Principles of scientific management

There are several principles of scientific management affecting functioning of management processes in modern companies. We can distinguish 5 basic principles and several decision making directives.

Basic management principles and laws

Principle of division of labour (by Adam Smith). If the repetitive work of any individual or group will be divided in such a way that each component function will detach and perform sets at a certain level of expertise, the overall amount of work and the means of production will decrease

Principle of concentration (by F. W. Taylor). If several elements performing the same (similar) function will be combined into one team working together or replacing one larger team executing the same task in an amount equal to the production of all elements, the overall amount of work and the means of production will decrease

Law of increased production (by Karol Adamiecki). The performance of the product cost per unit decreases and reaches its optimum size beyond which further effort and resources is no longer economical

Law of harmony (by Karol Adamiecki). Accuracy of selection (harmonization) of elements whose work is divided into a maximum time of alignment, the size of the useful effect of the team depends on the item, which has the smallest performance. Variations of the law of harmony: harmony in the choice of workers (optimizing of performance of interacting agents), the law of harmony in the operation of bodies (harmonization of operational time)

Rule of defiance (by Henry Louis Le Châtelier and Karl Ferdinand Braun). If the system in the state of equilibrium is subjected to a new external factor or participation in the operation of various external factors change, then the system will tend to reduce the impact of external factors and achieve a new state of equilibrium, similar to the initial equilibrium.

Effective decision rules and principles

Rules can be considered directional indications to help make appropriate decisions in certain situations. In its activities, the company should be guided by the following principles:

  • the principle of economic rationality
  • the principle of entrepreneurship,
  • the principle of profitability,
  • the principle of economic calculation.

The principle of economic rationality. According to this principle optimum can be defined in two ways:

  • providing a maximum amount of the anticipated benefits of any project as an objective measure, (PRINCIPLE OF BEST PERFORMANCE)
  • providing a corresponding minimum of resources assuming achievement of the anticipated benefits of a project (PRINCIPLE OF SAVINGS).

Duality of this principles is that the optimal solution is the same for both variants, if, for example, the optimum amount of production is defined by x, x is found in both the cost of a minimum size is achieved, and at the same x benefit (such as yield, profit) reaches the maximum value. Examples of applications of rational management principles: choice of quantitative structure of production, the search for the shortest route of transport, setting sales strategy.

The principle of entrepreneurship involves ability to take up initiative and creative problem solving, the ability to use emerging opportunities and being flexible to adapt to changing conditions. Entrepreneurship is the pursuit of maximum creative use of resources at the disposal company, in order to exploit any opportunities that arise in its environment. The principle of entrepreneurship is a way in making new, unconventional and risky ventures and in showing initiative in their search for and implementation. It is therefore directed towards the development, with innovative character.

Adhering to the principle of profitability makes the company receive the excess return on their investment in production after the sale. Consequently, once provided with the means - if the production is adapted to the needs - company becomes self-sufficient financially. Adhering to the principle of profitability across the enterprise and the use of full payment for the provision of individual companies requires not only the conduct of the relevant records and control of the business assets of the accounting department, but also the calculation of costs for services provided to other entities. Application of the principle of profitability determines the degree of implementation of the objective principles of economy in the company.

Principle of economy involves in the company's economic profit. The concept of "economic calculation" can be defined as a way of measuring the costs and benefits of economic activity, which is conducive to optimal decisions in order to maximize the effects of performance. Economic calculation forces managers to think in terms of alternatives and practical application of certain rules of operation. It requires use of a proper information system, development of mathematical methods for the determination of optimal solutions, which creates objective variant development opportunities and solving economic problems.


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