14 PRINCIPLES OF MANAGEMENT BY HENRI FAYOL
Henry Fayol was the Frenchman who introduced the General Principles of Management for the first time during his job as Junior Engineer in a Coal Mining and Iron Foundry Company. 14 Principles of management by Henri Fayol has emerged as a theoretical framework for the managers to enhance their skills. Because of this Henri Fayol is known as ‘Father of Modern Management’ or ‘Father of Management Studies and Thoughts’.
WHAT ARE PRINCIPLES OF MANAGEMENT?
Principles are the general statements which reflect the fundamental truth about some phenomenon based on cause and effect relationship. Management Principles are broad and general guidelines for decision making and behavior of managers.
The features of principles of management are as follows:
- Management principles are very flexible.
- These are applied with the creativity as these principles influence the behavior of human being.
- Management principles have to keep pace with the changing requirement of business environment.
14 PRINCIPLES OF MANAGEMENT BY HENRI FAYOL
The 14 principles of management by Henri Fayol are as follows:
DIVISION OF WORK
Division of work is also known as Principle of Specialization. This principle states that all the work should be divided into smaller tasks. Then the work should be divided on the basis of the qualifications, experience, skills and knowledge. This will lead to improved efficiency of the employee in completing the job. Fayol stated that this principle applies to all kinds of work may it be managerial or technical.
Example: In a bank, one person is appointed to deposit cash, one person is appointed for giving cash, a person is making entry in pass book and one is appointed to listen to customer queries. This will make each and everyone specializes in his work and will lead to effectiveness and efficiency in work.
Positive effects of this principle:
- Whenever work is divided according to the qualification then it will lead to specialization.
- When employee is performing only one part of the job then he becomes expert in that and results in less wastage of resources.
Consequences of violation of this principle:
- Lack of efficiency
- There will be no specialization
- Chances of duplication of work.
PARITY BETWEEN AUTHORITY AND RESPONSIBILITY
Authority refers to the power of getting things done through others.
Responsibility is the consequence of authority. It refers to duty to get the work done.
Fayol stated that there should be parity between the authority and responsibility of the employee. Authority without responsibility leads to its arbitrary use while responsibility without authority will not let employer finish his work on time. So both should be go hand by hand as these are co-extensive. To accomplish the goals effectively, adequate authority should be delegated along with responsibility.
Example: A person is given responsibility to produce 100 units of goods without giving him authority to purchase the raw material. This leads to his failure to complete the target of producing 100 units in time as responsibility was given to him without authority.
Positive effects of this principle:
- No misuse of authority.
- Helps in meeting responsibilities on time without any delay.
Consequences of violation of this principle:
- Delay in work or in completion of work due to lack of authority.
- Misuse of authority due to excess delegation of authority.
- Overburden with work due to excess responsibility.
DISCIPLINE
Discipline is one of the most important 14 Principles of Management by Henri Fayol. It refers to obedience and respect to superiors. It refers to :
- Following code of conduct, rules and regulations of employment contract.
- Clear and fair agreement among subordinate and superior.
- Meeting commitments at all levels.
- Judicious application of penalties.
Fayol says, “DISCIPLINE IS WHAT LEADERS MAKE IT’. It may be of two types: Self-Discipline and Command discipline. Self Discipline springs from within the individual and is in the nature of spontaneous response to a skillful leader. Command Discipline comes from recognized authority and seeks the observance of rules and regulations.
Example: The employees must honor their commitments towards the organization by working effectively and efficiently. On the other hand, superiors must also meet their commitment by meeting their promises of increments, promotions, wage revisions etc.
Positive effects of this principle:
- Systematic working in the organization.
- Improves efficiency.
Consequences of violation of this principle:
- Disorder, confusion and chaos.
- Wastage of resources in absence of discipline.
- Delay in work due to absence of rules and regulations.
UNITY OF COMMAND
Unity of Command is one of the most important 14 Principles of Management by Henri Fayol. Henry states ‘Should unity of command be violated, authority is undermined; discipline is in jeopardy, order disturbed and stability threatened. This rule seems fundamental to me; so I have put it to the rank of Principles.’
According to this principle, an employee should receive orders from one boss only because if he is receiving orders from more than one boss then he will get confused and will not be able to understand that whose orders must be executed first.
Example: If employee of production department is asked to go slow in production to maintain quality standard by the production in charge and sales in charge instructs the employee to fasten the production to meet the pending orders. In this situation, employee will get confused as to whose instructions must be followed by him.
Positive effects of this principle:
- No ego clashes.
- No confusion in the mind of subordinate.
- Improves effectiveness in working.
Consequences of violation of this principle:
- Confusion in the mind of the employee.
- Subordinate will get chance to escape from his responsibilities by giving excuses.
- Ego clashes among the different superiors.
- Difficulty in maintaining discipline in the organization.
UNITY OF DIRECTION
According to this principle, ‘one unit means one plan’, that is the efforts of all the members and employees of the organization must be directed towards one direction that is the achievement of common goal. Each department and a group having common objective must have one head and one plan only.
Example: If an organization is producing different lines of products: cosmetics, medicines and confectionery items each product has its own market and its own business environment. Each division must plan its target and every employee of that division must put his efforts towards he achievement of plan of their division under the direction of one head only.
Positive effects of this principle:
- Achievement of organizational goal.
- Efforts of all the employees get unified towards one direction only.
Consequences of violation of this principle:
- Lack of coordination.
- Wastage of efforts and resources by working in different directions.
- Difficulty in achieving organizational goal.
SUBORDINATION OF INDIVIDUAL INTEREST TO GENERAL INTEREST
According to this principle, there should be reconciliation between the individual and common interests. If there is any conflict or clash between the two, the interests of the organization should prevail over the individual interest.
Manager must take all the decisions in the organization by giving priority to organizational interest and not his personal interest. The manager can ensure this by his exemplary behavior by not misusing his authority for personal favors. The agreement between employers and employees should be fair and there should be constant vigilance and supervision.
Example: Before buying raw materials the manager must compare the prices and qualities of the entire supplier and give order to best rather than giving order to his own relative by misusing his power.
Positive effects of this principle:
- Achievement of organizational goal.
- Coordination between individual and organizational goal.
Consequences of violation of this principle:
- No achievement of organizational goal.
- No Coordination between individual and organizational goal.
REMUNERATION OF PERSONS
According to this principle employees in the organization must be paid fairly or adequately to give them maximum satisfaction. The employees should be paid fair wages and salaries, which would give at least a reasonable standard of living. At the same time it should be within the paying capacity of the company. The fair wage is determined according to:
- Financial capacity of the concern.
- By keeping in mind the minimum wage act of the Government.
- Wages and salaries paid by the competitors.
Fayol did not favor profit sharing plan for workers but advocated it for managers. If there is dissatisfaction among the employees relating to wage system of the company, it may lead to:
- Employee’s poor performance.
- Chronic absenteeism
- High turnover
- Poor communication
- Bad attitudes.
- Inordinate number of grievances etc.
Example: If in a particular year the organization has earned more profit than part from giving extra profit to shareholders and owners, some part of profit must be given to employees also in the form of bonus. This will encourage and motivate to put more efforts and increase the profit of the company.
Positive effects of this principle:
- Employees get motivated.
- Devotion and commitment of employees increases.
Consequences of violation of this principle:
- Increase in turnover of employees.
- Dissatisfaction and demotivation of employees.
CENTRALISATION AND DECENTRALISATION
Centralization refers to concentration of authority or power in few hands at the top level. Decentralization means evenly distribution of power at every level of management. According to Fayol, a company must not be completely centralized or completely decentralized but there must be combination of both depending upon the nature and size of the organization.
In small organization, centralization can be preferred but in large organizations, where there is large number of intermediaries, the decentralization should be adopted.
Example: The major decisions and activities of setting up organizational goals, plans, policies, strategies can be centralized but there can be policy of decentralization for the activities of routine work such as purchase of raw materials, fixing targets of workers etc.
Positive effects of this principle:
- Benefits of centralization as well as decentralization.
- Fast decisions at operational level and strict control by top level.
Consequences of violation of this principle:
- Complete centralization will result in delay in decision.
- Complete decentralization will result in misuse of authority.
PRINCIPLE OF SCALAR CHAIN
Scalar chain means chain of superiors ranging from top management to the lowest rank. This principle focuses that every communication must follow prescribed routes. It can be short circuited only in special circumstances or in emergency situations when its rigid following is feared to be detrimental to the organization. The information should be communicated through gang plank in case of emergency situations. Gang plank permits direct communication between the employees working in different positions without following the scalar chain.
Example: If the employee at lowest level wants to communicate some urgent information to the CEO of the company, he can use the gang plank. But generally workers cannot directly communicate with CEO but through gang plank it is possible.
Positive effects of this principle:
- Systematic flow of information.
- No communication gap in the organization.
Consequences of violation of this principle:
- There may be communication gap.
- No clarity in authority responsibility relationship.
PRINCIPLE OF ORDER
This principle is related to the arrangement of things and placement of people. Fayol says that there should be proper material and social order in the organization. There must be Right man at the Right place and Right thing should be at right place.
Example: If the worker is in need of tool he must know which tool room or box it will find. Similarly, if any worker needs guidance from the supervisor he must know the fixed cabin of the supervisor.
Positive effects of this principle:
- No wastage of time in search of men and material.
- Smooth and systematic working of an organization.
Consequences of violation of this principle:
- Wastage of time and energy in search of men and material.
- Not able to contact the people at the right time.
PRINCIPLE OF EQUITY
Equity refers to kind, fair and just treatments to the employees. The superiors should be fair and impartial in their dealings with the subordinates. They should give similar treatment to all the people working in the similar positions. Equity helps in creating cordial relations between management and workers and brings only loyalty in the organization.
Example: In multinational companies, people of various nationalities work together without any discrimination as we find a person of Indian origin Sunder Pichai became CEO of Google. Sunil Sood became CEO of Vodafone.
Positive effects of this principle:
- Employees get satisfied.
- Motivate the employees and boost up the morale of the employees.
Consequences of violation of this principle:
- Dissatisfaction in employees
- Increase in turnover
- Unhealthy relation between superior and subordinates.
STABILITY IN TENURE OF PERSONNEL
Stability of Personnel ensures no frequent termination or transfer of the employees. Fayol was of the view that job security is important for an employee to give his best at the job. High labor turnover is bad for the organization. So the management should adopt such policies that make the employees feeling connected to the organization.
Positive effects of this principle:
- Improves efficiency level of the employees.
- No wastage of time and resources.
Consequences of violation of this principle:
- Wastage of resources in learning the new job.
- Frustration and dissatisfaction among employees.
PRINCIPLE OF INITIATIVE
Initiative means doing something without being asked to do. It refers to freedom to think for oneself and use of discretion in doing work. Fayol says that employees at all levels in the organization should be given the opportunity to show initiative and exercise judgment in the formulation and execution of plans. It increases their zeal and energy and encourages them to act in an efficient way.
Example: Before setting up of plan, the manager must welcome the suggestions and ideas of employees to allow their maximum participation. But once the plan is made every employee must follow it and implement it.
Positive effects of this principle:
- Develops feeling of belongingness in employees.
- Employees achieve the target on time if they are set up with their consultation.
Consequences of violation of this principle:
- Employees will not work to the best of their ability.
- Demotivation among employees.
ESPIRIT DE CORPS
It is a French phrase which implies that there should be spirit of co-operation in the organization. This refers to harmony and mutual understanding among the members of an organization. Fayol stresses that only those organizations can be successful which act as a team.
Example: If the production manager assigned a target of manufacturing 100 units to a group of 10 members, then each member must contribute the production of 10 units at its own to reach the target. In case any employee falls sick, then remaining must take over its work and finished it well. This will be defined as accomplishment of goal with team work.
Positive effects of this principle:
- Develops team spirit.
- Achievement of group goal
Consequences of violation of this principle:
- Team goal may not be achieved.
- No team spirit and more stress on individualism.
