Management Theory: Henri Fayol’s 14 Principles Introduction Fayol’s 14 principles derive from the circumstance that Fayol felt that management was not well defined. In his striving to change this circumstance he suggested “some generalized teaching of management” to be a main part of every curriculum at places of higher education and even beginning in “primary schools”, Fayol’s dedication to this idea is demonstrated by the fact that after retirement he went on to not just write books about management ideas, but more importantly, he found the Centre for Administrative Studies (CAS) in 1917 in Paris. The CAS mainly functioned as a centre of discussion between professionals from a large variety of professions, in order to further the knowledge and understanding of management principles. Discussion is what Fayol had in mind, when he presented his 14 principles. In Fayol’'s own words: “Are they [the principles] to have a place in the management code which is to be built up? General discussion will show”. In the following | will discuss each of his principles under the aspect of a comparison with examples, historic or modern, and in relation to other theoreticians of management, in order to examine how Fayot's principles hold up as “management code” today. Principle 1: ion of work The idea of division of work, or as Adam Smith called it “division of labour”, in 1776 probably goes back to the beginning of work itself. Fayol recognizes this in considering specialization as part of “the natural order” comparing it to the organs of the body. “The object of division of work is to produce more and better work with the same effort”, Fayol describes. This very objective has not been altered in today’s labor. In a sense this principle is the fundamental feature of modern economy, allowing for the largest increases of productivity. Peter F. Drucker informs us, that the 20th century has seen a rate of 3% productivity increase per year, hence productivity has risen 50 fold since the time of Frederick Taylor, who acted as a catalyst in the development of division of work. ‘An example of this fact can come from early industrialization, namely the Ford motor company, Where Taylor's system of a scientific approach was applied. Taylor was interested in skill development by means of standardization and functional specialization. One worker would assemble the dashboard, another would assemble the wheels, and yet another would paint the exterior. The effects of this are well known and lead to Ford becoming not just the predominant car maker but also the inventor of the conveyer-belt production system- revolutionizing many industries.However, one could argue that extremes of division of work could lead to undesired effects. Division of labor can ultimately reduce productivity and increase costs to produce units. Several reasons as causes for reduction in productivity can be thought of. For example, productivity can suffer when workers become bored with the constant repetition of a task. Additionally, 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. Douglas M. McGregor for instance cautions that “people, deprived of opportunities to satisfy at work the needs which are now important to them, behave...with indolence, passivity, lack of responsibility, unreasonable demands for economic benefits”. This circumstance was probably well recognized by Fayol, when he states that the “division of work has its limits which experience and a sense of proportion teach us may not be exceeded”. In more recent years management thinkers have recognized and addressed this issue more intensely, as will be discussed further below. Principle 2: Authority and Responsibility Fayol defines authority as the “right to give orders”, but he emphasizes that responsibility arises With it. He “demands high moral character, impartiality and firmness.” Fayol thinks of responsibility as something that is “feared as much as authority is sought after”. This fear, he explains can lead to a paralysis and must be counter-acted by personal integrity and a “particularly high moral character”. These qualities may be rewarded monetarily, Fayol argues. When looking at these standards, Fayol arguably should be followed as a leading example. In the light of current developments in regards to the financial crisis of the year 2009 and onwards, one notices a discrepancy between today’s leadership moral and Fayol’s demands. The current debate about the reasons for the breakdown of banks following the financial crisis points in the direction of a lack of such high standards. In the banking business, management rewards itself with company shares- contrary to what Fayol demanded- and large bonuses. As mentioned, Fayol saw good reason for responsibility to be rewarded, however, this reward demands that responsibility has been assumed. This has been brought into question in the debate that ensues the aftermaths of the financial break-down. In comparing the depression of the 1930s Phil Angelides, the Democratic former treasurer of California expresses his frustration in the line: “in 1929, people were throwing themselves out of windows; in 2009, they were lining up for bonuses”. This quote expresses the observed lack of responsibility. As UK Prime Minister Gordon Brown put it: “Senior executives need to take responsibility”. Mr Brown was “angry” about bonuses being earmarked for bankers despite them being held responsible for the near-collapse of the financial systemApparently, Fayol’s “authority and responsibility”-appeal is being disregarded by some; nevertheless, this example provides evidence for the validity of his observation that with great power great responsibility should arise. Principle Discipline Discipline Fayol understood as obedience and outward marks of respect between the firm and its employees. He considered it as an absolute prerequisite in order to assure a smooth running of the business. “Without it”, he says, “No enterprise could prosper”. Interestingly, Fayol emphasizes discipline not merely as something the employee owes the management, but rather as something that “depends essentially on the worthiness of its leaders”, 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 stating: “the ill mostly results from the ineptitude of the leaders”. Respect for a leader increases with the leader possessing the appropriate qualifications for the position, i.e. with their perceived “worthiness”. In this respect, Fayol has 2 somewhat more behavioral approach to the problem of discipline than for instance Taylor, who points to “soldiering”, (i.e. the agreement between workers to low standards of work in order to protect their own interests) as something one can recognize as a lack of discipline. This lack of discipline, Taylor suggests, can be counter-acted by applying various techniques, none of which clearly addresses the interaction between worker and manager, other than, what he calls “heartily cooperation”. Deviating from this mechanistic point of view, Fayol recognizes the complexity of human interaction as an important topic to be addressed. Expanding on this idea Elton Mayo provides evidence for us that Fayol was onto the right idea, at least a functioning idea, for that matter. Mayo identifies, what he calls “universal cooperation” in order to thwart conflict and improve work conditions, thereby improving productivity. Even though some argue that Mayo’s famous Hawthorne and Topeka experiments were exaggerated and partially even interpreted wrongly, it remains, that the application of his ideas has contributed to a change of mind in theoretical management. Mayo’s behavioral approach has shown that workers under experimental observation performed better than unobserved. It has frequently been argued, that there is evidence in this that discipline and the correlating performance can maybe best be achieved by a treatment emphasizing fairness, participation, a caring attitude, and respect. More recently, for instance Peter Drucker supports the idea that these factor influence productivity. His concept of the “knowledge worker” presents the idea of a highly educated and independently working employee, which he developed as a role model for the modern worker. Discipline derives from the fact that the knowledge worker is being respected, his needs are taken seriously and are being addressed by a high degree of self-fulfillment.