Fayol's 14 principles of management

Publication info: New Straits Times ; Kuala Lumpur [Kuala Lumpur]22 Mar 1998: 25.

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ABSTRACT (ABSTRACT)
IN 1916, French technocrat Henri Fayol wrote and published a bulletin that later became famous throughout the
management world. It still is.

After more than 40 years of senior managerial experience in a large French mining conglomerate he wrote that all
organisational activities can be placed in six groups. He also summarised the lessons of his own experience as a
managing director into what is known today to students of management as Fayol's 14 principles of management.

Fayol believed that of all organisational activities, managerial function was the most important. He felt that most
organisations were short of managerial talents skilled in the five functions.

FULL TEXT
IN 1916, French technocrat Henri Fayol wrote and published a bulletin that later became famous throughout the
management world. It still is.

After more than 40 years of senior managerial experience in a large French mining conglomerate he wrote that all
organisational activities can be placed in six groups. He also summarised the lessons of his own experience as a
managing director into what is known today to students of management as Fayol's 14 principles of management.

Fayol's six groups of organisational activities consist of:

1. Technical: producing, and manufacturing of products.

2. Commercial: buying raw materials and selling products.

3. Financial: acquiring and optimising the use of capital.

4. Security: protecting employees and property.

5. Accounting: taking stock of costs, profits and liabilities, keeping balance sheet, etc.

6. Managerial: consisting of planning, organising, commanding, co- ordinating and controlling.

Today, Fayol's five business activities are referred to as a company's functional lines: (1) production, (2) marketing,
(3) finance &administration, (4) human resources and (5) information technology.

As for item (6), which was his primary focus, he described the five managerial functions as follows:

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a. Planning: assessing the future and drawing up a plan of action that will enable the organisation to achieve its
goals.

b. Organising: this refers to the building up of an organisation and mobilising resources such as money, manpower,
material and machine so that things get done according to the plan.

c. Commanding: here it means that managers must provide direction for their subordinates, instil a sense of
mission in them and obtain the best possible performance from them.

d. Co-ordinating: managers must ensure that all the resources of the company are working harmoniously to
achieve the desired goals.

e. Controlling: this function is to ensure that everything occurs in conformity with established rules, policies and
expressed commands.

Today, most of us associate the five functions with: (a) planning, (b) organising, (c) leading or directing, (d) staffing
and, (e) controlling.

Fayol believed that of all organisational activities, managerial function was the most important. He felt that most
organisations were short of managerial talents skilled in the five functions.

He, therefore, called for the introduction of formal managerial training in schools and universities instead of relying
on the sink-or-swim approach.

He also believed that managerial training could help people function better in all areas of life - at home, in
government, the military, etc.

The 14 Principles of Management.

IF we are to look closely at the 14 principles, we will see that these are rather similar to the principles used by the
Egyptian Pharaohs when they built the great pyramids and sphinxes more than 3,000 years ago.

But things have changed dramatically. Because of the drastic changes during the last 70 to 80 years in areas such
as lifestyle, educational level, aspiration etc, it may be useful to look at these principles in the present context.

The following are the principles, accompanied by several queries, where relevant, so that students of management
may find their own answers to the various issues.

* Division of work: Division of work and job specialisation allow individuals and work-teams to build up expertise
and thereby be more efficient and productive. This principle is best seen in a modern assembly line.

* Authority: Authority gives managers the right to issue orders. Along with authority, or position power, however,
goes responsibility. In other words, when authority is exercised, the managers must assume responsibility.

How often do we encounter situations where our superiors use their `position power' but do not assume
responsibility when things go wrong? Also, is authority alone sufficient to get things done.

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Shouldn't managers be skilful users of other sources of power such as `personal power', `expert power' and `reward
power'? In other words, is position power or authority (which alone could get workers going in the early 1900s) still
sufficient today?

* Discipline: Employees in an organisation need to respect top management's policies, rules and commands. To
Fayol, discipline will result from good leadership at all levels, fair practices such as rewarding superior
performance, and judiciously enforcing penalties for violations of rules, etc.

In today's office life, most workers are "disciplined" not because of good leadership or fair practices, but because
management uses coercive means to intimidate them into submission.

* Unity of command: Each employee must receive instructions about a particular operation from only one person.
Fayol believed that when an employee reported to more than one superior, conflicts in instruction and confusion
would result.

While the principle is applicable in settings such as the military or regimented operations, modern-day
organisations are no longer finding it meaningful. It is not uncommon even for senior managers in local companies
to be reporting to two bosses. Why can't superiors minimise organisational confusion by adhering to this principle?

* Unity of direction: Departments within the organisation that have the same objective should be directed by only
one manager using one plan.

This principle, and the preceding unity of command should be practised all the time. Unfortunately, they are not.
Why?

* Subordination of individual interest to the common good: In any undertaking, the interest of employees
(professional managers included) should not take precedence over that of the company.

Here again, practices in most companies tell a different story. For instance, the existence of office politics
condoned by top management.

A classic example of a boss who practised this principle faithfully was the late Konosuke Matsushita. He not only
looked after the common good of his organisation but also had the interest of customers at heart, passing on to
them the benefits of cost savings etc. by lowering the selling price of his products.

* Remuneration: Financial compensation for work done should be fair to both employer and employee. Although
Fayol recognised that salaries and rewards were important motivators, he knew that there was no perfect
remuneration system.

What do you think are practical remuneration policies managers can adopt if they want to create a strong
company?

* Centralisation: Refers to the degree to which employees are involved in decision-making. Decreasing their role is
centralisation and the converse is decentralisation. Fayol felt that while managers should retain final
responsibility, they must give subordinates enough authority to do their jobs effectively.

Generally speaking the degree of centralisation or decentralisation depends largely on factors such as the

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personal styles of the bosses or managers, the quality of the subordinates, and the intensity of rivalry among the
various competitors.

We can thus assume that each company has its own unique practice. And because the business environment is
always changing, organisations have, likewise, to change their policies on centralisation or decentralisation, in
order to remain competitive.

* Hierarchy: The line of authority represented by the boxes and lines in an organisational chart runs in order of rank
from top management to the lowest level. According to Fayol, communication and commands should follow this
chain of command.

However, if following the chain creates delays, cross-communications can be allowed if agreed to by all parties,
and superiors are kept informed.

Organisations will become chaotic and less effective if a good communication system is missing.

There are numerous reasons why communications break down even if they follow this principle of hierarchy. For
instance, emotional factors between persons result in the withholding of information, or deliberate distortion of
information.

The implication of this phenomenon in organisational life is obvious. Good managers or bosses have to be skilled
in human affairs. How do you think managers should conduct themselves so that authority is not undermined and
communication flow throughout the organisation is both smooth and undistorted?

* Order: Materials and people should be in the right place at the right time. People, in particular, should be in the
jobs or positions most suited for them. According to Fayol, order is achieved through good leadership, proper
organisation, and selection of people.

One of the hallmarks of a successful company is that everything runs in an orderly fashion with minimal hitches.
On the other hand, the reverse is true for a poorly managed company, irrespective of size. What do you think
managers should do to to fulfil this concept of `order'?

* Equity: In running a business, a combination of `kindness and fairness' is needed when treating employees if
equity is to be achieved.

Most employees would respect their superiors if they are `firm and fair' in their conduct. But managerial blindspots
are extremely difficult to deal with as those concerned are unconscious or unaware that their actions are unfair or
biased.

On the other hand, top-notch managers must develop this ability if they are to be good leaders. What would you
suggest?

* Stability of tenure of personnel: High employee turnover results in organisational inefficiency. Managers should
ensure proper personnel planning and that good employees stay with them.

Good organisations anywhere in the world have little problem with employee turnover. But such organisations are
rare.

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What are some of the approaches managers can take to ensure stability of staff?

* Initiative: Fayol wrote 80 years ago that allowing subordinates to show their initiative in some way is a source of
strength for the company even though it may involve a sacrifice of `personal vanity' on the part of many managers.

He recognised that employees who are allowed to exercise some initiative will show high levels of effort.

Allowing employee initiative also means that the managers are prepared to face certain risks. What should
managers do?

* Esprit de corps: Fayol recognised that promoting team spirit will build harmony and unity within the organisation.
To him, managers must foster the morale of subordinates, and managers must develop the ability to build co-
operation and teamwork, to use each person's abilities and to reward each one's merit or contribution without
arousing jealousies or disturbing harmonious relations. On paper all these sound easy, but are they?

* We welcome comments or suggestions from readers. You can write in to:

MIM/NST Readers' Contributions

Malaysian Institute of Management

227, Jalan Ampang

50450, Kuala Lumpur

Fax: 03-2643171 or 03-2643224

DETAILS

Publication title: New Straits Times; Kuala Lumpur

Pages: 25

Number of pages: 0

Publication year: 1998

Publication date: Mar 22, 1998

column: Managing problems

Section: Business

Publisher: The New Straits Times Press (M) Berhad

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 Place of publication: Kuala Lumpur

Country of publication: Malaysia, Kuala Lumpur

Publication subject: General Interest Periodicals--Malaysia

Source type: Newspapers

Language of publication: English

Document type: NEWSPAPER

ProQuest document ID: 266350165

Document URL: https://search.proquest.com/docview/266350165?accountid=188730

Copyright: Copyright Financial Publications Sdn. Bhd. Mar 22, 1998

Last updated: 2017-11-12

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