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Henri Fayol theory of management
At the beginning of the last century (1916) the French engineer Henri Fayol created the first principles of management theory. Henri Fayol is classified as the founding father of for example the line and staff organization. Based on his experience as a successful director or a mining company, he developed several theories that are still relevant today. At the time, managers had no formal training. However, the increasing complexity of organizations created a need for professional management.
Five Functions of Management
Henri Fayol gained world-wide fame for his 14 general principles of management. 1. Division of Work 2. Authority and Responsibility 3. Discipline 4. Unity of Command 5. Unity of Direction 6. Subordination of Individual Interest 7. Remuneration 8. The Degree of Centralization 9. Scalar Chain 10. Order 11. Equity 12. Stability of Tenure of Personnel 13. Initiative 14. Esprit de Corps.
He distinguished six general activities for industrial enterprises: technical, commercial, financial, security, accounting and managerial. He defined five functions of management for the management component and these are still seen as relevant to organizations today. These five functions focus on the relationship between personnel and its management and they provide points of reference so that problems can be solved in a creative manner.
1. Planning
Planning is looking ahead. According to Henri Fayol, drawing up a good plan of action is the hardest of the five functions of management. This requires an active participation of the entire organization. With respect to time and implementation, planning must be linked to and coordinated on different levels. Planning must take the organization’s available resources and flexibility of personnel into consideration as this will guarantee continuity.
2. Organizing
An organization can only function well if it is well-organized. This means that there must be sufficient capital, staff and raw materials so that the organization can run smoothly and that it can build a good working structure. The organizational structure with a good division of functions and tasks is of crucial importance. When the number of functions increases, the organization will expand both horizontally and vertically. This requires a different type of leadership. Organizing is an important function of the five functions of management.
3. Commanding
When given orders and clear working instructions, employees will know exactly what is required of them. Return from all employees will be optimized if they are given concrete instructions with respect to the activities that must be carried out by them. Successful managers have integrity, communicate clearly and base their decisions on regular audits. They are capable of motivating a team and encouraging employees to take initiative.
4. Coordinating
When all activities are harmonized, the organization will function better. Positive influencing of employees’ behaviour is important in this. Coordination therefore aims at stimulating motivation and discipline within the group dynamics. This requires clear communication and good leadership. Only through positive employee behaviour management can the intended objectives be achieved.
5. Controlling
By verifying whether everything is going according to plan, the organization knows exactly whether the activities are carried out in conformity with the plan.
Control takes place in a four-step process:
1: Establish performance standards based on organizational objectives
2: Measure and report on actual performance
3: Compare results with performance and standards
4: Take corrective or preventive measures as needed
It starts with an overview
Each of these steps is about solving problems in a creative manner. Finding a creative solution is often more difficult than discovering what the problem is, than making choices or the decision-making process. It starts with creating an environmental analysis of the organization and it ends with evaluating the results of the implemented solution.
Fayol’s Sixth Function
The sixth function of Henri Fayol is mostly managerial. This include activities like planning, organising, commanding, coordinating and controlling.
Although well understood in their own right, none of the first five of these functions takes account of drawing up a broad plan of where the business is going and how it will operate, organising people, coordinating all of the organisation’s efforts and activities, and monitoring to check that what is planned is actually carried out.
Fayol’s sixth function acts as an overall function in relation to the five functions.
A Closer look at organizing
As one of the five functions of management, Henri Fayol divided “organizing” into five subcategories. These first five functions of management are still important in organizations today. The first of the five functions of management, Henri Fayol mentioned was “specialization”; if every employee is allowed to use their individual skills this will be advantageous to their area of expertise. Secondly, he mentioned “unity of command”, in which an employee is answerable to one manager only. The “formal chain of communication” is linked to this so that the employee will know how and with whom they will have to communicate. The fourth category is “unity of direction”; all employees must be aware of the organization’s strategic objectives. The fifth category is “authority and responsibility” in which managers have the authority to give orders.

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4. Unity of Command

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The management principle ‘Unity of command’ means that an individual employee should receive orders from one manager and that the employee is answerable to that manager. If tasks and related responsibilities are given to the employee by more than one manager, this may lead to confusion which may lead to possible conflicts for employees. By using this principle, the responsibility for mistakes can be established more easily.

5. Unity of Direction

This management principle of the 14 principles of management is all about focus and unity. All employees deliver the same activities that can be linked to the same objectives. All activities must be carried out by one group that forms a team. These activities must be described in a plan of action. The manager is ultimately responsible for this plan and he monitors the progress of the defined and planned activities. Focus areas are the efforts made by the employees and coordination.

6. Subordination of Individual Interest

There are always all kinds of interests in an organization. In order to have an organization function well, Henri Fayolindicated that personal interests are subordinate to the interests of the organization (ethics). The primary focus is on the organizational objectives and not on those of the individual. This applies to all levels of the entire organization, including the managers.

7. Remuneration

Motivation and productivity are close to one another as far as the smooth running of an organization is concerned. This management principle of the 14 principles of management argues that the remuneration should be sufficient to keep employees motivated and productive. There are two types of remuneration namely non-monetary (a compliment, more responsibilities, credits) and monetary (compensation, bonus or other financial compensation). Ultimately, it is about rewarding the efforts that have been made.

8. The Degree of Centralization

Management and authority for decision-making process must be properly balanced in an organization. This depends on the volume and size of an organization including its hierarchy.

Centralization implies the concentration of decision making authority at the top management (executive board). Sharing of authorities for the decision-making process with lower levels (middle and lower management), is referred to as decentralization by Henri Fayol. Henri Fayolindicated that an organization should strive for a good balance in this.

9. Scalar Chain

Hierarchy presents itself in any given organization. This varies from senior management (executive board) to the lowest levels in the organization. Henri Fayol ’s “hierarchy” management principle states that there should be a clear line in the area of authority (from top to bottom and all managers at all levels). This can be seen as a type of management structure. Each employee can contact a manager or a superior in an emergency situation without challenging the hierarchy. Especially, when it concerns reports about calamities to the immediate managers/superiors.

10. Order

According to this principle of the 14 principles of management, employees in an organization must have the right resources at their disposal so that they can function properly in an organization. In addition to social order (responsibility of the managers) the work environment must be safe, clean and tidy.

11. Equity

The management principle of equity often occurs in the core values of an organization. According to Henri Fayol, employees must be treated kindly and equally. Employees must be in the right place in the organization to do things right. Managers should supervise and monitor this process and they should treat employees fairly and impartially.

12. Stability of Tenure of Personnel

This management principle of the 14 principles of management represents deployment and managing of personnel and this should be in balance with the service that is provided from the organization. Management strives to minimize employee turnover and to have the right staff in the right place. Focus areas such as frequent change of position and sufficient development must be managed well.

13. Initiative

Henri Fayol argued that with this management principle employees should be allowed to express new ideas. This encourages interest and involvement and creates added value for the company. Employee initiatives are a source of strength for the organization according to Henri Fayol. This encourages the employees to be involved and interested.

14. Esprit de Corps

The management principle ‘esprit de corps’ of the 14 principles of management stands for striving for the involvement and unity of the employees. Managers are responsible for the development of morale in the workplace; individually and in the area of communication. Esprit de corps contributes to the development of the culture and creates an atmosphere of mutual trust and understanding.

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Home  Management

14 Principles of Management (Fayol)

This article explains the administrative theory of the 14 Principles of Managementby Henri Fayol in a practical way. After reading you will understand the basics of this powerful management tool.

Introduction 14 principles of Management

In the last century, organizations already had to deal with management in practice. In the early 1900s, large organizations, such as production factories, had to be managed too. At the time there were only few (external) management tools, models and methods available.

Thanks to scientists like Henri Fayol (1841-1925) the first foundations were laid for modern scientific management. These first concepts, also called principles of management are the underlying factors for successful management. Henri Fayolexplored this comprehensively and, as a result, he synthesized the 14 principles of management. Henri Fayol ‘s principles of management and research were published in the book ‘General and Industrial Management’ (1916).

14 Principles of Management of Henri Fayol

14 principles of Management are statements that are based on a fundamental truth. These principles of management serve as a guideline for decision-making and management actions. They are drawn up by means of observations and analyses of events that managers encounter in practice. Henri Fayol was able to synthesize 14 principles of management after years of study.

1. Division of Work

In practice, employees are specialized in different areas and they have different skills. Different levels of expertise can be distinguished within the knowledge areas (from generalist to specialist). Personal and professional developments support this. According to Henri Fayol specialization promotes efficiency of the workforce and increases productivity. In addition, the specialization of the workforce increases their accuracy and speed. This management principle of the 14 principles of management is applicable to both technical and managerial activities.

2. Authority and Responsibility

In order to get things done in an organization, management has the authority to give orders to the employees. Of course with this authority comes responsibility. According to Henri Fayol, the accompanying power or authority gives the management the right to give orders to the subordinates. The responsibility can be traced back from performance and it is therefore necessary to make agreements about this. In other words, authority and responsibility go together and they are two sides of the same coin.

3. Discipline

This third principle of the 14 principles of management is about obedience. It is often a part of the core values of a mission and vision in the form of good conduct and respectful interactions. This management principle is essential and is seen as the oil to make the engine of an organization run smoothly.