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of
Manageme
nt
(Henri
Fayol)
The general management principles as summarized by Fayol. Explanation of 14
Principles of Management of Henri Fayol. (1916)
Contributed by: Vincent Marino
14 Principles
of
Manageme
nt
(Henri
Fayol)
The general management principles as summarized by Fayol. Explanation of 14
Principles of Management of Henri Fayol. (1916)
Contributed by: Vincent Marino
WHAT ARE THE 14 PRINCIPLES OF MANAGEMENT? DESCRIPTION
The 14 Management Principles from Henri Fayol (1841-1925) are:
1. Division of Work. Specialization allows the individual to build up
experience, and to continuously improve his skills. Thereby he can be more
productive.
2. Authority. The right to issue commands, along with which must go
the balanced responsibility for its function.
3. Discipline. Employees must obey, but this is two-sided: employees
will only obey orders if management play their part by providing good
leadership.
4. Unity of Command. Each worker should have only one boss with no other conflicting
lines of command.
5. Unity of 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.
Unity of command does not exist without unity of direction but does not necessarily flows from it.
6. Subordination of individual interest (to the general interest). Management must see
that the goals of the firms are always paramount.
7. Remuneration. Payment is an important motivator although by analyzing a number of
possibilities, Fayol points out that there is no such thing as a perfect system.
8. Centralization (or Decentralization). This is a matter of degree depending on the
condition of the business and the quality of its personnel.
9. Scalar chain (Line of Authority). A hierarchy is necessary for unity of direction. But lateral
communication is also fundamental, as long as superiors know that such communication is taking
place. Scalar chain refers to the number of levels in the hierarchy from the ultimate authority to
the lowest level in the organization. It should not be over-stretched and consist of too-many
levels.
10. Order. Both material order and social order are necessary. The former minimizes lost
time and useless handling of materials. The latter is achieved through organization and selection.
11. Equity. In running a business a ‘combination of kindliness and justice’ is needed.
Treating employees well is important to achieve equity.
12. Stability of Tenure of Personnel. Employees work better if job security and career
progress are assured to them. An insecure tenure and a high rate of employee turnover will affect
the organization adversely.
13. Initiative. Allowing all personnel to show their initiative in some way is a source of
strength for the organization. Even though it may well involve a sacrifice of ‘personal vanity’ on
the part of many managers.
14. Esprit de Corps. Management must foster the morale of its employees. He further
suggests that: “real talent is needed to coordinate effort, encourage keenness, use each person’s
abilities, and reward each one’s merit without arousing possible jealousies and disturbing
harmonious relations.”
WHAT IS MANAGEMENT? FIVE ELEMENTS
Fayol's definition of management roles and actions distinguishes between Five Elements:
1. Prevoyance. (Forecast & Plan). Examining the future and drawing up a plan of action.
The elements of strategy.
2. To organize. Build up the structure, both material and human, of the undertaking.
3. To command. Maintain the activity among the personnel.
4. To coordinate. Binding together, unifying and harmonizing all activity and effort.
5. To control. Seeing that everything occurs in conformity with established rule and
expressed command.
ORIGIN OF THE 14 PRINCIPLES OF MANAGEMENT. HISTORY
Henri Fayol (1841-1925) was a French management theorist whose theories in management and
organization of labor were widely influential in the beginning of 20th century. He was a mining engineer who
worked for a French mining company Commentry-Fourchamboult-Decazeville, first as an engineer. Then he
moved into general management and became Managing Director from 1888 to 1918. During his tenure as
Managing Director he wrote various articles on 'administration' and in 1916 the Bulletin de la Société de l’
Industrie Minérale, printed his "Administration, Industrielle et Générale – Prévoyance, Organisation,
Commandement, Coordination, Contrôle". In 1949 the first English translation appeared: ‘General and
Industrial Management’ by Constance Storrs.
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Giorgio (Italy) Age of Managers "They have more experience, take less risks and work slower."
Franco (Italy) older managers "It is not a matter of age, as of culture"
sunil (india) Ability is "Ability has usually not much to do with age. Yes experience which has
independent of been studies and analyzed does help do better in management :) (and in
Age most other areas, I guess )"
Sudha (India) Age of managers "Individual ability matters more than age."
Chris (UK) Are older "Yes, as they have developed greater life experience and emotional
managers better intelligence. Having said that, experience does not guarantee learning,
and I have met some awful older managers..."
Bruno (Netherlands) Are older "As different situations require different management styles, I would say
managers that one cannot answer this with a simple yes or no. I suppose that most
better? older managers developed their own individual management style that
might not be suitable for specific situations."
Rich (USA) Age of Managers "I agree with most of what has been said although I believe that older
managers are more resistant to change, they are also more susceptible
to Groupthink. As far as culture I don’t see how that impacts the age of
the manager and their effectiveness."
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Mike Forbes (USA) Management "Good stuff, can be used to build up an organization."
Jon (Canada) Human "This is a Very true statement. NO matter how long you've been in
Resources management, your still continuously learning through varius channels
such as co-workers, friends, acquaintences,..etc. "Bottom line..never
give up""
Mwanuzi (Tanzania) Management is a "Discipline in management in the organisation is the most important
discipline thing, because withought it nothing can be done wether it is a profitable
organisation or a non-profit organisation. Principles of management
indentify their position in management ie emphasizing in production,
organisation, and human resources. These principles are still the best
up to date."
G Punitha Management is "Management is an art of getting things done through or with people in a
Priya (INDIA) an art formally organised way."
G.Banupriya (INDIA) Management is "To manage an organisation is to forecast, to plan, to organize, to staff,
forecasting to direct, to control, to retrieve, to budget in an efficient way.""
u.kiran Management "Management is what a manager does."
kumar (INDIA)
Steve (NZ) Management is a "Management is a skill, a balance between the ever changing forces of
skill the market place and motivation of people for the betterment of the
company and society."
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Management Excel is about changing people not about changing businesses. We change people by helping them
improve their management skills. Our expectation is that with these tools, they are then likely to change their
businesses.
Management
In Management Excel, we start with an assumption of the universality of management. Management is management.
Management is generic. Management principles are general rather than specific to a type of firm or organization.
However, management is universal only if the manager has become familiar with the specific situation in which it is
applied. Production technology, customer characteristics and the culture of the industry are examples of specifics that
managers need to learn to be effective in applying their generic management skills.
A definition:(1)
Management is creative problem solving. This creative problem solving is accomplished through four functions of
management: planning, organizing, leading and controlling. The intended result is the use of an organization's
resources in a way that accomplishes its mission and objectives. (Figure 1.1, From Higgins, page 7)
In Management Excel, this standard definition is modified to align more closely with our teaching objectives and to
communicate more clearly the content of the organizing function. Organizing is divided into organizing and staffing so
that the importance of staffing in small businesses receives emphasis along side organizing. In the management
literature, directing and leading are used interchangeably. (Note figure of Management Excel wheel)
Planning is the ongoing process of developing the business' mission and objectives and determining how they will be
accomplished. Planning includes both the broadest view of the organization, e.g., its mission, and the narrowest, e.g.,
a tactic for accomplishing a specific goal.
Organizing is establishing the internal organizational structure of the organization. The focus is on division,
coordination, and control of tasks and the flow of information within the organization. It is in this function that
managers distribute authority to job holders.
Staffing is filling and keeping filled with qualified people all positions in the business. Recruiting, hiring, training,
evaluating and compensating are the specific activities included in the function. In the family business, staffing
includes all paid and unpaid positions held by family members including the owner/operators.
Directing is influencing people's behavior through motivation, communication, group dynamics, leadership and
discipline. The purpose of directing is to channel the behavior of all personnel to accomplish the organization's
mission and objectives while simultaneously helping them accomplish their own career objectives.
Controlling is a four-step process of establishing performance standards based on the firm's objectives, measuring
and reporting actual performance, comparing the two, and taking corrective or preventive action as necessary.
Each of these functions involves creative problem solving. (Figure 4.2 from Higgins, page 118) Creative problem
solving is broader than problem finding, choice making or decision making. It extends from analysis of the
environment within which the business is functioning to evaluation of the outcomes from the alternative implemented.
Management Skills
Management Excel concentrates on building management skills. There are three basic management skills: technical,
human and conceptual. A technical skill is the ability to use tools, techniques, and specialized knowledge to carry out
a method, process, or procedure. (Higgins, page 13) Much of the technology that farmers know and can use so well
comes under this management skill. Human skills are used to build positive interpersonal relationships, solve human
relations problems, build acceptance of one's co-workers, and relate to them in a way that their behavior is consistent
with the needs of the organization. Conceptual skills involve the ability to see the organization as a whole and to
solve problems in a way that benefits the entire organization. (Higgins, page 15) Analytical, creative and intuitive
talents make up the manager's conceptual skills.
Introductory Management Excel programs (Managing for Success) pay little attention to technical skills. Most
managers in attendance have developed these skills far beyond their human and conceptual skills. In some
advanced Management Excel programs, e.g., animal nutrition and financial management, the emphasis is on
integration of technical, human and conceptual skills rather than on a more traditional technical approach.
The relative importance of conceptual, human and technical skills changes as a person progresses from lower, to
middle, to top management. (Figure 1.4, Higgins, page 20) Although all three management skills are important at all
three levels of management, conceptual skills become relatively more important at the top level of management. The
consistently high level of importance of human skills helps us understand why people problems are so often cited as
a core cause of business failure.
A Guarantee of Success?
Management Excel does not and can not guarantee management success. As excited as we may be about the
progress being made by some Management Excel graduates, the reality is, "Sometimes the Dragon Wins!" (Note
figure.) Both factors external to the firm uncontrollable by managers and internal factors not perfectly controllable
frustrate a manager's use of her or his management skills. Nevertheless, Management Excel remains firmly grounded
on the teaching of five functions of management with the conviction that these functions define well what it is a
manager must do to maximize the chances of success.
Footnote: 1. This discussion of the functions of management draws on the basic reference for
Management Excel teaching: James Higgins, The Management Challenge, Second edition,
Macmillan, 1994.
Back to ManagementExcel Home Page
McKinsey & Co's 7S framework provides a useful framework for analysing the strategic attributes of an organisation.
The McKinsey Consulting Firm identified strategy as only one of seven elements exhibited by the best managed
companies.
Strategy, structure and systems can be considered the "hardware" of success whilst style, staff, skills and shared
values can be seen as the "software".
Companies, in which these soft elements are present, are usually more successful at the implementation of strategy.
• Shared values
• Structure
• Systems
• Style
• Staff
• Skills , and
• Strategy .
Shared Values
Shared values means that the employees share the same guiding values. Values are things that you would strive for
even if they were demonstrably not profitable. (Example: The Christians being fed to the Lions.)
Values act as an organisation's conscience, providing guidance in times of crisis.
Example 'The "famous" Johnson & Johnson Tylenol case is an example where a credo helped
provide guidelines for practical decision making. When tainted Tylenol was discovered,
J&J's leaders could quickly make a decision to immediately, publicly, remove all
Tylenol from the nation's shelves, because they were following the organisation's credo
- which said that J&J's first responsibility was to provide quality products to doctors,
nurses and patients. This dramatic action helped unsure a reinstatement of both public
trust and employee pride in the integrity of the company, and led to higher long term
sales.'
Identifying corporate values is also the first essential step in defining the organisation's role in the larger community in
which it functions.
Strategy
The integrated vision and direction of the company, as well as the manner in which it derives, articulates,
communicates and implements that vision and direction.
Structure
The policies and procedures which govern the way in which the organisation acts within itself and within its
environment. The organigram (e.g. hierarchical or flat) as well as the group and ownership structure are included
here. Also note Porter's categorisation of group structures: Efficient allocators of Capital; Allocation of Resources, etc.
Systems
The decision making systems within the organisation can range from management intuition, to structured computer
systems to complex expert systems and artificial intelligence. It includes
• Computer Systems,
• Operational Systems,
• HR Systems,
• etc.
Style
Style refers to the employees shared and common way of thinking and behaving - unwritten norms of behaviour and
thought:
• Leadership Style
• Organisational Culture
Skills
Skills refers to the fact that employees have the skills needed to carry out the company's strategy.
Training and Development - ensuring people know how to do their jobs and stay up to date with
the latest techniques.
Staff
Staff means that the company has hired able people, trained them well and assigned them to the
right jobs. Selection, training, reward and recognition, retention, motivation and assignment to
appropriate work are all key issues.
Pascale's Adaptation Thereof
UK / USA
Buy Managing on the Edge:
How the Smartest Companies
Use Conflict to Stay Ahead by
Richard Tanner Pascale from
Amazon
Pascale found that corporations with a high degree of fit amongst parts had a lot of focus, but they were often
threatened with stagnation.Where organisational parts meshed together less well, the resultant contradictions and
tensions made them somewhat more adaptive.Pascale found that contentions in organisations tended to arise in
predictable domains.These vectors of contention each corresponded to the 7 S's identified by McKinsey and
explained above.Each domain captures a paradox or polarity that needs to be reconciled.The polarities provide an
ongoing vehicle for sustaining constructive disequilibrium.
The contending opposites are:
The 7S model can be used in a wide variety of situations where an alignment perspective is useful, for
example to help you:
The McKinsey 7S model can be applied to elements of a team or a project as well. The alignment issues
apply, regardless of how you decide to define the scope of the areas you study.
“Hard” elements are easier to define or identify and management can directly influence them: These are
strategy statements; organization charts and reporting lines; and formal processes and IT systems.
“Soft” elements, on the other hand, can be more difficult to describe, and are less tangible and more
influenced by culture. However, these soft elements are as important as the hard elements if the
organization is going to be successful.
The way the model is presented in Figure 1 below depicts the interdependency of the elements and
indicates how a change in one affects all the others.
• Strategy: the plan devised to maintain and build competitive advantage over the competition.
• Structure: the way the organization is structured and who reports to whom.
• Systems: the daily activities and procedures that staff members engage in to get the job done.
• Shared Values: called “superordinate goals” when the model was first developed, these are the
core values of the company that are evidenced in the corporate culture and the general work
ethic.
• Style: the style of leadership adopted.
• Staff: the employees and their general capabilities.
• Skills: the actual skills and competencies of the employees working for the company.
Placing Shared Values in the middle of the model emphasizes that these values are central to the
development of all the other critical elements. The company’s structure, strategy, systems, style, staff and
skills all stem from why the organization was originally created, and what it stands for. The original vision
of the company was formed from the values of the creators. As the values change, so do all the other
elements.
The model is based on the theory that, for an organization to perform well, these seven elements need to
be aligned and mutually reinforcing. So, the model can be used to help identify what needs to be
realigned to improve performance, or to maintain alignment (and performance) during other types of
change.
Whatever the type of change – restructuring, new processes, organizational merger, new systems,
change of leadership, and so on – the model can be used to understand how the organizational elements
are interrelated, and so ensure that the wider impact of changes made in one area is taken into
consideration.
You can use the 7S model to help analyze the current situation (Point A), a proposed future situation
(Point B) and to identify gaps and inconsistencies between them. It’s then a question of adjusting and
tuning the elements of the 7S model to ensure that your organization works effectively and well once you
reach the desired endpoint.
Sounds simple? Well, of course not: Changing your organization probably will not be simple at all! Whole
books and methodologies are dedicated to analyzing organizational strategy, improving performance and
managing change. The 7S model is a good framework to help you ask the right questions – but it won’t
give you all the answers. For that you’ll need to bring together the right knowledge, skills and experience.
When it comes to asking the right questions, we’ve developed a Mind Tools checklist and a matrix to keep
track of how the seven elements align with each other. Supplement these with your own questions, based
on your organization’s specific circumstances and accumulated wisdom.
7S Checklist Questions
Here are some of the questions that you'll need to explore to help you understand your situation in terms
of the 7S framework. Use them to analyze your current (Point A) situation first, and then repeat the
exercise for your proposed situation (Point B).
Strategy:
Structure:
Systems:
• What are the main systems that run the organization? Consider financial and HR systems as well
as communications and document storage.
• Where are the controls and how are they monitored and evaluated?
• What internal rules and processes does the team use to keep on track?
Shared Values:
• What are the core values?
• What is the corporate/team culture?
• How strong are the values?
• What are the fundamental values that the company/team was built on?
Style:
Staff:
Skills:
7S matrix questions
Using the information you have gathered, now examine where there are gaps and inconsistencies
between elements. Remember you can use this to look at either your current or your desired organization.
Click here to download our McKinsey 7S Worksheet, which contains a matrix that you can use to check
off alignment between each of the elements as you go through the following steps:
• Start with your Shared Values: Are they consistent with your structure, strategy, and systems? If
not, what needs to change?
• Then look at the hard elements. How well does each one support the others? Identify where
changes need to be made.
• Next look at the other soft elements. Do they support the desired hard elements? Do they support
one another? If not, what needs to change?
• As you adjust and align the elements, you’ll need to use an iterative (and often time consuming)
process of making adjustments, and then re-analyzing how that impacts other elements and their
alignment. The end result of better performance will be worth it.
The matrix organization is an attempt to combine the advantages of the pure functional structure
and the product organizational structure. This form is identically suited for companies, such as
construction, that are “project-driven”. The figure below shows a typical Matrix organization.
In a matrix organization, each project manager reports directly to the vice president and the general
manager. Since each project represents a potential profit centre, the power and authority used by the
project manager come directly from the general manager.
Information sharing is mandatory in such an organization, and several people may be required for
the same piece of work. However, in general, the project manager has the total responsibility and
accountability for the success of the project. The functional departments, on the other hand, have
functional responsibility to maintain technical excellence on the project. Each functional unit is headed
by a department manager whose prime responsibility is to ensure that a unified technical base is
maintained and that all available information can be exchanged for each project.
The basis for the matrix organization is an endeavor to create synergism through shared
responsibility between project and functional management. Other advantages of a pure matrix
organizational form, to project management, include:
• Conflicts are minimal, and those requiring hierarchical referrals are more easily resolved