14 Principles of Management

Principles of Management:

The word Principle means a fundamental truth which acts as the foundation for action. Henri Fayol first gave the principles of management and stated 14 principles of management. Later on, Luther Gullick and Lyndall Urwick modified these principles which cover all aspects of management and are also known as Principles of Management. These may be remembered as PODSCORB:

P = Planning
O = Organising
D = Directing
S = Staffing
CO = Co-ordinating
R = Reporting
B = Budgeting


Planning means “deciding on in advance or making preparation for an anticipated event“. Planning is the most basic or fundamental of all management functions. This primary management function decides in advance what to do, how to do it, where to do it and who is to do it. Planning bridges the gap between the two questions – where we are now? and where do we want to go?

Every organisation have its objectives and mission. It is the tool by which an organization decides how to achieve that objective.

Planning may be –

  • Short-term (such as – marketing plan, 1-2 years)
  • Medium-term (such as – marketing plan, 3-5 years)
  • Long-term (such as – product diversification plan, future expansion etc, more than 5 years)

The purposes of planning are –

  • Fulfilment of objectives
  • Facing the changes
  • Proper utilization of resources
  • Reduction of cost
  • Co-ordination
  • Harmony in management


According to economics, the four factors of production are land, labour, capital and organization. Koontz and O’Donnell have defined organization as a structural relationship by which an enterprise is bound together and it also acts as a framework in which individual effort is coordinated.


Directing means instructing and inspiring the persons working in the same organization to achieve common objectives. Planning and Organising and concerned only with the preparation of work performance while directing stimulates the organization and starts working on plans. Thus “directing” may also be referred to as “management in action”. The main objective of direction is to bring harmony and coordination between the efforts of sub-ordinates and the interests of the enterprise.


The objective of staffing is to obtain the best available people for the organization and to develop the skills and abilities of these people. As a part of organising, we have grouped the like activities to make the organization structure. We have also learnt that each such group of like activities is headed by one person, which is known as unity of direction. Having done all this work, it is now necessary to fill different positions in the organization structure with the personnel, whose concerted effort with help in doing the job of each such group. Thus people are recruited according to their skills and experience and are engaged in matching jobs in these positions. There may be a requirement for training for these people to get the best of them.


Coordination integrates all the individuals and departments of the organization and helps in the achievement of organizational objectives. We have learnt that an organization should have grouped activities and people working in various positions should have a concerted effort to achieve the objectives. But there also exist relationships among the people working in different groups so far as organizational effectiveness is concerned.


A report is a spoken or written account of something which converts information about an event or situation. Once the organizational structure is set, the people working there are given matching positions, and there exists a coordinated effort among the people for achieving a common goal. It has now become very important to decide which person in a particular position will report to whom?


Budgeting is the formulation of plans for a given future period in numerical terms. As such, budgets are statements of anticipated results – in financial terms or non-financial terms. Budgeting in financial terms may involve a capital budget, revenue budget, expenditure budget, projected profit and loss account, etc. Budget in non-financial terms may involve direct-labour hours, the quantity of material, physical sales volume or the number of units to be produced.