Administrative Management focuses on the functions of management.

Henry Fayol is considered as the Father of the Management. Fayol was another classical thinker
who was born in France in 1841. He started his profession as a mining engineer and ultimately
became a General Manager (GM). Fayol developed an interest in management training and
attempted to analyze management and to evolve a series of management principles that could be
taught and trained.

Fayol argued that organizational activities can be grouped in to following six categories.

 Technical
 Commercial
 Financial
 Security
 Accounting
 Management

Further Fayol explained management is a process which has following main functions.

 Planning
 Organizing
 Commanding
 Coordinating
 Controlling

Fayol's 14 Principles of Management

Fayol's principles are listed below:

1. Division of Labor and allow to specialize

 The more people specialize, the more efficiently they can perform their work.
 When employees are specialized, output can increase because they become
increasingly skilled and efficient.
 This principle is epitomized by the modern assembly line.
2. Authority
 Managers must give orders so that they can get things done.
 While their formal authority gives them the right to command, managers will not
always compel obedience unless they have personal authority (such as relevant
expertise) as well.
 Authority and responsibility clearly defined and properly delegated.
3. Discipline
 Members in an organization need to respect the rules and agreements that govern
the organization.
  To Fayol, discipline results from good leadership at all levels of the
organization,fair agreements (such as provisions for rewarding superior
performance), and judiciously enforced penalties for infractions.

4. Unity of Command
 Each employee must receive instructions from only one person.
 Fayol believed that when an employee reported to more than one manager,
conflicts in instructions and confusion of authority would result.
5. Unity of Direction
 Those operations within the organization that have the same objective should be
directed by only one manager using one plan. For example, the personnel
department in a company should not have two directors, each with a different
hiring policy.
6. Subordination of Individual Interest to the Common Good
 In any undertaking, the interests of employees should not take precedence over
the interests of the organization as a whole.
 The interests of one employee should not be allowed to become more important
than those of the group. This includes managers.
7. Remuneration
 Compensation for work done should be fair to both employees and employers.
 Employee satisfaction depends on fair remuneration for everyone. This includes
financial and non-financial compensation.
8. Centralization
 Decreasing the role of subordinates in decision making is centralization;
increasing their role in decentralization. Fayol believed that managers should
retain final responsibility, but should at the same time give their subordinates
enough authority to do their jobs properly. The problem is to find the proper
degree of centralization in each case.
 This principle refers to how close employees are to the decision-making process.
It is important to aim for an appropriate balance.
9. Scalar Chain of commands / The Hierarchy
 The line of authority in an organization often represented today by the neat boxes
and lines of the organization chart runs in order of rank from top management to
the lowest level of the enterprise.
 Employees should be aware of where they stand in the organization's hierarchy, or
chain of command.
10. Order
 Materials and people should be in the right place at the right time. People, in
particular, should be in the jobs or positions they are most suited to.
  The workplace facilities must be clean, tidy and safe for employees. Everything
should have its place.
11. Equity
 Managers should be fair to staff at all times, both maintaining discipline as
necessary and acting with kindness where appropriate.
 Managers should be both friendly and fair to subordinates.

12. Stability of Tenure of Personnel / Stability of Staff.

 A high employee turnover rate undermines the efficient functioning of an
organization.
 Managers should strive to minimize employee turnover. Personnel planning
should be a priority.
13. Initiative
 Subordinates should be given the freedom to conceive and carry out their plans,
even though some mistakes may result.
 Employees should be given the necessary level of freedom to create and carry out
plans.
14. Esprit de Corps
 Promoting team spirit will give the organization a sense of unity. To Fayol, even
small factors should help to develop the spirit. He suggested, for example, the use
of verbal communications instead of formal, written communication whenever
possible.
 Organizations should strive to promote team spirit and unity.

ADMINISTRATIVE MANAGEMENT

Focused on principles that could be used by managers to coordinate the internal activities of
organizations

Five management functions

• planning

• organizing

• commanding

• coordinating

• controlling
administrative

management

The study of how to create an organizational structure that leads to high efficiency and
effectiveness.

Henry Fayol’s administrative management (1841-1925)

He started his career as a junior engineer in a coal mine company in France and became its
General Manager in 1980.

His contribution may be classified under three categories: classification of business activities,
functions of management, principles of management.

It focused on principles that could be used by managers to coordinate the internal activities of
organizations.

14 Principles of management

Division of labor: Division of work leads to specialisation resulting in higher output. This
principle recommends grouping of people as per their area of specialization. If people are
specialized at their work, they can perform their task better.

Authority: Managers must have the authority to issue orders and instructions to the
subordinates. Yet , formal authority alone may not help to compel obedience from subordinates;
managers must have the expertise to exert personal authority.

Discipline: Discipline means respect for rules and agreements. People working in an
organization need to comply with rules and agreements that govern the organization. Without
discipline results cannot be achieved.

Unity of command: There should be one boss for one subordinate. Conflict will arise when one
receives order and instructions from multiple managers.

Unity of direction: All operations in an organization need to be directed towards one objective.
Without this achievement of goal cannot be ensured.
Subordination of individual interest to general interest: If there is a conflict between the
individual goals and organizational goals, preference should be given to organizational goals,
i.e., individual goals should not supersede the goals of the organization.

Remuneration: There should be a fair system of remuneration that ensures equal pay for equal
work. It should be fair to both employees and employers.

Centralisation: It refers to declining role of subordinates in the decision making. Though major
decisions are taken by the managers at the top level, but at the same time enough authority
should be given to the subordinates to do the jobs properly.

Scalar Chain (Hierarchy): This the line of authority running from top level to lower level of
management. It is also known as hierarchy of authority. It illustrated in the form of an
organizational chart clearly showing the structure of authority from the top management to
employees down the line.

Order: People and material should be in the right place at the right time. Fayol followed the
concept of ‘ A place for everything and everything in its place ‘. When human beings are kept at
the right place( right man at the right place) it is social order, and when non-human or material
resources are kept at the right place, it is material order.

Equity: Managers should be fair to their subordinates.

Stability of staff: Employee turnover should be less to ensure efficiency of an organization.

Initiative: Subordinates should have the freedom to conceive new ideas and do their task, even
though they commit mistakes.

Esprit de corps: ‘ Unity is strength’. People should work as a team to enjoy the benefits of
synergy.