Question 2 Answer

Henri Fayol is claimed to be the real father of modern management. He was a Frenchman born in
1841 and was working as an engineer with a mining company. He improved the condition of the
company from virtual bankruptcy to high success. From his practical experience, he developed
some techniques. He brought out some 14 basic management principles, which he felt, could be
used in all management situations, irrespective of the organizational framework
He wrote a book entitled, General and Industrial Management, in French that was later on
translated into English. It is now considered as one of the classics of management literature. The
book mainly covers the aspects of the immutable and repetitive character of the management
process and the concept that management can be taught in the classroom or the workplace. He
also laid down the principles of management, which he deemed important for any organization.

Henri Fayol’s 14 Principles of Management

1. Division of Work – When employees are specialized, output can increase because they
become increasingly skilled and efficient.

2. Authority – Managers must have the authority to give orders, but they must also keep in
mind that with authority comes responsibility.

3. Discipline – Discipline must be upheld in organizations, but methods for doing so can
vary.

4. Unity of Command – Employees should have only one direct supervisor.

5. Unity of Direction – Teams with the same objective should be working under the
direction of one manager, using one plan. This will ensure that action is properly
coordinated.

6. Subordination of Individual Interests to the General Interest – The interests of one

employee should not be allowed to become more important than those of the group. This
includes managers.

7. Remuneration – Employee satisfaction depends on fair remuneration for everyone. This

includes financial and non-financial compensation.

8. Centralization – This principle refers to how close employees are to the decision-making
process. It is important to aim for an appropriate balance.
9. Scalar Chain – Employees should be aware of where they stand in the organization's
hierarchy, or chain of command.

10. Order – The workplace facilities must be clean, tidy and safe for employees.
Everything should have its place.

11. Equity – Managers should be fair to staff at all times, both maintaining discipline as
necessary and acting with kindness where appropriate.

12. Stability of Tenure of Personnel – Managers should strive to minimize employee

turnover. Personnel planning should be a priority.

13. Initiative – Employees should be given the necessary level of freedom to create and
carry out plans.

14. Esprit de Corps – Organizations should strive to promote team spirit and unity.

❖ EFFECTS OF HENRY FAYOL'S PRINCIPLES OF MANAGEMENT ON ORGANIZATION

The following are the positive and negative effects of Henry Fayol’s principles of management on organization;

Positive Effects Negative Effects

1 The principles facilitate a stable organisational
structure to the organisations. The top to
down model ensures that the decisions in the
organisation are implemented from the top-
level management to lower-level
management.
2 The principles facilitate a stable organisational
structure to the organisations. The top to
down model ensures that the decisions in the
organisation are implemented from the top-
level management to lower-level
management.
3 The principle believes in fair compensation to
employees. He also advocates employee
motivation through monetary and non-
monetary benefits.
The 14 principles are solely based on Fayol's personal
experiences in management. They do not involve other
people or organisations or any research.
The principle neglects the most important aspect of the
businesses, i.e., the customer and customer
satisfaction. The principles promote an organisational
structure that caters to the demands of the organisation
and not the customers. As most of the organisations are
customer-centric in present times, this structure collapses
on its own.
The structure is outdated when Fayol created the
principles the business organisations functioned
on command and control, which is stark opposite to the
business organisations in the present. Today the
organisations are run on creativity, innovation and
decentralization of power.
S. No. Name of Principle Traditional Effect Modern Effects

1. Division of work Specialisation in Generalisation in

worker’s job design. worker’s job design.

2. Authority and Managers are Employees are

Responsibility empowered. empowered.
3. Discipline Formalised rules Informal pressure
and regulations. control.
4. Unity of command Subordinates report Subordinate report to
to one boss only. multiple bosses.

5. Unity of direction Functions of one Functions have

direction. multiple directions.
6. Subordination of Employees are Organisation is
individual interest to committed to the committed to the
common goal organisation. employees.
7. Remuneration of Reasonable pay Performance based
Personnel reward. reward.
8. Centralisation Power in hands of Powers distributed
top level. evenly at every level.
9. Scalar chain Smooth flow of Flatter and short cut
information by communication.
passing through
every level.
10. Order Orderly Orderly arrangement
arrangement of of men and material
men and material for coordination.
for control.
11. Equity Kindness and just Developing sense of
treatment of ownership.
employee.
12. Stability of tenure Train employees to Ongoing employee
encourage them to training and
remain. development.
13. Initiative Managers are Workers are
encouraged to give encouraged to give
new ideas. new ideas.
14. Spirit de corps Maintaining high Maintaining high
morale of morale of employees.
managers.