Henri Fayol (1841-1925) who is known as the Father of Modern Management, was a French industrialist who developed a framework for studying management. He wrote “General and Industrial Management”. His five functions of managers were plan, organize, command, coordinate, and control.
Classification of Business Activities
According to Fayol, all activities could be classified into
- Technical (manufacturing or production)
- Commercial (buying, selling and exchange)
- Financial (search for and optimum use of capital)
- Security (protection of property and persons)
- Accounting (including statistics) and
- Managerial
Henri Fayol’s Principles of Management
His fourteen principles of management included division of work, authority and responsibility, discipline, unity of command, unity of direction, and subordination of individual interests to general interests, remuneration of personnel, centralization, scalar chain, order, equity, and stability of tenure of personnel, initiative, and esprit de corps (union is strength).
1. Division of Work
- The work of every person in the organization should be limited as far as possible to the performance of a single leading function.
- This means that a worker is given only a small element of work to do in which he becomes the specialist.
- Specialization leads to better efficiency and maximum output.
- This is applicable for all kinds of work, technical as well as managerial.
2. Authority & Responsibility
- Authority is the right to command to get the work done and responsibility is the accountability of authority so that the official authority is not misused.
- Responsibility goes with authority.
- The two are co-extensive, as responsibility is a natural consequence and a corollary of authority.
- Wherever authority is exercised, responsibility arises.
3. Discipline
- It implies respect for agreements (rules and regulations) designed to secure obedience.
- It must prevail throughout an organization to ensure its smooth functioning.
- Discipline ensures fair and clear agreements, good supervision and judicious application of penalties.
4. Unity of Command
- Every employee must receive orders and be accountable to only one superior.
- It is necessary to avoid conflicting orders and to ensure order and stability in the organization.
- Under the concept of Unity of Command the employee will always report to his immediate superior in the hierarchical ladder who alone will communicate orders, instructions and guidelines to him.
- The organization following this concept can secure the maximum contribution from each employee.
5. Unity of Direction
- There should be one head and one plan for a group of activities having the same objective.
- This is essential to ensure unity and coordination in the enterprise.
- Unity of command does not exist without unity of direction but not necessarily flow from it.
6. Subordination of Individual to General Interests
- The interest of one employee or group of employee should not prevail over that of the entire organization.
- Efforts should be made to reconcile individual interests with common interests.
- Where there is a conflict between the two, the interests of the organization should prevail over individual interests.
- This requires continuous and exemplary supervision and fair agreements
7. Remuneration
- The amount of remuneration and the methods of payment should be just and fair and should provide maximum possible satisfaction to both employee and employers.
- Remuneration, reward or compensation package all means the same.
- Compensation paid should be fair and adequate.
- Reward offered in the first instance should attract talented individuals to the organization and in the next phase it should serve to retain them in service over a period of time.
- Reward should be linked to productivity and performance.
8. Centralization
- Powers and authority are delegated and many routine functions can be decentralized. However responsibility and control will still remain centralized.
- This needs regular review, monitoring and calling for reports, to verify authority/powers delegated are properly utilized for the benefit of the organization and all safeguards are followed.
9. Scalar Chain
- Scalar chain refers to the number of levels in the hierarchy from the ultimate authority to the lowest level in the organization.
- It should not over-stretched and consist of too-many levels.
10. Order
- Order conveys that there should be a place of everything and everything should be at its place.
- This applies not only to arrangement of materials and stores, but also to placement of personnel.
11. Equity
- Equity implies that the employee should be treated with justice and kindness.
- Managers should be impartial in their dealings with subordinates.
- Equity helps to create cordial relations between management and workers which is essential for the successful functioning of any enterprise.
12. Stability of Tenure of Personnel
- Employees work better if job security and career progress is assured to them.
- Employee turn over should be reduced and long term commitment should be encouraged.
- Insecure tenure and high rate of employee turnover will affect the organization adversely.
13. Initiative
- Employees at all levels should be given the opportunity to take initiative and exercise judgment in the formulation and execution of plans.
- Initiative refers to freedom to think for one self and use discretion in doing work. It develops employee’s interest in the jobs and provides them job satisfaction.
14. Esprit De Corps
- This refers to harmony and mutual understanding among the members of the organization.
- Management should not follow the policy of ‘divide and rule’ and people should be made to work in teams
- Rather it should strive to maintain team spirit and cooperation among employees so that they can work together as a team for the accomplishment of common objectives.
- Unity among the personnel can be developed through proper communication and co-ordination.
Universality of Principles of Management
Fayol stated that managerial functions and principles are applicable to all types of organization. Management theory could be applicable to all types of culture and has universal validity since management practices differ based on socio-economic environment and culture.
Managerial Qualities and Training
Fayol identified the following skills that persons desirous of entering into management career.
- Physical (health, vigor and address)
- Mental (ability to understand and learn judgment and adaptability)
- Moral (energy, firmness, initiative, loyalty, tact and dignity)
- General education (general social contact with matters not belonging to the functions performed)
- Special knowledge (peculiar to the function being performed)
- Experience (knowledge arising from work proper)
Criticism against Fayol’s Contribution to Management
- His contribution is said to be too formal
- He did not pay adequate attention to workers
- He did not elaborately discuss about universal applicability