Read the following text and answer the following question.

After completing her Bachelors in Fashion Designing from a well-known college in Germany, Ashima has opened a boutique in a posh market in Mumbai. She has divided the work in smaller units and each employee is well trained to perform his/her task efficiently. The sales persons are allowed to close a deal with a buyer by giving a maximum of 10 percent discount, whereas the decision to give any further discount rests with Ashima as the final authority. In the earlier period of her business venture, employees were asked to put in extra hours of work. In return she had promised to give them a special incentive within a year. Therefore, when the business was doing well, she honoured her commitment by giving bonus to her employees. She also instructed her employees that communication from top to bottom should follow the official lines of command. However, she tends to be more biased towards her female employees, when it comes to solve the conflicts among employees.

"The sales persons are allowed to close a deal with a buyer by giving a maximum of 10 percent discount, whereas the decision to give any further discount rests with Ashima as the final authority."

Identify the principle of Management being followed here.

Authority and responsibility

The correct answer is option 2- Authority and responsibility.

The principle of management being followed here is Authority and Responsibility. This principle states that authority and responsibility should be balanced. In this case, salespersons have the authority to offer a discount up to 10 percent to close a deal, but any additional discount beyond that is the responsibility of Ashima, who holds the final authority. This structure ensures that employees have the necessary authority to perform their tasks effectively while keeping ultimate decision-making centralized.

Authority & Responsibility- According to Fayol, “Authority is the right to give orders and obtain obedience, and responsibility is the corollary of authority. The two types of authority are official authority, which is the authority to command, and personal authority which is the authority of the individual manager.” Authority is both formal and informal. Managers require authority commensurate with their responsibility. There should be a balance between authority and responsibility. An organisation should build safeguards against abuse of managerial power. At the same time a manager should have necessary authority to carry out his responsibility. A manager should have the right to punish a subordinate for wilfully not obeying a legitimate order but only after sufficient opportunity has been given to a subordinate for presenting her/his case.

OTHER OPTIONS

• Order- According to Fayol, “People and materials must be in suitable places at appropriate time for maximum efficiency.” The principle of order states that ‘A place for everything (everyone) and everything (everyone) in its (her/his) place’. Essentially it means orderliness. If there is a fixed place for everything and it is present there, then there will be no hindrance in the activities of business/ factory. This will lead to increased productivity and efficiency.

• Unity of Command- According to Fayol there should be one and only one boss for every individual employee. If an employee gets orders from two superiors at the same time the principle of unity of command is violated. The principle of unity of command states that each participant in a formal organisation should receive orders from and be responsible to only one superior. Fayol gave a lot of importance to this principle. He felt that if this principle is violated “authority is undermined, discipline is in jeopardy, order disturbed and stability threatened”. The principle resembles military organisation. Dual subordination should be avoided. This is to prevent confusion regarding tasks to be done.

• Unity of Direction- All the units of an organisation should be moving towards the same objectives through coordinated and focussed efforts. Each group of activities having the same objective must have one head and one plan. This ensures unity of action and coordination.