Administrative Management by Henri Fayol – Principles of Management

Introduction

Henri Fayol (1841–1925) was a French mining engineer, industrialist, and management theorist. He is
best known for developing Administrative Management Theory, which focuses on the functions of
management and principles of administration necessary for the smooth functioning of an
organization. His ideas laid the foundation for modern management practices.

Fayol identified five core managerial functions and 14 principles of management, which are widely
used in businesses and organizations today.

Fayol’s Five Core Functions of Management

1. Planning – Setting objectives and determining the best course of action to achieve them.

2. Organizing – Arranging resources (human, financial, material) efficiently.

3. Commanding (Leading) – Directing and motivating employees to achieve goals.

4. Coordinating – Ensuring different departments work in harmony.

5. Controlling – Monitoring performance and making necessary adjustments.

Fayol’s 14 Principles of Management – Detailed Explanation

Henri Fayol proposed 14 principles that managers should follow to run an organization effectively.
These principles help managers make better decisions, improve productivity, and create a positive
work environment.

1. Division of Work

 Specialization leads to increased productivity.

 Employees should be assigned tasks based on their expertise to improve efficiency.

🔹 Example: In a car manufacturing plant, different employees handle engine assembly, painting, and
quality checks rather than one person doing everything.

2. Authority and Responsibility

 Authority refers to the power to give orders.

 Responsibility means being accountable for decisions made.

 Managers should have the right balance between authority and responsibility.

🔹 Example: A project manager delegates tasks to team members but is also responsible for the
project’s success.

3. Discipline
  Employees must follow organizational rules and policies.

 A disciplined workplace ensures smooth operations.

 Discipline can be maintained through clear rules and fair enforcement.

🔹 Example: A company has an attendance policy where employees must clock in by 9:00 AM.
Latecomers are given warnings, and repeated violations lead to penalties.

4. Unity of Command

 An employee should report to only one superior.

 If multiple bosses give conflicting orders, confusion and inefficiency occur.

🔹 Example: In a hospital, if a nurse receives instructions from both the doctor and the administrative
officer, it can create confusion. Instead, they should report to only one superior at a time.

5. Unity of Direction

 All activities related to the same goal should have a single plan and direction.

 Helps in coordination and reduces conflicts.

🔹 Example: A marketing team and a sales team must work together with a common goal of
increasing product sales, following the same strategy.

6. Subordination of Individual Interests to Organizational Interest

 The interest of the organization should come before personal interests.

 Employees should prioritize company goals over personal gains.

🔹 Example: A manager should make decisions that benefit the company rather than favoring a
personal friend in promotions.

7. Remuneration

 Fair and adequate payment motivates employees.

 Wages should be competitive and based on job roles, industry standards, and employee
performance.

🔹 Example: A company offers performance-based bonuses to encourage employees to work harder

and be more productive.

8. Centralization and Decentralization

 Centralization: Decision-making is concentrated at the top level.

  Decentralization: Decision-making is distributed to lower levels for flexibility.

 The right balance is essential for efficiency.

🔹 Example: A multinational company allows regional managers to make local marketing decisions but
keeps financial decisions centralized at headquarters.

9. Scalar Chain (Hierarchy)

 A clear chain of command must be established from top management to lower levels.

 Communication should flow in an organized manner.

🔹 Example: If an employee wants to communicate a problem to the CEO, they should first inform
their direct manager, then the department head, and so on, following the chain of command.

10. Order

 Everything should have a proper place (both materials and employees).

 Ensures efficiency and reduces waste of time and resources.

🔹 Example: A well-organized office has a designated place for files, tools, and equipment, preventing
unnecessary searching.

11. Equity

 Employees should be treated fairly and respectfully.

 There should be no discrimination based on gender, religion, or background.

🔹 Example: A company provides equal pay for all employees in the same role, regardless of gender or
nationality.

12. Stability of Tenure

 High employee turnover negatively affects productivity.

 Companies should focus on retaining employees and providing job security.

🔹 Example: A company invests in employee training and career development to retain skilled workers
rather than frequently hiring new ones.

13. Initiative

 Employees should be encouraged to take initiative and make decisions.

 Increases motivation, innovation, and problem-solving abilities.

🔹 Example: An employee suggests a new way to reduce waste in production, and the company
implements it, leading to cost savings.

14. Esprit de Corps (Team Spirit)

 Organizations should promote teamwork and unity among employees.

 A positive workplace culture leads to better performance.

🔹 Example: A manager organizes team-building activities to improve collaboration and employee

morale.

Importance of Fayol’s Principles in Modern Management

1. Improves Organizational Efficiency – Provides a structured approach to managing

businesses.

2. Enhances Employee Satisfaction – Fair treatment, job stability, and motivation increase
productivity.

3. Encourages Innovation – Employees take initiative and bring new ideas.

4. Reduces Workplace Conflicts – Clear hierarchy and unity prevent misunderstandings.

5. Applicable to All Organizations – Can be used in businesses, governments, and non-profits.

Conclusion

Henri Fayol’s Administrative Management Theory and 14 Principles of Management provide a

strong foundation for modern management practices. By applying these principles, organizations can
improve efficiency, maintain discipline, and ensure a motivated workforce. Fayol’s principles remain
relevant today and are widely used in industries worldwide.