MANAGEMENT THOUGHT

AND EMERGING TRENDS

Endalkachew Wakuma (MA)

 UNIT THREE

THE ERA OF CLASSICAL

MANAGEMENT
 Henri Fayol: Principles of Administration
Eventful years
 Henri Fayol (1841-1925) was born from a French bourgeois family
 Beginning his career in 1860 as a mining engineer in the
Commentary mine pits of the SA Commrnysty-Fourchambault, he
had risen to the position of Managing Director in 1888, which post
he held until his retirement in 1918.
 His managerial talents pushed his organization from the verge of
bankruptcy to pinnacle of glory
 With the translation of his classic Administration Industrielle et
Genrale (1916) in English in 1949, Henri Fayol rose into prominence
in the field of management.
 It is a pity that the original ‘administration’ was translated into
English as ‘management ‘ and not ‘ administration’.
 In 1921, Fayol was awarded a Noble prize for his research in
metallurgy.
 Fayol’s Major Works

 Fayol published a dozen papers in mining engineering & geology

areas. His important works on administration includes:
I. General and Industrial management (1916):
 This work first appeared as Adminstration Industrielle et Generale in
the Bulletin of the Societe de l’ Industrie Minerale.
 It was subsequently republished in France in 1925 and translated in
to English first in 1922, and later in 1949 by Constance Storrs, with
an introduction by L.Urwick.
II. The Administrative Theory of the state (1923):
 This publication is an address presented to the international
conference of Administrative Science at Brussels in 1923. It was
translated by Sarah Greer and appeared in the collection, papers on
the Science of Administration, edited by L.Gulick and L. Urwick.
III. General Principle of Administration(1908):
 This paper appeared in Jubilee Congress of the Societe de L’ Industrie
Minerale.
 Approach to Administration
No Distinction between Management & Public Administration
 Fayol identifies administration with management
 He asserts; “management plays a very important part in the
government of undertakings: of all undertakings, large or small ,
industrial, commercial, political , religious and others”.
 He observes that administration is an activity common to all
human undertakings, whether at home, business or government
 All these undertakings require planning, organizing, commanding,
coordinating and controlling
 General principles can be applied equally well to public and
private affairs; “there is no one doctrine of administration for
business and other for affairs of state”
 The major task of organization, according to Fayol is to develop the
personnel so that they are able to carry out the essential functions
of an enterprise.
 Approach…

Essential Activities of an Industrial Undertaking

 Fayol divide the total industrial undertaking into six separate
activities, of which administration is only one:
 Technical (production, manufacture)
 Commerce (buying , selling , exchange)
 Finance (search for and optimum use of capital )
 Security (protection of property and person)
 Accounting (stocktaking, balance sheet, costs, statistics)
 Administrative (which operates only on personnel)
 Approach…

Elements of Administration
 Fayol indicates that the administrative activity is by far the
most important and deserves most attention.
 He develops this aspect further and indicates that
administration (administrative activity) is made up of five
elements:
I. Planning. It is an exercise of “examining the future and
drawing up a plan of action”. Fayol also states that unity,
continuity, flexibility and precision are the broad features
of a good plan of action.
II. Organizing. it means “building up a dual structure
(human and material) to achieve the undertaking”.
 Approach…
 Further, Fayol indicates that the organizer or manager has 16 managerial or administrative
duties to perform:
1. Ensure that the plan is judiciously prepared and strictly carried out.
2. See that the human and material organization is consistent with the objectives,
resources, and requirements of the concern.
3. Set up a single, competent, energetic building authority.
4. Harmonize activities and coordinate efforts
5. Formulate clear, distinct, precise decisions
6. Arrange for efficient selection of personnel-each department must be headed by a
competent, energetic man; each employee must be in that place where he can render
greatest service
7. Define duties clearly.
8. Encourage a linking for initiative and responsibility.
9. Have fair and suitable recompense for service rendered
10. Make use of sanctions against faults and errors.
11. See to the maintenance of discipline.
12. Ensure that individual interest are subordinated to the general interest
13. pay special attention to the unity of command
14. Supervise both material and human order.
15. Have every thing under control
16. Fight against excess of regulations, red tape and paper control.
 Approach…
III.Commanding. it implies maintaining activity among the
personnel of the organization. Fayol claims that the
manager who has to command should:
 have a thorough knowledge of his personnel
 eliminate the incompetent
 set a good example
 be well versed in the agreements binding the business and its
employees;
 conduct periodic audits of the organization and use
summarized charts to further this; Fayol heavily emphasized
organizational charts; and
 Bring together his chief assistants by means of conferences, at
which units of direction and focusing of effort are provided for.
 Human elements are of critical importance to
administration.
 Approach…

 Fayol suggests six types of abilities which an

administrator or a manager must possess. These are:
 Physical qualities: health , vigour and appearance
 Mental qualities: ability to learn and understand
judgment, mental vigour and adaptability.
 Moral qualities: energy , initiative, willingness to
accept responsibility, tact.
 General education: general acquaintance with matters
not belonging exclusively to the function performed.
 Special Knowledge: technical, commercial,
managerial, etc.
 Experience: knowledge arising from the work
involved.
 Approach…
IV. Coordinating. It consists of working together, and
harmonizing all activities and effort. Fayol recommends
weekly meetings of department heads and liaison officers to
improve coordination.
V. Controlling. It consists of verifying whether everything
occurs in conformity with the plan adopted, the instructions
issued and the principles established.
 Approach…
Need for Administrative Training
 Fayol seems to be the first writer in pleading for
administrative training of all employees at all levels.
 Administrative ability cannot be developed through technical
knowledge alone. He writes: “everyone needs some concepts
of administration; in the home, in affairs of state, the need
for administrative ability is in proportion to the importance of
the undertaking, and for individual people the need is
everywhere greater in accordance with the position
occupied”.
 Fayol becomes critical of civil engineering colleges in France
for not including administration in their syllabi.
 He suggests the teaching of administration even in primary
schools.
 Flexible Principles of Administration
 Fayol was determined to develop an administrative theory.
 With this view he propounded 14 principles of
administration. He says that these principles are flexible and
capable of adaptation to every need.
I. Division of Work. is based on the theory that if an employee is
given a specific task, they will become more efficient & skilled in it
II. Authority and responsibility. states that a manager needs to have
the necessary authority in order to ensure that his instructions are
carried out by the employees. steps must be taken to induce
people to accept responsibility while wielding authority.
Responsibility is a corollary of authority.
III. Discipline. He sees discipline in terms of ‘obedience’. Good
discipline is the result of (a) effective leadership, (b) a clear
understanding between management and workers regarding the
organization’s rules, and (c) the judicious use of penalties for
infractions of the rules.
 Principles…
IV. Unity of command. In contrast to Taylor’s functional
authority, Fayol maintains that “an employee should receive
orders from one superior only”.
V. Unity of direction. States that there should be one head and
one plan for a group of activities having the same objective.”
For him, “unity of command cannot exist without unity of
direction, but does not flow from it.”
VI. Subordination of individual interest to general interest. the
interest of one employee or group of employees should not
prevail over that of the concern (organization)
VII. Remuneration. employees should be paid fair wages for the
work that they carry out. The remuneration for the services
should be fair and reasonable. It must be fair and satisfy the
employer as a reasonable cost for services rendered and also
the employee as a means of livelihood and return for effort.
 Principles…
VIII.Centralization. According to Fayol , centralization belongs to
the natural order. In large organization, a serious of
intermediaries was necessary. The share of initiative left to
intermediaries depends on the character of the manager on
the reliability of his subordinates and on the conditions of
business.
IX. Scalar chain. refers to a clear chain of communication
between employees and their superiors. Employees should
know where they stand in the hierarchy of the organization
and who to go to in a chain of command. To implement this
in the workplace, Fayol suggests that there should be an
organizational chart drawn out for employees to see this
structure clearly.
 Principles…
X. Order. states that there should be an orderly placement of
resources (manpower, money, materials, etc.) in the right place at
the right time.
XI. Equity. Equity is a combination of kindness and justice. This
principle states that managers should use kindliness and justice
towards everyone they manage. This creates loyalty and devotion
among the employees towards the organization they work for.
XII. Stability of tenure. states that an organization should work to
minimize staff turnover and maximize efficiency. Any new
employee cannot be expected to get used to the culture of an
organization right away. They need to be given enough time to
settle into their jobs to become efficient. Both old and new
employees should also be ensured job security because instability
can lead to inefficiency.
 Principles…
XIII. Initiative. States that all employees should be encouraged to
show initiative. When employees have a say as to how best they
can do their job, they feel motivated and respected.
Organizations should listen to the concerns of their employees &
encourage them to develop & carry out plans for improvement.
XIV. Esprit de corps. means “Team Spirit”. States that the
management should strive to create unity, morale, and co-
operation among the employees. Team spirit is a great source of
strength in the organization. Happy and motivated employees are
more likely to be productive and efficient. A manager should not
follow the motto of ‘dived and rule’. Fayol welcomes the trend for
collective associations and for competing firms to develop
friendly relations and settle common interests by joint
agreement. Management must foster the morale of employees.
 Fayol and Taylor: A Comparison
 Like Frederick Taylor, Henri Fayol was an engineer who passed
his conclusions not on scientific observations but on personal
experience.
 Though they differed completely in their approaches, the
works of Taylor and Fayol were complementary.
 Fayol looked at the administrative from top down,
emphasizing managerial ability, and Taylor from the bottom
up, emphasizing the technical aspects of production.
 Taylor’s approach to management dealt with specifics of job
analysis, employees’ motions, and time standards while Fayol
viewed management as a teachable theory dealing with
planning, organizing, commanding, coordinating and
controlling.
 A Critical Evaluation
Criticism
 Peter Drucker, a critics of Fayol’s theory of functionalism,
holds that some of the worst mistakes of organizational –
building have been committed by imposing a mechanistic
model of an ‘ideal’ or ‘universal’ organization on a living
business.
 The model is found to be deficient in designing and logic as it
presents a single dimension of management determining all
facets of organization around it.
 Fayol’s base for building an administrative theory is not based
on scientific observations, but on personal experience in the
mining firm. It is too narrow (isolation of other complex and
public organizations may not generate a complete and
comprehensive theory on administration which would be
equally applicable to contemporary organizations.
 Criticism…
 In view of these limitations, it is imperative that functionalism as
principle should never be used in the design of organizations that
are complex & multidimensional in functions
 Human Relations School feel that Fayol has mostly ignored the
social-psychological or emotional needs of employees.
 Some of Fayol’s principles of management have been also criticized
on the grounds of vagueness and contradiction. For example,
critics of the principle of unity of command (dysfunctional to the
organization to strengthen the hierarchy, where the sense of unity is
less, personal contact is limited and real difference of outlook are
desirable).
 Further, there is no consistency between the unity of command
and unity of direction principle.
 Fayol favors the need for more specialists in the planning and
direction of work, but insists that their use be reconciled with the
unity of command.
 Contribution
 Henri Fayol is undoubtedly one of the great original and
unique contributors to the development and continuum of
administrative thought.
 Though focused in theoretical constructions of administration,
they have made scientific management more meaningful.
 According to George, the ‘General & Industrial Management’
is a singular and significant contribution to the management
thought in that it presented three revolutionary aspects.
i. Concept of Universality of Management: the concept that
management as a separate body of knowledge is applicable to all
forms of group activity.
ii. First comprehensive theory of management: First complete and
comprehensive theory of management which could be applied to all
endeavors.
iii. Need for teaching management: The concept of teaching and
developing management curricula in colleges and universities.
 Contribution…
 Fayol’s enunciations of flexible principles are widely
applied today in planning and developing company
organization structure.
 Even Peter Drucker, a critic of Fayol’s theory of
functionalism, acknowledges that the latter’s functional
organization is still the best way to structure a small
business, especially a small manufacturing business.
 Fayol’s ideas on human relations speak of his concern
for employee’s development. Gross puts it that
“personnel is for Fayol the essence of organization”.
 Similarly, his ideas on planning are still relevant. Fayol
appears to be a pioneer in presenting a broad
conception of organizational and national planning.