Henri Fayol Principles of Management

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Everything you need to know about Henry Fayol’s fourteen principles of management. Henry Fayol has developed a body of principles of management, the father of modern management.

Fayol wrote perceptibly on the basis of his practical experience as a manager. Although, he did not develop an integrated theory of management, his principles are surprisingly in tune with contemporary thinking in management theory.

Fayol suggested fourteen principles of management for running the business efficiently. They are:-

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1. Division of Work 2. Authority and Responsibility 3. Discipline 4. Unity of Command 5. Unity of Direction 6. Subordination of Individual Interests to General Interest

7. Fair Remuneration to Workers 8. Effective Centralization 9. Scalar Chain 10. Order 11. Equity 12. Stability of Tenure of Workers 13. Initiative 14. Esprit De Corps.

Fayol held that there is a single “administrative science”, whose principles can be used in all management situations no matter what kind of organizations are being managed.

This earned him the title of “Universality”. He, however, emphasized that his principles were not immutable laws but rules of thumb to be used as occasion demanded.


Henry Fayol’s 14 Principles of Management

Fayol’s Principles of Management – For Running the Business Efficiently

Henry Fayol developed a general theory of management. In 1916 he published the book called “ADMINISTRATION INDUSTRIELLA ET GENERALE” in French which was translated into English in 1929.

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Fayol gave the 14 principles of management for running the business efficiently.

These are as follows:

1. Division of Work:

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Division of work refers to division of the total work into smaller parts. It will not only lighten the burden but also increase the efficiency of the labour. It promotes specialisation in such a way that one person does only one thing rather than doing everything himself. Division of work applies to all kinds of works; managerial as well as technical and at all levels of organisation.

2. Authority and Responsibility:

Authority and responsibility are related terms. Responsibility is the essential counter part of authority and the two go hand in hand. Authority without responsibility leads to irresponsible behaviour while responsibility without authority makes a person ineffective. Fayol says that there should be a proper balance between authority and responsibility.

3. Discipline:

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Discipline refers to obedience, application, energy, behaviour and outward marks of respect. Discipline is essential for the smooth running of business and without it no business can prosper.

There are three requisites of disciplines:

i. Good supervision at all levels.

ii. Clear and fair agreement.

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iii. Judicious application of all penalties and sanctions.

4. Unity of Command:

Unity of command means that an employee should get orders and instructions only from one superior. He should be responsible only to one superior and not to so many bosses. If the principle of unity of command is not observed, the authority is undermined, discipline weakened, loyalty divided causing confusion and delays.

5. Unity of Direction:

Unity of direction signifies that each group of activities having the same objective must have one head and one plan. The purpose of unity directions is to have better co-ordination among various activities to be undertaken in an organisation.

6. Subordination of Individual’s Interest to General Interest:

Fayol states that the people should realize the objectives of the group and direct their efforts towards the achievement of these objectives. Individual interest must be subordinate to the common interest. When the individual interest and common interest differ, it is the duty of management to reconcile them. Fair agreements with the subordinates and constant supervision are to prevent promotion of individual interest at the cost of general interest.

7. Fair Remuneration to Workers:

Remuneration and method of payment should be fair and afford maximum satisfactions to both employees and employers. It-should provide sufficient incentive to the well-directed employee’s effort but over payment beyond reasonable limits is undesirable.

8. Effective Centralisation:

Centralisation refers to the concentration of authority in the hands of few i.e., top management. Centralisation reduces the individual subordinate’s role. The degree of centralisation may be different in different cases, but a balance must be maintained between centralisation and decentralisation of authority to attain the best possible result.

9. Scalar Chain:

It is the chain of superiors from the higher level to the lowest level for the purpose of communication. It decides the line of authority, i.e., who is superior to whom. The line can be shortened only when it seems detrimental to the interest of the organisation to strictly follow the line of authority. The need for swift action can be reconciled with due regard to the line of authority by using “gang plank and or direct contact”.

10. Order:

This principle relates to arrangement of things and people. Everything should be in its place and there should be a place for everything. Similarly, every man in the organisation should be properly placed i.e., right man in the right place. This kind of order demand precise knowledge of the human requirement and resources of the organisation and a constant vigil is necessary in order to maintain this order.

11. Equity:

Manager should be just and kind to attain loyalty and devotion from personnel. Equity is the combination of kindness and justice. The application of equity requires much of good sense, experience and good nature.

12. Stability of Tenure:

There should be reasonable security of job. No employee should be removed unnecessarily within a short period. Stability of tenure is necessary to get an employee accustomed of doing a new work and to enable him in performing it well.

13. Initiative:

Managers should encourage their employees to take initiative within the limits of authority and discipline. Initiative is concerned with thinking and executing a plan.

14. Espirit de Corps:

This is an extension of the principle of unity of command. It refers to the principle of “unity is strength.” The manger should develop a team spirit in his employees. Team spirit is of great importance to accomplish tasks. The manger should avoid written explanation against an erring employee. Oral direction should be there to set things right.


Fayol’s Principles of Management – Division of Work, Authority, Discipline, Unity of Command, Unity of Direction, Group of Interest, Remuneration and a Few Others

Henry Fayol (29th July, 1841-19th Nov, 1925) is the father of modern professional management. He was a mining engineer and director of mines.

He identified 14 principles of management, they are:

1. Division of work

2. Authority

3. Discipline (both employer and employee)

4. Unity of command (one boss only)

5. Unity of direction (one action plan only)

6. Group interest

7. Remuneration (bonus and wages)

8. Centralization of authority

9. Scalar chain (authority flows from top to bottom)

10. Orders (keep the right persons at right place)

11. Equity

12. Stability (avoid frequent transfers)

13. Initiative

14. Teamwork.

1. Division of Work:

In every organization the entire work may not be done at one center. The entire work has to be divided into number of segments, and each segment or part has to be done by one person which is known as division of work. Division of work results in higher productivity and performance of human factor.

2. Authority and Responsibility:

Authority and responsibility are two related events. Authority refers to the right to command to make oneself obey, responsibility is the accountability for performing a job. Fayol explained about the distinction between official authority and personal authority. Official authority as per the position held while personal authority is derived from the managers own experience and personality.

3. Discipline:

As per Fayol’s suggestions, there are three measures to have good discipline:

i. Good supervision at all levels

ii. Clear opinion to disciplinary matters

iii. Legal application of penalties.

4. Unity of Command:

The measuring of unity of command is that an employee should receive orders from one superiors only, many superiors involvement spoils and violates the discipline and also threatens stability of the organization, one boss is better than many bosses.

5. Unity of Direction:

The unity of command is concerned with personnel but unity of direction is concerned with the total organization.

6. Coordination for Group Interest:

Every employee should think about the growth of the organization and not for individual growth. So common interest with coordination for group interest is very much required.

7. Remuneration:

To encourage and motivate the employees, management has to apply uniform wage policy and with special bonus for extra efforts done by the employees, lower level wages may not be a saving to the organization.

8. Centralization:

If there is full authority for operating the organization activities at lower levels without any reservations or limitations then it is called centralization. In some issues, the functions are more critical to take suitable decisions at lower levels, top levels are involved to resolve the issues which comes under lesser degree of decentralization.

9. Scalar Chain:

In modern scientific management process, the chain management system is more preferable for effective communication from top levels to bottom levels. In any organization, the communication process is continuous.

Henry Fayol says that there should not be any bypassing system in the organizations and he expressed his views as that the communication process to be direct between intermediate levels so that confusion may be eliminated. The scalar chain process depends on chain management as the authority flows from top to bottom levels only.

10. Orders:

Keeping the employees as right person at right place results positive progress. While selecting the employees should be fair and proper by avoiding evils and favoritism which influences growth of the organization.

11. Equity:

In the organizations, equity to be implemented properly which leads to loyalty, royalty and devotion towards the organization by the employees. With fairness, kindness and justice the equity can be operated by the managers to reduce the problems for the industrial relations.

12. Stability:

Frequent transfers to the employees will harm the stability of the organization. If the employee is settled at his job, he should not be disturbed to change the job which creates instability. So the employee after settled should not be transferred to other place and to be continued at the same place to avoid the instability crisis.

13. Initiative:

Initiative and drive is very much required for each employee to run the organization properly and also to face the challenges of competition. Henry Fayol advices the managers to sacrifice their personnel matters to permit the subordinates to plan and execute.

14. Teamwork:

In every organization one man show is not having any better results. Team work is very much essential to complete the planned targets of the organization. Team playing with good team work leads to get team success for growth of the organization. Team building with team spirit helps in the growth of the organization.


Fayol’s Principles of Management – Top 14 Principles: Division of Work, Authority and Responsibility, Discipline, Unity of Command and a Few Others

1. Division of Work:

The objective of division of work is to derive the benefits of specialization which can be applied not only in technical work, but in all other works as well. Fayol pointed out, of course, that the division of work has its limits.

2. Authority and Responsibility:

Both are correlated terms. Responsibility is the essential counterpart of authority and they go hand in hand. An ideal manager is expected to have official authority arising out of his position as well as his inherent personal authority which is based on intelligence, experience, moral work, ability etc.

3. Discipline:

It is nothing but obedience, application, energy, behaviour and outward marks of respect shown by employees to their superiors. The objectives, rules and regulations, the policies and procedure, must be honoured by each member of the organization. There must be penalties and fines (punishment) for non-obedience or indiscipline.

No organisation can work smoothly without discipline-Preferably voluntary or self-discipline. Three requisites for discipline are – (a) good supervision at all level (b) clear and fair agreements (c) judicious applications of penalties or sanctions.

4. Unity of Command:

This principle requires that an employee should receive orders from one superior only. He must be accountable to one superior (boss). Dual command creates problems in all concerns.

5. Unity of Direction:

For accomplishment of a group of activities having the same objectives, there should be one head and one plan. While unity of command is concerned with functions of personal, unity of direction is concerned with functioning of body corporate. Hence all members of an organization must work together to accomplish the objectives of the concern.

6. Subordination of Individual Interest to General Interest:

Common interest must prevail over individual interest. Some factors like ambition, laziness, weakness and others tend to reduce the importance of common interest.

7. Remuneration of Personnel:

Employees remuneration should be just and fair and acceptable to both parties-employer and employees. Fair pay with non-financial rewards can act as the best incentive for good performance. Exploitation of employees in any manner must be eliminated.

8. Centralization:

The degree of centralization of authority should vary according to the needs of situation. If there is greater importance to the subordinate’s role decentralization is advisable. Otherwise centralization is the only way. As far as possible extreme centralization and decentralization must be avoided.

9. Scalar Chain:

It is the chain of superiors from higher to the lowest rank. An employee should feel free to contact his superiors.

10. Order:

This is principle of organization relating to things and persons. Material orders require “place for everything and everything in a place” and social orders demand “the right man in the right place”. Order or system can create a sound organization and efficient management. Any deviation from order leads to chaos and confusion.

11. Equity:

Equity is greater than justice, since it results from the combination of kindness and justice. The application of equity requires good sense and experience with a view to secure devotion and loyalty from employees.

12. Stability of Tenure of Personnel:

Stability in employment is essential to perform well. Security of income and employment is pre-requisite of sound organization and management. Its stability of tenure is an evidence of bad running of affairs.

13. Initiative:

Manages should permit subordinates to think individually in executing plans. This will give them to keen satisfaction.

14. Spirit De Crops (Spirit of Co-Operation):

Team spirit and proper communication among the members of team are important for the success of an organization. Pride, loyalty and sense of belonging are responsible for good performance.


Fayol’s Principles of Management

Fayol’s Contribution:

Henri Fayol is well known for his book ‘General and Industrial Management’ (translated version from French,). He became aware of the need to alleviate trade friction and deterioration of business unit when the responsibility to turn a losing business concern into a profit making one was thrust on him. He soon established that authority and responsibility when shaped on a certain pattern can change the fortunes of business.

Beginning as a mining engineer, he rose to the position of General Manager of a company in France. When the company started losing business he was given the responsibility of the Chief Executive in 1898. Within a few years the company started making profits and rose to the position of prominence. Fayol retired in 1916 and devoted rest of his life to writing on management principles and practices. In enunciating the principles.

Fayol remains committed to the role of top management in influencing actions and decisions at all lower levels. He classified business activities into six major categories and visualised a mutually complimentary system based on certain principles. The six major categories of business are – Production and Manufacturing; Finance; Accounting; Sales and Marketing; Security and Managerial.

The Principles are:

1. Division of Labour;

2. Unity of Command;

3. Unity of Direction;

4. Sharing of Authority and Responsibility and their Parity;

5. Line of Authority (Scalar Chain);

6. Team Work (Esperit de Corps);

7. Equity;

8. Position and Tenure of Employees;

9. Fair Remuneration;

10. Discipline;

11. Initiative; and

12. Order.

1. Division of Labour – Fayol recommended horizontal division of work from shop-floor level to management level. This meant that at each level each one performed a specialised work to ensure speed, accuracy and better performance.

2. Unity of Command – The subordinate should be accountable to and receive orders from only one superior to avoid confusion and conflict. This process facilitates fixing of responsibility.

3. Unity of Direction – The dominant strategy of this principle is “one head and one plan for a group of activities having the same objective.” Emphasising the importance of common goals, it refers to activities of the group as against line of authority suggested by Unity of Command. Both are thus complimentary.

4. Authority and Responsibility – It refers to the mutually complementary nature of authority and responsibility. Both go together and there should be parity to guide and regulate the behaviour of the employees.

5. Scalar Chain – It is a ladder-like chain of command from top to bottom. The hierarchical system of command also serves as a chain of communication. Represented by a pyramidal structure of the organisation the orders flow from the upper level to the next immediate level (A to B, B to C and so on). However, to minimise delays but not as a normal practice, Gang Plank (direct contact) may be created and then on that command line will it will move upwards.

6. Esperit de Crops – The members of the organisation must have team spirit to strengthen the business organisation. They must work with a sense of cooperation and not herd mentality.

7. Equity – A similar treatment is assured to people in similar position. The managers should not give undue favours to some and neglect others.

8. Position and Tenure -Employees should not be moved from one position to another very frequently. They must be allowed time to get used to work. They may however be elevated to higher positions as the interests of the organisation demand.

9. Remuneration – Remuneration should reward the effort and be satisfactory.

10. Discipline – Obedience, subordination and proper conduct ensure smooth running of business unit. Penalties may be imposed on employees for bad conduct.

11. Initiative -Inspiration, and innovation to bring about improvements is the bane of management.

12. Order -There is a “proper place for everything and everything in its right place”. Fayol also emphasised ‘social order’ meaning that each employee is allotted a place of work where he/she will be generally available. Fayol applied these principles to all types of organisations on universal basis.


Fayol’s Principles of Management – For Running an Efficient Business

Henry Fayol is popularly known as the father of modern management theory. Fayol suggested 14 principles of management for running the business efficiently.

These principles may be briefly stated as follows:

Principle # 1. Division of Work:

Division of work implies dividing the total task into compact jobs and allocating these com­pact jobs to different individuals. The object of division of work is to facilitate specialization and improve efficiency. Due to division of work, higher productivity and better performance is possible. When an individual does the same job on a repetitive basis, he specializes in his task and, thus, acquires speed and accuracy in the performance.

Principle # 2. Authority and Responsibility:

Authority is the right to give orders and power to exert obedience. Responsibility implies obligations to perform the work in the manner desired and directed. Authority and responsibility must go side by side. There should be parity between authority and responsibility. Authority without responsibility leads to irresponsible behaviour, whereas responsibility without authority makes a person ineffective.

Principle # 3. Discipline:

Discipline means obedience and outward marks of respect. Discipline is essential for the smooth running of business and without it, no business can prosper. Clarity of rules, good supervision, and built-in system of reward and punishments ensure discipline in an enterprise.

Principle # 4. Unity of Command:

This principle states that one subordinate should receive orders from one superior only. The subordinate should be accountable to that superior from whom he received orders. In other words, every employee should have only one boss. Dual or multiple commands create chaos in the organization, since it under­mines authority. Authority should be delegated in such a manner that a subordinate works under one superior only.

Principle # 5. Unity of Direction:

According to this principle, there should be one plan for a group of activities having the same objectives. In other words, each group of activities having the same objective must have one plan of action and that action plan should be executed under the control of one superior.

Principle # 6. Subordination of Individual Interests to General Interest:

According to this principle, individual interests must be discarded and a general interest must be maintained. It means that the selfish attitude of an individual should be surrendered if it affects the interests of the enterprise. The interest of the group must always prevail over individual interests.

Principle # 7. Fair Remuneration to Workers:

The remuneration payable to workers must be fair, reasonable, and satisfac­tory. The management must ensure a fair reward for the work and decide the most equitable method of calculat­ing wages. Fair remuneration brings about satisfaction to the workers and high productivity for the organization.

Principle # 8. Effective Centralization:

Centralization means concentration of authority for decision-making, especially at the top managerial level. There should not be too much centralization. The management has to decide the extent of authority to be concentrated at the top level and its dispersion among subordinates. There should be a proper balance between centralization and decentralization. Neither absolute centralization nor absolute decentralization is desirable.

Principle # 9. Scalar Chain:

This refers to the chain of superiors ranging from the top rank to the lowest ranks in the man­agement. The scalar chain determines the clear line of authority from top to bottom linking managers at all levels. It serves as a chain of command and chain of communication.

Principle # 10. Order:

Order refers to a systematic arrangement of materials and placement of people in the organiza­tion. This principle stresses upon the proper utilization of physical and human resources of an enterprise. It implies the right man in the right job and right material in the right place for effective utilization of the available resources in an organization.

Principle # 11. Equity:

It signifies that management must treat employees with justice and equity-based kindliness. There should neither be nepotism nor be favoritism while selecting workers. All workers should be given a just and fair treatment. Equity promotes a friendly atmosphere between superiors and subordinates and encourages loyalty.

Principle # 12. Stability of Tenure of Workers:

Stability in the tenure of workers brings prosperity in the organization. Every employee should feel that his service is not going to be terminated without any substantial cause. In other words, for securing better results, guarantee of service should be awarded to every employee. Stability and continuity of workers promotes teamwork, loyalty, economy, and minimize labour turnover.

Principle # 13. Initiative:

It means eagerness to initiate action in work-related matters without being asked to do so. Initiative is a powerful motivator of human behaviour and is a source of strength for the organization. Every person has got his own inspiration of his mental faculty and he feels keenly that he must be provided with the scope to do the work with his own initiative. Workers must be encouraged to make suggestions or make improvements in the original plans.

Principle # 14. Esprit De Corps:

This term comprises two principles – (a) Union is strength and (b) Team spirit is most essen­tial. This principle implies that there should be cooperation and team work among the members of an organization. The manager must always make a constant effort to ensure harmony among his subordinates to ensure unity and high morale. The management should not follow the policy of divide and rule. Differences of opinion must be settled then and there. The manager should infuse a spirit of teamwork in his subordinates.


Fayol’s Principles of Management – A Fundamental Truth

Fayol has given fourteen principles of management. He has made distinction between management principles and management elements. While management principle is a fundamental truth and establishes cause-effect relationship, management donates the function performed by a manager.

Various principles of Management are as follows:

1. Division of Work

2. Authority and Responsibility

3. Discipline

4. Unity of Command

5. Unity of Direction

6. Subordination of Individual Interest to General Interest

7. Remuneration of Personal

8. Centralisation

9. Scalar Chain

10. Order

11. Equity

12. Stability of Ensure of Personnel

13. Initiative

14. Esprit de corps (Union of Strength)

Principle # 1. Division of Work:

Fayol has advocated division of work to take the advantage of specialisation. According to him, “specialisation belongs to natural order. The workers always work on the same part the managers concerned always with the same matters, acquire an ability, sureness and accuracy which increase their output. Each change of work brings in it training and adaptation which reduces output, yet division of work has its limits which experience and a sense of proportion teaches us may not be exceeded. This division of work can be applied at all levels of the organisation.”

Principle # 2. Authority and Responsibility:

The authority and responsibility are related, authority denotes the right or power to give orders to the subordinates. Responsibility means the duty which the subordinates is expected to perform by virtue of his position in the organisation. Responsibility must be expressed either in terms of functions or in terms of objectives.

When a subordinate is asked to control the working of a machine, the responsibility is in terms of function and when a subordinate is asked to produce a number of units of a product, the responsibility is created in terms of objectives.

Principle # 3. Discipline:

Discipline means getting obedience to rules and regulations of the organisation. According to Fayol, discipline is obedience application, energy and outwards marks of respect. Discipline is necessary for the smooth running of the organisation. Maintenance of discipline in the organisation depends upon the quality of leadership, clear and fair agreements and a judicious application of rules.

According to Fayol, discipline can be maintained by:

(i) Having good superiors at all levels.

(ii) Entering into agreement either with the individual employees or with the union, as the case may be, those are as clear and fair as possible.

(iii) Ensuring that penalties are judiciously imposed.

Principle # 4. Unity of Command:

This principle conveys that a subordinate should receive orders from one superior only. If he receives orders from more than one superior, he will not be able to carry out the orders in a proper manner. Fayol observed that if this principle is violated, authority will be undermined, discipline will be in a jeopardy, order will be disturbed and stability will be threatened. Dual command is a permanent source of conflict. Therefore in every organisation, each subordinate should have one superior whose command he has to obey.

By observing the principle of unity of command, the following benefits may be achieved:

(i) It helps to clarify authority-responsibility relationships in the organisation.

(ii) There will be no possibility of the subordinate receiving conflicting orders.

(iii) The organisation structure will be simple and management will be more effective because there will be no confusion as to who is respon­sible to whom.

Principle # 5. Unity of Direction:

According to this principle, each group of activities with the same objective must have one head and one plan. Unity of direction is different from unity of command in the sense that the formers is concerned with functioning of the organisation in respect of its grouping of activities or planning while the latter in terms of reporting relationship. Unity of direction provides better coordination among various activities to be undertaken by an organisation.

Principle # 6. Subordination of Individual Interest to General Interest:

Common interest is above the individual interest. Individual interest must be subordinate to general interest when there is conflict between the two. However, factors like ambition, laziness, weakness, etc., tend to reduce the importance of general interest. Therefore, superiors should set an example in fairness and goodness. The agreement between the employers and the employees should be fair and there should be constant vigilance and supervision.

Principle # 7. Remuneration of Personnel:

Remuneration of employees should be fair and provide minimum possible satisfaction to employees and employers. Fayol did not favour profit sharing plans for workers but advocated it for managers. He was also in favour of non-financial benefit though these were possible only in the case of larger-scale organisation. The method of employee remuneration should accord satisfaction to both the employers and the organisation.

Principle # 8. Centralisation:

Everything which goes to increase the importance of subordinate role is decentralisation, everything which goes to reduce it is centralisation. Without using the term ‘centralisation of authority’ Fayol refers the extent to which authority is or decentralised. Centralisation and decentralisation is the natural order, but in large firms, a series of intermediaries is required.

Share of authority and initiative left to intermediaries depends on the personal character of the manager, his moral worth, the reliability of his subordinate and also on the relative values of managers and employees are constantly changing, and it is desirable that the degree of centralisation or decentralisation may itself vary constantly.

Principle # 9. Scalar Chain:

There should be a scalar chain of authority and of communication ranging from the highest to the lowest. It suggests that each communication going up or coming down must flow through each position in the line of authority. It can be short-circuited only is special circumstances when its rigid following would be detrimental to the organisation. For this purpose, Fayol has suggested ‘gang plank’ which is used to present the scalar chain from bogging down action. His scalar chain and gang plank can be presented in Fig 1.11.

In Fig 1.11, A is the man having immediate subordinates B and L. In turn B and L are having immediate subordinates C and M. This continues to be level of G and Q. Ordinarily; the communication must flow from A to B to C to D, and so on while coming from the top to down. Similarly, it must flow from F to A via E, D, C and B and coming down to P via L, M, N and O. Fayol suggests that this scalar chain system takes time and therefore, can be substituted by gang plank (dotted line) without weakening the chain of command.

In order to maintain authority it is desirable that superiors of F and P authorise them to deal directly provided each informs his superiors of any action taken. Fayol suggested that this system allows F and P to deal in a few hours with some questions or other which via the scalar chain would pass through twenty transmissions, inconvenience people, involve masses of paper, and lose weeks or months to get to a conclusion.

Principle # 10. Order:

There must be “a place for everything and everything in its place.” This is what is meant by order. Fayol deal with order in material things and also social order. In order to achieve order for material things, there must be a place specified for everything and everything must be in its specified place.

For social order to prevail in the organisation, there must be an appointed place for every employee and every employee must be in his/her appointed place. There will be perfect social order in the organisation if there is right person in the right place.

Principle # 11. Equity:

Equity refers to the fair judgement in dealing with human resources. Personnel must be treated with kindness and equity if devotion and loyalty are expected of them. Equity does not exclude forcefulness or sternness. The superiors in the organisation should be experienced and good-natured so as to deal with the subordinates in a proper manner.

Principle # 12. Stability of Tenure of Personnel:

This principle calls for lowest possible turnover of personnel for a well-being of the enterprise. Moreover, the employees should not be rotated at 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 assuring 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 worthwhile service.”

Principle # 13. Initiative:

Fayol wanted that the subordinates should be given an opportunity to take some initiative in thinking out and executing the plans. Employees get satisfaction when they are allowed to take initiative. Initiative on their part can be a great source of organisational strength.

Principle # 14. Esprit De Corps (Union is Strength):

Esprit de corps means the spirit of loyalty and devotion which units the members of group. It also means the regard for the honour of the group to which they belongs. This principle calls for harmonious human relations in the organisation so that the employees are loyal to the organisation. Harmony among organisational personnel is source of strength. Unit among personnel can be accomplished by proper communication. Verbal contacts with the personnel should be encouraged as for as possible.

Fayol Warned against Two Enemies of Spirit de Corps:

(i) Divide and Rule

(ii) Abuse of Written communication.

It will be dangerous for the firm to divide its workers. They should rather be welded in cohesive and highly interacting work-groups. Over reliance on written communication also tends to disrupt the team spirit. Written communication where necessary, should always be supplemented by oral communication because face-to- face contacts tend to promote speed, clarity and harmony.


Fayol’s Principles of Management – Underlying Management of all Kinds of Organisations

Henry Fayol has developed a body of principles of management, the father of modern management. Fayol wrote perceptibly on the basis of his practical experience as a manager. Although, he did not develop an integrated theory of management, his principles are surprisingly in tune with contemporary thinking in management theory.

Fayol held that there is a single “administrative science”, whose principles can be used in all management situations no matter what kind of organizations are being managed. This earned him the title of “Universality”. He, however, emphasized that his principles were not immutable laws but rules of thumb to be used as occasion demanded.

Fayol held that activities of an industrial enterprise can be grouped in six categories:

(i) Technical (production),

(ii) Commercial (buying, selling and exchange),

(iii) Financial (search for and optimum use of capital),

(iv) Security (protection of property and persons),

(v) Accounting (including statistics), and

(vi) Managerial.

However, he devoted most of his attention to managerial activity.

He developed the following principles underlying management of all kinds of organizations:

Principle # 1. Authority and Responsibility are Related:

Fayol held that authority flows from responsibility. Managers who exercise authority over others should assume responsibility for decisions as well as for results. He regarded authority as a corollary to responsibility. Authority is official as well as personal. Official authority is derived from the manager’s position in organizational hierarchy and personal authority is compounded of intelligence, experience, moral worth, past services, etc.

A corollary of the principle that no manager should be given authority unless he assumes responsibility is that those who have responsibility should also have commensurate authority in order to enable them to initiate action on others and command resources required for the performance of their functions. This aspect of relationship between responsibility and authority is particularly relevant in India where authority tends to be concentrated in higher echelons of management.

Principle # 2. Unity of Command:

This principle holds that one employee should have only one boss and receive instructions from him only. Fayol observed that if this principle is violated authority will be undermined, discipline will be jeopardy, order will be disturbed and stability will be threatened. Dual command is a permanent source of conflict. Therefore, in every organization, each subordinate should have one superior whose command he has to obey.

Principle # 3. Unity of Direction:

This means that all managerial and operational activities, which relate a distinct group with the same objective, should be directed by one head and one plan. According to Fayol, there should be, “one head and one plan for a group of activities having the same objective”. It, however, does not mean that all decisions should be made at the top. It only means that all related one person should direct activities.

For example- all marketing activities like product strategy and policy, advertising and sales promotion, distribution channel policy, product pricing policy, marketing research, etc., should be under the control of one manager and directed by an integrated plan. This is essential for the “unity of action, coordination of strength and focusing of effort”. Violation of this principle will cause fragmentation of action and effort, and wastage of resources.

Principle # 4. Scalar Chain of Command:

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.

Principle # 5. Division of Work:

This is the principle of specialization, which, according to Fayol, applies to all kinds of work, managerial as well as technical. It helps a person to acquire an ability and accuracy with which he can do more and better work with the same effort. Therefore, the work of every person in the organization should be limited as far as possible to the performance of a single leading function.

Principle # 6. Discipline:

Discipline is a sine qua non for the proper functioning of an organization. Members of an organization are required to perform their functions and conduct themselves in relation to others according to rules, norms and customs.

According to Fayol, discipline can best be maintained by:

(i) Having good superiors at all levels;

(ii) Agreements (made either with the individual employees or with a union as the case may be) that are as clear and fair as possible; and

(iii) Penalties judiciously imposed.

Principle # 7. Subordination of Individual Interest to General Interest:

The interest of the organization is above the interests of the individual and the group. It can be achieved only when managers in high positions in the organization set an example of honesty, integrity, fairness and justice. It will involve an attitude and a spirit of sacrificing their own personal interests whenever it becomes apparent that such personal interests are in conflict with organizational interests. It may, however, be emphasized that social and national interests should have precedence over organizational interests whenever the two run counter to each other.

Principle # 8. Remuneration:

Employees should be paid fairly and equitably. Differentials in remuneration should be based on job differentials, in terms of qualities of the employee, application, responsibility, working conditions and difficulty of the job. It should also take into account factors like cost of living, general economic conditions, and demand for labour and economic state of the business.

Principle # 9. Centralization:

Fayol believed in centralization. He, however, did not contemplate concentration of all decision-making authority in the top management. He, however, held that centralization and decentralization is a question of proportion. In a small firm with a limited number of employees, the owner-manager can give orders directly to everyone.

In large organizations, however, where the worker is separated from the chief executive through a long scalar chain, the decision-making authority has to be distributed among various managers in varying degrees. Here one generally comes across a situation of decentralization with centralized control. The degree of centralisation and decentralization also depends on the quality of managers.

Principle # 10. Order:

Order, in the conception of Fayol, means right person on the right job and everything in its proper place. This kind of order depends on precise knowledge of human requirements and resources of the concern and a constant balance between these requirements and resources.

Principle # 11. Equity:

It means that subordinates should be treated with justice and kindliness. This is essential for eliciting their devotion and loyalty to the enterprise. It is, therefore, the duty of the chief executive to instill a sense of equity throughout all levels of scalar chain.

Principle # 12. Stability of Tenure of Personnel:

The managerial policies should provide a sense of reasonable job security. The hiring and firing of personnel should depend not on the whims of the superiors but on the well-conceived personnel policies. He points out that it takes time for an employee to learn his job; if they quit or are discharged within a short time, the learning time has been wasted. At the same time those found unsuitable should be removed and those who are found to be competent should be promoted. However, “a mediorce manager who stays is infinitely preferable to outstanding managers who come and go”.

Principle # 13. Initiative:

It focuses on the ability, attitude and resourcefulness to act without prompting from others. Managers must create an environment, which encourages their subordinates to take initiative and responsibility.

Since it provides a sense of great satisfaction to intelligent employees, managers should sacrifice their personal vanity in order to encourage their subordinates to show initiative. It should, however, be limited, according to Fayol, by respect for authority and discipline.

Principle # 14. Esprit de Corps:

Cohesiveness and team spirit should be encouraged among employees. It is one of the chief characteristics of organized activity that a number of people work together in close cooperation for the achievement of common goals. An environment should be created in the organization, which will induce people to contribute to each other’s efforts in such a way that the combined effort of all together promotes the achievement of the overall objectives of enterprise.

Fayol warns against two enemies of esprit de corps, viz.,-

(i) Divide and rule, and

(ii) Abuse of written communication.

It may work to the benefit of the enterprise to divide its enemy but it will surely be dangerous to divide one’s own workers. They should rather be welded in cohesive and highly interacting work-groups. Over-reliance on written communication also tends to disrupt team spirit. Written communication, where necessary, should always be supplemented by oral communication because face-to-face contacts tend to promote speed, clarity and harmony.

The other important principles of management as developed by pioneer thinkers on the subject are:

(a) Separation of planning and execution of business operations.

(b) Scientific approach to business problems.

(c) Adoption of technological changes.

(d) Economizing production costs and avoiding the wastage of resources.

(e) Fuller utilization of the operational capacity and emphasis on higher productivity.

(f) Standardization of tools, machines, materials, methods, timings and products.

(g) Evaluation of results according to criteria of standard levels of performance.

(h) Understanding and cooperation among the members of the organization set-up.


Fayol’s Principles of Management – 14 Important Principles

Principle # 1. Division of Work— To Each According to his Ability:

Man acquires greater skill when he specializes in single operations. This will help him avoid waste of time caused by switching from one operation to another, or from one process to another. Fayol pre­scribes a formula: A worker should stick to the same operation and process and the manager should deal with the same matters. This will equip them with ability, sureness and accuracy that will increase their performance level and output.

Division of work enables a person to gain specialization, which will be difficult to achieve if he were to work on several tasks and processes. Fayol says that the principle of division of work should apply to all kinds of work—technical as well as managerial.

Principle # 2. Authority and Responsibility— Power to Order and Willingness to Accept Responsibility:

Authority and responsibility go hand in hand. One flows from, and is directly the result of, the other. A manager’s authority may be official or personal. It is official, when he derives it from his official posi­tion or status in the organization. It is personal, when it is the result of his “intelligence, moral worth, ability to lead past services, etc.” and which assures his subordinates that he represents their aspira­tions and will help realize them. To be good manager, both official and personal authority is necessary.

It is easy to measure the degree of responsibility and weight of authority at lower levels. But it becomes difficult as one climbs the management ladder. As Fayol observes, people want authority but are afraid to accept responsibility. A good manager should be courageous enough to accept responsi­bility and inspire others around him to do the same.

But it should be remembered that responsibility without matching authority will make a person inef­fective, authority without matching responsibility might make him irresponsible, even dictatorial.

Principle # 3. Discipline— Abide by Agreed Norms:

According to Fayol, discipline essentially means obedience, application, energy, behavior and outward marks of respect to standing agreements between the organization and its employees. It makes no dif­ference whether the agreements are imposed on employees or made with their consent.

Obviously, discipline cannot be one-sided affair. If Fayol prescribes discipline for employees, he also wants managers to practice discipline; workers will observe discipline if they are convinced about the worth of manager. An inefficient and useless manager cannot discipline his workers. At the same time, Fayol is against arbitrary use of authority to discipline workers through wage-cut, issuing warn­ing, suspension or dismissal.

To sum up, discipline can be enforced only under following conditions:

(a) Able superiors at all levels.

(b) Clear and fair employer-employee agreements; and

(c) Fair and judicial use of means of punishment.

Principle # 4. Unity of Command—One Employee One Boss:

Each employee should only have one superior to order him. If he is given orders by two or more supe­riors, it will challenge superiors’ authority and upset order and stability.

According to Fayol, it will be difficult to avoid awkward situations if two or more superiors, placed in equal positions of authority in the organization, are allowed to control the same employees. Any employee in such a situation will be confused about which employer’s order should be carried out first. Any superior, whose order is not given priority in execution by an employee, would dislike this and may punish him; he may also nurse grievance against fellow-superiors whose orders are executed first.

Consequences of multiplicity of command can be avoided if there is clear definition of authority-responsibility relationships in the organization structure.

Principle # 5. Unity of Direction— All Working for Same Objectives:

Fayol prescribes the principle of ‘one head and one plan’ for groups of activities having same objective. ‘Unity of direction’ principle is not the same as principle of ‘unity of command’. Unity of direction means efforts of all workers in any group should be focused on achievement of common goals. Unity of com­mand principle says no worker should have more than one superior.

Unity of command will not be possible without unity of direction, but one does not automatically flow from the other. Without unity of direction it will not be possible to achieve unity of action, coor­dination of strength and focusing on group effort. For any group effort to be successful, it is necessary that authority for directing the group action is only vested in one person and the entire group has the same plan to accomplish.

Principle # 6. Subordination of Individual Interest to Group Interest:

Interests of the group, be it a family or a business undertaking, should be given priority over interests of its individual members. Due to ignorance, ambition, selfishness, laziness, weakness, etc., group interests may sometimes be pushed behind individual interests. In case of any conflict between group and individual interests, it is duty of manager to step in and restore the primacy of group interest.

But this is easier said than done. Reconciliation between group interest and individual interest will severely test the qualities of manager.

However, the following factors will be helpful in achieving the desired reconciliation:

(a) Firmness coupled with exemplary behavior on the part of superiors.

(b) Agreements as fair as possible.

(c) Constant monitoring of performance.

Principle # 7. Remuneration of Personnel—Pay them what They Deserve:

Fayol says remuneration of employees should be fair and reasonable to both—employer and employ­ees. The rate of remuneration depends on a number of factors, not just on what the employer will pay, or what the employees deserve. Also important will be other factors—cost of living, availability of workers to replace those who find more remunerative work elsewhere, financial condition of the orga­nization, remuneration policy of rival organizations and condition of the national economy.

It is difficult to determine wage-policy that equally serves the interests of both—organization and employees. Should it be time, job or piece-rate system? Should there be incentive bonus schemes, like Employee Stock Option (ESOP)? Should the business evolve a method of profit sharing?

Determination of the method of remuneration should take into account the following:

(a) It should provide fair remuneration to all.

(b) It should reward efficiency and sincerity at work.

(c) It should not cast unbearable burden on financial resources of the organization.

Principle # 8. Centralization— Assuming all Authority in Own Hands:

Fayol says the question of centralization or decentralization is a simple question of proportion, a matter of finding the optimum degree for any organization. In his view, everything that increases delegation of decision-making authority to subordinates is decentralization; and that which decreases or eliminates it is centralization.

The degree of centralization will be different in each case. A small business, for example, is likely to have complete centralization of authority in the hands of owner, who directly issues orders to sub­ordinates. However, in a large business, decision-making authority flows from top to bottom.

To what extent a manager can centralize authority in his hands will depend on his intelligence, experience and decision-making ability. However, in a centralized set-up, the chief alone will take all decisions irrespective of his competence.

Principle # 9. Scalar Chain— The Chain through which Communications Travel:

Fayol defines the scalar chain as the chain of superiors ranging from ultimate authority to the lowest ranks. Line of authority means the route through which a communication will travel up or down the scalar chain.

The scalar chain principle prescribes that every communication should pass through proper channel. But, at times, adherence to the prescribed route may delay or distort the communication.

Suppose, for example, scalar chain in a business is represented by the double ladder, GAQ. Now, suppose ‘F’ needs to communi­cate with ‘P’. Going by the line of authority, his communication will travel up through ‘E’ ‘D’ ‘C’ ‘B’ up to ‘A’, and from there, through ‘L’ ‘M’ ‘N’ ‘O’ down to its destination: ‘A’ and the response from ‘P’ will be communicated to ‘F’ through ‘O’ ‘N’ ‘M’ ‘L’ to ‘A’ and from him down through ‘B’ ‘C’ ‘D’ ‘E’ to ‘F’.

The problem is that in its journey through as many as nine persons, there will be avoidable delay in reaching the final destination. There may be further problem if any of the persons in between fails to grasp its meaning or object and returns it to ‘F’ or ‘P’ as the case may be. And, God forbid, if any person(s) distorts or kills the communication because of misunderstanding or rivalry with sender or recipient, the very purpose of communication will be defeated.

In contrast, the communication would serve its purpose if ‘F’ and ‘P’ are allowed to contact each other directly. In the days of mobile phones and emails, this should not be difficult. And to ensure that their immediate superiors (‘E’ and ‘O’) are not left out of the loop, ‘F’ and ‘P’ may be asked to seek permis­sion from their respective superiors before the contact and also report to them the result of the contact.

Fayol calls the direct contact between two or more officials at the same level as gang plank. He says the mechanism of gang plank will inspire subordinates to accept responsibility. In fact, he suggests that the supreme authority (‘A’ in the above example) should ask his subordinates (‘B’ and ‘L’) to follow gangplank and they, on their part, should ask their own subordinates to do likewise.

Fayol does not recommend a wholesale departure from the prescribed line of authority. But he does say that if adherence to the line of authority is likely to cause delay and ignoring it promises quick results, subordinates at all levels should opt for gang plank.

Principle # 10. Order—Right Persons and Things at Right Place:

Fayol holds that there are two aspects to order – material and social. In case of an organization, “a place for everything and everything in its place” means material order and “a place for everyone and everyone in his place” means social order.

Material Order – It is not enough that there is an appointed place for everything and everything is at its appointed place. It is also important that the place itself should be chosen properly. The object of material order is to avoid loss of material. Fayol does not forget to suggest that the place should be neat and clean (there can be no appointed place for dirt!) and arranged in orderly manner.

Sometimes, an orderly place might hide disorder such that outward appearance of disorder may reflect real order. In fact, there can be no perfect test in this respect. But it would suffice that the place is clean and divided into sections equal to the number of responsible persons in the organization.

Social Order – It means an appointed place for every employee, and that every employee should be at his appointed place. Right man in the right place is the message here.

For ensuring social order, the two essential conditions are – (a) Good organization, and (b) Selection of competent and committed employees. In either case, proper planning is essential. There should be balance between human resources ideally required and what are actually available to it. It would be easy to do this in a small business; however, in a large organization, selection of right employees may become difficult; religion, caste or gender factor may influence the selection.

Principle # 11. Equity—Ensuring Justice and Equality:

Equity means impartiality, justice, and fairness. For Fayol equity does not mean complete absence of power or penal measures to enforce discipline. At times exercise of power may become necessary for the sake of equity itself. But, as he sees it, only a manager blessed with good nature, fair judgment and experience can apply equity.

It is not that only the chief executive officer needs to apply equity in his dealings with subordi­nates. Rather, it is the duty of the chief executive himself to ensure that managers under him at all levels apply equity in their dealings with their respective subordinates.

Principle # 12. Stability of Tenure of Personnel— Allow them Time to Settle and Learn the Ropes:

Even an employee with all requisite abilities and motivation will need time to get familiar with his work. If an employee is frequently shifted from one job to another, he would not be able to do justice to any job, causing him frustration.

In largo organizations, where an employee requires reasonable time to know people and things around, stability of tenure is very important. It would be unfair to expect that during his brief stay at any position a manager would master all details of his work, gain confidence to lead subordinates and introduce imaginative plans of action.

Take the case of upright civil servants in India whom their political bosses whimsically transfer from one district to another because they are not pliable; one of them reportedly faced 40 transfers in his career of 25 years!

Therefore, Fayol advocates stability of tenure for all, particularly managerial personnel. Change of position should only be made in unavoidable circumstances, like when an employee suffers a major ailment that will take time to cure, or if he retires or dies. There is something called plum and punish­ment postings and employees get them based on their competence and proven record.

Fayol is all for stability of tenure when he says, “mediocre manager who stays is infinitely prefera­ble to outstanding managers who merely come and go.”

Principle # 13. Initiative—Ability to Think Differently:

Initiative means the power of thinking – ability to conceive a plan and translate it into reality. Initiative on the part of a manager or employee will benefit his organization a great deal. Where subordinates are encouraged to display initiative, the superior may be required to take a back seat. But a manager who encourages subordinates to conceive and implement their plans of action, is more likely to suc­ceed than those who, like a former central minister, think subordinates must only listen, not think.

Principle # 14. Esprit De Corps—Union is Strength:

Esprit de corps means the spirit of loyalty and devotion that unites the members of any group or society that seeks to achieve objectives which are beneficial for all members. The term also refers to the ‘sense of belonging’ to the organization.

To inculcate esprit de corps, there should, first, be proper coordination of work at all levels. Second, subordinates should be encouraged to develop informal social relationships among them. Third, subordi­nates should be motivated to work to their maximum potential. Fourth, there should be suitable reward for employees with proven track record, and opportunities of suitable training for below-average perform­ers to achieve the desired performance-level.

Fifth, impressing on subordinates that their performance adds value to the organization and society. Last, but not least, the management should display by word and deed its commitment to welfare of subordinates.

Fayol cautions managers against practicing ‘divide and rule’ among employees. In the short-run, this policy may look beneficial but its long-term effects might damage the morale of workers, including interests of the organization.

There is another word of caution – Don’t communicate with subordinates in writing on matters that can be easily sorted out by talking to them face-to-face or on phone. This will help clear misun­derstanding and produce quicker results. A written communication will only strain relations, besides being time-consuming and complex.


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