Business Studies Part I
Business Studies Part II

Fayol’s Principles of Management

   
  1. Universal Applicability: The principles of management are deemed to apply to all types and sizes of organizations.
  2. General Guidelines: The principles are guidelines to action but do not provide readymade, straitjacket solutions to all managerial problems as the real business situations are very complex and dynamic and are a result of many factors.
  3. Formed by practice and experimentation: The principles of management are formulated by the management experts through observation and tested through repeated experimentation.
  4. Flexible: The principles of management are not rigid prescriptions, which have to be followed absolutely. They are flexible and can be modified by the manager in the light of given situation so as to achieve the desired goals.
  5. Mainly Behavioural: The principles of management aim at influencing behaviour of human beings in a desired manner.
  6. Cause and effect relationships: The principles of management seek to establish relationship between cause and effect so that they can be used in similar situations in a large number of cases.
  7. Contingent: The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time.

FAYOL’S PRINCIPLES OF MANAGEMENT

  1. Division of work: The whole organisation work, both managerial and technical, should be divided into smaller jobs and the task involved in doing each such job should be determined. It leads to specialization, speed, efficiency and accuracy of work.
  2. Discipline: It refers to the obedience to organizational rules and the employment agreement. It is necessary for the systematic working of the organisation. It requires good superiors at all levels, clear and fair agreements and judicious application of penalties.
  3. Authority and Responsibility: There should always be a balance between the authority given and responsibility entrusted to an employee. This is because if authority is more than responsibility, the employees are likely to misuse it whereas if authority is less than responsibility, he/she will be unable to do the desired work.
  4. Unity of command: There should be one and only one boss for every individual employee from whom he should receive orders and be responsible to. Dual subordination should be avoided.
  5. Unity of Direction: All the units of an organisation should be moving towards the same objectives through coordinated and focused efforts. Each group of activities having the same objective must have one head and one plan.
  6. Subordination of Individual Interest to General Interest: In all the situations, the interests of an organisation should take priority over the interests of any one individual employee .
  7. Remuneration of employees: The overall pay and compensation should be fair to both employees and the organization. The employees should be paid fair wages, which should give them at least a reasonable standard of living. At the same time it should be within the paying capacity of the company i.e. remuneration should be just and equitable.
  8. Centralisation and Decentralisation: The concentration of decision-making authority is called centralisation whereas its dispersal among more than one person is known as decentralization. Large organizations have more decentralization than small organizations.
  9. Scalar Chain: The formal lines of authority along which the communication flows from highest to lowest ranks are known as scalar chain. Gang Plank is a shorter route that has been provided so that communication is not delayed during emergencies. However, the superior has to be informed later on.
  10. Order: The people and materials must be in suitable places at appropriate time for maximum efficiency i.e. ‘a place for everything (everyone) and everything in its place/
  11. Equity: It emphasizes kindliness and justice in the behaviour of managers towards workers. No discrimination should be made by them on the basis of caste, creed, gender or otherwise caste, creed.
  12. Stability of Personnel: The employee turnover should be minimized to maintain organizational efficiency. Personnel should be selected and appointed after due and rigorous procedure. After placement, they should be kept at their post for a minimum fixed tenure so that they get time to show results. Any adhocism in this regard will create instability/insecurity among employees. They would tend to leave the organisation.
  13. Initiative: Initiative means taking the first step with self-motivation. The workers should be encouraged to develop and carry out their plans for improvement. Suggestion system should be adopted in the organization.
  14. Espirit De Corps: The management should promote a team spirit of unity and harmony among employees. A manager should replace T with ‘We’ in all his conversations with worker. Mnemonics for Henry fayol: I DECODE USSR USA…..INITIATIVE, DIVISION OF WORK, EQUITY, CENTRALISATION N DECENTRALISATION, ORDER, DISCIPLINE, EQUITY, UNITY OF COMMAND, SCALAR CHAIN, SUBORDINATION OF INDIVIDUAL INTEREST TO GENERAL INTEREST, REMUNERATION TO EMPLOYEES, UNITY OF DIRECTION, STABILITY OF PERSONNEL, AUTHORITY AND RESPONSIBILITY.

  1. Unity of direction: According to Fayol, each group of activities having same objective
    must have one head and one plan. It prevents overlapping of activities. For example if a company is manufacturing handmade carpets as well as machine made carpets there is likely to be a lot of overlapping of activities. Therefore, there should be two separate divisions for both of them wherein each division should have its own in charge, plans and execution resources.
  2. Order: According to Fayol, “People and materials must be in suitable places at appropriate time for maximum efficiency.” The principle of order states that ‘A place for everything (everyone) and everything (everyone) in its (her/his) place’. A sense of orderliness will lead to increased productivity and efficiency in the organization.