Home

Learning Hub

Articles

Principles of Management by Henri Fayol: Definition & Importance

Henry Fayol was a French mining engineer who is among a few individuals credited with developing the modern management theory. His work has marked a real revolution in the field of organising the administrative management of enterprises and determined the development of the management profession. Fayol’s extensive work experience began during the Industrial Revolution with the Compagnie de Commentry-Fourchambault-Decazeville mining company. He was swiftly promoted through the ranks and eventually became the company’s general manager. It helped him to gain vast experience in organising and managing a huge workforce, especially testing the management practices in a highly competitive industrial setting.

In 1916, he wrote perhaps his most important work, “Administration Industrielle et Générale”, in which he laid down his management theories and principles. These principles of management were intended to be used in the enhancement of managerial procedures and organisational outcomes. Looking at the 14 principles of management introduced by Fayol, it can be said that these principles remain suitable for modern management in today’s complex environment. Using the comparison approach, Fayol offered a set of principles that can be implemented equally in every managerial field regardless of the nature of a business since most of the problems can be solved at the level of administration instead of affecting technical changes.

Detailed Explanation of the 14 Principles of Management by Henri Fayol

Division of Work and Its Impact on Productivity

Fayol’s first principle is the division of work. This principle states that employees will work more efficiently and effectively if work is divided according to specialisation. Specialisation allows the specialised workers to be more efficient in the assigned task, and this increases productivity. For example, the division of activities like assembly, inspection, and packaging in a manufacturing organisation can prove to be advantageous in terms of operational efficiency and product quality.

Key Points:

• Specialisation improves skill levels.
• Increased efficiency and productivity.
• Clear assignment of tasks.

Authority and Responsibility: Balancing Power and Accountability

Authority and responsibility are identical; they represent two sides of the same coin. Fayol pointed out that authority must be granted to a manager to issue orders, and responsibility must be placed on implementing these orders. Both of these aspects need to be in balance. If managers have the power of decision-making without responsibility, then they can misapply their power. On the other hand, the reverse position is unhealthy for an organisation because the person will have responsibilities but cannot fulfil these responsibilities efficiently. For instance, in a retail store, there is a need to have the authority to direct the employees and the responsibility to order stock.

Key Points:

• Authority must be paired with responsibility.
• Ensures effective execution of tasks.
• Prevents misuse of power.

The Role of Discipline in organisational Success

Discipline is essential in every organisation to guarantee productivity. This involves obedience to the rules, respect for authority, and timeliness. Managers have the responsibility of maintaining discipline by establishing and educating their subordinates on how they should behave or else face the implications. Punctuality and discipline in workplaces promote respect for each other and the proper running of the enterprise. For instance, timetables and procedures guarantee that customer inquiries within a call centre are well addressed and in the shortest time possible.

Key Points:

• Adherence to rules and regulations.
• Mutual respect and efficient operations.
• Clear expectations and consequences.

Unity of Command: Ensuring Clear and Effective Leadership

According to this principle, every worker should be accountable to one manager, not several. This helps avoid confusion and contradictory instructions, which creates a lot of confusion among the subordinates, thus enhancing efficient communication. In cases where an employee is working under different managers or receives instructions from different managers, the operation may be ineffective, or the employee may feel stressed. It is easier to have one project manager to manage all the activities because the team is from the software development aspect.

Key Points:

• Prevents confusion and conflicting instructions.
• Ensures clear and consistent guidance.
• Reduces stress and inefficiencies.

Unity of Direction: Aligning Team Efforts Towards Common Goals

Unity of direction implies that all activities in an organisation should be directed towards one goal of a unified plan and under the leadership of one person. It builds a culture in which people align all their efforts towards common organisational objectives. For instance, in a marketing department, merging advertising, social media, and public relations to conform to a single strategy would employ most of the marketing campaigns.

Key Points:

• Aligns activities towards common goals.
• Ensures harmonious teamwork.
• Maximises impact of efforts.

Subordination of Individual Interests to Organisational Goals

The notion of subordination of human interests to organisational aims implies that organisational objectives and interests should take precedence over personal aspirations. Workers are expected to work towards the attainment of organisational aims and objectives rather than servicing their individual interests. This principle helps reinforce staff unity due to the fact that everyone has to work in unity with the aim of achieving one goal. In sales, for instance, members of the sales team should work towards reaching organisational goals such as overall sales, not chronological individual sales.

Key Points:

• Prioritises organisational goals over personal interests.
• Fosters teamwork and shared purpose.
• Enhances overall performance.

Importance of Fair and Motivating Remuneration for Employees

Wages are important since they can retail employees’ morale and performance. In regards to remuneration, which encompasses both monetary and non-monetary forms of reward, Fayol claimed that it has to be fair so that it could motivate people to work both individually and as part of a team to hire the most competent employees. Higher wages/salaries coupled with incentives and impressive remunerations ensure that workers work harder, hence increasing productivity. In a hi-tech firm, some motivational factors include the provision of competitive wages and being able to present their team with stocks to encourage them to work harder.

Key Points:

• Fair compensation motivates employees.
• Includes financial and non-financial rewards.
• Attracts and retains talented employees.

Also Read: Best Project Management Tools

Centralisation vs. Decentralisation: Finding the Right Balance

The process of distributing the power of decision-making in an organisation can highly influence the overall outcome. If all the decisions are taken by the high-level team, then this is an example of centralised decision-making. On the other side, if the decisions are taken at a lower level of the company, then it can be called decentralised decision-making. According to Fayol, the two should be in an equilibrium for the best outcome to be achieved in the organisation. For instance, a multinational company may decide strategically and implement centralisations at the corporate level, but because different market realities exist at the operational level, it may assign choices to regional managers.

Key Points:

• Balance between centralisation and decentralisation.
• Strategic decisions at the top, operational decisions at lower levels.
• Enhances organisational effectiveness.

Scalar Chain: Establishing a Clear Line of Authority

The scalar chain principle involves having a clear line of authority from the top management to the lowest ranks. This chain of command ensures that communication flows efficiently and that everyone knows their direct superior and subordinates. To speed up decision-making, Fayol developed the concept of a “gang plank,” which allows for direct interaction among workers at the same level when necessary and eliminates the chain of command. In a hospital, for example, an established hierarchy ensures that department heads comply and staff members receive orders from the chief medical officer.

Key Points:

• A clear chain of command ensures efficient communication.
• Everyone knows their direct superior and subordinates.
• “Gang plank” allows for direct communication when needed.

The Principle of Order: Proper Placement of Resources and People

Order involves arranging resources and people in the right place at the right time. Fayol emphasised that both material and social order are crucial for organisational efficiency. Material order means that there is a designated place for every tool and resource, while social order means that there is a place for every employee based on their qualifications. In a warehouse, for instance, keeping inventory organised and ensuring staff are assigned roles based on their skills can significantly improve operational efficiency.

Key Points:

• Proper arrangement of resources and people.
• Material and social order enhance efficiency.
• Designated places for tools and roles based on skills.

Equity in the Workplace: Fair Treatment of All Employees

Equity is all about both fairness and righting the wrongs that employees have suffered in their places of work. It is also very important that managers be friendly and fair to everybody in the organisation; then, organisations will have a high level of commitment. Fayol said that for better productivity, fair dealings always result in motivated employees and a reduction in conflicts. For example, when distributing resources at a university, it is advantageous to offer all faculty members the chance to be paid for research and professional development.

Key Points:

• Fairness and justice in the workplace.
• Fosters loyalty and commitment.
• Reduces conflicts and promotes motivation.

Stability of Tenure of Personnel for Organisational Efficiency

Any organisation could not achieve the objectives it set without a stable employment base. High staff turnover affects organisational productivity because it leads to changes in the way work is done. Offering employment security and advancement in the organisation helps in retaining the employees. For instance, a law firm that has provisions for staff development and well-articulated career progression arrangements for its legal experts will ensure it does not lose staff to competition, and thus, it will uphold high service quality.

Key Points:

• Stable employment enhances organisational efficiency.
• Job security and career growth opportunities.
• Reduces disruption from high employee turnover.

Encouraging Initiative Among Employees for Innovation

According to Fayol, the motivation of employees to act independently results in creativity and improvement. Everyone wants to feel that they are valuable to the company, and when personnel are encouraged to come up with suggestions and execute them on their own, they feel more valued. This principle enhances innovation and gets rid of rigidity in thinking. Thus, when in a tech startup, the developers are urged to come forward with new ideas or enhancements, and they will be able to innovate products and services.

Key Points:

• Encouraging initiative leads to innovation.
• Employees feel more invested in the organisation.
• Promotes creativity and problem-solving.

Promoting Esprit de Corps for Team Spirit and Unity

Esprit de corps refers to the encouragement of pride in the team, especially among workers. Fayol said that the encouragement of unity and regard between employees would improve their cooperation and morale. A consolidated team is likely to make the optimum use of its workforce and is more likely to meet set objectives. For instance, arranging for inter-group problem-solving sessions and fostering free communication in a marketing agency enhances the clot between them and hence boosts performance.

Key Points:

• Promotes team spirit and unity.
• Enhances cooperation and morale.
• Strengthens team bonds and improves performance.

Conclusion

Henri Fayol’s 14 principles of management provide a comprehensive framework that remains relevant in modern organisational settings. We explored each principle, from the importance of specialisation in the division of work to the balance of authority and responsibility. We also discussed the need for discipline, unity of command, and direction to ensure clarity and efficiency.

The requirements of a reasonable pay scale, the optimum degree of control and decentralisation, and stability in the terms of employment were underlined. This shows that Fayol’s elements, such as equity, encouragement of initiative, and spirit de corps, all capture the human side of management. Fayol has made great contributions to the management field, giving the world theoretical perspectives that are still important in solving the present business challenges.