4 Henry Fayol’s Principles of Management

Tejinder Sharma

1. Learning Outcomes

After studying this module, you shall be able to

• Know the meaning, nature and significance of principles of management.

• Understand Fayol’s principles of Management.

• Elaborate the need of principles of management.

2. Concept and meaning of principles of management

Principle means a generally and universally acceptable thought or belief.

According to George Terry,“Principle if a fundamental statement or truth providing a guide to thought or action.”

The term principle generally means a statement which is based on cause and effect relationship. These principles are not based on pure cause and effect relationship as in case of science but are related to human behaviour and management of persons working in an organization.

According to Hicks and Gulleick, “Principles of management are not so exact and infallible as principles of the physical science because they have to do with human behavior.”

According to Koontz O‟ Donnel, “ Management principles are fundamental truth if general validity which have value in predicting the result of management action.”

Thus management principles are the conclusions derived from studies and these apply almost in all fields and situations both in case of business and non business enterprises.

3. Formation of principal of management

Figure-Formation of Principles of Management

4. Nature/characteristics of principles of management

1. Based on human behaviour: Management principles aims at influencing behavior of human beings. Therefore, principles of management are mainly behavioral in nature.

2. Universality of principles: different principles of management apply in different situations. Principles are suitably amended while applying in different situations to different organizations, business as well as non-business, small as well as large, public sector as well as private sector, manufacturing as well as the services sectors. However, the extent of their applicability would vary with the nature of the organization, business activity, and scale of operations.

3. Flexible: The principles of management are not rigid which have to be followed absolutely. They are flexible and can be modified by the manager when the situation so demands.

4. Generalized observation: Principles of management are general conclusions. These provide direction to management but do not claim any guarantee for desired results.

5. Formed by practice and experimentation: The principles of management are formed by experience and collective wisdom of managers as well as experimentation.

6. Cause and effect relationship: The principles of management are intended to establish relationship between cause and effect so that they can be used in similar situation in a large number of cases.

7. Contingent: The application of principles of management is contingent or dependent upon the prevailing situation at the particular point of time.

8. Equal importance: There is no inferiority or superiority between the principles no one principle has greater significance than the other. We cannot say the principles of unity of command are more important than the principle of unity of direction. In this way all the principles of management are equally important.

5. Need of principles of management

1. Better analysis and interpretation of human behaviour: Management principles help in understanding human behaviour. Managers can better understand the needs and expectations of their subordinates.

2. To understand nature and complexities of management: Management principles are conclusions drawn from different situations over a period of time. Therefore, these conclusions are based on rich experience and thus help in understanding the nature and the complexities of management.

3. Optimum utilization of resources and effective administration: Principles equip the managers to foresee the cause and effect relationship of third decisions and actions. Principles of management limit the boundary of managerial discretion so that their decisions may be free from personal prejudices and biases.

4. It directs the areas of training: the principles of management identify the present and prospective areas of management. For this managers should be specially trained. Business situations are themselves difficult and they change considerably with the change in social, political and economic situations. So, the principle of management makes significance in finding the areas and impart requisite training program to their executives.

5. It guides to research work in management: The management principles needed to make guidelines which requires necessary modifications with the changing situations. In order to make management meaningful and practical utility, researchers examine these principles justify this utility and suggest various modification, if necessary.

6. To improve productivity: Management principles help to deal with different situations, particularly the persons working for the organization. These help in striking a balance between the individual expectations and group objectives.

7. To attain social objective: An organization is an integral organ of society. Objectives of an organization can be achieved only if the individual expectations of persons working are met. Management principles help in understanding the human behavior and thus contribute to attain social objectives.

8. Direction for Training of Managers: Principles of management provides understanding of management process what managers would do to accomplish what. Thus, these are helpful in identifying the areas of management in which existing & future managers should be trained.

6. Henry Fayol and Principal of management

Henri Fayol, a French industrialist, developed his concept of administration which was based on his experience. The 14 principles of management propounded by him were discussed in detail in his book published n 1917, ‘Administration industrielle et generale.‟ It was published in English as „General and Industrial Management‟ in 1949 and is widely considered a foundational work in classical management theory. For his contribution he is also known as the ‘Father of General Management’.

Henri Fayol (1851-1925)

Fayol was the first to identify four functions of management- Planning, Organising, Directing and Controlling although his version was a bit different- Plan, Organise, Command and Control. Fayol firstly divided all organisational activities into six functions:

1. Technical: engineering, production, manufacture, adaptation.
2. Commercial: buying, selling, exchange.
3. Financial: the search for optimum use of capital.
4. Security: protection of assets and personnel.
5. Accounting: stocktaking, balance sheets, costs, statistics.
6. Managerial: planning, organising, commanding, coordinating, controlling.

14 Principles of Management by Henri Fayol

These 14 Principles of Management by Henri Fayol can be explained as follows:-

1. Division of Work: This principle states that there should be division of work amongst the persons. Every person should be assigned a separate job. Division of work implies distribution of activities in a logical way so that each person performs his assigned work only. There should not be any duplication of work and for each work only one person be held liable or responsible for his performance.

2. Authority & Responsibility: Authority implies power or right to instruct the subordinates to get the things done. Responsibility on the other hand implies the extent to which a person is liable for one‟s performance. According to Fayol, there should be a balance between authority delegated to a person and his responsibility for being liable in case of deficiency in his performance.

For example if a person is delegated the responsibility to achieve a production target then he should also be given sufficient authority to direct the subordinates for achieving the target.

Positive impacts of this principle:

No misuse of authority.
Helps to complete job effectively and efficiently.
Individuals can be held accountable.
Systematized and effective achievement of organizational objectives.

Consequences of violation of this principle:

Misuse of authority.
Responsibility can‟t be discharged effectively.
No one can be held accountable.
Conflicts between management and employees.

3. Discipline: Discipline implies working in an orderly manner. It involves obedience, following of instructions, orders as well as adherence to rules, procedures and methods. According to Fayol, discipline requires good superior at all levels, clear and fair agreements and judicious application of penalties.

Example: Suppose management and labour union have entered into an agreement whereby worker s have agreed to put in extra hours without any additional payment to revive the company out of loss. In return the management has promised to increase wages of the workers when thus mission is accomplished. Here discipline when applied would mean the the workers and management both honour their commitments without any prejudice towards one another.

4. Unity of Command: According to Fayol, there should be one and one only boss for evry individual employee. If an employee gets orders from two superiors at the same time the principles of unity of command is violated. Unity of command is an essential management principle because it leads to following benefits:

i) It makes authority –responsibility relationship clear both to superiors and subordinates.

ii) Orders issued to subordinates are clear.

iii) It helps to fix responsibility.

iv) It eliminates frictions, clash among superiors.

v) It makes relations harmonious.

5. Unity of Direction: According to this principle, each group of activities with the same objective must have one head and one plan. Unity of direction is different from unity of command in the sense that the former is concerned with functioning of the organization in respect of its grouping of activities or planning with the later is concerned with personnel at all levels in the organization in terms of reporting relationship.

Difference between Unity of Command and Unity of Direction

6. Subordination of Individual Interest to Group Interest: This principle proposes that employees must sacrifice their interests for the good of the organization. Thus, an organization should employ only individuals who are fully committed to its objectives and are willing to readily comply with its mandates. This principle emphasizes that individual objects are secondary and all have to work together to achieve the group objectives.

For Example, Interests of carious stakeholders i.e., owners, shareholders, creditors, debtors, financers, tax authorities, customers and the society at large cannot be sacrificed for one individual or a small group of individuals who want to exert pressure on the company.

Positive impacts of this principle:

Achievement of organizational objective;
Coordination between individual and organizational goal
Harmony in the organization
Increases employee‟s respect for the organization.

Consequences of violation of this principle:

Difficulty in achievement of organizational goal;
Conflicting situations in the organization;
Wastage of efforts, time and resources; and
Delay in work.

7. Remuneration of employees: The quantum and method of remuneration to be paid to the workers should be fair, reasonable, satisfactory & rewarding of the efforts.

As far as possible it should accord satisfaction to both employer and the employees.
Wages should be determined on the basis of cost of living, work assigned, financial position of the business, wage rate prevailing etc.
Logical & appropriate wage rates and methods of their payment reduce tension & differences between workers & management creates harmonious relationship and pleasing atmosphere of work.
Fayol also recommended provision of other benefits such as free education, medical & residential facilities to workers.

8. Centralization and Decentralization: Centralization means concentration of authority at the top level. In other words, centralization is a situation in which top management retains most of the decision making authority.

Decentralization means disposal of decision making authority to all the levels of the organization. In other words, sharing authority downwards is decentralization.
According to Fayol, “Degree of centralization or decentralization depends on no. of factors like size of business, experience of superiors, dependability & ability of subordinates etc.
Anything which increases the role of subordinate is decentralization & anything which decreases it is centralization.
Fayol suggested that absolute centralization or decentralization is not feasible. An organization should strike to achieve a lot between the two.

9. Scalar Chain: Scalar Chain implies chain of superiors from the ultimate or top authority to the lower rank in the organization. Scalar chain refers to the route which the communications follow while flowing from one level to the ultimate authority. There should be a scalar chain of authority and of communication ranging from the highest to the lowest. It suggests that each communication going up or coming down must flow though each position in the line of authority.

Gang Plank

The principle prescribes that every communication must follow the prescribed channels. The scalar chain can be illustrated as shown.

The triangle GAN here represents scalar chain. Accordingly if F has to communicate to P then it has to follow the proper channel ads to discipline but at times it proves to be too lengthy and time consuming and the need for short circuiting the chain is felt. This short circuiting has been describing by Fayol as “GANG PLANK”. In present diagram communication by F to P directly is called Gang Plank.

Positive impacts of this principle:

Clear communication of information;
Better relation among employees;
Systematic communication in the organization; and
Faster solution to organizational problems.

Consequences of violation of this principle:

Bitterness in the relation of employees because of ignoring the close supervisors
Improper communication of information;
Difficulty in finding the responsible person.

10. Order: Fayol remarked, “There should be a place for everything and everyone. It implies two things. One material and other social. This is a principle relating to the arrangement of things and people. In material order, there should be a place for everything and everything should be in its place. Similarly, in social order, there should be the right man in the right place. This kind of order demands precise knowledge of the human requirements and resources of the organization and a constant balance between these requirements and resources.

11. Equity: Equity implies just, fair and reasonable treatment. This principle emphasizes kindliness and justice in the behavior of managers towards workers. This will ensure loyalty and devotion. All should be treated without any bias or discrimination on account of sex, religion, language, caste, belief or nationality etc.

12. Initiative: Initiative means self action- action without motivation. Fayol emphasized that subordinates be given proper opportunity to take initiative while making and executing plans.

This principle helps the management to know more ways of executing the predetermined plan as the employees give various suggestions. When the employees are involved in such a way in the management they feel satisfied and take each and every necessary step to accomplish the plan. This will make the working environment more interesting, more cooperative and more effective.

13. Esprit De Corps (Union is Strength): The phrase esprit de corps means the spirit of loyalty and devotion which unites the members of a group. It also means the regard for the honor of the group to which one belongs. Fayol suggested that there should be a team spirit in the organization and all the employees must consider themselves as member of the organization. This principle is based on two theories:

a. Unity is Strength

b. Unity is Staff is the foundation of success in any organization.

Thus, thus principle states that both the workers and management should work together to accomplish the objectives. The reason behind this principle is that, team contribution is always better than individual contribution.

14. Stability of Tenure: According to this principle, job security must be provided by organization to each personnel. In fact, if the personnel are secured about their jobs than they will give their hundred percent contributions for the achievement of predetermined goals of organization.

Positive impacts of this principle:

Develops sense of belongingness towards the organization.
Improves the efficiency level of employees.
Minimizes the wastage of resources.
Employee‟s satisfaction.
Better accountability.
Saves time.

Consequences of violation of this principle:

Non-achievement of the organizational objectives,
Lack of employee‟s participation,
Wastage of resources and time,
Dissatisfaction,
Adds to cost.

7. Comparison between Fayol and Taylor

Sr. No.	Basis of Difference	Henri Fayol	F.W Taylor
1	Perspective	Top level of management	Shop floor level of a factory
2	Unity of Command	Staunch Proponent	Did not feel that it is important as under functional foremanship a worker received orders from eight specialists.
3	Applicability	Applicable universally	Applicable to specialized situations
4	Basis of formation	Personal experience	Observations and experimentations
5	Focus	Improving overall administration	Increasing Production
6	Personality	Practitioner	Scientist
7	Expression	General Theory of Administration	Scientific Management

8. Summary

Management principles are guidelines to action and they denote a cause and effect relationship. While functions of management i.e Planning, Organising, Staffing, Directing and Controlling are the actions to be taken while practicing management, principles help managers to take decisions while performing these functions. The 14 principles of management can be used to manage organizations and are useful tools for forecasting, planning, process management, organization management, decision-making, coordination and control.

References

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