Henri Fayol was from France born in 1841. He got a degree of mining engineering in 1860 and started working as an engineer at a coal mining company. In 1888, he was promoted to the managing director of the company.
Major Contributions of Henry Fayol
Henry Fayol became famous as “Father of Management Studies and Thoughts”, because of the following contribution:
- He made a clear distinction between technical and managerial skills.
- He Identifies the main steps in the process of management which are the major function of management- planning, organizing, staffing, directing, and controlling.
14 Principles of Management Developed by Fayol
1. Division of work
According to this principle, the whole work must be divided into small units and instead of assigning the whole work to one person. The work should be assigned to a person according to the qualification and experience of the person.
Example: In bank one person is receiving cash, one is giving cash,one is giving loan etc .so work is divided and banks operate efficiently.
Positive effect of principle of division of work:
Whenever work is divided according to qualifications then automatically it lets to specialization.
2. Improves efficiency
When an employee is performing only one part of the job then he becomes an expert and results in less wastage of resources.
2. Authority and Responsibility
Authority means the power to take decisions.
Responsibility means an obligation to complete the job assigned on time.
According to this principle, there must be a balance between authority and responsibility.
Excess of authorities without matching responsibility may bring negative results and excess of responsibility without matching authorities will not allow the worker to complete his job on time.
Example: If a person is given responsibility to produce 100 units in one week but he is not given authorities to purchase the raw material.
If there is no supply of raw material as a result he could not complete the target of producing units on time.
The worker cannot be blamed for not completing on time because he was given only the responsibility and not the matching authority to carry on the work.
Excess of responsibility with less authority result is known completion of job.
Positive effects of this principle of Authority and Responsibility
- No misuse of authority.
- Helps in meeting responsibilities on time without any delay.
It refers to rules regulations of the employment agreements. It includes Good superior at all levels.
Fayol insists that discipline is required at the superior as well as subordinate level.
The disciplinary rules shall not be applicable only to subordinates but it requires good superiors at every level and fair agreement between superiors and subordinates.
Example: The employees must honor their commitments towards the organization by working effectively and efficiently and superiors must also meet their commitments by meeting their promises of increment, promotion, etc.
Positive effects of this principle
- Systematic working in the organization.
- Improves efficiency.
4. Unity of Command
According to this principle, an employee should receive an order from one boss superior and should be accountable to one superior 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 order must be executed first.
Example: If an employee of the production department is asked to go slow in production to maintain the 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, the employee will get confused as to whose instruction must be followed by him.
Positive effects of Unity of Command
- No confusion in the mind of subordinates.
- No ego clashes.
5. Unity of direction
According to this plan, one unit means one plan that is the effort of all the members and employees of the organization must be directed towards one direction that is the achievement of a common goal. If this principle is applied it leads to coordination.
Example: If an organization is producing a different line of products like medicine and cosmetic item each product has its own market and its own business environment.
Each division must plan its targets and every employee must put his effort towards the achievement of the plan of their division under the division of one head only on no account should the working of different departments overlap.
Positive effects of Unity of Direction
- Achievement of organisational goal
- Efforts of all the employee get unified towards One Direction only.
6. Subordination of Individual Interest to General Interest
According to this principle, the interest of an organization must supersede the interest of individuals or employees.
If the Objectives of the individual are in the same direction of organization then there is no problem but if the objectives of both the groups are in a different direction then-manager try to reconcile individual interest with an organizational goal and if it is not possible then individual goal must be sacrificed for achieving organizational goals.
Example: Before buying raw materials the manager must compare the prices and qualities of all the supplier and give order to best rather than giving order to his own relative by misusing his power.
Positive effects of subordination of Individual Interest to General Interest
- Achievement of organizational goal.
- Coordination between individual and organizational goals.
7. Remuneration of Persons
According to this principle employees in the organization must be paid fairly or adequately to give them maximum satisfaction. The employee should be paid fair wages and salaries which would give at least a reasonable standard of living.
Example: If in a particular year the organisation has earned more profit than a part from giving extra profit to shareholders and owners, some part of profit must be given to employee also in the form of bonus.
Positive effects of this principle
- Employees get motivated.
- Devotion and commitment of employees improve.
8. Centralization and Decentralization
Centralization refers to the concentration of authority or power in few hands at the top level. Decentralization means the 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 a combination of both depending upon the nature and size of the organization.
Example: Panchayat in our country have been given more powers to decide and spend funds granted to them by the government for Welfare of villagers. This is decentralization at National level.
Positive effects of Centralization and Decentralization:
- Benefits of centralization as well as decentralization.
- Fast decisions at the operational level and strict control by the top level.
9. Principle of Scalar Chain
Scalar chain means a line of authority or chain of superior from highest to lowest rank. All information must pass through every key of this chain no skipping of any one key should be allowed.
Example: In an organization there are employees A, B,C,D,E,F,G, H,I at various post if employee C has to communicate with employees G using the scalar chain the route should be like C-B-A-F-G .
Thus there will be fourth steps for the information to reach from employees C to the employee G.
Positive effects of Principle of Scalar Chain
- Systematic flow of information.
- No communication gap in the organisation.
10. Principle of order
This principle does not mean command but it refers to the orderly arrangement of men and material that is a fixed place for everything and everyone in the organization.
Example: If a worker is in need of a tool he must know in which box or tool room it will be found and if he needs guidance from Superior he must know the fixed cabin off supervisor.
Positive effects of Principle of Order
- No wastage of time in search of men and material.
- Smooth working of the organization.
11. Principle of Equity
It refers to the fair treatment of employees. Employees will put their maximum effort only when they are treated with kindness and Justice.
Example:In multinational companies people of various nationality work together without any discrimination.
Positive effects of Principle of Equity
- Employees get satisfied.
- Motivate the employees.
12. Stability of Tenure of Personnel
It referred to no frequent termination and transfer. According to this principle, the management must provide the feeling of job security among the employees because, with the feeling of insecurity for the job, the employees cannot contribute their maximum.
Example: Manju a the nature of Axis Ltd. recruited15 new employees, she kept these employees in an organization for a period of one year so that the employees become familiar with their job and can contribute their best to the realization of goals.
Positive effects of stability of Tenure of personnel
- Improves efficiency level of employees.
- No wastage of time and resources.
It refers to taking the first step with self-motivation. Fayol suggested that employees in the organization must be given an opportunity to take some initiative in making and executing a plan.
Example:Before setting up of plan the manager must welcome the suggestions and ideas of employee to allow their maximum participation but once the plan is made every employee must follow it and implemented it.
Positive effects of Initiative principle
- Develops feeling of belongingness in employees.
- Employees achieve the target on time if they are set up with their consultation.
14. Esprit De Corps
Management Must encourage and promote Team Spirit, unity, and harmony this will bring coordination and cooperation organization.
A manager should replace “I” with “we” this will give rise to mutual trust and belongingness among team members.
Example: This principle of Team Spirit says that each member of the group should not concentrate only on achieving his Individual target but they must concentrate on achieving the group target.
Positive effects of Espirit De Corps
- Develop Team Spirit.
- Achievement of group goal.