Fayol’s Principles of Management – Explained!

Fayol’s Principles of Management – Explained!

Management principles as they exist today have been evolved over a period of time.

The emergence of management in this century may have been a pivotal event of history. It signalled a major transformation of society into a pluralist society of institutions of which managements are the effective organs.

But it should not be concluded that the emergence of management is a phenomenon of the twentieth century only. The fact is that only in the beginning of twentieth century attempts were made to recognise clarify and codify the principles of management. These principles constitute the theory of management.

While tracing the historical background of management, it should be remembered that many of the management problems date back to antiquity. For instance, the co-ordination of human efforts is as old as mankind. Leadership has been practised as long as we have record of human activities.

Fayol pointed out in his monumental work the fourteen principles of management (or administration). According to him, the list is not exhaustive, but he has tried to describe only those which he had to follow at most of the occasions. He said, “There is nothing rigid or absolute in management affairs, it is ail a question of proportion… therefore, principles are flexible and capable of adoption to every need. It is a matter of knowledge, how to make use of them, which is difficult art requiring intelligence, experience and proportion”.

Thus, he made it quite clear that these principles were flexible and capable of adaptation to every need. He very ably stated that the light of principles, like that of light house, guides only those who knew the way into port.

The most well-known of fayol’s principles of management are the following:

(i) Division of Work:

The object of division of work is to derive the benefits from the principles of specialisation. Its advantages are widely recognised and it can be applied to any kind of work employing large number of workers of varying abilities.

It has its limits and the work should not be sub-divided beyond these limits. Fayol goes beyond the workshop level to apply the principle to all kinds of work, managerial as well as technical. The functions like planning, organizing, directing, co-ordinating and controlling etc., implied in the concept of management cannot be performed with overall competence and minutest accuracy by any one proprietor or by a group of directors of their own.

These functions have to be assigned to experts specialising in their specific areas. Managerial specialisation denotes the separation of mental and manual work, planning, direction and execution of business operations. Specialisation in decision making, policy formulation, directing and controlling would lead to more efficiency and systematic working of the concern.

(ii) Authority and Responsibility:

Authority, as Fayol puts it, is the right to give orders and power to exact obedience. Its exercise must be accompanied by reward and penalty, and must carry with it responsibility. He wrote: “Responsibility is a corollary of authority, it is its natural consequence and essential counterpart, and wheresoever authority is exercised, responsibility arises.”

In this principle, he pointed out that authority is not to be conceived of apart from responsibility. Those who accept authority should be willing to share responsibility. Managerial position becomes effective only by the large range of authority it can exercise. Authority is not merely derived from the manager’s position but is also compounded of intelligence, experience, moral worth, past service, etc.

The formal (or legal) and moral authority of manager will ensure the proper, prompt and productive performance of work by the subordinates. On the other hand, responsibility means obligation to perform the work in the manner desired and directed by superior authorities. Responsibility is the reciprocal duty of an individual for the authority vested in him. The success of management is hinged on the parity of authority and responsibility.

(iii) Discipline:

According to Fayol, discipline is obedience, application, energy and outward marks of respect. He considered discipline as absolutely essential for the smooth running of business. Discipline of course, should not mean that authorities are entitled to frighten, harass or exploit the subordinates to force them to comply with the orders or rules.

Discipline is now interpreted as securing compliance with the orders issued on equitable consideration on the basis of scientific study of the work. Superiors also are required to be reasoned, considerate and tactful in evolving discipline among their personnel.

That is why Fayol wrote that discipline requires (a) good superiors at all levels ; (b) agreements with employees as clear and fair as possible ; and (c) penalties judiciously applied. Bad discipline, Fayol maintains, is an evil which usually comes from bad leadership.

Management which involves direction of efforts of large bodies of people has to be invariably matched by marked discipline among the people whose skills and energy are to be channelized in specific directions. Discipline, therefore, is essential to consolidate the hold of management over the activities and affairs of any undertaking.

(iv) Unity of Command:

For any action, whatsoever, an employee should receive orders from one superior only. Fayol warned that in all human associations, in industry, commerce, army, home and state “dual command is a perpetual source of conflict.”

Dual or multiple commands creates havoc in the organisation since it undermines authority. He (Fayol) observes “As soon as two superiors wield their authority over the same person or department, uneasiness makes itself felt, the disorder increases. The spirit of authority will be overshadowed and discipline will be in danger.

The employee’s work will be confused if they have to report to more than one superior. Responsibility can be pin-pointed only when there is unity of command. Employees may, of course, be required to deal with different officers but unity of command implies that the workers in a department are required to be accountable to one head or superior or for complying with the orders for performing a job.

Effective exercise of authority, proper fixation of responsibility, orderliness in work discipline among the subordinats are all based on the management structured on the principle of unity of command.

(v) Unity of Direction:

This principle of Fayol states “that there should be one head and one plan” for a group of activities having the same objectives. “A body with two heads is in the social (as in the animal) sphere a monster, and has difficulty in surviving.” It means one manager, and one plan for all operations which have the same object in view, whereby activity and resources are co-ordinated and directed to the same end. Expected sequence of production with the desired level of excellence can be realised only if the correlated activities are designed and directed by one top executive with an integrated plan. In other words, there should be one master to direct the activities.

Fayol wrote, “unity of direction (one unit, one plan) must not be confused with the unity of command (one employee should have orders from one superior only). Unity of direction is provided for by sound organisation of the body corporate, unity of command turns on the functioning of the personnel. Unity of command cannot exist without unity of direction, but does not flow from it.”

(vi) Subordination of Individual Interest to General Interest:

Common interest is above the individual interest and when there is conflict between the two, the common interest must prevail. This principle calls for the reconciliation of objectives of individuals with those of the organisation and when the individual and organisational interests conflict, the latter must prevail.

Both the employees and management should subordinate their interest to the general interests of the concern. To ensure this, Fayol suggested (a) firmness and good example on the part of superiors, (b) agreement as fair as possible and (c) constant supervision.

(vii) Remuneration to Personnel:

Reward for the work done should, as far as possible, give satisfaction to both the employees and the employer. The various systems of payment of wages are not considered of universal applicability, and none of them can be offered as perfect, says Henri Fayol.

The importance of non-financial incentives is also stressed by him, (as also the conditions that affect the individual inside the factory during working hours and outside the factory during his non- working hours), which is now accepted as a matter of vital concern to the management. Employer must be discreet and prudent, desired rather than imposed, in harmony with the culture and tastes of his employee, which he is supposed to have.

A contented staff is a solid asset to the management. Remuneration should enable the employees to lead a satisfactory life and in addition offer special incentive to those who are more versatile or meritorious. Wages, bonus, share in profits would constitute a remuneration plan. It should be based on cost of living, an expected normal standard of living, productivity of the concerned employee and the capacity of the firm to pay.

(viii) Centralisation:

Like division of labour, Fayol considered that centralisation belonged to the natural order. “In many organisms, sensations move towards the brain or directive part, and from the brain or directive part orders are sent out which set all parts of the organism in movement.” The question of centralisation or decentralisation is a simple question of proportion.

It is a matter of finding the optimum degree for the particular concern. In his view, everything that increases the importance of subordinates’ role is decentralisation and that which reduces it is centralisation. The degree of centralisation will vary in each case. Small concerns have absolute centralisation because the management orders go directly to employees. But in large companies, there is less degree of centralisation since a manager’s orders pass through a number of levels and intermediaries to reach the operators.

Management should centralise the authority to the extent that neither there should be too much concentration of power nor should see that maximum results are realised from all the faculties of the personnel.

(ix) Scalar Chain:

According to Fayol, scalar chain is “the chain of superiors” ranging from the ultimate authority to the lowest ranks. The line of authority is the route followed via every link in the chain by all communication which start from or go to the ultimate authority.

The above diagram shows that A holds the ultimate authority on the two departments. A will give orders to B and B will pass on to C and so on. Similarly A will issue instructions to W, who will pass on these to X and so on. Now, if C wants to consult X, then C will approach to B and B to A. A will inform W and W to X. So it will take long time.

Fayol felt that departure from the chain is necessary to make the communication fast and effective. If C talks directly to X and both get the approval of their superiors about the agreement, there is no harm. Communication should be short-circuited as far as possible.

(x) Order:

By order Fayol meant a place for everyone and every one in his place, the right man in the right place, lie believed that this order demanded precise knowledge of the human requirements and resources. Orderliness in work can be obtained by the management through suitable organisation of men and materials.

Right man for the right thing or job and right materials for the right person would ensure systematic utilisation of resources and manpower employed in the undertakings. “Right place for everything and for every man” should be the important guideline of management. If the ‘order’ is followed, it will be necessary to follow scientific selection of competent personnel and bring about correct assignment of duties to the respective persons.

(xi) Equity:

This principle of Fayol states that managers must treat employees with “kindliness”. “Desire for equity and equality of treatment are aspirations to be taken into account in dealing with employees”. A manager should strive to install a “sense of equity” throughout all levels of scalar chain.

Prejudices, personal likes or dislikes should not influence the managerial treatment of the subordinate personnel. Management should not be unduly harsh towards the employees but their problems should be dispassionately considered and solutions based on justice should be evolved. Equity ensures cordial relations between the management and the labour. Smooth and successful working of an enterprise depends on healthy industrial relations which are built on enduring basis of justice and fair play. Equity does not excludes either forcefulness or sternness.

xii) Stability of Tenure of Personnel:

No employee should be removed within a short period of time. Stability of tenure generates prosperity in the organisation. Moreover, the employees should not be rotated on different jobs very frequently because considerable time is required to learn each job. According to Fayol, 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 that he is removed, he will not have had time to render worth-while service. Frequent change should be avoided. He considers that it is much better to have one manager of mediocre quality than a sequence of able managers moving rapidly into and out of the function. He maintains that instability is both the cause and the consequence of lack of success.

(xiv) Initiative:

Initiative is concerned with thinking out and execution of a plan. Initiative increases zeal and energy of the employees. Managers should secure as with initiative as possible from the subordinates. It becomes a source of strength in different situations and is, therefore, desirable because of psychological effect upon the individual. It suggests that managers should permit subordinates to exercise authority.

This has implications of sharing decision-making authority with subordinates. Fayol describes initiative as one of the keenest satisfactions for an intelligent man to experience. Management should encourage every employee in his field of duties to turn out better work with his maximum versatility. Freedom to propose a plan and to execute it is what Fayol means by initiative. Employees should be welcomed to make any suggestions which should receive proper consideration by the management in formation of its objectives and plans.

(xiv) Esprit De Corps (Team Spirit):

This is the principle of ‘union is strength’ and extension of unity of command for establishing teamwork. Literally speaking, the phrase esprit de corps means the spirit of loyalty and devotion which unites the members of a group. It also means ‘regard for the honour of the group to which one belongs. Fayol called for harmonious relations among the personnel of the concern.

Harmony among the personnel is a source of strength. Unity among the personnel can be accomplished through proper communication and coordination. Management should not try to drive doubtful temporary advantage by following ‘divide and rule’ policy. Strength, stability, stature and reputation depend on the harmonious relations subsisting among the personnel.

The reasons of misunderstanding, symptoms of distrust, potential pretext of clash of interests among the staff should be eliminated in time by an alert management through its wholesome policies on matters concerning the well being of the workers and their levels of efficiency.

In concluding the discussion on the above-mentioned principles, Fayol made it quite clear that the list was not exhaustive but he considered this codification indispensible. Be it commerce, industry, politics, religion, war and in every concern management functions had to be performed. It may be pointed out that Fayol used the word principle only for the sake of convenience, and according to him principles are not the exact laws.

The principles are flexible and capable of adaption to every need. He further suggested that the principles are simply guide post which helps a manager to take right decisions. They are to be used carefully and intelligently. To quote Fayol, “It is a matter of knowing how to make use of them, which is a difficult art requiring intelligence, experience, decision and proportion.”

Evaluation:

Henry Fayol gave a comprehensive theory of management, the aim of which was to improve and rationalise the system of management. According to him, the management process consists of six functions. He also gave fourteen principles of management which have proved true until now. He considered the management universal in character.

He was also in favour of providing formal training to the future managers. The contribution of Fayol in the field of management is recognised as the core of modern management. His philosophy and principles helped in the development of management as a separate discipline.

However, Fayol’s theory of management could not escape criticism because of the following reasons:

1. It is too formal

2. It does not pay adequate attention to the remuneration of the workers.

The criticism of Fayol’s theory is not fully justified. Fayol’s theory is too formal, is a baseless charge because, every scientific and analytical study is bound to be formal. As regards the second point of workers’ remuneration, Fayol did discuss about the fairness of remuneration and non-financial incentives. But, he did not work out a rational system of wage fixation. Thus, this point of criticism is partially valid.

To sum up, it can be said that the points of criticism are very minor in comparison to the contribution of Fayol in the field of management. He is regarded as the Father of Administrative Management Theory. In the words of Albert Lepawsky—

“The twentieth century has yet to produce as balanced a combination of able practitioner and keen student of administration as Henry Fayol”.