HENRY FAYOL ;

ADMINISTRATIVE MANAGEMENT THEORY

( ALL YOU NEED TO KNOW)

CA Anushri Agrawal
anushriagrawal.com
anulohia.agrawal@gmail.com
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WHO?
 A French
 An engineer in mining firm in 1860 at an age of
19
 Develop a universal theory of management (
applicable in all types of organization)
 To make an organization efficient and effective
irrespective of nature of the organization whether
manufacturing or non manufacturing, big or
small, commercial or charitable, govt or non govt.
 Fayol presented his total work in “Administration
Industrelle et general” in 1916

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WHAT IS ADMINISTRATIVE MANAGEMENT

THEORY ?
organization

6 activities

Technical Commercial Managerial Financial Security Accounting

5 Functions

Planning Organizing Commanding coordinating Controlling

Principles ( 14)

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ACTIVITIES
 Fayol argued that every organization performs 6 activities:
1) Technical : related to production, manufacturing, providing
services (organic activity)( core activity)
2) Commercial : Buying or selling or exchange of goods and
services
3) Financial : Procurement and utilization of finance (
optimum use of capital)
4) Security: Protection of Personnel and Property ( org
security)
5) Accounting : Keeping of books( stock taking, accounts,
costs and statistics)
6) Managerial : Most important activity, on which depends the
success of the rest of the five activities .

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FUNCTIONS

 Managerial activity consists of 5 Functions;

1. Planning

2. Organizing

3. Commanding

4. Coordinating

5. Controlling

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PRINCIPLES:

 In all the 6 activities , the managerial activity is

the most important which consist of 5
functions, and the efficiency of which depends
on the 14 principles…

UNIVERSAL

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1) Division of work
work should be systematically divided so that there is no
confusion .Clarity about who has to do what
2) Authority and responsibility
No responsibility without authority. Authority and
responsibility are coexistent.
3) Initiative
Employees should be encouraged to take initiative.
Thinking and execution of plans at all managerial levels so
that sub-ordinates has an opportunity to use own initiative
4) Centralization
Centralization of authority at few places
5) Unity of Command
Every employee should have only one boss.
6) Unity of Direction
Every employee- one direction i.e. common goal

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7) Stability of Tenure
Retention of employess, minimum employee turnover
8) Discipline
Every employee is expected to obey the rules of Organization.
9) Remuneration / Pay
Fair wages
10) Subordination of individual interest to general interest
Individual must subordinate their personal interests for
greater organizational goal.( against sub- unit goal
internalization)
11) Order
Systematic arrangement of man, money and material. “
Specific place” for everything.
12) Equity
Equal pay for equal work; employees treated fairly and
impartially

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13) Espirit de corps

Spirit of coperation
Harmony and unity within the organization
14) Scaler Chain

“the chain of superiors ranging from the ultimate authority to

the lowest rank.”
Scalar chain is the formal line of authority which moves from
highest to lowest rank in a straight line. This chain specifies the
route through which the information is to be communicated to
the desired location/person.

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EMPHASIS IN FAYOL THEORY A

universal
theory
 STRUCTURAL
 Belief in principle

 Generality

 Efficiency A set of
ready
 Capable of Adaptability made
guidelines

More
elaborative
theory

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CRITICAL APPRECIATION
 Ignoring human side of enterprise:
By thinkers like Elton Mayo: Some principles where Fayol considered
Too mechanical and too structural Psychological needs of individual :
Scaler chain, Unity of commnad, Equity, Initiative, Espirit de corps
Centralisation, Division of work.

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 Prescriptive theory

• Unlike Taylor, only principles no • universal principles so techniques cant

techniques to implement the principles.
• Scientific management was confined to
manufacturing concerns.
be universal and hencemanagers to
develo operational tools suiting the needs
of their enterprise
•Development of general techniques is not
possible as general principles can be
applied anywhere and everywhere.

Fayol presented skeleton not the flesh. Flesh is to be

provided by organization as per its unique needs.

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Peter F Drucker said it cant be applied to modern organizations: hence

irrelevant principles. Organizations such as boundry less or system
organization cant work on the basis of hierarchy.
Hence, “ Time universality of principles” not applicable.

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CAPABLE OF ADAPTABILITY
Fayol himself kept and adapted for scope of flexibility in
use of principles.
 14 functional truths are principles rather than rules

 UOD along with UOC

 Level jumping: purposive violation of hierarchy

principle: gang plank
 Centralization vs initiative

 PETER DRUCKER,” Fayol’s functional

organization is still best way of
designing structures of small
businesses particularly manufacturing
one.”
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