Henri Fayol(1841-1925)

Father of modern operational management theory

Fayol: -French mining engineer and a management

theorist.

-Started as an engineer at a mining company

and became Director in 1888. - Viewed management as a profession that can be trained and developed. -First one to analyze the functions of management.

Made three major contributions to the theory of Management:

(A)A clear distinction b/n technical & managerial skills. (B)Identified functions constituting the management process. (C)Developed principles of management.

(B) Fayol described management as a scientific process built up of five immutable elements: Planning, Organizing, Commanding, Coordinating, Controlling

Functions of Management MANAGING MEANS LOOKING AHEAD!

1. Planning process of activities required to meet a goal. 2. Organizing making orderly determination & arrangement of a task. 3. Commanding(Directing) involves guiding, supervising, motivating & leading people for attainment of the timeoriented tasks. 4. Coordinating- bringing together the elements 5. Controlling- having control over all of the aspects that contribute to meeting the goal.

(C)Fayol s Principles
Division of Labour: allows for job
specialization.

Fayol noted firms can have too much specialization leading to poor quality and worker involvement.
2.. Authority and Responsibility:

Fayol included both formal and informal authority resulting from special expertise.
Managers gain authority derived from expertise, technical knowledge, moral worth, and ability to lead and generate commitments from subordinates (informal).

3. Discipline: obedient, applied, respectful employees needed.

- Fayol believed that discipline resulted from respectful relations between organizational member and reflects the quality of an organization s leadership and a manager s ability to act fairly and equitably.

4. Unity of Direction: One plan of action to guide the organization.

5. Unity of Command: Employees should have only one boss.

Leads to less opportunities for confusing or conflicting directives.

6. General interest over individual interest: The organization takes precedence over the individual.
remember Fayol believed that there needed to exist a harmonious relationship between the organization and its members

7. Remuneration of

Personnel: The payment system contributes to success.

Fayol was a big proponent of bonuses and profit sharing plans, because he believed it encouraged productivity. However, he was cautious to state the reward system could not be the subject of abuse or bias.

8.Centralization: the degree to which authority rests at the very top.

Authority should not be concentrated at the top of the chain of command because it slows down decision making.

9. Scalar chain: a clear chain from top to bottom of the firm

Allows for cross departmental interaction of middle managers to speed decision making.

10.Order: Each employee is put where they have the most value.
Fayol recommended the use of organizational charts to show the position and duties of each employee and to indicate which positions an employee might move to or be promoted into the future

11.Equity: Treat all employees fairly in justice and respect.

Equity in an organization gains its members loyalty and trust.

12. Stability of Tenure: Longterm employment is important.

Fayol believed that when employees stayed with an organization for extended periods of time, they develop skills that improve the organization s ability to utilize its resources.

13.Initiative: Encourage innovation.

Fayol believed that managers needed to encourage their employees to act on their own, without direct supervision from a supervisor. This key to this principle is to promote creativity and innovation . 14. Esprit de corps: Union is strength - refers to harmony & mutual understanding among the members of an organization. - Comes about by encouraging communication between managers and workers to solve problems and implement solutions.

Activities of an industrial enterprise can be grouped in to six categories:

(1)Technical Processing production & operation (2)Commercial Buying, selling & exchange (3)Financial Optimum use of capital (4)Security Protection of asset and resources (5)Accounting Ascertaining the financial position (6)Managerial Optimum use of resources for optimum result