Fayol's Administrative Management Theory: Concept and Principles

Fayol’s Administrative Management Theory

Through his rich experience, Fayol provided 14 principles of general management to guide the managers who in his time didn’t use a scientific approach of management. His theory is based on how the management should interact with the employees. Fayol’s theory provided a broad and analytical framework of the process of administration which overcomes the drawback of Taylor’s management theory.Henri Fayol (1841-1925) was a French mining engineer, managing director and an industrialist who is known for his contribution towards management science in his work ”Administration Industrielle et Generale" in the year 1916 A.D. The book was later translated as “General and Industrial Management” in the year 1929 A.D.

Fayol’s theory which is still considered applicable and reliable is used in managing the personnel in any organization. Fayol’s Administrative management can be understood by the following four section:

(Mind tool editorial team)

Function/Elements Of Management

According to Administrative theory of Management, the five basic elements of management are:

• Planning: Planning is forecasting the future and making a structural plan of action and determining the goals and objectives of the action. Fayol considers planning as most essential function.
  
  
• Organizing: Organizing is the creation of an organizational structure which brings human resources and non-human resources together to work together.
  
  
• Commanding: The process of giving direction and orders by the superior to the subordinate is known as commanding.
  
  
• Coordinating: There are various divisions in an organization. So, coordinating is the process of bringing the action of all the divisions and departments and integrating their efforts for the fulfillment of organizational goals .
  
  
• Controlling: Controlling means comparing the actual performance of the organization with the desired performance level and checking if there is the need for improvement and when a deviation is found implementing the necessary changes to improve the performance.
  
  

  

(Shrestha-pg. 53-54)

Division of Industrial Activities

H. Fayol observed the organization from a manager’s point of view. So he identified six major activities in which industrial activities can be divided. They are:

• Technical activities: This activity is related to the production or manufacturing of goods and services.
  
  
• Commercial activities: This activity is concerned with the marketing dealing with sales, purchase, and distribution of goods and services.
  
  
• Financial activities: This activity is related to the creation of necessary capital and its optimum use for development and growth.
  
  
• Accounting activities: This activity is related to the recording of transactions and then preparing the financial statements.
  
  
• Managerial activities: This activity is considered with the elements of management which are planning, organizing, commanding, coordinating and controlling.
  
  
• Security activities: This activity is related to the protection of people and property in an organization by providing safe working condition, insurance policies etc.

(Neupane Surendra; Parajuli , Ram Prasad; Jha, Deepak Kumar; Chhetri, Tuk Bahadur; Dulal, Gopal Prasad pg- 45)

Managerial Skills and Qualities

Fayol has focused on the role of a manager. He believes that anyone cannot be a manager. A manager needs some skills and qualities to manage people and resources in an organization. The six managerial skills are:

• Physical qualities: This quality is concerned with the good health, well-maintained dress and outlook and high energy level of the manager.
  
  
• Mental qualities: To become a good manager they must possess the quality to learn and understand, judge and adapt to the problems and should have the mental energy to focus.
  
  
• Educational qualities: To become a sound manager, one needs to have a general understanding of the subject matter of the basic functioning of the organization.
  
  
• Moral qualities: To become a good manager, one needs to have high energy level, willingness to take responsibilities, loyal to action, tactful and feeling of dignity.
  
  
• Technical qualities: One needs to have technical knowledge regarding what are the procedures to carry out the action in an organization.
  
  
• Experience: Experience comes with years of practice of an action. So a good manager needs years of experience to work smoothly and efficiently.

Principles of Administrative Management

The 14 principles of management given by H. Fayol are particularly focused on the five management function of an organization. These are the basic guidelines to a management of the organization as a whole.

Even though the principles were not created on a basis of experiments, they were created by the experience of Henri Fayol. These principles are universal and can be applied in any organization in any part of the world.

Fayol suggests that these principles are not rigid but they are flexible and should be used according to the need. So it depends on the art of the manager on how they use the above to suit the organization and to manage effectively and efficiently. The 14 guiding principles by H. Fayol are:

• Division of work:

This principle implies that the overall action of management should be divided into a compact job and employees should be allocated certain jobs viewing their interest and skills. This principle helps in specialization and helps to make the workers more effective and efficient. Division of work is important in technical level as well as managerial level in an organization for smooth operation.

• Authority and Responsibility:

Authority is the right to give the command and make decisions. Responsibility is the obligation of an employee to perform a certain designated task and be accountable to the supervisor. There should be a balance between authority and responsibility. An employee must be given the amount of authority required to perform the given responsibility. Authority without responsibility will lead to waste of position and lack of utilization of power and responsibility without power will lead to poor utilization of human and another resource.

• Discipline:

An employee should be obedient and respectful to the authority and the established rules and regulation of the organization. Clarity of Rules, Reward-Punishment system, good supervision etc. are some ways to maintain discipline. But it depends on the need and policies of the organization on how to maintain discipline.

• Unity of Command:

An employee must get orders from only one immediate supervisor. And the employee should be accountable to the immediate supervisor only. There should not be other supervisors to guide the employee. This will help to clear the confusion and will make the employee loyal to the activity.

• Unity of Direction:

According to this principle, there should be only one manager under the guidance and plan of which the groups having same goals and objectives should move forward. This principle suggests that one department, section, the division should only get instruction from one head. This helps in coordinating the group activity to attain a single goal.

• Subordination of individual interest to general interest:

There are two types of interests. One is interest of the individuals and the other is organizational interest. So this principle suggests that there must be harmony between these two interests. Organizational interest must be given more priority as doing good for the organization will bring rewards for the individuals.

• Remuneration of Personnel:

There must be monetary as well as non-monetary remuneration to the employees based on their performance level. Fayol focuses more on non-monetary remuneration in which he believes will create bonding between the employee and the organization. So the remuneration must be fair, reasonable and satisfactory.

• Centralization:

This principle implies that the top most level of authority should be centralized to the top level management. There should be delegation of power to the subordinate but the power to make the important decisions in the organization should remain with the top level management.

• Scalar Chain:

There should be a chain of superiors ranging from the top level of management to the lower level management based on the hierarchy level. The head of an organization is in the top of the chain. The communication flows from the top to the bottom through this chain of authority of superiors. However, there is no hard and fast rule regarding the process of communication through scalar chain.

• Order:

This principle states that every material and manpower should be given a proper place in the organization. The right man for the right job is essential in the smooth running of an organization. So Management must identify tasks and put them in proper order with the limited human and other resources.

• Equity:

This principle implies that all the members of the organization should be treated equally. There should be no biases and there should be an environment of kindness and justice.

• Stability of tenure:

Any employee can work to the fullest if they have secured job. So an employee must be provided with job security which will help them to be efficient. This will also benefit the organization as it lowers the labor turnover and reduces cost of recruiting and training new employees.

• Initiative:

Initiative is the level of freedom that an organization should provide to the employee to carry out the plans without forcing them or ordering them. This is related to creation of interest and willingness in the employees by motivating and satisfying the employees.

• Esprit de Corps:

This principle implies that “union is strength” and team spirit. So the organization must integrate all its actions towards a single goal and objective. If the action is not unified then they cannot achieve their desired objectives. So there must be unified team contribution in harmony and cooperation which is always greater than the aggregate of individual performances.

(Sharma, Surendra Raj; Jha, Surendra Kumar pg-43-46)

Hence these are the 14 principles of Administrative management theory. These principles have helped in making the management more efficient and helped managers to develop necessary skills. But the principle has also been criticized as not being applicable in all situations.

References

• Neupane Surendra; Parajuli , Ram Prasad; Jha, Deepak Kumar; Chhetri, Tuk Bahadur; Dulal, Gopal Prasad;. "Business Studies class: XII." Kathmandu: Nawakala Publications, 2011 A.D. 33.48.
• Sharma, Surendra Raj; Jha, Surendra Kumar;. "Business Studies Grade XII." Kathmandu: Sakuntala Pustak Bhawan, 2011 A.D. 41-46.
• Shrestha, Kul Narsingh. "Business Organization and Management." Kathmandu: Nabin Publication, 2065 B.S. 53.
• team, Mind tool editorial. www.mindtools.com/pages/article/henri-fayol.htm. n.d. <https://www.mindtools.com/pages/article/henri-fayol.htm>.