Fundamental Principles of management by Henri Fayol PDF

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Fundamentals of Management and Management theories as described by various scholars....

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VENUE: BIM NJIRU

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Northwestern Christian University EXTRA NOTES

FAYOL 14 PRINCIPLES

Lecturer: Boniface

Fayol’s 14 Principles of Management Everything you need to know about Fayol’s fourteen principles of management. Henry Fayol who is regarded in responsible quarters as the real father of management science, has evolved fourteen principles of management

The fourteen principles of management as given by Henry Fayol are:1. Division of Work 2. Authority and Responsibility 3. Discipline 4. Unity of Command 5. Unity of Direction 6. Subordination of Individual Interest to General Interests 7. Remuneration 8. Centralization 9. Scalar Chain 10. Order 11. Equality 12. Stability of Tenure of Personnel 13. Initiative 14. Esprit De Corps.

Fayol’s 14 Principles of Management The management has to perform a number of functions such as planning, organizing, coordinating, directing, controlling etc. for the purpose of achieving its aims of operational efficiency, financial economy, and profitable return on investment. In order to perform the management functions effectively so as to enable the business concern to achieve its aims, there is need for the business concerns to observe certain principles of management. Henry Fayol who is regarded in responsible quarters as the real father of management science, has evolved fourteen principles of management, which may be briefly stated as follows: Principle # 1. Division of Work: The object of division of work is to derive benefits from the principle of specialization. The various functions of management like planning, organisation, co-ordination control, etc., cannot be performed efficiently by a single proprietor or by a group of directors on their own and they have to be entrusted to specialists in the related fields. Division of work in the management process produces more and better work with the same effort. Principle # 2. Authority and Responsibility: As management consists in getting the work done through others, it implies that the manager should have the right to give orders and the power to extract obedience. Thus, the manager gives orders to his subordinates to perform the job as per his direction. A manager may exercise his official authority and also his personal authority.

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Official authority is derived from his official status, while personal authority is compounded by intelligence, experience, moral worth, ability to lead, past service etc. Authority is closely related to responsibility, and it arises wherever authority is exercised. An individual to whom authority is given to exercise power must also be prepared to bear the responsibility to perform the work.

VENUE: BIM NJIRU

DATE:

Northwestern Christian University EXTRA NOTES

FAYOL 14 PRINCIPLES

Lecturer: Boniface

Principle # 3. Discipline: Discipline is absolutely essential for the smooth running of business. By discipline, we mean obedience to authority, observance of rules of service and norms of performance, respect for agreements, sincere efforts for completing the given job, respect for superiors, etc. The best means of maintaining discipline are – (a) good supervisors at all levels, (b) clear and fair agreements between the employer and the employee, and (c) judicious application of penalties. Principle # 4. Unity of Command: This principle requires that the employee should receive orders from one superior only for any action or activity. It means workers in a department are required to be accountable to one superior for complying with the orders for performing a job. If two superiors wield authority over the same person or department, it causes uneasiness, disorder, indiscipline among employees and undermining of authority. Further, for the same job, if the workers have to report to more than one superior, they will be confused and it will be difficult to pinpoint responsibility on anyone. Principle # 5. Unity of Direction: It means that there should be one head and one plan for a group for activities having the same objective. While unity of command is concerned with the functioning of personnel, unity of direction is concerned with the functioning of the body corporate, the departments and subdepartments comprising the business concern. For every category of work, there should be one plan of action and it should be executed under the overall control and supervision of one head or superior. Principle # 6. Subordination of Individual Interest to General Interests: In a business concern, the interest of one employee or group of employees should not prevail over the common interest or should not block the fulfilment of general goals of the business concern. If there is disagreement among two superiors on any matter, the management should reconcile the differences so as to conduct the overall operation of the enterprise smoothly.

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Principle # 8. Centralization: If subordinates are given a higher role and importance in the management and organisation of the firm, it is decentralization whereas if they are given less role and importance, it is centralization. Management has to decide the degree of centralization and decentralization’s decisive authority on the basis of the nature of circumstances, size of undertaking, and the type of activities and the

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Principle # 7. Remuneration: The remuneration that is paid to the personnel of the firm should be fair and as far as possible, afford satisfaction both to the personnel and the firm. Employees who are paid decent wages or salary will have a high morale and their efficiency will be high. Further, contented staff is an asset to the firm and also there will be good relationship between the management and the employees. The rate of remuneration paid should be based on general business conditions, cost of living, and productivity of the concerned employees and the capacity of the firm to pay.

VENUE: BIM NJIRU

DATE:

Northwestern Christian University EXTRA NOTES

FAYOL 14 PRINCIPLES

Lecturer: Boniface

nature of organizational structure. The objective should be the optimum utilization of faculties of the personnel. Principle # 9. Scalar Chain: Scalar principle exhibits the chain of superiors or the line of authority from the highest executive to the lowest one for the purpose of communication. It states superior-subordinate relationship and the responsibility of superiors in relation to subordinates at the various levels. According to this principle, order or communications should pass through the proper channels of authority along the scalar chain. But in case there is need for swift action, the principle of scalar chain (proper channel of authority) may be reconciled with due respect for the line authority by making direct contact with the concerned authority instead of going through the proper channel. A diagrammatical explanation of Scalar Chain is given. This diagram consists of double ladders and we find a hierarchy of authority from A to E and A to P. If section D wants to communicate with section O, the file should go up the ladder from D to A and then descend to O, stopping at each section. This involves a lengthy procedure and is time-consuming. In case there is need for swift action or urgent contact, D and O may be authorized by their respective superiors (viz., C and N) to have direct contact to settle that matter. By this method, the scalar principle is safeguarded and at the same time, the subordinate officers are enabled to take swift action.

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Management should obtain order in work through suitable organisation of men and materials. The principle of “right place for everything and for everyman” should be observed by the management. To observe this principle, there is need for scientific selection of competent personnel, correct assignment of duties to the personnel and good organisation.

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Principle # 10. Order:

VENUE: BIM NJIRU

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Northwestern Christian University EXTRA NOTES

FAYOL 14 PRINCIPLES

Lecturer: Boniface

Principle # 11. Equality: Equality means fair dealings, equality of treatment and accommodative or co-operative attitude among the personnel in the undertaking. Equality results from a combination of kindness and justice. Employees expect equity from the management. The application of equity requires good sense, experience and good nature on the part of the manager. The managerial treatment of the subordinates should be free from the influence of prejudices and personal likes or dislikes. Equity ensures healthy industrial relations between management and labour which is essential for the successful working of the enterprise. Principle # 12. Stability of Tenure of Personnel: In order to motivate the workers to show keener interest in their work, enterprise, initiative and turn out of better work, it is necessary that they should be assured security of job by the management. If they have fear of insecurity of job, their morale will be low and they cannot turn out better work. Further, they will not have a sense of attachment of the firm and they will always be on the lookout for a job elsewhere. Hence, the management must ensure stability of tenure of personnel. Principle # 13. Initiative: Initiative means freedom to think and execute a plan. The zeal and energy of employees are augmented by initiative. Innovation which is mark of technological progress is possible only where the employees are encouraged to take initiative. According to Fayol, “initiative is one of the keenest satisfactions for an intelligent man to experience” and hence, he advises managers to give its employees sufficient scope to show their initiative. Employees should be welcomed to make any suggestions regarding the formulation of objectives and plans and they should be encouraged to turn out better work with maximum versatility. Principle # 14. Esprit De Corps: Since ‘union is strength’, the management should clear a team spirit among the employees. Only when all their personnel pull together as a team, there is scope for realizing the objectives of the concern. Harmony and unity of the staff of a concern is a great source of strength to the undertaking. The management should not follow the policy of ‘divide and rule’ and it should strive to maintain unity among the staff. If there are any differences or misunderstandings or symptoms of distrust, the management should take necessary steps.

Fayol’s Fourteen Principles of Management – Quick Notes 1. Division of Work – This leads to specialization of work and organizational success. 2. Authority – The right to order should go with responsibility.

5. Unity of Direction – Every employee’s effort should be channelized in one direction.

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4. Unity of Command – Each employee should receive one order having only one boss.

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3. Discipline – Mutual respect and obedience facilitates smooth running of operations.

VENUE: BIM NJIRU

DATE:

Northwestern Christian University EXTRA NOTES

FAYOL 14 PRINCIPLES

Lecturer: Boniface

6. Subordination of individual interest to the general interest – Manager should strive hard to divert personal interest towards organizational interests. 7. Remuneration – Employee should be paid fair wage. 8. Centralization -There should be a balance between centralization and decentralization. 9. Scalar Chain – Employees should follow formal chain of comman d unless otherwise expressed. 10. Order – Both people and materials should be in their places.

11. Equity – All should be treated equally with kind and justice. 12. Stability and Tenure – Allow people to stabilize in their jobs. 13. Initiative – Allow and motivate people to take initiative to design and implement plans. 14. Espirit de corps – Harmonious relationship has to be developed amongst workers.

Fayol’s 14 Principles of Management – With Criticisms Management has some properties that make it a sci-ence; for example principles.

DISCUSSION OF THE 14 PRINCIPLES 1. Division of Labour- It means dividing a major activity into its sub-components, and each person doing one activity, leading to specialization and increase in productivity. 2. Authority and responsibility coexist- Everyone should have specific re-sponsibility and matching authority. 3. Unity of command- One person should report to only one boss. 4. Unity of direction- All functions of an organisation should have the same direction. 5. Equity- Rewards should be in relative proportion to the contribution. 6. Order- Do things systematically and scientifically. 7. Discipline- Adhere to lines of authority, norms, rules, and regulations. 8. Initiative- Undertake actions that achieve goals better, even when a spe-cific direction is absent. 9. Fairness- Be consistent with rules and logic, and implement actions without impartiality and favoritism.

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11. Scalar chain- Flow of authority and information is from top to bottom and vice versa, in a stepby-step manner.

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10. Stability- Have constancy of purpose, methods, rules, and procedures.

VENUE: BIM NJIRU

DATE:

Northwestern Christian University EXTRA NOTES

FAYOL 14 PRINCIPLES

Lecturer: Boniface

12. Subordination of individual interest to general interest- Individuals draw their identity and livelihood from the organisation, and hence should give priority to organizational interest. 13. Esprit de corps- It refers to creating team spirit and harmony in the work group as a whole. 14. Centralization and decentralization- The need to accept the importance of both, and creating a balance between both.

Criticism of Henry Fayol’s Principles of Management: Unity of command is redundant in an era of matrix organizations. Organizations such as Goldman Sachs have tried joint management concept where two people concurrently head one responsibility successfully. Unity of direc-tion, as envisaged originally, is impossible today, since businesses enter many different areas For example, Bharti Airtel’s main business is mobile telephony, but they are also into other businesses. Stability seldom exists in organizations as they begin to thrive through continuous and disruptive changes. In a networked world, scalar chain principle does not stand scru-tiny. The principle of subordination of individual interest to general inter-est is often criticized as it is used to exploit employees and members of an organisation from time to time.

Fayol’s 14 Principles of Management (Short Notes) Managers in the early 1900s had very few external resources to draw upon to guide and develop their management practice. But thanks to early theorists like Henri Fayol (1841-1925), managers began to get the tools they needed to lead and manage more effectively. Henry Fayol synthesized fourteen principles for organizational design and effective administration.

Fayol’s 14 principles are: 1. Specialization/Division of Labour: A principle of work allocation and specialization in order to concentrate activities to enable specialization of skills and understandings, more work focus and efficiency. Specialization/division of Labour influences the overall performance of the workers organization in the way: i. To brings specialization. ii. To increases work efficiency. iii. To increases productivity.

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Authority means the right of a superior to give order to his subordinates. Responsibility means obligation for performance. There must be parity between authority and responsibility. If

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2. Authority with Corresponding Responsibility:

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Northwestern Christian University EXTRA NOTES

FAYOL 14 PRINCIPLES

Lecturer: Boniface

responsibilities are allocated then the post holder needs the requisite authority to carry these out including the right to require others in the area of responsibility to undertake duties. 3. Discipline: The generalization about discipline is that discipline is essential for the smooth running of a business and without it-standards, consistency of action, adherence to rules and values; no enterprise could prosper. In an essence; obedience, application, energy, behavior and outward marks of respect observed in accordance with standing agreements between firms and its employees. Obedience, proper conducts in relation to others and respect of authority. 4. Principle of One Boss: This is known as principle unity of command. The idea is that an employee should receive instructions from one superior only. This generalization still holds; even where we are involved with team and matrix structures which involve reporting to more than one boss or being accountable to several clients. The basic concern is that tensions and dilemmas arise where we report to two or more bosses. One boss may want A, the other Band the subordinate is caught between the devil and the deep blue sea. 5. Unity of Direction: The unity of command idea of having one head (chief executive, cabinet consensus) with agree purposes and objectives and one plan for a group of activities) is clear. All related activities should be put under one group. There should be one plan of action for them. It seeks to ensure unity of action, focusing of efforts and coordination of strength. 6. Subordination of Individual Interest to the General Interest: Fayol’s line was that one employee’s interests or those of one group should not prevail over the organization as a whole. This would spark -a lively debate about who decides that the interests of the organization as a whole are. Ethical dilemmas and matters of corporate risk and the behavior of individual “chancers” are involved here. Fayol’s work-assumes a shared set of values by people in the organization – a unitarism where the reasons for organizational activities and decisions are in some way neutral and reasonable. The interests and goals of the organization must prevail over the personal interests of individuals. 7. Remuneration of Staff:

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8. Centralization v/s Decentralization:

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The general principle is that levels of compensation should be “fair” and as far as possible afford satisfaction both to the staff and the firm (in terms of its cost structures and desire for profitability/surplus). The quantum and methods of remuneration payable should be fair, reasonable and rewarding of effort.

VENUE: BIM NJIRU

DATE:

Northwestern Christian University EXTRA NOTES

FAYOL 14 PRINCIPLES

Lecturer: Boniface

Centralization for Henry Fayol is essential to the organization and a natural consequence of organizing. Fayol defined centralization as lowering the importance of the subordinate role. Decentralization is increasing the importance. The degree to which centralization or decentralization should be adopted depends on the specific organization in which the manager is working. 9. Scalar Chain/Line of Authority: The scalar chain of command of reporting relationships from top executive to the ordinary shop operative or driver needs to be sensible, clear and understood. Scalar chain refers to the chain of superiors ranging from top management to the lowest rank. A Clear line of authority, chain of command; concept called a “Gang Plank” using which a subordinate may contact a superior or his superior in case of an emergency, defying the hierarchy of control. However the immediate superiors must be informed about the matter. 10. Order:

The level of generalization becomes difficult with this principle. Basically an organization ‘should’ provide an orderly place for each individual member, who needs to see how their role fits into the organizat...