Saturday, 18 November 2017

Henri Fayol's 14 Principles of Management - Class 12

Who was Henry Fayol?

Henry Fayol was a French mining engineer. After a lot of research and studies, he had developed 14 principles of management. Due to his contribution to management studies, he is also called as a father of modern management. So let's see what are those principles of management defined by Henri Fayol

1. The Principle of Division of Work - According to Henri Fayol the total work of an organization should be divided into smaller parts and these parts should be assigned to various employees based on their skill sets. So a person who is good at sales should be given a sales job. Similarly, someone who is good at operations should be placed in the operations department and someone who is good in finance must be placed in the finance department. Division of work leads to specialization. When one person performs the same task, again and again, he specializes in the performance of that task. If a person keeps on doing the same task again and again over a period of time he will be able to do it faster and better.

2. The Principle of Authority and Responsibility -  What this principle says is that whenever you assign responsibility to a particular employee he should also be given the required authority. Unless he is given the required authority, he won't be able to perform the task which has been assigned to him. For example, if you have assigned a task of producing 10000 units of a product X to a factory manager then he should be given sufficient authority to order the raw materials required for making 10000 units of that particular product X. He should also be given authority to hire the required number of workers to achieve the target of production. With authority, also comes the responsibility. It means that when you give authority to someone it is his responsibility to complete the task assigned to him. For example, if you have given all the required authorities to factory manager to produce ten thousand units of a product X then if he cannot achieve the target he should be held responsible for the same. So with authority comes the responsibility. You can't have a scenario where there is an authority but no responsibility. Authority will always be accompanied by the corresponding responsibility.

3. The Principle of Discipline - According to Henry Fayol, discipline is one of the most important aspects of any organization. Maintaining proper discipline within the organization is the responsibility of Management. If there is no discipline within the organization, then the organization cannot achieve its goals.

4. The Principle of Unity of Command - This principle states that every employee should receive orders from only one person. This is because if he is receiving orders from more than one person, it will lead to confusion and he will not be able to perform his task properly. This principle is applicable to employees at all levels right from top management to bottom.

5. The Principle of Unity of Direction - Principle of unity of direction deals with groups within the organization. The principle of unity of command is applicable to individual employees. So the previous principle talks about every individual employee of the organization, whereas this principle talks about groups within the organization. As per the principle of unity of direction, each group in the organization should have the same objective. The group should be directed by only one person using one plan.

6. The Principle of Remuneration - According to this principle every employee in the organization should receive fair remuneration. The remuneration of the employees should be decided based on his skills, education, expertise, knowledge, and tenure with the organization. The principle of remuneration, says that when the employees are given a fair remuneration they work with enthusiasm and show more productivity which results in more output.

Also Read: F.W.Taylor's Scientific Management

7. The Principle of Subordination of Individual Interest to General interest - What this Principal says is that the interest of the organization is supreme. Individual interest is subordinate to the general interest or the interest of the company. So while taking the decisions the managers should always keep the organization's interest on the top. Individual interest should not come in the way of interest of the organization. The interest of the organization is more important as compared to individual interest. While making the decisions managers have to realize that the organization's interest is more important than the personal interest of any employee (including himself).

8. The Principle of Centralization - This principle refers to the concentration of decision making power or authority in the hands of a few people in the organization. In certain organizations, there is a high concentration of power or authority in the hands of a few people. In such organizations, only a few people control the organization and make decisions. This is especially true in the case of smaller organizations. However, large organizations cannot have a concentration of power in the hands of a few employees. In such big organizations, the power is generally divided among different groups or different managers. This is called as decentralization of power. According to Henry Fayol, there should be a proper balance between centralization and decentralization of powers depending upon the size of the organization and the nature of business the company does. There should not be complete centralization of powers, nor there should be complete decentralization of powers. There should be a balance between the two. Decision-making power should not be given to very few people at the same time it is important that decision making power is not given to every Tom, Dick, and Harry. People to whom the decision making power is given should be responsible and mature enough to make good decisions. Otherwise, they may give self-interest more importance than the interest of the organization.

9. The Principle of Scalar Chain- In any organization, usually the communication flows from top to bottom or from bottom to top. Such communications happen in a very proper manner. They generally happen in the form of a chain. So if a manager wants to convey a certain message to everybody till the level of workers, he will pass on this information to the departmental head who in turn will pass it on to the supervisor, the supervisor will pass on the information to the foreman and the foreman will inform the workers. Thus, you can see that the information is passed on in the form of a chain. This is called as Scalar Chain. Similarly, if there is any information which workers want to pass on to the manager, the process happens exactly in a reverse manner. The workers will pass on the information to the foreman, the foreman will pass on the information to the supervisor, the supervisor will pass on that information to the departmental head who will then pass on the information to the manager. However, this principle of Scalar Chain should have some flexibility because it is very time-consuming. Sometimes you may not have enough time to pass on the information in this form. So if there is some urgent information which is to be passed on, then the cross-communication should be allowed. Cross communication means the communication that doesn't happen exactly in the form of Scalar Chain. So in case, there is an urgent message, then one may not follow the scalar chain. However, if someone is not following the Scalar Chain, he/she must do it with the permission of the proper authorities.

10. The Principle of Order- As per this principle, there must be a place for everything and everything must be in its place. You cannot have a mess in the office or in the factory. There should be a place for everything. So there should be a proper place where you keep your files, there should be a proper place where you keep your stationery, there must be a fixed place where you can keep your raw materials, there should be a  proper place where you would keep your finished goods etc. Thus, there should be a place for everything. At the same time, everything must be in its place. So, if you have allocated a particular area to keep the files, then the files should be kept in that area only. Similarly, if you have assigned a particular area for keeping your finished goods, then all the finished goods should be kept at that particular place only. There should be a place for everything and everything must be in its place.

11.. The Principle of Equity - What this principle says is that all the employees should be treated in an equal manner. There should not be any discrimination among the employees. Everybody should get fair treatment. If this principle is not followed properly, then this may result in de-motivation of the employees which will affect the overall output of the organization.

12. The Principle of Stability of Tenure - According to this principle, the employees should not have any insecurity about their job. They should feel that their job is stable and secure. This creates a sense of belongingness among the employees and it also motivates the employees to put more efforts, thereby resulting in higher productivity and higher output.

13. The Principle of Initiative - What this principle says is that managers should encourage workers to take the initiative. They should encourage the workers to come out with new ideas (new ideas about the products or maybe even the processes). When the employees are encouraged to come up with new ideas, they feel motivated and if the idea is good and if it is implemented, it results in the overall benefit of the organization. Hence it is important that the management realizes the importance of this principle and creates an environment where employees can come up with new and innovative ideas. The managers should not only encourage the employees to come up with new ideas, but they should also encourage them to take initiative in the implementation of those ideas.

14. The Principle of Esprit de Corps- What is Espirit de Corps? Esprit de Corps means the union is the strength. What this principle says is that the management should create a team spirit within various employees or various groups in the organization. All the employees should work as a team towards the achievement of the organizational goals. A team spirit is required in all group activities and management is no different. Management involves leading a group of employees and hence management is a group activity. There should be a team spirit between various departments of the organization and unless there is a team spirit within all the employees, the organization will not be able to achieve its goals.

Also refer-F.W.Taylor's Scientific Management

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