Henri Fayol’s 14 Henri Fayol’s 14 Principles Of Principles Of ManagementManagement

1. Division Of Work1. Division Of Work

Specialization allows the individual Specialization allows the individual to build up experience, and to to build up experience, and to continuously improve his skills. continuously improve his skills. Thereby he can be more productive. Thereby he can be more productive.

2. Authority2. Authority

The right to issue commands, along The right to issue commands, along with which must go the balanced with which must go the balanced responsibility for its function.responsibility for its function.

3. Discipline3. Discipline

Employees must obey, but this is Employees must obey, but this is two-sided: employees will only obey two-sided: employees will only obey orders if management play their orders if management play their part by providing good leadership.part by providing good leadership.

4. Unity Of Command4. Unity Of Command

Each worker should have only one Each worker should have only one boss with no other conflicting lines of boss with no other conflicting lines of command. command.

5. Unity of Direction

People engaged in the same kind of People engaged in the same kind of activities must have the same activities must have the same objectives in a single plan. This is objectives in a single plan. This is essential to ensure unity and essential to ensure unity and coordination in the enterprise. Unity coordination in the enterprise. Unity of command does not exist without of command does not exist without unity of direction but does not unity of direction but does not necessarily flows from it.necessarily flows from it.

6. 6. Subordination of individual Subordination of individual interestinterest

Management must see that the Management must see that the goals of the firms are always goals of the firms are always paramount.paramount.

7. Remuneration7. Remuneration

Payment is an important motivator Payment is an important motivator although by analyzing a number of although by analyzing a number of possibilities, Fayol points out that possibilities, Fayol points out that there is no such thing as a perfect there is no such thing as a perfect system system

8. Centralization (Or 8. Centralization (Or Decentralization)Decentralization)

This is a matter of degree This is a matter of degree depending on the condition of the depending on the condition of the business and the quality of its business and the quality of its personnel.personnel.

9. 9. Scalar chainScalar chain (Line of Authority) (Line of Authority)

A hierarchy is necessary for unity of A hierarchy is necessary for unity of direction. But lateral communication is direction. But lateral communication is also fundamental, as long as superiors also fundamental, as long as superiors know that such communication is taking know that such communication is taking place. Scalar chain refers to the number place. Scalar chain refers to the number of levels in the hierarchy from the of levels in the hierarchy from the ultimate authority to the lowest level in ultimate authority to the lowest level in the organization. It should not be over-the organization. It should not be over-stretched and consist of too-many stretched and consist of too-many levels levels

10. Order10. Order

Both material order and social order Both material order and social order are necessary. The former minimizes are necessary. The former minimizes lost time and useless handling of lost time and useless handling of materials. The latter is achieved materials. The latter is achieved through organization and selection.through organization and selection.

11. Equity11. Equity

In running a business a In running a business a ‘combination of kindliness and ‘combination of kindliness and justice’ is needed. Treating justice’ is needed. Treating employees well is important to employees well is important to achieve equity.achieve equity.

12. 12. Stability of Tenure of Stability of Tenure of PersonnelPersonnel

Employees work better if job Employees work better if job security and career progress are security and career progress are assured to them. An insecure assured to them. An insecure tenure and a high rate of employee tenure and a high rate of employee turnover will affect the organization turnover will affect the organization adversely.adversely.

13. Initiative13. Initiative

Allowing all personnel to show their Allowing all personnel to show their initiative in some way is a source of initiative in some way is a source of strength for the organization. Even strength for the organization. Even though it may well involve a though it may well involve a sacrifice of ‘personal vanity’ on the sacrifice of ‘personal vanity’ on the part of many managers.part of many managers.

14. Esprit de Corps 14. Esprit de Corps

Management must foster the morale Management must foster the morale of its employees. He further suggests of its employees. He further suggests that: “real talent is needed to that: “real talent is needed to coordinate effort, encourage coordinate effort, encourage keenness, use each person’s keenness, use each person’s abilities, and reward each one’s abilities, and reward each one’s merit without arousing possible merit without arousing possible jealousies and disturbing harmonious jealousies and disturbing harmonious relations.” relations.”

What Is Management?What Is Management? (According (According To Fayol)To Fayol)

Fayol'sFayol's definition of management roles and actions definition of management roles and actions distinguishes between distinguishes between Five ElementsFive Elements: :

PrevoyancePrevoyance.. (Forecast & Plan). Examining the future and (Forecast & Plan). Examining the future and drawing up a plan of action. The elements of strategy.drawing up a plan of action. The elements of strategy.

To organizeTo organize.. Build up the structure, both material and Build up the structure, both material and human, of the undertaking.human, of the undertaking.

To commandTo command.. Maintain the activity among the personnel.Maintain the activity among the personnel.

To coordinateTo coordinate.. Binding together, unifying and harmonizing Binding together, unifying and harmonizing all activity and effort.all activity and effort.

To controlTo control.. Seeing that everything occurs in conformity with Seeing that everything occurs in conformity with established rule and expressed command.established rule and expressed command.

Application Of Fayol’s PrinciplesApplication Of Fayol’s Principles

Change and Organization.Change and Organization. Decision-making.Decision-making. Skills. Can be used to improve the Skills. Can be used to improve the

basic effectiveness of a manager. basic effectiveness of a manager. Understand that management can be Understand that management can be

seen as a variety of activities, which seen as a variety of activities, which can be listed and grouped. can be listed and grouped.

Peter Drucker’sPeter Drucker’s Management By ObjectivesManagement By Objectives

8 Key Result Areas Where Managers Must Pursue Clear Objectives - Kotelnikov, 2008

•Marketing Marketing

In order for a business to create a customer, there needs to be a market.

•Innovation Innovation

New ideas are required by a business in order to create a demand for a product.

•Human organization Human organization •Financial resources Financial resources •Physical resourcesPhysical resources

According to Drucker, 2007 the above three Key Result Areas are interlinked and all businesses depend on them. These are known as the factors of production.

8 Key Result Areas Where Managers Must Pursue Clear Objectives Continued….

Productivity Productivity

Resources must be used productively and the productivity must grow in order for the business to survive.

Social responsibilitySocial responsibility

A business exists in a society therefore it has certain obligations towards the community and is responsible for its impact on the environment.

Profit requirementsProfit requirements

Profit is essential for a business to succeed. It is one of the main reasons behind the existence of a business and without it there would be no way of covering the risk of potential losses, financing future projects and most importantly none of the other above areas would exist without profit.

Management By Objectives - Management By Objectives - PrinciplesPrinciples

Cascading of organizational goals Cascading of organizational goals and objectives.and objectives.

Specific objectives for each member.Specific objectives for each member. Participative decision making.Participative decision making. Explicit time period.Explicit time period. Performance evaluation and Performance evaluation and

feedback. feedback.

SMART MethodSMART Method

SSpecificpecific MMeasurableeasurable AAchievablechievable RRealisticealistic TTime-relatedime-related

Management by Objectives also Management by Objectives also introduced the SMART method introduced the SMART method for checking the validity of the for checking the validity of the objectivesobjectives.

BibliographyBibliography 14 Principles of Management.14 Principles of Management. (2008, Aug (2008, Aug

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Drucker, P. (2007). Drucker, P. (2007). Management Tasks, Management Tasks, Responsibilities, Practices.Responsibilities, Practices. New Jersey: New Jersey: Transaction Publishers.Transaction Publishers.

Kotelnikov, V. (2008). Kotelnikov, V. (2008). Management by Management by Objective.Objective. Retrieved 10 2008, from Retrieved 10 2008, from www.1000ventures.com: www.1000ventures.com: http://www.1000ventures.com/business_ghttp://www.1000ventures.com/business_guide/mgmt_mbo_main.htmluide/mgmt_mbo_main.html