Management Theories > General Principles of Management
Henri Fayol was born in 1841 in Istanbul, is often known as the person who developed a general theory of business administration. He was a mining engineer who worked as the managing director of a big French mining company named as Compagnie de Commentry-Fourchambeau-Decazeville for the last 30 years of his working life (1888–1918). He died in Paris in 1925.
He suggested the following 14 principles as the general principles management:
1. Division of work: This principle is basically the same with Adam Smith’s “Division of Labour” which means “specialization“. According to Fayol, the object of division of work is to produce more and better work with the same effort.
2. Authority and Responsibility: Authority is the right to give orders and the power to exact obedience. Distinction must be made between a manager’s official authority deriving from office and personal authority. (Note: Later in 1959, social psychologists John French and Bertam Raven, defined five sources of power as: coercive power, reward power, legitimate power, referent power and expert power).
According to Fayol, authority is not to be conceived of apart from responsibility, that is apart from sanction – reward or penalty – which goes with the exercise of power. Responsibility is a corollary of authority, it is its natural consequence and essential counterpart, and wheresoever authority is exercised responsibility arises.
3. Discipline: Discipline, being the outcome of different varying agreements, naturally appears under the most diverse forms; obligations of obedience, application, energy, behaviour, vary, in effect from one firm to another, from one group of employees to another, from one time to another. Nevertheless, general opinion is deeply convinced that discipline is absolutetly essential for the smooth running of business and that without discipline no enterprise could prosper.
4. Unity of command: This principles emphasizes that an employee should receive orders from one superior only. Fayol says that if it is violated, authority is undermined, discipline is in jeopardy, order distributed and stability threatened. (Note: matrix organizations are in contrast to Fayol’s unity of command principle).
5. Unity of direction: One head and one plan for a group of activities having the same objective. (Note: Organizations write and announce vision and mission statements, objectives and strategies so that the organizations align and go in the same direction).
6. Subordination of individual interest to the general interest: This principle calls to mind the fact that in a business the interest of one employee or group of employees should not prevail over that of the concern, that the interest of the home should come before that of its members and that interest of the state should have pride of place over that of one citizen or group of citizens. (Note: What about the “invisible hand” concept of Adam Smith?)
7. Remuneration (payment/compensation) of personnel: Remuneration of personnel is the price of the services rendered. It should be fair and, as far as is possible, afford satisfaction both to personnel and firm (employee and employer). Three modes of payment in use for workers are : Time rates, job rates and piece rates. Fayol also mentioned about bonuses and profit-sharing and non-financial incentives.
8. Centralization: Everything which goes to increase the importance of the subordinate’s role is decentralization, everything which goes to reduce it is centralization. The question of centralization or decentralization is a simple question of proportion, it is a matter of finding the optimum degree for the particular concern.
The degree of centralization must vary according to different cases:
- If the moral worth of the manager, his strength, intelligence, experience and swiftness of thought allow him to have a wide span of activities he will be able to carry centralization.
- If conversely, he prefers to have greater recourse to the experience of his colleagues whilst reserving himself the privilige of giving central directives, he can effect considerable decentralization.
9. Scalar Chain (line of authority): The scalar chain is the chain of superiors from the ultimate authority to the lowest ranks.
10. Order: Fayol defines the formula for order as “a place for everyone and everyone in his place”. He classifies two types of order as material order, which means everthing must be in its appointed place and social order, which presupposes the most succesful execution of the two most difficult managerial activities: good organization and good selection. Social order demands precise knowledge of the human requirements and resources of the concern and a constant balance between these requirements and resources.
11. Equity: Desire for equity and equality of treatment are aspirations to be taken into account in dealing with employees. (Note: In motivation theories of organizational behaviour equity is important. John Stacey Adams, (behavioral psychologist) asserted that employees seek to maintain equity between the inputs that they bring to a job and the outcomes that they receive from it against the perceived inputs and outcomes of others in 1963. Please follow the link for a visual representation of Adams theory)
12. Stability of tenure of personnel: Time is required for an employee to get used to new work and succeed in doing it well, always assuming that he possesses the requisite abilities. If when he has got used to it, or before then, he is removed, he will not have had time to render worthwhile service. If this be repeated indefinetly the work will never by properly done.
Generally the managerial personnel of prosperous concerns is stable, that of unsuccessful ones is unstable. Instability of tenuer is at one and the same time cause and effect of bad running. In common with all the other principles, therefore, stability of tenure and personnel is also a question of proportion.
13. Initiative: Much tact and some integrity are required to inspire and maintain everyone’s initiative, within the limits imposed, by respect for authority and for discipline. The manager must be able to sacrifice some personal vanity in order to grant this sort of satisfaction to subordinates.
14. Esprit de corps: Means “Union is strength“. Harmony, union among the personnel of a concern, is great strenght in that concern. The principle to be observed is unity of command; the dangers to be avoided are (a) a misguided interpretation of the motto “divide and rule”, (b) the abuse of written communications.
(a) Personnel must not be split up. Dividing enemy forces to weaken them is clever, but dividing one’s own team is a grave sin against the business.
(b) Abuse of written communications. Wherever possible, contacts should be verbal; there is gain in speed, clarity and harmony.
Please follow the link for Management Theories:
- Henri Fayol, General and Industrial Management, 1949 (Original work published in 1916 with the title: “Administration Industrielle et Générale”)