Why principles matter

Why do management principles matter? They turn past experience into guidance.

• Useful insights into reality: managers learn from past mistakes and solve recurring problems quickly.
• Optimum use of resources and effective administration: no wasteful trial and error; and since principles limit managers' personal discretion, decisions are free from personal bias.
• Scientific decisions: based on logic and facts, not blind faith.
• Meeting a changing environment: for example, the old principle of division of work has grown into ideas like focusing on a firm's core competency and outsourcing the rest (BPO, KPO). Hindustan Lever sold off its chemicals and seeds businesses to focus on its core.
• Fulfilling social responsibility: principles now include fairness to society. BHEL built the Ranipur township for its workers; Lijjat Papad has made thousands of women self-reliant.
• Management training, education and research: principles are the base of management courses and tests, such as management aptitude tests.