Henri Fayol's Management Theory

Henri Fayol (1841-1925)

Henri Fayol, born in Istanbul in 1841 and died in Paris in 1925, was a French management theorist.
A mining engineer and director of mines, he remained relatively unknown outside France until Constance Storrs translated his 1916 work, "Administration Industrielle et Generale," in the late 1940s.
Fayol began his career as a mining engineer, then moved to research geology. In 1888, he joined Comambault as Director, turning the struggling operation around.

Fayol's Contribution to Management Theory

Upon retirement, Fayol published his comprehensive theory of administration, which described and classified administrative management roles and processes.
His work gained recognition and was referenced by others in the growing discourse on management.
He is considered a key early contributor to the classical or administrative management school of thought, although he himself would not have recognized such a "school."

Fayol's Principles of Management

Fayol developed a theory of management asserting that managerial excellence is a technical ability that can be acquired.
His universally accepted theories and principles of management have made him a universalistic figure.
He pioneered formal education in management.
Fayol's principles of management are applicable to modern management.
In 1916, Henry Fayol, a French industrialist, first offered fourteen principles of management.
During the period of 1920-40 in the U.S., many authors worked hard in developing and testing various principles of management.

The 14 Principles of Management

Fayol's Principles of Management

1. Specialization of Labour (Division of Work)

Specializing encourages continuous improvement in skills and the development of improvements in methods.

2. Authority

The right to give orders and the power to exact obedience.

3. Discipline

No slacking or bending of rules; workers should be obedient and respectful of the organization.

4. Unity of Command

Each employee should have one and only one boss.

5. Unity of Direction

A single mind generates a single plan, and all play their part in that plan.

6. Subordination of Individual Interests

When at work, only work-related matters should be pursued or thought about.

7. Remuneration

Employees should receive fair payment for services, not what the company can get away with.

8. Centralization

Consolidation of management functions; decisions are made from the top.

9. Chain of Superiors (Line of Authority)

A formal chain of command runs from top to bottom of the organization, like in the military.

10. Order

All materials and personnel have a prescribed place and must remain there.

11. Equity

Equality of treatment (but not necessarily identical treatment).

12. Personnel Tenure

Limited turnover of personnel; lifetime employment for good workers.

13. Initiative

Thinking out a plan and doing what it takes to make it happen.

14. Esprit de Corps

Harmony and cohesion among personnel; it's a great source of strength in the organization.
Fayol stated that for promoting esprit de corps, the principle of unity of command should be observed, and the dangers of divide and rule and the abuse of written communication should be avoided.

Elaboration on Key Principles

Division of Work

According to Henry Fayol, under division of work:
- "The worker always on the same post, the manager always concerned with the same matters, acquire an ability, sureness and accuracy which increases their output."
Division of work means specialization.
According to this principle, a person is not capable of doing all types of work; each job should be assigned to the specialist in that job.
Division of work promotes efficiency because it permits an organizational member to work in a limited area, reducing the scope of his responsibility.
Fayol wanted the division of work not only at factory but also at higher managerial levels.

Authority and Responsibility

Authority and responsibility go together or are co-existing.
Both authority and responsibility are two sides of the same coin.
If someone is made responsible for a job, they should also have the concerned authority.
An efficient manager makes the best possible use of his authority and does not escape from the responsibility.
When the authority is exercised, the responsibility is automatically engaged.

Discipline

According to Henry Fayol, discipline means sincerity about the work and enterprise, carrying out orders and instructions of superiors, and having faith in the policies and programs of the business enterprise.
Discipline is understood in terms of obedience, application, energy, and respect to superiors.
Fayol does not advocate warning, fines, suspension, and dismissals of workers for maintaining discipline, as these punishments are rarely awarded.
A well-disciplined working force is essential for improving quality.

Unity of Command

A subordinate should take orders from only one boss and should be responsible and accountable to him.
If the unity of command is violated, authority is undermined, discipline is endangered, order is disturbed, and stability is threatened.
Violation of this principle will face some serious consequences.
The principle of unity of command provides the enterprise with disciplined, stable, and orderly existence.
It creates harmonious relationships between officers and subordinates and a congenial atmosphere of work.
It is one of the important principles of sound organization.

Unity of Direction

Fayol advocates "One head and one plan," which means that group efforts on a particular plan should be led and directed by a single person.
This enables effective coordination of individual efforts and energy.
This fulfills the principles of unity of command and brings uniformity in the work of the same nature.
The principle of direction creates dedication to purpose and loyalty.
It emphasizes the attainment of a common goal under one head.

Subordination of Individual Interests to General Interests

The interest of the business enterprise ought to come before the interests of the individual workers.
Employees should surrender their personal interests to the general interest of the enterprise.
Sometimes employees, due to ignorance, selfishness, laziness, carelessness, and emotional pleasure, overlook the interest of the organization.
This attitude proves to be very harmful to the enterprise.

Fair Remuneration to Employees

According to Fayol, wage rates and methods of payment should be fair, proper, and satisfactory.
Both employees and employers should agree to it.
Logical and appropriate wage rates and methods of payment reduce tension and differences between workers and management, create harmonious relationships, and a pleasing atmosphere of work.
Fayol recommends that residential facilities be provided, including arrangements for electricity, water, and facilities.

Centralization and Decentralization

There should be one central point in the organization that exercises overall direction and control of all parts.
The degree of centralization of authority should vary according to the needs of the situation.
Fayol suggests there should be centralization in small units and proper decentralization in big organizations.
Fayol does not favor either centralization or decentralization of authorities but suggests there should be proper and effective adjustment between them to achieve maximum objectives of the business.
The choice between centralization and decentralization should be made after taking into consideration the nature of work and the abilities of the personnel.

Scalar Chain

The scalar chain is a chain of supervisors from the highest to the lowest rank, and communication should follow this chain.
An employee should feel the necessity to contact his superior through the scalar chain.
Authority and responsibility are communicated through this scalar chain.
Fayol defines scalar chain as "the chain of superiors ranging from the ultimate authority to the lowest rank."
The flow of information between management and workers is a must.
Business opportunities must be acted upon immediately so direct contact with the concerned employee is sometime needed.
Business problems need immediate solution, so we cannot always depend on the established scalar chain. It is through direct contact.

Order

According to Fayol, there should be proper, systematic, and orderly arrangement of physical and social factors, such as land, raw materials, tools and equipments, and employees, respectively.
There should be a safe, appropriate, and specific place for every article, and every place should be used effectively for a particular activity and commodity.
Every piece of land and every article should be used properly, economically, and in the best possible way.
Selection and appointment of the most suitable person to every job.
There should be a specific place for everyone, and everyone should have a specific place.
This principle implies scientific location and arrangement.

Equity

The principle of equality should be followed and applicable at every level of management.
There should not be any discrimination regarding caste, sex, and religion.
Effective management always accords sympathetic and human treatment.
The management should be kind, honest, and impartial with the employees.
Kindness and justice should be exercised by management in dealing with their subordinates.
This will create loyalty and devotion among the employees.
Workers should be treated at par at every level.

Stability of Tenure of Personnel

The principle of stability is linked with long tenure of personnel in the organization.
Production is teamwork, and efficient management always builds a team of good workers.
If the members of the team keep changing, the entire process of production will be disturbed.
It is always in the interest of the enterprise that its trusted, experienced, and trained employees do not leave the organization.
Stability of job creates a sense of belonging among workers, who with this feeling are encouraged to improve the quality and quantity of work.

Initiative

Under this principle, successful management provides an opportunity to its employees to suggest their new ideas, experiences, and more convenient methods of work.
The employees who have been working on the specific job for a long time discover new and better alternative approaches and techniques of work.
It will be more useful if initiative to do so is provided to employees.
To ensure success, plans should be well formulated before they are implemented.

Esprit de Corps (Spirit of Co-operation)

To achieve the best possible results, individual and group efforts are to be effectively integrated and coordinated.
Production is teamwork, for which the whole-hearted support and co-operation of the members at all levels is required.
Everyone should sacrifice his personal interest and contribute his best energies to achieve the best results.
This refers to the spirit of loyalty and faithfulness on the part of the members of the group, which can be achieved by strong motivation, recognition, and importance of the members for their valuable contribution, effective coordination, and informal mutual social relationship between members of the group.