The Principles of Management are rules that allow better results in managing entities. In 1916, Henri Fayol postulated the 14 principles of management for general use that are still followed by businesses and organizations today. In this blog, we will discuss the principles of management as postulated by Henri Fayol.
Henri Fayol’s 14 Principles of Management with Examples -
- Division of labor
- Authority and Responsibility
- Unity of Command
- Unity of Direction
- Subordination of Individual Interest
- Degree of Centralization
- Scalar Chain
- Stability of Tenure of Personnel
- Esprit de Corps
Who Was Henri Fayol? Why His Principles Are Still Relevant?
Henri Fayol was a mining engineer who worked for the French mining company Commentry-Fourchambault and Decazeville, first as an engineer, then promoted to general manager and then director of administration from 1888 to 1918. He wrote his famous “General and Industrial Management” as a director. He developed theories on management and work organization that were widely influential in the early 20th century; his school of thought is known as the Classical Theory of Management.
Image - Henri Fayol (Image source – Wikipedia)
Henri Fayol’s 14 principles of management helped early 20th-century managers manage work and interact with employees efficiently. The 14 Principles of Management influenced the present management theory significantly.
This list of principles is still relevant and comprehensive because his general theories can be applied to all levels of management and every department. Even with the advent of so many concepts and theories, Fayol is considered one of the most influential contributors and pioneers of the modern management concept.
To learn more about the management concept, you can read our blog, What is Management?
Henri Fayol’s 14 Principles of Management with Examples
1. Division of Labor
The division of labour involves dividing the tasks within any organization into different teams specialized in those tasks.
Example: To explain it more straightforwardly, let’s take an example of any fast food joint like McDonald’s or Burger King. Here, one person takes the order, the second person assembles the burger, the third prepares the fries, the fourth person readies the drink, and the first person serves the entire order.
2. Authority and Responsibility
Fayol defines authority as “the right to give orders and obedience,” where the worker must be responsible for complying with the order. Both authority and responsibility must be balanced. The managers should be able to ensure their tasks are being done without fail.
Example: A company manager gives his employees the order to go to work the next day at an item exhibition. Therefore, they are responsible for complying with the request and showing up on time at said event.
The discipline principle of management follows the previous principle and depends on obedience and compliance with established rules, that is, on behaving correctly. A culture of mutual respect must be created within teams so that discipline doesn’t feel imposed but should be a part of the organizational flow. Good supervision forms the base of the discipline.
Example: If the employees mentioned in the previous example arrive late or wear an inappropriate dress to the event, this principle would not be complied with.
4. Unity of Command
There needs to be clarity on the chain of command within the teams. The unity of command means that every worker will always receive orders from a single boss or superior to avoid the duality of information, that is, receiving two contradictory orders and not knowing which one to obey. The unity of command will help ensure no conflicts of authority.
Example: Priya is a secretary in a small family business with two owners, Raj and Mahesh. Five minutes before the end of his workday, Raj asks her to print some sales reports. Shortly after, Mahesh tells him she must go to the bank to deposit some checks.
Who does Priya listen to?
This would be an example of the duality of information, and the “unity of command” principle would not be fulfilled.
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5. Unity of Direction
Unity of direction suggests that all employees work towards the goal. All activities must be led by a manager responsible for the plan. Unity of direction is dependent on good organizational skills and planning. There cannot be unity of command without unity of direction.
Example: Production activities within a production unit should be supervised and managed by one manager, while its marketing activities, such as advertising, pricing, policy, etc., must be directed by only one manager.
6. Subordination of Individual Interest
In any organization, the company’s interests must always be privileged over the particular interests of the owners and employees. This is called subordination of individual interest against the company’s interest. It will always be necessary to give more importance to what happens in the company than personal issues.
Example: Mini is responsible for meeting with a potential client for an event in a community hall on 10th August. Instead, she used that community hall to celebrate her birthday party. This way, she not only misses out on a potential client for her company but also puts her reputation at stake.
The salary paid to staff (remuneration) must be equitable, fair, and guaranteed for all company employees to perform the same task.
Example: A company’s salespeople are paid a 3% commission as a sales award, but a newly hired employee is paid only 2%. In other words, this principle would not be fulfilled in this case.
It is also good to emphasize that there are still salary inequities due to gender issues, where women often earn less than men for the same positions and responsibilities.
8. Degree of Centralization
Centralization is the concentration of power and decision-making in the top hierarchy. In this situation, there is almost no or minor delegation of tasks or decision-making.
Example: Centralization is very common in SMEs (small and medium-sized enterprises), where the owners generally make most of the decisions. They do not delegate them or do not involve middle-management or other employees.
9. Scalar Chain
The scalar chain principle of management suggests that hierarchy is the order in the command lines from the highest levels. In this hierarchy, the directors and managers are at the top, the middle managers (bosses and supervisors), and the lower-level employees. Hierarchy defines authority and responsibility.
Example: The lines of the hierarchy are evident in defence services with different degrees of importance. For instance, in the army, the hierarchy is as follows – Field marshal, General, Lieutenant general, Major general, Brigadier, Colonel, Lieutenant colonel, etc.
The principle of order suggests that there should be a fixed place for everything and everyone, and everything and everyone should be in its place. This will lead to improved productivity and efficiency.
This aligns with the scientific management theory.
Example: There is no order for tools and equipment in a company dedicated to manufacturing auto parts in the workshop. The staff also does not have a fixed place of work assigned, and each does different tasks without an assigned role. This example defies all the components of the principle or order.
In any company, consistently to achieve the employees’ loyalty, it will be necessary to treat the employees in a friendly manner, without any preferences, and fairly. Equity is a combination of kindness and justice.
Equity also makes it essential to talk about the importance of gender equality. This means men and women can access a position and receive the same salary.
Example: Maxine is a manager at a production workshop. She allows choosing the simplest job to an employee with whom she plays golf on weekends, and to another colleague with whom she doesn’t get along, she allocates a more challenging job.
Considering that Maxine is biased in her professional behaviour, the Fayol principle of equity would not be fulfilled in this situation.
12. Stability of Tenure of Personnel
Fayol argues that it is essential to ensure that employees last a long time in their positions and avoid staff turnover as much as possible. The idea of the stability of tenure of personnel is to inculcate a sense of job security and loyalty in the teams so they don’t think of leaving the organization. The sense of job insecurity is directly proportional to low labour efficiency and the high cost of training a new person to carry out their tasks.
Example: Info Edge India Limited awards its employees for their contribution after they achieve a benchmark period (five years, ten years, and so on). This fosters loyalty toward the organization and encourages the employees to contribute their best.
Fayol defines initiative as “the ability to see a plan and ensure its success.” Extending this definition, we can add that the initiative links to people’s ability to propose, develop or devise projects that improve current situations and the chances of meeting the business goals with lesser costs and time.
Example: Alex is a production manager in a textile factory. He devised a plan to improve the manufacturing process to reduce costs by 2%, thereby making an initiative towards achieving business goals more efficiently.
14. Esprit de Corps
Esprit de Corps is a French term that means “Team Spirit.” Therefore, the management should create unity, cooperation, and team spirit among employees. Managers are responsible for fostering an environment of mutual trust, understanding, and empathy. Working as a team will achieve more meaningful results than independently. Therefore, it will be essential to achieve unity and harmony among employees.
Example: The best example of Esprit de Corps is in military combat units. They take pride in inspiring enthusiasm and devotion and work together to deal with their counter units.
Fayol’s 14 principles of management are a comprehensive set of guidelines that can help managers improve the performance of their organizations. These principles are still relevant today, and managers across domains use them, from small businesses to large corporations.
We hope this article on Henri Fayol’s 14 principles of management with examples helped you understand how you can manage your teams, plan, organize, control, coordinate, and make better decisions toward a common business objective.
What are the principles of administrative management?
The administrative function is at the service of the general interests. It is developed based on equality, morality, efficiency, economy, speed, impartiality and publicity through decentralization, delegation and deconcentration of functions.
What are some potential challenges in applying Fayol's principles?
A potential challenge in applying Fayol's principles is that they were developed in a different period and cultural context and may only directly apply to some organizations or situations. Additionally, some principles may conflict with other organizational values or goals, and managers may need to find a balance between them.
How do Fayol's principles compare to other management theories?
Fayol's principles are one of several management theories developed over the years, and each theory has its strengths and weaknesses. For example, Frederick Taylor's scientific management theory emphasizes efficiency and productivity, while Elton Mayo's human relations theory emphasizes the importance of employee motivation and satisfaction. These multiple theories can help create a comprehensive management approach that works best for the organization.
What are Henri Fayol 14 Principles of Management?
Henri Fayol's 14 Principles of Management are guidelines for effective management. They include principles such as division of work, authority, unity of command, and more.
How does the "Scalar Chain" principle help in avoiding communication bottlenecks in large organizations?
The Scalar Chain ensures a clear communication hierarchy. In a multinational corporation, information flows smoothly from top executives to regional managers and down to local supervisors, preventing delays.
How can organizations promote "Esprit de Corps" among remote or geographically dispersed teams?
Organizations can foster team spirit through virtual team-building activities and regular video conferences to create a sense of unity among remote team members.
What are some strategies for applying the "Subordination of Management to Authority" principle to prevent misuse of power within an organization?
To prevent misuse of power within an organization while applying the "Subordination of Management to Authority" principle:
To prevent misuse of power within an organization while applying the "Subordination of Management to Authority" principle:
- Establish clear ethical guidelines
- Provide training on ethics and authority
- Create a confidential reporting system
- Conduct regular audits and reviews
- Promote transparency in decision-making
- Form ethics committees
- Enforce conflict of interest policies
- Include ethics in performance evaluations
- Maintain open communication channels
- Define consequences for misuse
- Lead by example from top management