Today's managers have access to an amazing array of resources which they can use to improve their skills. But what about those managers who were leading the way forward 100 years ago?
Managers in the early 1900s had very few external resources to draw upon to guide and develop their management practice. But thanks to early theorists like Henri Fayol (1841-1925), managers began to get the tools they needed to lead and manage more effectively. Fayol, and others like him, are responsible for building the foundations of modern management theory.
Henri Fayol was born in Istanbul in 1841. When he was 19, he began working as an engineer at a large mining company in France. He eventually became the director, at a time when the mining company employed more than 1,000 people.
Through the years, Fayol began to develop what he considered to be the 14 most important principles of management. Essentially, these explained how managers should organize and interact with staff.
In 1916, two years before he stepped down as director, he published his "14 Principles of Management" in the book "Administration Industrielle et Générale." Fayol also created a list of the six primary functions of management, which go hand in hand with the Principles.
Fayol's "14 Principles" was one of the earliest theories of management to be created, and remains one of the most comprehensive. He's considered to be among the most influential contributors to the modern concept of management, even though people don't refer to "The 14 Principles" often today.
The theory falls under the Administrative Management school of thought (as opposed to the Scientific Management school, led by Fredrick Taylor).
Fayol's 14 Principles of Management
Fayol's principles are listed below:
- Division of Work – When employees are specialized, output can increase because they become increasingly skilled and efficient.
- Authority – Managers must have the authority to give orders, but they must also keep in mind that with authority comes responsibility.
- Discipline – Discipline must be upheld in organizations, but methods for doing so can vary.
- Unity of Command – Employees should have only one direct supervisor.
- Unity of Direction – Teams with the same objective should be working under the direction of one manager, using one plan. This will ensure that action is properly coordinated.
- Subordination of Individual Interests to the General Interest – The interests of one employee should not be allowed to become more important than those of the group. This includes managers.
- Remuneration – Employee satisfaction depends on fair remuneration for everyone. This includes financial and non-financial compensation.
- Centralization – This principle refers to how close employees are to the decision-making process. It is important to aim for an appropriate balance.
- Scalar Chain – Employees should be aware of where they stand in the organization's hierarchy, or chain of command.
- Order – The workplace facilities must be clean, tidy and safe for employees. Everything should have its place.
- Equity – Managers should be fair to staff at all times, both maintaining discipline as necessary and acting with kindness where appropriate.
- Stability of Tenure of Personnel – Managers should strive to minimize employee turnover. Personnel planning should be a priority.
- Initiative – Employees should be given the necessary level of freedom to create and carry out plans.
- Esprit de Corps – Organizations should strive to promote team spirit and unity.
Fayol's Six Functions of Management
Fayol's six primary functions of management, which go hand in hand with the Principles, are as follows:
Henri Fayol's "14 Principles of Management" have been a significant influence on modern management theory. His practical list of principles helped early 20th century managers learn how to organize and interact with their employees in a productive way.
Although the 14 Principles aren't widely used today, they can still offer guidance for today's managers. Many of the principles are now considered to be common sense, but at the time they were revolutionary concepts for organizational management.
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Henri fayol’s 14 principles of management are remembered even today for their simplicity and genius. The thing is, whenever you are managing something or running a business, you cannot pinpoint what is going wrong.
The principles of management suggested 14 such steps which you can compare to your business, and find out where you are missing out in proper implementation of the principles. This was especially useful in the times when computers and modern software were not available. Today, there are so many time tracking devices as well as management techniques available, that you might think you don’t need the 14 principles of management.. But these principles are applicable in today’s work environment as well.
Here are the 14 principles of management by Henri fayol and how you can implement these 14 principles of management in your organization.
1) Division of work
Applicable for firms which have many employees as well as few employees, the principle of division of work says, that the work should be divided between all people who are capable of doing it and should not be overloaded to a concentrated few. It should not be diluted by giving the same work to many people. This ensures proper utilization of labour and keeps them focused and productive.
In the long term, this same targeted division of work helps the labour in specializing in the work they are doing, thereby ensuring there are far fewer mistakes. In a factory, the problem solver is always someone who has worked on the machinery for years on end. Here is how you can apply this principle of management in your case
- Are you dividing the work equally between employees of your organization?
- Are people specializing in the work they are doing?
- Do you need to restructure the division of labour in your organization?
Above are some questions which can guide you in improving your organization’s management and labour division.
The power and responsibility to give orders should reside with only a few people and should not be diluted. One of the common errors of large companies is that the management comprises of too many people, thereby creating conflicts. When a few hand selected people have the power to vote, then this authority is carried down the chain and the process gets implemented.
With such authority comes responsibility. Imagine if you were the marketing head of a company, and you took a call with regards to marketing a particular product, in the end if the product fails, you have to take ownership of the failure. You cannot pass the buck. Thus, when the person takes responsibility, he also takes wise decisions. Hence, authority and responsibility go hand in hand and form an important part of Henri fayol’s 14 principles of management.
- Are you giving the authority of decision making to too many people?
- Are the people in authority not ready to take responsibility?
It goes without saying, that management is responsible for the way discipline is maintained in an organization. And this discipline percolates down the line, to the end of the employee chain as well.
A best example will be ad agencies, who encourage informal meetings and conversations so as to build better relationships with the customers. However, even these ad agencies are known to maintain discipline in the way the ad executive interacts with the customers or the way they carry out their work. Discipline is a part of the mission and values of the organization itself.
- Are your employees disciplined? If not, what can you do to bring discipline in them?
- Are you and your managers disciplined with regards to usage of time and space?
4) Unity of command
When we discussed authority in the above point, we said that authority should lie with only certain people. Similarly, the authority flows down the chain only when there are a limited number of people associated with the authoritative person. If all the people in a political party were directly reporting to the prime minister, he will soon be admitted in the hospital due to stress.
So to maintain command, there is a hierarchy. One person should report only to one leader and not to 3-4 people. Hence the standard hierarchy of national manager, regional manager, group manager, team leader is kept in most organizations. This ensures that at all times, the managers and the executives know who they are reporting to, and they know their responsibilities as well as the performance expected from them.
- Is there unity of command in your company?
- Are there too much conflicts at the managerial level with regards to who is reporting to whom?
5) Unity of direction
Once unity of command is achieved and you have a complete hierarchy, where everyone knows who they are reporting to, and they are ready to do the leaders bidding, then it is time to implement unity of direction.
It is like the famous saying “United we stand, divided we fall”.
The company, from the CEO level to the executive level should be moving towards one direction. If growth is the direction you are moving to, then a single executive to the CEO of the company should be performing in a manner which brings growth for the company. And this executive should be trained and managed accordingly by his managers.
This is one of the 14 principles of management applicable to all firms, irrespective of their size.
- Unity of direction is important to give one vision to all the employees of your company
- United we stand, divided we fall
6) Subordinate interests
To control people, you have to understand their interests first. And in the end, you have to ensure that the interest of the company lies above the interest of the individual. Many a time, a person is removed from the company when he is moon lighting or doing his own sideline jobs. This is because the company wants to ensure, that the person who is working in the company is giving his 100% to the company.
The focus of the organization is on individuals who are giving their all to the company. The interests of the company should be placed above the interests of the individual.
- Do you have employees or managers who are placing personal interest above company’s interests?
- How would you change or tackle these sub ordinate interests?
Now, naturally when you are expecting your employees to be disciplined, you want unity of direction and command, then you have to remunerate the employees so that they are less likely to shift to the competition and more likely to concentrate on the jobs they have in hand.
As per Henri fayol’s 14 principles of management, employees should be remunerated fairly to keep their motivation levels high. This remuneration may be monetary or non monetary. The monetary compensation includes incentives, bonus or other financial compensation. The non monetary compensation may include rewards or recognition.
- Are your employees happy with the monetary remuneration and is it as per industry standards?
- Are offering non monetary remuneration from time to time to keep employees motivated?
Centralization is the amount of control that is lying with people in an organization. If there are select group of people who have control (for example – in large corporates), then this is known as centralization. On the other hand, if there are a higher percentage of people in the organization having control (for example – in small businesses), then this is known as decentralization.
Organizations have to balance centralization and decentralization both. Most top companies have strategic business units which are also a form of decentralization. These SBU’s are given their own decision making power. Similarly, most small businesses will share authority in a decentralized manner to get the work done faster. However, it completely depends on the business and the sector in question on whether to use centralization or not.
- Is your organization centralized or decentralized?
- Which of the centralization tactics will help you?
9) Scalar chain
Scalar chain is confusing for many people, but let me break it down simply for you. When mentioning the unity of command, i said that one person should report to a single manager higher up the chain only. So an executive should report to a team manager, who should report to the regional manager who will report to the national manager, so on and so forth.
Scalar chain says that there should be a clear line of authority in the company so that when you have to “Escalate things” then you know the line of authority. When you are facing emergencies or calamities, you should know who to go to, if your immediate boss doesn’t resolve your queries.
Popular companies like Samsung and others have the scalar chain set to a dot. In such companies, for customer service, if your complaint is not resolved in 3 days, it goes to the local manager, if not resolve in 5 days, it goes to regional head, and if not resolved in 7 days it goes to national heads. So this is how a scalar chain looks like. It looks like the wireframe of a company, with complete architecture and hierarchy of the company shown in the wireframe.
- Does your company implement Scalar chain and does each employee know the chain of command?
This order does not mean that someone sitting on top is ordering the people. It is the order of “Order vs chaos”. Simply said, if an organization does not work in an orderly manner, there will be chaos. So to work in an orderly manner, employees need the right equipment and the right procedure to ensure order is maintained at all times.
Hence, most large companies have specific ways that they calculate the attendance of their labour. Specific time is given when the labour can go to lunch as per their work stations. Maintenance officers are placed for any problems in the equipment. Overall, everything works in a well oiled, smooth and orderly manner. The maintenance of order is an important principle in Henri fayol’s 14 principles of management.
- What measures have you taken to ensure that your employees are working in an orderly manner?
- Bringing order to chaos ensures clear thinking of mind and more productivity.
Everyone should be treated equally and no preference should be given in an organization. Many a times, the most common complaint of employees is that a different employee was preferred over them for promotion or better remuneration.
However, a fair organization is the one which maintains equity amongst everyone. For this, having the right culture in the organization is absolutely important. If the company is ethical, equity will automatically be maintained.
12) Stability of tenure
One of the critical things in Henri fayol’s 14 principles of management was stability of tenure, or attrition of employees. In essence, Henri fayol said that an organization has a better chance to grow faster if its employees are stable. Naturally, if there is high attrition in the organization, then there will be a lot of time wasted in training and development, costs will go up and stability of tenure will not be observed.
If you look at most large companies, they take attrition and employee turnover very seriously. There are various procedures set to ensure that employees do not leave the company, and even if they do, then the management should know why they are leaving. Similarly, there are other tactics which can be employed such as job rotation to combat boredom, incentives to motivate aggression, and various such tactics can be used to ensure stability of tenure.
- Simply said, the more the stability of tenure, the more the profit
- High attrition means a lot of cost towards training and development
- If tenure is stable, means your employees are happy and the company will develop faster as you have trained employees handling the work.
It sounds too good when we think that a company has innovated and brought a new product to the market. But many a times, we question, why companies are not regularly innovating. If you look at it, the most innovative companies are the ones which encourage young and old talent to bring out their own ideas. They also show interest and involvement to encourage such professionals.
Google, Apple and Facebook are some of the companies who have implemented this principle amongst the 14 principles of management soundly. At google, developers and engineers are given their own sweet time to work out innovative ways that can be developed as products for google itself. Same goes for Facebook and apple as well. As the employees are encouraged to take initiative, the innovation level of these companies is high.
- Are you listening to feedback from your employees with regards to product / company’s improvement?
- Are you taking initiative to change things as they are and to make them even better?
14) Esprit de corps
Esprit de corp is defined as a feeling of pride and mutual loyalty shared by the members of a group. And that’s exactly what you have to target for if you want to achieve success while applying the 14 principles of management.
Esprit de corps is the ultimate union of the management and employees within an organization, which leads to an organization which is proud of what it does, and which has garnered a lot of loyalty from its employees and customers. There are very few companies who have been able to manage that (Intel, apple, Amazon and few others). Esprit de corps in an organization gives true competitive advantage to the organization because it means that the employees are enthusiastic, motivated and will do anything for the company or the management.
Overall, these 14 principles of management are evergreen in nature, and no matter the way technology is catching up with us, these 14 principles of management will matter to even the smallest of organizations and will help them when they are growing large.
There are even simpler ways to track several of the things written in 14 principles of management. But the ultimate goal is to have an organization which is efficiently managed, productive, and gives optimum results as per the goals of the organization.