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14 Principles of Management described by Henri Fayol.

1. Division of Labor
a. Henry Fayol has stressed on the specialization of jobs.
b. He recommended that work of all kinds must be divided & subdivided and allotted
to various persons according to their expertise in a particular area.
c. Subdivision of work makes it simpler and results in efficiency.
d. It also helps the individual in acquiring speed, accuracy in his performance.
e. Specialization leads to efficiency & economy in spheres of business.
2. Party of Authority & Responsibility

a. Authority & responsibility are co-existing.
b. If authority is given to a person, he should also be made responsible.
c. In a same way, if anyone is made responsible for any job, he should also have
concerned authority.
d. Authority refers to the right of superiors to get exactness from their sub-ordinates
whereas responsibility means obligation for the performance of the job assigned.
e. There should be a balance between the two i.e. they must go hand in hand.
f. Authority without responsibility leads to irresponsible behavior whereas
responsibility without authority makes the person ineffective.
3. Principle of One Boss

a. A sub-ordinate should receive orders and be accountable to one and only one
boss at a time.
b. In other words, a sub-ordinate should not receive instructions from more than one
person because -

- It undermines authority
- Weakens discipline
- Divides loyalty
- Creates confusion
- Delays and chaos
- Escaping responsibilities
- Duplication of work
- Overlapping of efforts

c. Therefore, dual sub-ordination should be avoided unless and until it is absolutely
d. Unity of command provides the enterprise a disciplined, stable & orderly existence.
e. It creates harmonious relationship between superiors and sub-ordinates.
4. Unity of Direction

a. Fayol advocates one head one plan which means that there should be one plan
for a group of activities having similar objectives.
b. Related activities should be grouped together. There should be one plan of action
for them and they should be under the charge of a particular manager.
c. According to this principle, efforts of all the members of the organization should be
directed towards common goal.
d. Without unity of direction, unity of action cannot be achieved.
e. In fact, unity of command is not possible without unity of direction.

Necessity It is necessary for fixing responsibility of It is necessary for sound organization. Social order. objectives. Advantage It It avoids duplication of efforts and avoids conflicts. d.Selection and appointment of most suitable person on the suitable job. f. 5. wastage of resources.Basis Unity of command Unity of direction Meaning It implies that a sub-ordinate should It means one head. c. enterprise. unity of direction is a pre-requisite for unity of command. They should give similar treatment to people of similar position. appropriate and specific place for every article and every place to be effectively used for specific activity and commodity. sex. Material order. caste. They should not discriminate with respect to age. h. b. Order a. kindness & justice. Result It leads to better superior sub-ordinate It leads to smooth running of the relationship. each subordinates. Arrangement of things is called material order and placement of people is called social order. Equity a. Fayol was of opinion that. 6. Equity is essential to create and maintain cordial relations between the managers and sub-ordinate. This principle is concerned with proper & systematic arrangement of things and people.e. religion. Therefore it is obvious that they are different from each other but they are dependent on each other i. . The employees should be treated with kindness & equity if devotion is expected of them. Nature It is related to the functioning of It is related to the functioning of personnel’s. relation etc. Equity means combination of fairness. c. confusion & chaos. “at times force and harshness might become necessary for the sake of equity”. b.There should be safe. It implies that managers should be fair and impartial while dealing with the subordinates. d. g. or organization as a whole. departments. But equity does not mean total absence of harshness. But it does not automatically come from the unity of direction. There should be a specific place for every one and everyone should have a specific place so that they can easily be contacted whenever need arises. one plan for a receive orders & instructions from only group of activities having similar one boss. e.

As a result. Logical & appropriate wage rates and methods of their payment reduce tension & differences between workers & management creates harmonious relationship and pleasing atmosphere of work. c. As far as possible it should accord satisfaction to both employer and the employees. “Discipline means sincerity. financial position of the business. reasonable. f. work assigned. respect of authority & observance of rules and regulations of the enterprise”. d. b. d.There are good superiors at all levels. satisfactory & rewarding of the efforts. . g. People then enjoy working in the organization because it adds to their zeal and energy. Wages should be determined on the basis of cost of living. Discipline is not only required on path of subordinates but also on the part of management.There are clear & fair agreements with workers. e. 8. It helps in developing an atmosphere of trust and understanding. effort and money spent on training the worker will go waste. According to Fayol.Sanctions (punishments) are judiciously applied. d. Fayol emphasized that employees should not be moved frequently from one job position to another i. Discipline a. “Time is required for an employee to get used to a new work & succeed to doing it well but if he is removed before that he will not be able to render worthwhile services”. 11. It means eagerness to initiate actions without being asked to do so.e. b. c. Workers should be encouraged to take initiative in the work assigned to them. Discipline can be enforced if - . Stability of job creates team spirit and a sense of belongingness among workers which ultimately increase the quality as well as quantity of work. c. Initiative a. To suggest improvement in formulation & implementation of place. Stability of Tenure a. wage rate prevailing etc. 10. experiences& new method of work. medical & residential facilities to workers. Scalar Chain . 9. e. This principle applies that subordinate should respect their superiors and obey their order. According to Fayol. Therefore employees should be appointed after keeping in view principles of recruitment & selection but once they are appointed their services should be served. c. Fair Remuneration a. e. They can be encouraged with the help of monetary & non-monetary incentives. . the period of service in a job should be fixed. the time. e. obedience. b. d. The quantum and method of remuneration to be paid to the workers should be fair. It is an important requisite for smooth running of the enterprise. Fayol also recommended provision of other benefits such as free education. Fayol advised that management should provide opportunity to its employees to suggest ideas.7. b.

Sub-Ordination of Individual Interest to General Interest a. Fayol cautioned the managers against dividing the employees into competing groups because it might damage the moral of the workers and interest of the undertaking in the long run. d. . instructions. explanation etc. it may not be worth therefore a gang plank has been developed between the two. c. b. c. An organization is much bigger than the individual it constitutes therefore interest of the undertaking should prevail in all circumstances. b. But in case of conflict. But. It refers to team spirit i. They can be moulded and modified as per the requirements of situations 12. for change of profit sharing ratio. The managers . d.e.  Subordinates should be made conscious of that whatever they are doing is of great importance to the business & society. Gang Plank clarifies that management principles are not rigid rather they are very flexible. 13. Every orders. A Gang Plank is a temporary arrangement between two different points to facilitate quick & easy communication as explained below: In the figure given. . harmony in the work groups and mutual understanding among the members. Spirit De’ Corps inspires workers to work harder. if D has to communicate with G he will first send the communication upwards with the help of C. He also cautioned against the more use of Britain communication to the subordinates i. reconciliation should be achieved between individual and group interests.e. for the sake of convenience & urgency. To inculcate Espirit De’ Corps following steps should be undertaken -  There should be proper co-ordination of work at all levels  Subordinates should be encouraged to develop informal relations among themselves.Reconciliation of mutual differences and clashes by mutual agreement. requests.Proper & regular supervision of work. c.  Efficient employees should be rewarded and those who are not up to the mark should be given a chance to improve their performance. For example.  Efforts should be made to create enthusiasm and keenness among subordinates so that they can work to the maximum ability. for change of location of plant. individual must sacrifice for bigger interests. d. it is essential that - . B to A and then downwards with the help of E and F to G which will take quite some time and by that time. has to pass through Scalar chain. In order to achieve this attitude. As far as possible. a. this path can be cut shirt and this short cut is known as Gang Plank. e. b. e. messages. etc.Employees should be honest & sincere. face to face communication should be developed. Espirit De’ Corps (can be achieved through unity of command) a. Fayol defines scalar chain as ’The chain of superiors ranging from the ultimate authority to the lowest”.

DISCIPLINE: A successful organization requires the common effort of workers. CENTRALIZATION: Fayol defined centralization as lowering the importance of the subordinate role. According to Fayol. general business conditions. 2. should infuse team spirit & belongingness. 6. dependability & ability of subordinates etc. Fayol suggested that absolute centralization or decentralization is not feasible. REMUNERATION: Many variables. centralization is a situation in which top management retains most of the decision making authority. 3. 8. supply of qualified personnel. AUTHORITY: The concepts of Authority and responsibility are closely related. Fayol presented work specialization as the best way to use the human resources of the organization. An organization should strike to achieve a lot between the two. Anything which increases the role of subordinate is decentralization & anything which decreases it is centralization. Centralization & De-Centralization a. Penalties should be applied judiciously to encourage this common effort. 5. Decentralization means disposal of decision making authority to all the levels of the organization. In other words. Authority was defined by Fayol as the right to give orders and the power to exact obedience. should be considered in determining a worker’s rate of pay. and success of the business. 7. DIVISION OF WORK: Work should be divided among individuals and groups to ensure that effort and attention are focused on special portions of the task. e. experience of superiors. The degree to which centralization or decentralization should be adopted depends on the specific organization in which the manager is working. Responsibility involves being accountable. In other words. UNITY OF DIRECTION: The entire organization should be moving towards a common objective in a common direction. 4. UNITY OF COMMAND: Workers should receive orders from only one manager. “Degree of centralization or decentralization depends on no. such as cost of living. Decentralization is increasing the importance. There should be no place for misunderstanding. Centralization means concentration of authority at the top level. of factors like size of business. Whoever assumes authority also assumes responsibility. c. PRINCIPLES OF MANAGEMENT: 1. d. People then enjoy working in the organization & offer their best towards the organization. . and is therefore naturally associated with authority. b. SUBORDINATION OF INDIVIDUAL INTERESTS TO THE GENERAL INTERESTS : The interests of one person should not take priority over the interests of the organization as a whole. 14. sharing authority downwards is decentralization.

who acted as a catalyst in the development of division of work .revolutionizing many industries. STABILITY OF TENURE OF PERSONNEL: Retaining productive employees should always be a high priority of management. Additionally. 10. which is defined as new or additional work activity undertaken through self direction. another would assemble the wheels. INITIATIVE: Management should take steps to encourage worker initiative. where Taylor’s system of a scientific approach was applied. hence productivity has risen 50 fold since the time of Frederick Taylor. An example of this fact can come from early industrialization. 12. Fayol describes. 11. Drucker informs us. Lower level managers should always keep upper level managers informed of their work activities. productivity can suffer when workers become bored with the constant repetition of a task. Taylor was interested in skill development by means of standardization and functional specialization . However. 9. from the first line supervisor to the president. allowing for the largest increases of productivity. possess certain amounts of authority. Each manager. The effects of this are well known and lead to Ford becoming not just the predominant car maker but also the inventor of the conveyer-belt production system. ESPIRIT DE CORPS: Management should encourage harmony and general good feelings among employees. The existence of a scalar chain and adherence to it are necessary if the organization is to be successful. as well as increased product-reject rates are usually associated with hiring new workers. all materials and people related to a specific kind of work should be treated as equally as possible. “The object of division of work is to produce more and better work with the same effort”. In a sense this principle is the fundamental feature of modern economy. This very objective has not been altered in today’s labor. For example. namely the Ford motor company . EQUITY: All employees should be treated as equally as possible. in 1776 probably goes back to the beginning of work itself. Peter F. Fayol recognizes this in considering specialization as part of “the natural order” comparing it to the organs of the body . Several reasons as causes for reduction in productivity can be thought of. ORDER: For the sake of efficiency and coordination. SCALAR CHAIN: Managers in hierarchies are part of a chain like authority scale. . one could argue that extremes of division of work could lead to undesired effects. Recruitment and Selection Costs. 13. productivity can be affected when workers lose pride in their work because they are not producing an entire product they can identify as their own work. or as Adam Smith called it “division of labour”. the first line supervisor the least. One worker would assemble the dashboard. and yet another would paint the exterior. that the 20th century has seen a rate of 3% productivity increase per year. Management theoretician Henri Fayol’s 14 principles discussed Principle 1: Division of work The idea of division of work. Division of labor can ultimately reduce productivity and increase costs to produce units. The President possesses the most authority. 14.

but rather as something that “depends essentially on the worthiness of its leaders”. Principle 3: Discipline Discipline Fayol understood as obedience and outward marks of respect between the firm and its employees .Principle 2: Authority and Responsibility Fayol defines authority as the “right to give orders”. and hence division of work is a natural state. Fayol has a somewhat more behavioral approach to the problem of discipline than for instance Taylor. “no enterprise could prosper”.g. can be counter-acted by applying various techniques. Fayol himself apparently has not merely preached high morals but lived them too. Fayol argues. In this respect. He for example purchased no shares in Commentry-Fourchambault. when in the position of a CEO . . one notices a discrepancy between today’s leadership moral and Fayol’s demands. but he emphasizes that responsibility arises with it . other than.e. the agreement between workers to low standards of work in order to protect their own interests) as something one can recognize as a lack of discipline . he explains can lead to a paralysis and must be counter-acted by personal integrity and a “particularly high moral character”. responsibilities and authorities are not clearly defined. with their perceived “worthiness” .” Fayol thinks of responsibility as something that is “feared as much as authority is sought after”. in other words on the respect employees have for their leader. but can occur coincidently. he says. When looking at these standards. Fayol emphasizes discipline not merely as something the employee owes the management. for instance if departments are not clearly demarcated. (i. He “demands high moral character. one could make the point that a single leader is an evolutionary requirement. family etc) lead to someone assuming authority that was not originally associated with this individual. These qualities may be rewarded monetarily. so called dominance hierarchies . Respect for a leader increases with the leader possessing the appropriate qualifications for the position. where he served. or relationship dynamics (e. Simple speaking: social groups of animals often are organized in a way that resembles the hierarchy of companies. amongst friends.e. Similar to Fayol’s argument that specialization. This lack of discipline. Principle 4: Unity of Command This rule requires that an “employee should receive orders from one superior only” . This fear. impartiality and firmness. This is especially true in primates. in order to avoid a dependence on the board. so he could subordinate his interests to the common good . Dual command must not necessarily derive from an intentional organizational design. what he calls “heartily cooperation”. none of which clearly addresses the interaction between worker and manager. In the light of current developments in regards to the financial crisis of the year 2009 and onwards. who points to “soldiering”. Fayol arguably should be followed as a leading example. i. Interestingly. Taylor suggests. He continues in describing the reasons for defects in employee and management relationships by stating: “the ill mostly results from the ineptitude of the leaders” . “Without it”. He considered it as an absolute prerequisite in order to assure a smooth running of the business.

or. Hence unity of command is a principle we find applied in the military just as much as in rather modern and alternatively run companies like Google Inc. He emphasizes that there should be no overpayment “beyond reasonable limits”. a decision maker. However.e. with which we search to establish such hierarchical structures. One can only speculate how Fayol would think about the bonus practice of banks today. job rates. in his time bonuses and profit-sharing were still rather new concepts. that with the demand for subordination of individual interest to general interest Fayol included another principle in his catalogue that has not lost its validity today. he believed in granting benefits to workers . that personal interests and company interests must be reconciled. We see. i. The struggle of interest can be exemplified by the worker rights movements and unions. Most interestingly he also mentions the aforementioned bonuses and profit sharing. In fact. That means first one must know where to take the company and subsequently constantly assure that the plan is still on track. this point is naturally closely connected to the unity of command principle. Generally speaking however. the corporation. Interestingly. laziness and others. is imbedded into our brains due to our evolution. Principle 6: Subordination of individual interest to general interest Fayol points out. Principle 5: Unity of Direction Fayol summarizes this principle with the words: “one head and one plan for a group” . which cloud the vision for the company’s interests . which is run by three CEOs (Sergey.. pointing out. like selfishness. Hence. the companies’ interests must be put ahead of personal interests . Fayol was not at all opposed to such organizations as unions.Some argue that our ability as well as our proneness to hierarchies with a clear leadership and the connected aggression. Google claims to have flat hierarchies and maintain a small-business feel . and piece rates . time rates. there still must be a leader. His attitude is summarized in his words: “We have such control over this ship [the GM corporation] that we know exactly where we are at all times” .g. Fayol suggests “constant supervision” as one measure to restrict unwanted egoistic effects. that a salary entirely depending on profit-sharing would lead to a loss of salary under certain circumstances. Eric and Larry) . e. . Fayol mentions several still used strategies. one who carries the largest responsibility. Fayol did not mean to suppress workers interests but rather that every worker must compromise with the interests of the collective. This indicates. as in the case of Google. Or as Fayol said: “Unity of direction is provided for by sound organization of the body corporate…” . As Fayol explains himself. The success story of GM under Sloan exemplifies the validity of this principle. Sloan introduced a wide variety of metrics in order to measure the performance of departments and the firms that were part of the GM concern. And he wonders what would happen with bonuses in lean times. a team of leaders. Principle 7: Remuneration of Personnel In discussing how to apply fair modes of payment. Again Sloan and GM can serve as an example.

A revealing example mentioned by Hammer is that of Johnson & Johnson. It has been argued that with ever increasing size of globally acting companies the scalar chain is increasing in length. Many organizations attempt to place decision-making authority in the organizational structure with those who can most effectively and efficiently respond to environmental demands. However.Revisiting the banks’ situation of today we see how Fayol’s thoughts on remuneration are largely ignored in regards to the example of the hotly debated banker-bonuses. he describes salary policies as important in maintenance of “relative social quiet”. . This concept can be exemplified by Michael Hammer’s approach who goes so far as to claim that “the key structural issue is no longer centralization versus decentralization. At the same time the sales and manufacturing processes are dealt with decentralized in order to enable decisions to be taken tailored to the specific circumstances and products. and Fayol’s suggestion is thereby proven to be a relevant principle also today. different solutions must be found. the scalar chain principle is still very much’s process standardization versus process diversity” . In today’s corporate world IT has contributed to an easier approach to centralization. However. Principle 8: Centralization Centralization is understood by Fayol as the necessity to have control over processes in a central place. thus increasing the cost of coordination . Possibly larger firms. With the changing environment. At the same time has the fact that large corporations act globally led to adjustments that can best be performed locally. Additionally. Principle 9: Scalar Chain In many organizations. as he calls it . He suggests that the degree of centralization must fit the design and size of the corporation . some adopt structures that emphasize flexibility and quick response to change (as discussed with Google above). In other words. some have argued that modern management demands new approaches. in a traditional administrative approach the examples mentioned by Hammer exemplify the dichotomy modern management is facing. whose remuneration practice is perceived as socially unsustainable and hence immoral. For different business aspects. globally operating companies find themselves exposed to in the twenty-first century. Fayol’s flexible approach regarding centralization is absolutely of relevance for today’s businesses. with longer chains of command do better with more centralization and vice versa. Fayol is flexible on the concept of centralization though. a company must be able to do both. This attitude echoes like a warning for today’s management leaders. and compares this concept with the brain where centrally control is exhibited over the body. This reminds of Michael Hammer’s theory of the process enterprise . The company standardized (centralized the process aspect in other words) R&D activities and manages these efforts as a single research portfolio. Concluding.

that case managers. A modern example can be found in two personal examples. which is being “reconciled with the need for swift action”. He repeatedly emphasizes the usage of modern IT in order to simplify. which are designed to maintain or achieve order. contact managers and their subordinates have. In other words.Hammer states. When working as a chemical technician it was of crucial importance that both. Hence. But if we take a closer look. The ISO certifications. may improve or harm the effectiveness of the direct report relationships in the chain of command . The international organization for standardization (ISO) is one modern example of how today’s management attempts to achieve order. we see that this new approach also demands a close communication base. it is still compulsory for companies to have a clearly defined hierarchy of communication that incorporates a “respect for the line of authority”. which are designed to test a companies’ compliance with the ISO principles. This would undermine the authority and position of the manager who is bypassed. If this would be allowed. are a fixed part of literally every business undertaking there is. namely. occurs when a subordinate bypasses a manager in either the communication of information or the making of a decision. In this specific case it was also necessary in order to avoid wrong decision taking that could have had physical consequences in a dangerous work environment. in order to achieve the maximum possible outcome of the employee’s applied skills. a reduction of productivity. Principle 10: Order In discussing. the modern answer to Fayol’s problem to find the “right man” is a specialized department that addresses this aspect of social order. with heightened autonomy would lead to a more productive work process. He also points to social order and the risks attached to a lack thereof. the material order is being addressed by a range of strategies. in order to assure a smooth production process. unify and increase efficiency of processes. he states. Furthermore. as Fayol himself put it . . The control of order is a paramount interest in Fayol’s opinion. For social order he demands “the right man in the right place”. Fayol points to lost time and an increase of mistakes as a main disadvantage of disorder . The principle of order that Fayol mentioned is thereby taken very seriously in today’s business world. morale of the managers would decline. discussions and meetings. Ultimately. The ISO has developed guidelines that intent to help management to achieve order and the correlated high level of quality of leadership. but he warns that “real order” does not simply mean that things have the appearance of order. information and orders were passed along a well defined chain of command. Modern corollaries of how this principle can be applied can be found in the fact that every larger company today has a human resources department that to the largest part deals with the question of how to find the right employees . As Justin Longnecker puts it. as Fayol observes it. material order is a question of “quality management”. production and documentation . At first sight this may contradict Fayol’s principle. A problem associated with the scalar chain. what he calls material order. “Perfect order presupposes a judiciously chosen place and the appearance of order is merely a false or imperfect image of real order”.

for instance Chandrajit Banerjee. Germany.g. It also allows for a psychologically beneficial state of mind of the employees. In fact. this system is naturally not fool proof and private organizations attempt to draw attention to the victims of mistreatment. Clearly. e. however.Principle 11: Equity “Equity and equality of treatment are aspirations to be taken into account in dealing with employees”. employers may occasionally view this issue differently. Fayol says. Principle 12: Stability of Tenure of Personnel It is Fayol’s opinion that it is better to have a “mediocre manager who stays” than “outstanding mangers who merely come and go” . for instance the so-called ombudsman . hence certainly improving efficiency and the willingness to perform well for the corporation’s good. Maybe a way out of this dilemma and back to following Fayol’s principle can derive from an example Henry Chesbrough gave when discussing differences in culture between the USA and Japan . it is easy to find web-blogs with advice how to fire workers without ensuing lawsuit and some influential individuals. Fayol’s principle is being recognized by corporations and enhanced by the public opinion and most importantly the lawmakers . a section of the United Nations. Sweden and others. While the problem still persists. Fayol does not only apply this idea to management though. Apparently however. Principle 13: Initiative . However. today’s work environment is arguably more equipped to tackle this issue than previous generations of corporations. One example is an organization taking care of claims of victims of mobbing within the company Novartis . Internationally the International Labor Organization. One indication for this claim is to be found in the fact that most companies have appointed officials who deal with complaints of employees against the management. This is demonstrated by the fact that most countries have passed employee protection regulations when it comes to the reasons why people can be laid off. demands it to become easier to hire and fire in India . this standard is not easily achieved. he also points to negative effects of a lack of stability when it comes to employees. watches over various aspects of employment and also deals with unfair dismissals of employees . this rule of requirement has not sunken in generally. While this point might be debatable to some extend it is clear that stability contributes to better planning possibilities. While from an employee perspective the protection laws make sense. Several nations. head of the Confederation of the Indian Industry . intend to tackle the problem of unequal treatment by passing laws that intend to establish a juridical basis for people who fell victim of inequality.

This circumstantial evidence hints to a confirmation of Fayol’s assumption. While these projects are not necessarily connected to their immediate work tasks experience has shown. added to that of the manager…represents a great source of strength for businesses” .Fayol summarizes the need for employees to show initiative in the saying. Companies. in translation. Again modern IT companies can be utilized as living example of this principle. Fayol emphasizes the importance of meetings and personal communication over written communications. Principle 14: Esprit de Corps This principle unifies a number of demands that can best be summarized with Fayol’s own words: “Union is strength”. This policy implies that employees get a large part of their time to invest in projects of their choosing.e. One example is again Google and their policy of “20% time” . Some modernly run companies have come to find their special ways in order to ensure employee satisfaction. i. . A survey looking at approval ratings for CEOs and overall employee satisfaction shows companies like Apple and Google in top positions. to emphasize and nurture team spirit. that “the initiative of all. that they often built the basis for spin-off ideas that benefit the firm. He suggests to management to “inspire and maintain everyone’s initiative”. concomitantly their initiative. and. that companies who strive to become successful must strengthen team spirit. This principle deals with the personnel being united in their direction and in regards to the correlating efforts to achieve the set goals. which are famed. and Fayol warns managers against believing they could achieve their goals by the strategy “divide an rule”. in other words. to reveal team spirit. The importance of teamwork is mentioned.