Henri Fayols 14 Principles Of Management

Prep By Naidu

Introduction

The real father of modern operational management theory is the French Industrialist Henry Fayol. His contribution are generally termed as operational management or administrative management.

Continued.....

Fayol looked at the problems of managing an organization from top management point of view. He has used the term administration instead of management. Fayol found that activities of an industrial organization could be divided into 6 groups.

Continued.
1.

2.

3.

4.

5.
6.

Technical(relating to production) Commercial(buying , selling, and Exchange) Financial(search for capital and its optimum use) Security(Protection of property & person) Accounting(including statistics) Managerial(POSDC)

Continued.
Fayol has divided his approach of studying management into three parts: 1.Managerial qualities & training

2.General principles of management 3.Elements of management

1.Managerial Qualities &Training

1.

2.
3. 4. 5. 6.

Physical Mental(Ability to understand & learn) Moral(energy,loyalty,initiative & dignity)s Educational Technical Experience

General Principles of Management

1. Division Of Work
Specialization allows the individual to build up experience, and to continuously improve his skills. Thereby he can be more productive. According to him,"Specialsations belongs to natural order

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

3. Discipline
Employees must obey, but this is twosided: employees will only obey orders if management play their part by providing good leadership. Discipline is obedience,application,energy and outward mark of respect shown by employees.

Discipline
It may be 2 types: 1. Self-imposed discipline It springs from within the individual and is in the nature of spontaneous response to a skilful leader. 2. Command discipline which is expressed by established customs, rules and regulations.

4. Unity Of Command
Each worker should have only one boss with no other conflicting lines of command. It means that a person should get orders and instructions from only one superior. An individual has a reporting r/s to a single superior.

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

Unity of Direction

UOD is concerned with functioning of the organisation in respect of its grouping of activities or planning. UOC is concerned with personnel at all levels in the organisation in terms of reporting relationship.

6. Subordination of individual interest

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

7. Remuneration
Payment is an important motivator although by analyzing a number of possibilities, Fayol points out that there is no such thing as a perfect system It should be fair and provide maximum possible satisfaction to employees & employers.

8. Centralization (Or Decentralization)

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

9. Scalar chain (Line of Authority)

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

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

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

12. Stability of Tenure of Personnel

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

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

14. Esprit de Corps

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

Elements of Management
He viewed management as a process consisting of 5 elements: 1. Planning 2. Organisation 3. Commanding 4. Co-ordination 5. Controlling

Contribution of Taylor & Fayol

Similarity: 1. Both have attempted to overcome managerial problem in a systematic way. 2. Both have developed some principles which can be applied in solving managerial problems. 3. Both have emphasized that management actions can be effective if these are based on sound principles.

Contd
4. Both of them have emphasised that managerial qualities are acquirable and can be acquired through training. 5. Both have emphasised harmonious relationships between management and workers for the achievement of organisational objectives.

Dissimilarity
Basis of difference 1. Perspective 2. Focus 3. Orientation 4. Results Taylor Shop-floor level Efficiency through work simplification and standardisation Production & Engineering Scientific observation & measurement Fayol Higher management level Overall efficiency by observing certain principles Managerial Functions Personal experiences translated into universal truths Systematic theory of management

5.Overall contributions

Basis for accomplishment on the production line

What Is Management? (According To Fayol)

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

Prevoyance. (Forecast & Plan). Examining the future and drawing up

a plan of action. The elements of strategy. undertaking.

To organize. Build up the structure, both material and human, of the To command. Maintain the activity among the personnel. To coordinate. Binding together, unifying and harmonizing all activity
and effort.

To control. Seeing that everything occurs in conformity with

established rule and expressed command.

Application Of Fayols Principles

Change and Organization. Decision-making. Skills. Can be used to improve the basic effectiveness of a manager. Understand that management can be seen as a variety of activities, which can be listed and grouped.

Peter Druckers Management By Objectives

8 Key Result Areas Where Managers Must Pursue Clear Objectives - Kotelnikov, 2008
Marketing In order for a business to create a customer, there needs to be a market. Innovation New ideas are required by a business in order to create a demand for a product. Human organization Financial resources Physical 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 Resources must be used productively and the productivity must grow in order for the business to survive.

Social 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 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 Principles

Cascading of organizational goals and objectives. Specific objectives for each member. Participative decision making. Explicit time period. Performance evaluation and feedback.

SMART Method

Specific Measurable Achievable Realistic Time-related

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

Bibliography

14 Principles of Management. (2008, Aug 29).

Retrieved 10 2008, from www.12manage.com: http://www.12manage.com/methods_fayol_14_ principles_of_management.html Drucker, P. (2007). Management Tasks, Responsibilities, Practices. New Jersey: Transaction Publishers. Kotelnikov, V. (2008). Management by Objective. Retrieved 10 2008, from www.1000ventures.com: http://www.1000ventures.com/business_guide/ mgmt_mbo_main.html