Henri Fayol's Principles of Management

Henri Fayol’s Principles of Management

Henri Fayol, a French engineer, argued that large organizations needed a systematic way to develop competent managers. His book General and Industrial Management was intended to start discussion and provide a foundation for management theory, not to establish rigid, final rules.

Fayol’s approach covered three related areas: the activities of industry, the functions of management, and 14 general principles.

Six Activities of Industry

Fayol identified six broad kinds of activity involved in running an organization:

1. Technical: Production and manufacturing.
2. Commercial: Buying, selling, and exchanging goods and services.
3. Financial: Finding and using capital.
4. Security: Protecting people and property.
5. Accounting: Keeping records, tracking costs, and preparing balances.
6. Managerial: Planning, organizing, commanding, coordinating, and controlling.

The importance of each activity varies by organizational level. Frontline workers rely more on technical knowledge, while managers higher in the hierarchy need increasingly strong managerial knowledge. Senior leaders still need awareness of the other activities, but their responsibilities are weighted more toward management.

Five Management Functions

Fayol described five main functions that make up managerial work:

• Planning: Look ahead and chart a course for the organization.
• Organizing: Select and arrange people and resources effectively.
• Commanding: Lead and oversee work while maintaining a broad perspective.
• Coordinating: Harmonize and facilitate work across departments.
• Controlling: Ensure that activities and standards—such as financial, accounting, technical, and quality requirements—are followed.

Fourteen Principles of Management

Fayol presented these as flexible guidelines to adapt to the situation, rather than inflexible rules:

1. Division of work: Specialize tasks to build skill and improve productivity.
2. Authority and responsibility: Managers need the authority to give orders, along with responsibility for their role.
3. Discipline: Employees should follow agreed expectations; managers are responsible for addressing failures to do so.
4. Unity of command: Each employee should receive orders from one supervisor.
5. Unity of direction: Activities pursuing the same goal should follow one head and one plan.
6. Subordination of individual interests to general interests: The organization’s broader purpose should take precedence over personal interests at work.
7. Remuneration of personnel: Pay and rewards should be fair and reflect well-directed effort.
8. Centralization: Managers should choose an appropriate balance between centralized decisions and delegated authority, considering the organization and situation.
9. Scalar chain: Maintain a chain of command, while allowing people to communicate directly when appropriate and acceptable to their supervisors.
10. Order: Put the right people in the right positions to support effective work.
11. Equity: Treat people with a combination of kindness and justice.
12. Stability of tenure: Retain capable employees and support continuity in their jobs.
13. Initiative: Managers should encourage employees to take initiative.
14. Esprit de corps: Build unity and harmony within the organization.

Speaker and Source

The video features an unnamed narrator explaining Fayol’s ideas and discusses Henri Fayol’s book General and Industrial Management.