Name the principle requiring good superiors at all levels, clear and fair agreements and judicious application of penalties.

Discipline

The correct answer is option (1) : Discipline

The principle requiring good superiors at all levels, clear and fair agreements, and judicious application of penalties is Discipline.

Discipline is the obedience to organisational rules and employment agreement which are necessary for the working of the organisation. According to Fayol, discipline requires good superiors at all levels, clear and fair agreements and judicious application of penalties. Suppose management and labour union have entered into an agreement whereby workers have agreed to put in extra hours without any additional payment to revive the company out of loss. In return the management has promised to increase wages of the workers when this mission is accomplished. Here discipline when applied would mean that the workers and management both honour their commitments without any prejudice towards one another.