Henri Fayols 14 Principles of Management

A principle refers to a fundamental truth. It establishes cause and effect relationship between two or
more variables under given situation. They serve as a guide to thought & actions. Therefore,
management principles are the statements of fundamental truth based on logic which provides
guidelines for managerial decision making and actions. These principles are derived: a. On the basis of observation and analysis i.e. practical experience of managers.
b. By conducting experimental studies.

There are 14 Principles of Management described by Henri Fayol.

What is Management?
Management is a universal phenomenon. It is a very popular and widely used term. All organizations
- business, political, cultural or social are involved in management because it is the management
which helps and directs the various efforts towards a definite purpose. According to Harold Koontz,
Management is an art of getting things done through and with the people in formally organized
groups. It is an art of creating an environment in which people can perform and individuals and can
co-operate towards attainment of group goals. According to F.W. Taylor, Management is an art of
knowing what to do, when to do and see that it is done in the best and cheapest way.
Management is a purposive activity. It is something that directs group efforts towards the attainment of
certain pre - determined goals. It is the process of working with and through others to effectively
achieve the goals of the organization, by efficiently using limited resources in the changing world. Of
course, these goals may vary from one enterprise to another. E.g.: For one enterprise it may be
launching of new products by conducting market surveys and for other it may be profit maximization
by minimizing cost.
Management involves creating an internal environment: - It is the management which puts into use
the various factors of production. Therefore, it is the responsibility of management to create such
conditions which are conducive to maximum efforts so that people are able to perform their task
efficiently and effectively. It includes ensuring availability of raw materials, determination of wages and
salaries, formulation of rules & regulations etc.
Therefore, we can say that good management includes both being effective and efficient. Being
effective means doing the appropriate task i.e, fitting the square pegs in square holes and round pegs
in round holes. Being efficient means doing the task correctly, at least possible cost with minimum
wastage of resources.
Management can be defined in detail in following categories :
1. Management as a Process
2. Management as an Activity
3. Management as a Discipline
4. Management as a Group
5. Management as a Science
6. Management as an Art
7. Management as a Profession
(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 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 abovementioned 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.
(3) Discipline:

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:
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.
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 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.
(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.
(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.
(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.
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.
(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 prestige.
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.