dependent on contingent factors for existing situations in a company. The effect and application of such principles will also have to consider the function, requirement and nature of an organization. The application will have to be tailored accordingly. 

• Cause and Effect Relationship- The establishment of management principles takes into account causal relationships with respect to stock situations. It means that if those principles are applied in a particular scenario, a general effect may be assumed. However, one cannot anticipate the exact result borne out from applying management principles.

Nature of Management

• Universal process- Management is a universal process that exists wherever there is a human pursuit. The organization's goals cannot be met unless effective management is in place.

• The Production Factor- Well-trained and experienced managers are required for the efficient use of funds and labor.

• Goal-Oriented- The primary goal of all management endeavors is to achieve the firm's objectives. The goals must be practical and attainable.

• Supreme in Thought and Deed- Managers are supreme in thought and action because they set attainable goals and then direct execution on all aspects of achieving them. They will require complete assistance from middle and lower levels of management to accomplish this.

• The authority structure- The authority system consists of well-defined regulatory principles, the regulation of proper power, and efficiency at all levels of decision-making. This is necessary so that each self performs what is expected of him or her and reports to whom he or she is accountable.

• Profession- Managers must control managerial expertise and education, as well as adhere to a proven code of conduct and stay informed of their human and social responsibilities.

• Process- The management method entails a variety of activities or services aimed at a specific goal.

Significance of Principles of Management 

The significance of Principles of Management is twofold. 

Firstly, the adoption of management principles equips managers to handle numerous situations. They will have the necessary understanding of practical situations. With proper policy implementation, managers may enhance their managerial capabilities. 

Secondly, implementing management principles also helps in optimally utilizing resources which is likely to lead to efficient management. Human resources, as well as other material resources, are available in a limited manner with an organization. Hence, to minimize cost and maximize profit, resources should be effectively utilized. Management principles enable managers for influence and predict the outcome of activities and choices. 

Importance of Principles of Management 

The very nature of principles of management contributes to its importance. 

• Scientific Nature of Decision-Making- Adoption of management principles equips managers to take objective decisions with more realistic considerations that are bias-free. Such decisions may be subsequently subjected to objective evaluation.

• Adhering to Social Responsibility- Managers can observe their commitment not only towards their subordinates but also the society at large. Organizational goals are also achieved efficiently. It can be understood in the context of the fair remuneration principle. An organization becomes not only compliant with government regulations but also ensures social justice for its members.

• Adapting to an Ever-Changing Business Environment- Due to the dynamic nature of management principles, the broad guidelines are subject to modification consistent with changes in the business environment. With such modification, an organization may continue to retain its efficiency.

• Training and Development- The principles will have to be clearly understood to initiate proper training and development. Managers need to undergo training programs to stay updated with due knowledge and expertise. It will help them to engage in proper decision-making and carry out their duties responsibly. 

• It aids in the accomplishment of group objectives- It aids in the achievement of group goals by arranging the factors of production, assembling and organizing the resources, and efficiently integrating the resources to achieve goals. It directs the efforts of a group toward the achievement of predetermined goals. There would be no waste of time, money, or effort if the organization's objectives were clearly defined. Management organizes the disorganized resources of men, machines, money, and so on into productive enterprise. These resources are coordinated, directed, and controlled for the enterprise to achieve its goals.

• Optimum utilization of resources- Management makes efficient use of all physical and human resources. This leads to management efficacy. Management maximizes the utilization of scarce resources by selecting the best possible alternate use in industry from a variety of options. It employs experts and professionals, and these services result in the use of their skills, knowledge, and proper utilization, as well as the avoidance of waste. When employees and machines are working to their full potential, there is no underutilization of resources.

• Reduces cost- It achieves maximum results with minimal input by properly planning and using minimal input to achieve maximum output. Management allocates physical, human, and financial resources in the most efficient way possible. This aids in cost-cutting.

• Creates a sound organization- There is no duplication of effort. Establishing a sound organizational structure is one of the goals of management that is aligned with the goals of the organization, and to do so, it establishes effective authority and responsibility relationships, i.e. who is accountable to whom, who can give instructions to whom, who are superiors and who are subordinates. Management fills various positions with the right people who have the necessary skills, training, and qualifications. Everyone should have access to all jobs.

• Establishes Equilibrium- It allows the organization to thrive in an ever-changing environment. It maintains contact with the changing environment. The initial coordination of the organization must be changed as the external environment changes. As a result, it adapts the organization to changing market demand and changing societal needs. It is in charge of the organization's growth and survival.

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