14 Fundamental Principles of Management Formulated by Henry Fayol PDF

7/16/2016
14FundamentalPrinciplesofManagementFormulatedbyHenryFayol
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14 Fundamental
Principles of
Management
Formulated by Henry
Fayol
bySamikshaS
Different management experts have explained different

principles on the basis of their research. Henry Fayol, a
famous industrialist of France, has described fourteen
principles of management in his book General and
Industrial Management.
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Explaining the difference between principles and

elements he makes it clear that the principles of
management are fundamentally true and establish a
relationship between cause and effect, while the
elements of management point towards its functions.
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While presenting the principles of management Fayol

has kept two things in mind. Firstly, the list of the
principles of management should not be long but should
be suggestive and only those principles should be
explained which become applicable in most of the
situations.
Secondly, the principles of management should be
flexible and not rigid so that changes can be made in
them in case of need. The fourteen principles given by
Fayol are as under:
(1) Division of Work:
This principle of Fayol tells us that as far as possible the
whole work should be divided into different parts and
each individual should be assigned only one part of the
work according to his ability and taste rather than
giving the whole work to one person.
When a particular individual performs the same job
repeatedly, he will become an expert in doing that
particular part of the whole job. Consequently, the
benefits of specialisation will become available.
For example, a furniture manufacturer gets an order for
manufacturing 100 lecture stands. He has five workers
who will do the job. There are two ways to complete this
order. First, every worker should be asked to complete
20 lecture stands.
The second method can be distributing different parts of
the lecture stand-legs, top board, centre support,
assembling and polishing-to all the five workers in a
manner that only one worker does the same job for all
the 100 lecture stands. Here, Fayols indication is to the
second way to do this job and not the former one.
The principle of division of labour applies not only to
the workers but also equally to the managers. For
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example, if a manager is tuned to work on the same kind

of activities for a long period of time, he will certainly be
an expert in his particular job. Consequently, more and
beneficial decisions can be taken in a comparatively less
time by him.
Positive Effect advantages of specialisation are obtained,
such as increase in the quality of work, increase in the
speed of production, decrease in the wastage of
resources.
Violating Effect the above-mentioned positive effects of
specialisation will not be available.
(2) Authority and Responsibility:
According to this principle, authority and responsibility
should go hand in hand. It means that when a particular
individual is given a particular work and he is made
responsible for the results, this can be possible only
when he is given sufficient authority to discharge his
responsibility.
It is not proper to make a person responsible for any
work in the absence of authority. In the words of Fayol,
The result of authority is responsibility. It is the natural
result of authority and essentially another aspect of
authority and whenever authority is used, responsibility
are automatically born.
For example, the CEO of a company has doubled the
sales target of the sales manager for the coming year. To
achieve this target, authority for appointing necessary
sales representatives, advertising according to the need,
etc. shall have to be allowed. In case these things are not
allowed the sales manager cannot be held responsible
for not
(3) Discipline:
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Discipline is essential for any successful work

performance. Fayol considers discipline to mean
obedience, respect for authority, and observance of
established rules.
Discipline can be established by providing good
supervision at all levels, clearly explaining the rules, and
implementing a system of reward and punishment. A
manager can present a good example to his
subordinates by disciplining himself.
For example, if the employees break their promise of
working up to their full capacity, it will amount to the
violation of obedience. Similarly a sales manager has the
authority to do business on credit.
But in case he allows this facility not to the general
customers but only to his relatives and friends, then it
will amount to ignoring his respect to his authority.
(Note: Both these examples give a message of
indiscipline which is an undesirable situation.)
(4) Unity of Command:
According to the principle of unity of command, an
individual employee should receive orders from only
one superior at a time and that employee should be
answerable only to that superior. If there are many
superiors giving orders to the same employee, he will
not be able to decide as to which order is to be given
priority. He thus finds himself in a confused situation.
Such a situation adversely affects the efficiency of the
subordinates. On the other hand, when there are many
superiors, every superior would like his orders to be
given priority. This ego problem creates a possibility of
clash. Consequently, their own efficiency is likely to be
affected.
(5) Unity of Direction:
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Unity of direction means that there should be one head

for one plan for a group of activities having the same
objective. In other words, there should be one plan of
action for a group of activities having the same objective
and there should be one manager to control them.
For example, suppose an automobile company is
manufacturing two products, namely, scooters and cars,
hence having two divisions.
As each product has its own markets and problems
therefore each division must have its own targets. Now
each division must plan its target as per its
environmental conditions to get better results. It is
necessary to distinguish between the meaning of the
unity of command and the unity of direction.
Unity of command means that there should be only one
manager at a time to give command to an employee,
while the unity of direction means that there should be
only one manager exercising control over all the
activities having the same objective.
Unity of Command & Unity of Direction
In this connection Fayol feels that for the efficient
running of an organisation the unity of direction is
important, while the unity of command is important to
enhance the efficiency of the employees.
(6) Subordination of Individual Interest to General
Interest:
This principle can be named Priority to General Interest
over Individual Interest. According to this principle, the
general interest or the interest of the organisation is
above everything. If one is asked to place individual
interest and the general interest in order of priority,
definitely the general interest will be placed at the first
place.
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For example, if a manager takes some decision which

harms him personally but results in a great profit to the
company, he should certainly give priority to the interest
of the company and take the decision accordingly. On
the contrary, if some decision helps the manager
personally but results in a great loss to the company,
then such a decision should never be taken.
For example, a purchase manager of a company has to
purchase 100 tonnes of raw material. His son happens to
be a supplier along with other suppliers in the market.
The manager purchases the raw material from the firm
of his son at a rate higher than the market rate. This will
profit the manager personally, but the company will
incur heavy loss. This situation is undesirable.
(7) Remuneration to Employees:
Fayol is of the opinion that the employees should get a
fair remuneration so that the employees and the owners
find equal amount of satisfaction. It is the duty of the
manager to ensure that employees are being paid
remuneration according to their work. If, however, they
are not paid properly for their work, they will not do
their work with perfect dedication, honesty and
capacity.
As a result, the organisation shall have to face failure.
Proper remuneration depends on some factors like the
cost of living, demand of labour and their ability. Fayol
feels that in order to motivate the employees, apart from
general remuneration, they should be given some
monetary and non-monetary incentives.
For example, suppose that the things are getting dearer
and dearer and the company is getting good profits. In
such a situation, the remuneration of the employees
should be increased even without their asking. If this is
not done, the employees will leave the company at the
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first opportunity. Expenses shall have to be incurred on

new recruitment which shall bring loss to the company.
(8) Centralisation and Decentralisation:
According to this principle, the superiors should adopt
effective centralisation instead of complete
centralisation and complete decentralisation. By
effective centralisation, Fayol does not mean that
authority should be completely centralised.
He feels that the superiors should keep the authority of
taking important decisions in their own hands, while the
authority to take daily decisions and decisions of less
importance should be delegated to the subordinates.
The ratio of centralisation and decentralisation can
differ in different situations. For example, it is
advantageous to have more centralisation in a small
business unit and more decentralisation in a big
business unit.
For example, the decisions in respect of determining the
objectives and policies, expansion of business, etc.
should remain in the hands of the superiors. On the
other hand, authority for the purchase of raw material,
granting leave to the employees, etc. should be delegated
to the subordinates.
Positive Effect
(i) Decrease in the workload of superiors
(ii) Better and quick decisions
(iii) Increase in the encouragement to the subordinates
Violating Effect
(i) Unnecessary increase in the workload of the
superiors in case of centralisation and of the
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subordinates in case of decentralisation

(ii) Impatient and wrong decisions by the superiors in
case of complete centralisation and weak decisions by
the subordinates in case of complete decentralisation
(iii) Decline in the encouragement to subordinates in
case of complete centralisation
(9) Scalar Chain:
(i) Meaning of Scalar Chain:
It refers to a formal line of authority which moves from
highest to the lowest ranks in a straight line,
(ii) Fayols Opinion:
This chain must be followed in a strict manner. It means
each communication must move from top to bottom and
vice versa in a straight line. The important condition
here is that no step (post) should be overlooked during
communication.
(iii) Fayols Ladder:
Fayol has explained this principle with the help of a
ladder.
For example, in a company the employee F wants to
have contact with the employee P. According to the
principle of scalar chain F shall have to reach A
through the medium of E,D,C,B and then having contact
with L,M,N,0 shall reach P. Thus F shall have to take
the help of all the nine steps (posts) to have business
contact with P.
(iv) Utility:
Due to more clear system of authority and
communication, problems can be solved faster.
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(v) Gang Plank:

It is the exception of the principle of scalar chain. This
concept was developed to establish a direct contact with
the employee of equal rank in case of emergency to
avoid delay in communication.
For example, as shown in the diagram employee F can
have direct contact with employee P. But for doing so
employees F and P shall have to seek the prior
permission of their immediate bosses E and O. The
details of their talk also shall have to be given to them.
(10) Order:
According to the principle of order, a right person
should be placed at the right job and a right thing should
be placed at the right place. According to Fayol, every
enterprise should have two different orders-Material
Order for Physical Resources and Social Order for
Human Resources.
Keeping the physical resources in order means that a
proper place for everything and everything in its right
place. Similarly, keeping the human resources in order
means a place for everyone and everyone in his
appointed place.
Maintaining these two orders properly will ensure that
everybody knows his workplace, what he is to do and
from where he would get his required material.
Consequently, all the available resources in the
organisation will be utilised properly.
Gang Plank: A Special Note
Gang Plank can only be established with the employees
of the equal or same level. For example, in the present
example no gang plank can be established between F
and O.
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For example, an employee working in a factory should

know the place or source from where he can get his
tools in case of need. Similarly, he should know the place
where his supervisor will be available in case of any
need.
It is, however, important to note that it is not sufficient
to have an allotted place for a toolbox and for the
supervisor but the availability of both at their decided
place is absolutely important. If this is not the case, it
can lead to a heavy loss as a result of damage to the
machines.
(11) Equity:
This principle tells that the managers should treat their
subordinates in a just and kind manner so that they
develop a feeling of dedication and attachment for their
work. All the employees should be treated equally and
impartially.
Fayol tells us in connection with this principle that there
should not be any equality of treatment between a
person whose work is really good and a person who is a
shirker by nature.
Rather, the latter should be treated sternly. Doing so
would be equitable. It is because of this point of view
that Taylor has presented his differential remuneration
method.
(12) Stability of Personnel:
From the point of view of management it is absolutely
harmful to change the employees frequently as it is a
reflection of inefficient management. Therefore,
according to this principle there should be stability of
tenure of the employees so that the work continues
efficiently.
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Fayol thinks that instability in the tenure of employees is

a cause of poor management and results. High rate of
labour turnover will result in increased expenses
because of selecting them time and again, and giving
them training afresh.
It also lowers the prestige of the organisation and
creates a feeling of insecurity among the employees
which keeps them busy in finding out new avenues of
work. Consequently, the sense of dedication cannot be
created among them.
For example, it is true that if the workers in a company
are not treated well and the atmosphere in the company
is also unhealthy, the employees will not stay for a long
time. In other words, they will leave the company at the
first opportunity available. This situation is absolutely
harmful.
For example, a labourer completes 10 units of goods in a
day. Another labourer who happens to be a relative of
the supervisor completes 8 units but both get equal
remuneration. This violates the principles of equality.
The second labourer should get less remuneration than
the first one.
(13) Initiative:
Initiative means the capacity to work while expressing
ones thoughts. According to Fayol, it is the duty of the
manager to encourage the feeling of initiative among his
employees for doing some work or taking some decision
but within the limits of authority and discipline.
It will be possible only when the manager will welcome
the thoughts of his/her subordinates. By doing so the
subordinates will present new and useful ideas time and
again and gradually they will become an integral part of
the organisation. In order to make this process a success
a manager will have to abandon his false sense of
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prestige.
For example, a salesman suggests to his sales manager to
implement a new advertisement technique. The sales
manager sends him away by telling him that it is not
possible and ignores the suggestion altogether.
In such a situation the salesman, who has been
admonished and belittled, will never venture to offer
any suggestion in future because his desire of taking
initiative has been suppressed.
On the contrary, if his suggestion had been listened to
carefully (even though not to be implemented) he could
have taken the courage to offer some suggestion in
future. Such an action would simply have encouraged
his initiative.
Positive Effect
(i) Increase in the thinking power of the employees
(ii) Cooperation of the employees in implementing
decisions
(iii) Increase in the sense of attachment to the
organisation Violating Effect
(iv) Decline in the thinking power of the employees
(v) An atmosphere of non-cooperation
(vi) Decline in the employees attachment to the
company
(14) Esprit de corps:
As per this principle, a manager should continuously
make efforts to develop a team spirit among the
subordinates. To do this, he/she should use the word
We instead of during the conversation with
subordinates.
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7/16/2016

Different management experts have explained different

Explaining the difference between principles and

While presenting the principles of management Fayol

example, if a manager is tuned to work on the same kind

Discipline is essential for any successful work

Unity of direction means that there should be one head

For example, if a manager takes some decision which

first opportunity. Expenses shall have to be incurred on

subordinates in case of decentralisation

(v) Gang Plank:

For example, an employee working in a factory should

Fayol thinks that instability in the tenure of employees is

The Importance of Principles in Teaching

Before publishing your

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