The significance of principles of management can be discussed in terms of the following points:
1)- Providing managers with useful insights into reality: The principles of management provide the managers with useful insights into real world situations. Adherence to these principles will add to their knowledge, ability and understanding of managerial situations and circumstances. These principles guide the managers to make the right decision at the right time. It will also enable managers to learn from past mistakes. As such management principles increase managerial efficiency.
For example, a manager can leave routine decision-making to his subordinates and deal with exceptional situations which require her/his expertise by following the principles of delegation.
2)- Optimum utilisation of resources and effective administration: Resources both human and material available with the company are limited. They have to be put to optimum use. By optimum use we mean that the resources should be put to use in such a manner that they should give maximum benefit with minimum cost. Principles help the managers to foresee the cause and effect relationships of their decisions and actions. As such the wastages associated with a trial-and-error approach can be overcome. The management principles insist on planned activated and systematic organization of human and material in the organization. Principles are designed to get maximum benefits from human efforts and other resources.
For example, in deciding the annual budgets for different departments, rather than personal preferences, managerial discretion is bound by the principle of contribution to organisational objectives.
3)- Scientific decisions: Decisions must be based on facts, thoughtful and justifiable in terms of the intended purposes. They must be timely, realistic and subject to measurement and evaluation. Management principles help in thoughtful decision-making. They emphasise logic rather than blind faith. Management decisions taken on the basis of principles are free from bias and prejudice. They are based on the objective assessment of the situation.
4)- Meeting changing environment requirements: Although the principles are in the nature of general guidelines but they are modified and as such help managers to meet changing requirements of the environment. Since, management principles are flexible to adapt to a dynamic business environment. Management principles train the managers in implementing the changes in the right direction and right level in the organization.
For example, management principles emphasize division of work and specialization . In modern times this principle has been extended to the entire business whereby companies are specializing in their core competency and divesting non-core businesses.
5)- Effective administration: Administration is the function of top level management. In this function major plans and policies are formed. The management principles act as guidelines and base to form various administrative policies to have systematic working in an organization.
6)- Fulfilling social responsibility: The increased awareness of the public, forces businesses especially limited companies to fulfill their social responsibilities. A business is the creation of society and makes use of resources of the society so it must do something for society also by performing some social responsibilities. Management theory and management principles have also evolved in response to these demands. Moreover, the interpretation of the principles also assumes newer and contemporary meanings with the change in time. So, if it is about ‘equity’ today, it does not apply to wages alone but it shall apply in all aspects of the organization like, value to the customer, care for the environment, dealings with business associates and so on.
7)- Management training, education and research: Principles of management are at the core of management theory. These are used as a basis for management training, education and research. The management principle stresses on scientific judgments and logical thinking. As a result, these principles act as a base of doing research and development in management studies. As these principles provides body of knowledge to perform research work and generate more and more knowledge, they have provided new ideas, imagination and base for research and development.
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