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31 October 2012

14 Principles of Management


According to Henry Fayol management has 14 principles. Henry Fayol listed the 14 principles of management as follows:
  1. Specialization of labor. Specializing encourages continuous improvement in skills and the development of improvements in methods.
  2. Authority. The right to give orders and the power to exact obedience.
  3. Discipline. No slacking, bending of rules.
  4. Unity of command. Each employee has one and only one boss.
  5. Unity of direction. A single mind generates a single plan and all play their part in that plan.
  6. Subordination of Individual Interests. When at work, only work things should be pursued or thought about.
  7. Remuneration. Employees receive fair payment for services, not what the company can get away with.
  8. Centralization. Consolidation of management functions. Decisions are made from the top.
  9. Scalar Chain (line of authority). Formal chain of command running from top to bottom of the organization, like military
  10. Order. All materials and personnel have a prescribed place, and they must remain there.
  11. Equity. Equality of treatment (but not necessarily identical treatment)
  12. Personnel Tenure. Limited turnover of personnel. Lifetime employment for good workers.
  13. Initiative. Thinking out a plan and do what it takes to make it happen.
  14. Esprit de corps. Harmony, cohesion among personnel.
Out of the 14, the most important elements are specialization, unity of command, scalar chain, and, coordination by managers (an amalgam of authority and unity of direction).
Henry Fayol synthesised 14 principles for organisational design and effective administration. It is worthwhile reflecting on these are comparing the conclusions to contemporary utterances by Peters, Kanter and Handy to name but three management gurus. Fayol's 14 principles are:

1. Specialisation/division of labour

A principle of work allocation and specialisation in order to concentrate activities to enable specialisation of skills and understandings, more work focus and efficiency.

2. Authority with corresponding responsibility

If responsibilities are allocated then the post holder needs the requisite authority to carry these out including the right to require others in the area of responsibility to undertake duties. Authority stems from:

  • that ascribed from the delegation process (the job holder is assigned to act as the agent of the high authority to whom they report - hierarchy)
  • allocation and permission to use the necessary resources needed (budgets, assets, staff) to carry out the responsibilities.
  • selection - the person has the expertise to carry out the responsibilities and the personal qualities to win the support and confidence of others.
The R = A correspondence is important to understand. R = A enables accountability in the delegation process. Who do we cope with situations where R > A? Are there work situations where our R< A?
"judgement demands high moral character, therefore, a good leader should possess and infuse into those around him courage to accept responsibility. The best safeguard against abuse of authority and weakness on the part of a higher manager is personal integrity and particularly high moral character of such a manager ..... this integrity, is conferred neither by election nor ownership. " 1916
A manager should never be given authority without responsibility--and also should never be given responsibility without the associated authority to get the work done.

3. Discipline

The generalisation about discipline is that discipline is essential for the smooth running of a business and without it - standards, consistency of action, adherence to rules and values - no enterprise could prosper.

"in an essence - obedience, application, energy, behaviour and outward marks of respect observed in accordance with standing agreements between firms and its employees " 1916

4. Unity of Command

The idea is that an employee should receive instructions from one superior only. This generalisation still holds - even where we are involved with team and matrix structures which involve reporting to more than one boss - or being accountable to several clients. The basic concern is that tensions and dilemmas arise where we report to two or more bosses. One boss may want X, the other Y and the subordinate is caught between the devil and the deep blue sea.

5. Unity of Direction

The unity of command idea of having one head (chief executive, cabinet consensus) with agree purposes and objectives and one plan for a group of activities) is clear.

6. Subordination of individual interest to the general interest

Fayol's line was that one employee's interests or those of one group should not prevail over the organisation as a whole. This would spark a lively debate about who decides that the interests of the organisation as a whole are. Ethical dilemmas and matters of corporate risk and the behaviour of individual "chancers" are involved here. Fayol's work - assumes a shared set of values by people in the organisation - a unitarism where the reasons for organisational activities and decisions are in some way neutral and reasonable.

7. Remuneration of staff

The general principle is that levels of compensation should be "fair" and as far as possible afford satisfaction both to the staff and the firm (in terms of its cost structures and desire for profitability/surplus).

8. Centralisation

Centralisation for HF is essential to the organisation and a natural consequence of organising. This issue does not go away even where flatter, devolved organisations occur. Decentralisation - is frequently centralisaed-decentralisation !!! The modes of control over the actions and results of devolved organisations are still matters requiring considerable attention.

9. Scalar chain/line of authority

The scalar chain of command of reporting relationships from top executive to the ordinary shop operative or driver needs to be sensible, clear and understood.

10. Order

The level of generalisation becomes difficult with this principle. Basically an organisation "should" provide an orderly place for each individual member - who needs to see how their role fits into the organisation and be confident, able to predict the organisations behaviour towards them. Thus policies, rules, instructions and actions should be understandable and understood. Orderliness implies steady evolutionary movement rather than wild, anxiety provoking, unpredictable movement.

11. Equity

Equity, fairness and a sense of justice "should"pervade the organisation - in principle and practice.

12. Stability of tenure

Time is needed for the employee to adapt to his/her work and perform it effectively. Stability of tenure promotes loyalty to the organisation, its purposes and values.

13. Initiative

At all levels of the organisational structure, zeal, enthusiasm and energy are enabled by people having the scope for personal initiative. (Note: Tom Peters recommendations in respect of employee empowerment)

14. Esprit de Corps

Here, Fayol emphasises the need for building and maintaining of harmony among the work force , team work and sound interpersonal relationships.
In the same way that Alfred P Sloan, the executive head of General Motors reorganised the company into semi-autonomous divisions in the 1920s, corporations undergoing reorganisation still apply "classical organisation" principles - very much in line with Fayol's recommendations.

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