Early management principles were born of necessity. The most influential of these early principles were set forth by Henri Fayol, a French mining engineer. In 1888, Fayol became director of a mining company. The company was in difficulty, but Fayol was able to turn it around and make it profitable again. When he retired, Fayol wrote down what he’d done to save the company. He helped develop an “administrative science” and developed principles that he thought all organizations should follow if they were to run properly.
Fayol presented three principal ideas about management.1Industrial and General Administration. Translated by J.A. Coubrough, London: Sir Isaac Pitman & Sons. First, Fayol stressed the need for unity of command, that is, that a company’s management should speak with only voice. Too often under the Taylor system, a worker could have up to eight managers telling him how to perform a single task. Fayol stressed flexibility and recognized that authority must have responsibility attached to it. Accordingly, he stressed that management should maintain a unity of command, which ensured that each supervisor would explain to each of the employees in his group or division what aspect of his job to focus on. Each supervisor receives direction and information from the managers above him and passes that information down the chain of command.
Fayol’s second notable contribution was his recognition that workers focused on the social aspects of their jobs as well as on the monetary compensation they received for doing the job. Taylor was well aware of the social aspects and pressures of work, but he sought to limit them. Fayol sought to use them for the business’s benefit by stressing the development of an esprit de corps among workers. Esprit de corps refers to the cohesion of workers in a given unit or department, to their commitment to their individual goals and to their coworkers even in the face of adversity, and to the pride that one feels by being a member of the organization. Fayol stressed communication as a means of creating esprit de corps and building commitment between personal goals and organizational goals.
A third important aspect of Fayol’s work was his emphasis on the notion of justice within an organization and on the idea that an organization must decide issues fairly and equitably. In this way, managers could limit the ways in which their biases and personal feelings could influence their decisions.
Taken as a whole, Fayol’s ideas became what we today call Fayolism, or administrative theory. Fayolism consists of the 14 principles of management. These 14 principles articulate the types of tasks that managers are supposed to do. Faylor’s principles are still used today, but how they are used varies with a firm’s use of technology and its culture. For example, a society that stresses individual outcomes will have different compensation systems than those that are focused on collective or group outcomes.
Fayol’s 14 Principles of Management:
- Specialization/Division of Labor
By specializing in a limited set of activities, workers become more efficient and increase their output.
Managers must have the authority to issue commands, but with that authority comes the responsibility to ensure that the work gets done.
Workers must obey orders if the business is to run smoothly. But good discipline is the result of effective leadership: workers must understand the rules and management should use penalties judiciously if workers violate the rules.
- Unity of Command
An employee should receive orders only from one boss to avoid conflicting instructions.
- Unity of Direction
Each unit or group has only one boss and follows one plan so that work is coordinated.
- Subordination of Individual Interest
The interests of one person should never take precedence over what is best for the company as a whole.
Workers must be fairly paid for their services.
Centralization refers to decision making: specifically, whether decisions are centralized (made by management) or decentralized (made by employees). Fayol believed that whether a company should centralize or decentralize its decision making depended on the company’s situation and the quality of its workers.
- Line of Authority
The line of authority moves from top management down to the lowest ranks. This hierarchy is necessary for unity of command, but communication can also occur laterally if the bosses are kept aware of it. The line should not be overextended or have too many levels.
Orderliness refers both to the environment and materials as well as to the policies and rules. People and materials should be in the right place at the right time.
Fairness (equity), dignity, and respect should pervade the organization. Bosses must treat employees well, with a “combination of kindliness and justice.”
- Stability of Tenure
Organizations do best when tenure is high (turnover is low). People need time to learn their jobs, and stability promotes loyalty. High employee turnover is inefficient.
Allowing everyone in the organization the right to create plans and carry them out will make them more enthusiastic and will encourage them to work harder.
- Esprit de Corps
Harmony and team spirit across the organization builds morale and unity.
Management 2020 text remixed from multiple sources under a CC Attribution-NonCommercial-ShareAlike 4.0 International License. View a complete list of original sources.