Henri Fayol’s 14 principles of management – With examples and application

Henri fayol’s 14 principles of management are remembered even today for their simplicity and genius. The thing is, whenever you are
managing something or running a business, you cannot pinpoint what is going wrong.
The principles of management suggested 14 such steps which you can compare to your business, and find out where you are missing
out in proper implementation of the principles. This was especially useful in the times when computers and modern software were
not available. Today, there are so many time tracking devices as well as management techniques available, that you might think you
don’t need the 14 principles of management. But these principles are applicable in today’s work environment as well.
Here are the 14 principles of management by Henri fayol and how you can implement these 14 principles of management in your
organization.
1) Division of work
Applicable for firms which have many employees as well as few employees, the principle of division of work says, that the work should
be divided between all people who are capable of doing it and should not be overloaded to a concentrated few. It should not be
diluted by giving the same work to many people. This ensures proper utilization of labour and keeps them focused and productive.
In the long term, this same targeted division of work helps the labour in specializing in the work they are doing, thereby ensuring there
are far fewer mistakes. In a factory, the problem solver is always someone who has worked on the machinery for years on end. Here
is how you can apply this principle of management in your case
Above are some questions which can guide you in improving your organization’s management and labour division.

2) Authority
The power and responsibility to give orders should reside with only a few people and should not be diluted. One of the common errors
of large companies is that the management comprises of too many people, thereby creating conflicts. When a few hand selected
people have the power to vote, then this authority is carried down the chain and the process gets implemented.
With such authority comes responsibility. Imagine if you were the marketing head of a company, and you took a call with regards to
marketing a particular product, in the end if the product fails, you have to take ownership of the failure. You cannot pass the buck.
Thus, when the person takes responsibility, he also takes wise decisions. Hence, authority and responsibility go hand in hand and form
an important part of Henri fayol’s 14 principles of management.

3) Discipline
It goes without saying, that management is responsible for the way discipline is maintained in an organization. And this discipline
percolates down the line, to the end of the employee chain as well.
A best example will be ad agencies, who encourage informal meetings and conversations so as to build better relationships with the
customers. However, even these ad agencies are known to maintain discipline in the way the ad executive interacts with the customers
or the way they carry out their work. Discipline is a part of the mission and values of the organization itself.

4) Unity of command
When we discussed authority in the above point, we said that authority should lie with only certain people. Similarly, the authority
flows down the chain only when there are a limited number of people associated with the authoritative person. If all the people in a
political party were directly reporting to the prime minister, he will soon be admitted in the hospital due to stress.
So to maintain command, there is a hierarchy. One person should report only to one leader and not to 3-4 people. Hence the standard
hierarchy of national manager, regional manager, group manager, team leader is kept in most organizations. This ensures that at all
times, the managers and the executives know who they are reporting to, and they know their responsibilities as well as the
performance expected from them.

5) Unity of direction
Once unity of command is achieved and you have a complete hierarchy, where everyone knows who they are reporting to, and they
are ready to do the leaders bidding, then it is time to implement unity of direction.
It is like the famous saying “United we stand, divided we fall”.
The company, from the CEO level to the executive level should be moving towards one direction. If growth is the direction you are
moving to, then a single executive to the CEO of the company should be performing in a manner which brings growth for the company.
And this executive should be trained and managed accordingly by his managers.
This is one of the 14 principles of management applicable to all firms, irrespective of their size.
Unity of direction is important to give one vision to all the employees of your company
United we stand, divided we fall
6) Subordinate interests
To control people, you have to understand their interests first. And in the end, you have to ensure that the interest of the company
lies above the interest of the individual. Many a time, a person is removed from the company when he is moon lighting or doing his
own sideline jobs. This is because the company wants to ensure, that the person who is working in the company is giving his 100% to
the company.
The focus of the organization is on individuals who are giving their all to the company. The interests of the company should be placed
above the interests of the individual.

7) Remuneration
Now, naturally when you are expecting your employees to be disciplined, you want unity of direction and command, then you have
to remunerate the employees so that they are less likely to shift to the competition and more likely to concentrate on the jobs they
have in hand.
As per Henri fayol’s 14 principles of management, employees should be remunerated fairly to keep their motivation levels high. This
remuneration may be monetary or non monetary. The monetary compensation includes incentives, bonus or other financial
compensation. The non monetary compensation may include rewards or recognition.

8) Centralization
Centralization is the amount of control that is lying with people in an organization. If there are select group of people who have control
(for example – in large corporates), then this is known as centralization. On the other hand, if there are a higher percentage of people
in the organization having control (for example – in small businesses), then this is known as decentralization.
Organizations have to balance centralization and decentralization both. Most top companies have strategic business units which are
also a form of decentralization. These SBU’s are given their own decision making power. Similarly, most small businesses will share
authority in a decentralized manner to get the work done faster. However, it completely depends on the business and the sector in
question on whether to use centralization or not.

9) Scalar chain
Scalar chain is confusing for many people, but let me break it down simply for you. When mentioning the unity of command, i said
that one person should report to a single manager higher up the chain only. So an executive should report to a team manager, who
should report to the regional manager who will report to the national manager, so on and so forth.
Scalar chain says that there should be a clear line of authority in the company so that when you have to “Escalate things” then you
know the line of authority. When you are facing emergencies or calamities, you should know who to go to, if your immediate boss
doesn’t resolve your queries.
Popular companies like Samsung and others have the scalar chain set to a dot. In such companies, for customer service, if your
complaint is not resolved in 3 days, it goes to the local manager, if not resolve in 5 days, it goes to regional head, and if not resolved
in 7 days it goes to national heads. So this is how a scalar chain looks like. It looks like the wireframe of a company, with complete
architecture and hierarchy of the company shown in the wireframe.

10) Order
This order does not mean that someone sitting on top is ordering the people. It is the order of “Order vs chaos”. Simply said, if an
organization does not work in an orderly manner, there will be chaos. So to work in an orderly manner, employees need the right
equipment and the right procedure to ensure order is maintained at all times.
Hence, most large companies have specific ways that they calculate the attendance of their labour. Specific time is given when the
labour can go to lunch as per their work stations. Maintenance officers are placed for any problems in the equipment. Overall,
everything works in a well oiled, smooth and orderly manner. The maintenance of order is an important principle in Henri fayol’s 14
principles of management.

11) Equity
Everyone should be treated equally and no preference should be given in an organization. Many a times, the most common complaint
of employees is that a different employee was preferred over them for promotion or better remuneration.
However, a fair organization is the one which maintains equity amongst everyone. For this, having the right culture in the organization
is absolutely important. If the company is ethical, equity will automatically be maintained.
12) Stability of tenure
One of the critical things in Henri fayol’s 14 principles of management was stability of tenure, or attrition of employees. In essence,
Henri fayol said that an organization has a better chance to grow faster if its employees are stable. Naturally, if there is high attrition
in the organization, then there will be a lot of time wasted in training and development, costs will go up and stability of tenure will not
be observed.
If you look at most large companies, they take attrition and employee turnover very seriously. There are various procedures set to
ensure that employees do not leave the company, and even if they do, then the management should know why they are leaving.
Similarly, there are other tactics which can be employed such as job rotation to combat boredom, incentives to motivate aggression,
and various such tactics can be used to ensure stability of tenure.
Simply said, the more the stability of tenure, the more the profit
High attrition means a lot of cost towards training and development
If tenure is stable, means your employees are happy and the company will develop faster as you have trained employees handling the
work.

13) Initiative
It sounds too good when we think that a company has innovated and brought a new product to the market. But many a times, we
question, why companies are not regularly innovating. If you look at it, the most innovative companies are the ones which encourage
young and old talent to bring out their own ideas. They also show interest and involvement to encourage such professionals.
Google, Apple and Facebook are some of the companies who have implemented this principle amongst the 14 principles of
management soundly. At google, developers and engineers are given their own sweet time to work out innovative ways that can be
developed as products for google itself. Same goes for Facebook and apple as well. As the employees are encouraged to take initiative,
the innovation level of these companies is high.

14) Esprit de corps

Esprit de corp is defined as a feeling of pride and mutual loyalty shared by the members of a group. And that’s exactly what you have
to target for if you want to achieve success while applying the 14 principles of management.
Esprit de corps is the ultimate union of the management and employees within an organization, which leads to an organization which
is proud of what it does, and which has garnered a lot of loyalty from its employees and customers. There are very few companies
who have been able to manage that (Intel, apple, Amazon and few others). Esprit de corps in an organization gives true competitive
advantage to the organization because it means that the employees are enthusiastic, motivated and will do anything for the company
or the management.

Overall, these 14 principles of management are evergreen in nature, and no matter the way technology is catching up with us, these
14 principles of management will matter to even the smallest of organizations and will help them when they are growing large.

There are even simpler ways to track several of the things written in 14 principles of management. But the ultimate goal is to have an
organization which is efficiently managed, productive, and gives optimum results as per the goals of the organization.