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1. Division of Labor a. Henry Fayol has stressed on the specialization of jobs. b. He recommended that work of all kinds must be divided & subdivided and allotted to various persons according to their expertise in a particular area. c. Subdivision of work makes it simpler and results in efficiency. d. t also helps the individual in ac!uiring speed" accuracy in his performance. e. Specialization leads to efficiency & economy in spheres of business. 2. Party of Authority & Responsibility a. #uthority & responsibility are co$existing. b. f authority is given to a person" he should also be made responsible. c. n a same way" if anyone is made responsible for any job" he should also have concerned authority. d. #uthority refers to the right of superiors to get exactness from their sub$ordinates whereas responsibility means obligation for the performance of the job assigned. e. %here should be a balance between the two i.e. they must go hand in hand. f. #uthority without responsibility leads to irresponsible behavior whereas responsibility without authority makes the person ineffective. 3. Principle of One Boss a. # sub$ordinate should receive orders and be accountable to one and only one boss at a time. b. n other words" a sub$ordinate should not receive instructions from more than one person because $ $ $ $ $ $ $ $ $ t undermines authority &eakens discipline 'ivides loyalty (reates confusion 'elays and chaos )scaping responsibilities 'uplication of work *verlapping of efforts
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c. %herefore" dual sub$ordination should be avoided unless and until it is absolutely essential. d. +nity of command provides the enterprise a disciplined" stable & orderly existence. e. t creates harmonious relationship between superiors and sub$ordinates. nity of Direction a. Fayol advocates one head one plan which means that there should be one plan for a group of activities having similar objectives. b. ,elated activities should be grouped together. %here should be one plan of action for them and they should be under the charge of a particular manager. c. #ccording to this principle" efforts of all the members of the organization should be directed towards common goal. d. &ithout unity of direction" unity of action cannot be achieved. e. n fact" unity of command is not possible without unity of direction.
Basis -eaning
nity of co!!an" t implies that a sub$ordinate should receive orders & instructions from only one boss. t is related to the functioning of personnel/s.
nity of "irection t means one head" one plan for a group of activities having similar objectives. t is related to the functioning of departments" or organization as a whole. t is necessary for sound organization.
.ature
.ecessity
t is necessary for fixing responsibility of each subordinates. t avoids conflicts" confusion & chaos.
#dvantage
t avoids duplication of efforts and wastage of resources. t leads to smooth running of the enterprise.
,esult
%herefore it is obvious that they are different from each other but they are dependent on each other i.e. unity of direction is a pre$re!uisite for unity of command. 0ut it does not automatically come from the unity of direction. #. $%uity a. )!uity means combination of fairness" kindness & justice. b. %he employees should be treated with kindness & e!uity if devotion is expected of them. c. t implies that managers should be fair and impartial while dealing with the subordinates. d. %hey should give similar treatment to people of similar position. e. %hey should not discriminate with respect to age" caste" sex" religion" relation etc. f. )!uity is essential to create and maintain cordial relations between the managers and sub$ordinate. g. 0ut e!uity does not mean total absence of harshness. h. Fayol was of opinion that" 1at times force and harshness might become necessary for the sake of e!uity2. &. Or"er a. %his principle is concerned with proper & systematic arrangement of things and people. b. #rrangement of things is called material order and placement of people is called social order. c. -aterial order$ %here should be safe" appropriate and specific place for every article and every place to be effectively used for specific activity and commodity.
d. Social order$ Selection and appointment of most suitable person on the suitable job. %here should be a specific place for every one and everyone should have a specific place so that they can easily be contacted whenever need arises. '. Discipline a. #ccording to Fayol" 1'iscipline means sincerity" obedience" respect of authority & observance of rules and regulations of the enterprise2. b. %his principle applies that subordinate should respect their superiors and obey their order. c. t is an important re!uisite for smooth running of the enterprise. d. 'iscipline is not only re!uired on path of subordinates but also on the part of management. e. 'iscipline can be enforced if $ $ %here are good superiors at all levels. $ %here are clear & fair agreements with workers. $ Sanctions 3punishments4 are judiciously applied. (. )nitiative a. &orkers should be encouraged to take initiative in the work assigned to them. b. t means eagerness to initiate actions without being asked to do so. c. Fayol advised that management should provide opportunity to its employees to suggest ideas" experiences& new method of work. d. t helps in developing an atmosphere of trust and understanding. e. 5eople then enjoy working in the organization because it adds to their zeal and energy. f. %o suggest improvement in formulation & implementation of place. g. %hey can be encouraged with the help of monetary & non$monetary incentives. *. +air Re!uneration a. %he !uantum and method of remuneration to be paid to the workers should be fair" reasonable" satisfactory & rewarding of the efforts. b. #s far as possible it should accord satisfaction to both employer and the employees. c. &ages should be determined on the basis of cost of living" work assigned" financial position of the business" wage rate prevailing etc. d. 6ogical & appropriate wage rates and methods of their payment reduce tension & differences between workers & management creates harmonious relationship and pleasing atmosphere of work. e. Fayol also recommended provision of other benefits such as free education" medical & residential facilities to workers. 1,. -tability of .enure a. Fayol emphasized that employees should not be moved fre!uently from one job position to another i.e. the period of service in a job should be fixed. b. %herefore employees should be appointed after keeping in view principles of recruitment & selection but once they are appointed their services should be served. c. #ccording to Fayol. 1%ime is re!uired for an employee to get used to a new work & succeed to doing it well but if he is removed before that he will not be able to render worthwhile services2. d. #s a result" the time" effort and money spent on training the worker will go waste.
e. Stability of job creates team spirit and a sense of belongingness among workers which ultimately increase the !uality as well as !uantity of work. 11. -calar /hain a. Fayol defines scalar chain as /%he chain of superiors ranging from the ultimate authority to the lowest2. b. )very orders" instructions" messages" re!uests" explanation etc. has to pass through Scalar chain. c. 0ut" for the sake of convenience & urgency" this path can be cut shirt and this short cut is known as 7ang 5lank. d. # 0an1 Plan2 is a temporary arrangement between two different points to facilitate !uick & easy communication as explained below8
n the figure given" if ' has to communicate with 7 he will first send the communication upwards with the help of (" 0 to # and then downwards with the help of ) and F to 7 which will take !uite some time and by that time" it may not be worth therefore a gang plank has been developed between the two. e. 0an1 Plan2 clarifies that management principles are not rigid rather they are very flexible. %hey can be moulded and modified as per the re!uirements of situations 12. -ub3Or"ination of )n"ivi"ual )nterest to 0eneral )nterest a. #n organization is much bigger than the individual it constitutes therefore interest of the undertaking should prevail in all circumstances. b. #s far as possible" reconciliation should be achieved between individual and group interests. c. 0ut in case of conflict" individual must sacrifice for bigger interests. d. n order to achieve this attitude" it is essential that $ $ )mployees should be honest & sincere. $ 5roper & regular supervision of work. $ ,econciliation of mutual differences and clashes by mutual agreement. For example" for change of location of plant" for change of profit sharing ratio" etc. 13. $spirit De4 /orps 5can be achieve" throu1h unity of co!!an"6 a. t refers to team spirit i.e. harmony in the work groups and mutual understanding among the members. b. Spirit 'e/ (orps inspires workers to work harder. c. Fayol cautioned the managers against dividing the employees into competing groups because it might damage the moral of the workers and interest of the undertaking in the long run. d. %o inculcate )spirit 'e/ (orps following steps should be undertaken $ %here should be proper co$ordination of work at all levels Subordinates should be encouraged to develop informal relations among themselves. )fforts should be made to create enthusiasm and keenness among subordinates so that they can work to the maximum ability. )fficient employees should be rewarded and those who are not up to the mark should be given a chance to improve their performance.
Subordinates should be made conscious of that whatever they are doing is of great importance to the business & society. e. He also cautioned against the more use of 0ritain communication to the subordinates i.e. face to face communication should be developed. %he managers should infuse team spirit & belongingness. %here should be no place for misunderstanding. 5eople then enjoy working in the organization & offer their best towards the organization. 14. /entrali7ation & De3/entrali7ation
a. (entralization means concentration of authority at the top level. n other words" centralization is a situation in which top management retains most of the decision making authority. b. 'ecentralization means disposal of decision making authority to all the levels of the organization. n other words" sharing authority downwards is decentralization. c. #ccording to Fayol" 1'egree of centralization or decentralization depends on no. of factors like size of business" experience of superiors" dependability & ability of subordinates etc. d. #nything which increases the role of subordinate is decentralization & anything which decreases it is centralization. e. Fayol suggested that absolute centralization or decentralization is not feasible. #n organization should strike to achieve a lot between the two.
PRINCIPLE !F M"N"#EMEN$%
1. D)8)-)O9 O+ :OR;8 &ork should be divided among individuals and groups to ensure that effort and attention are focused on special portions of the task. Fayol presented work specialization as the best way to use the human resources of the organization. 2. A .<OR).=8 %he concepts of #uthority and responsibility are closely related. #uthority was defined by Fayol as the right to give orders and the power to exact obedience. ,esponsibility involves being accountable" and is therefore naturally associated with authority. &hoever assumes authority also assumes responsibility. 3. D)-/)PL)9$8 # successful organization re!uires the common effort of workers. 5enalties should be applied judiciously to encourage this common effort. 4. 5. 9).= O+ /O>>A9D8 &orkers should receive orders from only one manager. 9).= O+ D)R$/.)O98 %he entire organization should be moving towards a common objective in a common direction.
6. - BORD)9A.)O9 O+ )9D)8)D AL )9.$R$-.- .O .<$ 0$9$RAL )9.$R$-.- 8 %he interests of one person should not take priority over the interests of the organization as a whole. 7. R$> 9$RA.)O98 -any variables" such as cost of living" supply of !ualified personnel" general business conditions" and success of the business" should be considered in determining a worker/s rate of pay. 8. /$9.RAL)?A.)O98 Fayol defined centralization as lowering the importance of the subordinate role. 'ecentralization is increasing the importance. %he degree to which
centralization or decentralization should be adopted depends on the specific organization in which the manager is working. 9. -/ALAR /<A)98 -anagers in hierarchies are part of a chain like authority scale. )ach manager" from the first line supervisor to the president" possess certain amounts of authority. %he 5resident possesses the most authority9 the first line supervisor the least. 6ower level managers should always keep upper level managers informed of their work activities. %he existence of a scalar chain and adherence to it are necessary if the organization is to be successful. 10. ORD$R@ For the sake of efficiency and coordination" all materials and people related to a specific kind of work should be treated as e!ually as possible. 11. $A ).=8 #ll employees should be treated as e!ually as possible. 12. -.AB)L).= O+ .$9 R$ O+ P$R-O99$L8 ,etaining productive employees should always be a high priority of management. ,ecruitment and Selection (osts" as well as increased product$reject rates are usually associated with hiring new workers. 13. )9).)A.)8$8 -anagement should take steps to encourage worker initiative" which is defined as new or additional work activity undertaken through self direction. 14. $-P)R). D$ /ORP-8 -anagement should encourage harmony and general good feelings among employees.
suffer when workers become bored with the constant repetition of a task. #dditionally" productivity can be affected when workers lose pride in their work because they are not producing an entire product they can identify as their own work.
Principle .% )iscipline
'iscipline Fayol understood as obedience and outward marks of respect between the firm and its employees . He considered it as an absolute prere!uisite in order to assure a smooth running of the business. 1&ithout it2" he says" 1no enterprise could prosper2. nterestingly" Fayol emphasizes discipline not merely as something the employee owes the management" but rather as something that 1depends essentially on the worthiness of its leaders2" in other words on the respect employees have for their leader. He continues in describing the reasons for defects in employee and management relationships by stating8 1the ill mostly results from the ineptitude of the leaders2 . ,espect for a leader increases with the leader possessing the appropriate !ualifications for the position" i.e. with their perceived 1worthiness2 . n this respect" Fayol has a somewhat more behavioral approach to the problem of discipline than for instance %aylor" who points to 1soldiering2" 3i.e. the agreement between workers to low standards of work in order to protect their own interests4 as something one can recognize as a lack of discipline . %his lack of discipline" %aylor suggests" can be counter$acted by applying various techni!ues" none of which clearly addresses the interaction between worker and manager" other than" what he calls 1heartily cooperation2.
Similar to Fayol/s argument that specialization" and hence division of work is a natural state" one could make the point that a single leader is an evolutionary re!uirement. Simple speaking8 social groups of animals often are organized in a way that resembles the hierarchy of companies" so called dominance hierarchies . %his is especially true in primates. Some argue that our ability as well as our proneness to hierarchies with a clear leadership and the connected aggression" with which we search to establish such hierarchical structures" is imbedded into our brains due to our evolution. Hence unity of command is a principle we find applied in the military just as much as in rather modern and alternatively run companies like 7oogle nc." which is run by three ()*s 3Sergey" )ric and 6arry4 . 7oogle claims to have flat hierarchies and maintain a small$business feel . However" there still must be a leader" a decision maker" one who carries the largest responsibility" or" as in the case of 7oogle" a team of leaders.
*ne can only speculate how Fayol would think about the bonus practice of banks today. #s Fayol explains himself" in his time bonuses and profit$sharing were still rather new concepts. #nd he wonders what would happen with bonuses in lean times" pointing out" that a salary entirely depending on profit$sharing would lead to a loss of salary under certain circumstances. ,evisiting the banks/ situation of today we see how Fayol/s thoughts on remuneration are largely ignored in regards to the example of the hotly debated banker$bonuses. #dditionally" he describes salary policies as important in maintenance of 1relative social !uiet2" as he calls it . %his attitude echoes like a warning for today/s management leaders" whose remuneration practice is perceived as socially unsustainable and hence immoral" and Fayol/s suggestion is thereby proven to be a relevant principle also today.
Principle 3% Centrali4ation
(entralization is understood by Fayol as the necessity to have control over processes in a central place" and compares this concept with the brain where centrally control is exhibited over the body. Fayol is flexible on the concept of centralization though. He suggests that the degree of centralization must fit the design and size of the corporation . 5ossibly larger firms" with longer chains of command do better with more centralization and vice versa. n today/s corporate world % has contributed to an easier approach to centralization. #t the same time has the fact that large corporations act globally led to adjustments that can best be performed locally. n other words" a company must be able to do both. For different business aspects" different solutions must be found. %his concept can be exemplified by -ichael Hammer/s approach who goes so far as to claim that 1the key structural issue is no longer centralization versus decentralization$ it/s process standardization versus process diversity2 . However" in a traditional administrative approach the examples mentioned by Hammer exemplify the dichotomy modern management is facing. # revealing example mentioned by Hammer is that of Fohnson & Fohnson. %he company standardized 3centralized the process aspect in other words4 ,&' activities and manages these efforts as a single research portfolio. #t the same time the sales and manufacturing processes are dealt with decentralized in order to enable decisions to be taken tailored to the specific circumstances and products. (oncluding" Fayol/s flexible approach regarding centralization is absolutely of relevance for today/s businesses.
-any organizations attempt to place decision$making authority in the organizational structure with those who can most effectively and efficiently respond to environmental demands. %his reminds of -ichael Hammer/s theory of the process enterprise . Hammer states" that case managers" with heightened autonomy would lead to a more productive work process. He repeatedly emphasizes the usage of modern % in order to simplify" unify and increase efficiency of processes. #t first sight this may contradict Fayol/s principle. 0ut if we take a closer look" we see that this new approach also demands a close communication base. #s Fustin 6ongnecker puts it" discussions and meetings" contact managers and their subordinates have" may improve or harm the effectiveness of the direct report relationships in the chain of command . n other words" it is still compulsory for companies to have a clearly defined hierarchy of communication that incorporates a 1respect for the line of authority2" which is being 1reconciled with the need for swift action2" as Fayol himself put it . # problem associated with the scalar chain" as Fayol observes it" occurs when a subordinate bypasses a manager in either the communication of information or the making of a decision. %his would undermine the authority and position of the manager who is bypassed. f this would be allowed" morale of the managers would decline. # modern example can be found in two personal examples. &hen working as a chemical technician it was of crucial importance that both" information and orders were passed along a well defined chain of command" in order to assure a smooth production process. n this specific case it was also necessary in order to avoid wrong decision taking that could have had physical conse!uences in a dangerous work environment.
%he principle of order that Fayol mentioned is thereby taken very seriously in today/s business world.