Management Concepts and Practices

Assignment 1




Submitted by:








K.S Gautham
107111035
P.R Siddharthan
107111057
R.K Adhavan
107111065
S Dinesh Kumar
107111073
S.T.Aravind
107111074
Subhash T
107111090
V.B Arjun
107111095
V Yogeshwaran
107111098
Anjuthan Johann
107111105
Henri Fayol (1841 - 1925):
Background:
Henry Fayol was born in 1841 in a suburb of Istanbul, Ottoman Empire. He graduated from the
National School of Mines in Saint Etrenne in 1860. After graduation he went to work and spent
his entire career at the mining company,Commentry-Fourchamboult-Decazeville. By 1890,
the company was one of the largest producers of iron and steel in France and regarded as a vital
industry. Fayol became managing director in 1888, when the mine company employed over
10,000 people, and held that position over 30 years until 1918. He is credited with saving the
company from bankruptcy .During his career he lectured at Ecole Superievre de la Guerre. In his
retirement he established the Center of Administrative Studies. Based largely on his own
management experience, he developed his concept of administration. In 1916 he published his
experiences in the book "Administration Industrielle et Gnrale", and at about the same time as
Frederick Winslow Taylor published his Principles of Scientific management. He is a director of
mines who developed a general theory of business administration. He was one of the most
influential contributors to modern concepts of management.






HENRI FAYOLS 14 Principles of Management:

1. Division of labour.
2. Scalar chain.
3. Centralization.
4. Unity of direction.
5. Equity.
6. Subordination of individual interests to the general interest.
7. Authority.
8. Remuneration of personnel.
9. Stability and of tenure of personnel.
10. Unity of command.
11. Order.
12. Discipline.
13. Initiative.
14. Esprit de corps.




1) Division of Labor:
The objective of this is to produce more and better work with the same effort. Work should be
divided among individuals and groups to ensure that effort and attention are focused on special
portions of the task. Fayol presented work specialization as the best way to use the human
resources of the organization. Division of work should not be limited to technical activities only
but extended across all aspects of an organization.

2) Scalar chain:
This chain represents the line of authority from top level management to the lowest ranks. More
familiar terms for the scalar chain would be hierarchy and channels or lines of communication.
Fayol combined these two concepts in his examination of the scalar chain, establishing the need
for the ultimate authority but conceding that reference of every issue up to the highest point in an
organization is not always the swiftest. It is even time consuming in large concerns, notably in
governmental ones. However cross-communications can be allowed if agreed to by all parties
and superiors are kept informed.

3) Centralization:
Centralization is a situation in which top management retains most of the decision making
authority. Decentralization means disposal of decision making authority to all the levels of the
organization. According to Fayol, Degree of centralization or decentralization depends on no. of
factors like size of business, experience of superiors, dependability & ability of subordinates etc.
In considering the extent to which any organization should have a centralized or decentralized
structure should be applied pragmatically depending on circumstances. The question of
centralization or decentralization is a matter of finding the optimum degree for the particular
concern.

4) Unity of Direction:
This involves one head and one plan for a group of activities having the same objective. Unity of
direction could be summed up in the phrase one head, one plan. All the efforts of the employees
must be directed in one way in achievement of one common goal. The entire organization should
be moving towards a common objective in a common direction.People engaged in the same kind
of activities must have the same objectives in a single plan. This is essential to ensure unity and
coordination in the enterprise. In Fayols own words, it is the condition essential to unity of
action, coordination of strength and focusing of effort.

5) Equity:
Employees should be treated fairly. Managers should be kind and fair to their subordinates. They
should not discriminate with respect to age, caste, sex, religion, relation etc. Equity is essential to
create and maintain cordial relations between the managers and sub-ordinate. For personnel to be
encouraged to carry out their duties with all the devotion and loyalty, they must be treated with
respect for their own sense of integrity, and equality. But equity does not mean total absence of
harshness. Fayol was of opinion that, at times force and harshness might become necessary for
the sake of equity.

6) Subordination of Individual Interests to the common interest:
Fayol drew attention to the fact that one of the greatest problems of management was to
reconcile the general interest with that of the individual and group interests. The interests of one
person should not take priority over the interests of the organization as a whole. Ignorance,
ambition, selfishness, laziness, weakness and all human passions tend to cause the general
interest to be lost sight of in favor of individual interest.

7) Authority & Responsibility:
This is the right to give orders and the power to exact obedience. Authority was always allied to
responsibility and the proper exercise of both required the ability to make judgments and if
necessary, impose sanctions. Responsibility arises wherever authority is exercised. There must
be balance between authority and responsibility. An authority should derive from expertise,
leadership skill, knowledge, etc., and lead to a sincere commitment from subordinates

8) Remuneration of Personnel:
Remuneration is the price for services received. If an organization wants efficient employees and
best performance, then it should have a good remuneration policy. This policy should give
maximum satisfaction to both employer and employees. He also examined the various modes of
compensation available such as time rates, job rates, piece rates, bonuses, profit-sharing,
payment in kind and various non-financial incentive.




9) Stability and tenure of employees:
Fayol called for suitable induction period to enable employees and particularly managers, to
acclimatize themselves to new work and situations. As he observed, insecurity of tenure is
especially to be feared in large concern in order to be in a position to decide on a plan of action,
to gain confident in one self and inspire it in others. Stability of job creates team spirit and a
sense of belongingness among workers which ultimately increase the quality as well as quantity
of work.

10) Unity of Command:
This is the nation that an employee should receive orders from one superior only. Dual command
was bound to generate tension, confusion and conflict. He noted the tendency to divide command
between individuals and also to blur the lines of demarcation between departments. The outcome
was a dilution of responsibility and the erosion of clear lines of communication. A higher
manager might sometimes give orders directly to workers further down the hierarchy, thereby
bypassing middle management.

11) Order:
Fayol advocated the maintenance of the tidy material order with appropriate and well-kept
storage facility, general cleanliness and the preparation of a diagram of plan of the premises
showing the various sections and facilities. The things must be ordered properly so that the
resource can be located efficiently and quickly. It is applied to both material and men. The
material should be kept in order in the place where it is necessary. The personnel are selected
scientifically and assigned duties according to their skills.

12) Discipline:
This is in essence obedience, application, energy, behavior and outward marks of respect
observed in accordance with standing agreement between the firm and its employees. Discipline
would take different forms in various organizations but maintained that it was nevertheless, in all
circumstances, an essential ingredient. The move away from individual bargaining toward
collective bargaining merely adjusted the rule governing discipline. Managers need to enforce
rules to achieve company goals.



13) Initiative:
This is the power to conceive a plan and ensure it success. It is central to ensuring high
motivation and job satisfaction, being one of the most powerful stimulants to human Endeavour.
The maximum opportunity to exercise initiative should be extended to all employees through
delegated authority.

14) Esprit de Corp:
This involved the building and maintaining of harmony among the workforce. Dividing enemy
force to weaken them is clear, but dividing ones own team is a grave sin against businesses.
The employees must be appreciated for their effort without arousing jealously among others.



Conclusion:
Henri Fayols main contribution is that he was the first general administrative theorist who
developed the complete theory of management by suggesting what managers should do and what
constitutes good management practices. More than eight decades have passed since these
principles were proposed. As we are moving into the age of rapid industrial and technological
development, we think that these principles are only common sense at present. It important to
understand that it really needs intuition to propose such a significant idea in the environment
where there were no clear boundaries of worker and management responsibilities, no existence
of effective work standard, and no clear concept about how organizations work and how they
should be structured or managed. As we all know that a building cannot attain stability without
proper foundation, an organization also cannot be stable in its long run and achieve its long term
goals without following these 14 principles of management. Organization and these principles
are like complimentary goods which completes each other, one is useless without the other.