FAYOL’S PRINCIPLES OF

MANAGEMENT – PART II
SUNITA RANI
PGT-COMMERCE
KV-2 DMW PATIALA
 Principle of Centralisation
and Decentralisation

Centralisation refers to concentration of authority or power in few hands

at top level. Decentralisation means evenly distribution of power at every
level of management. According to Fayol a company must not be
completely centralised or completely decentralised but there must be
combination of both depending upon the nature and size of the
organisation.
A small organisation can be well organised and managed with centralised
technique but in large organisation there is need for centralised.
 Principle of Centralisation
and Decentralisation

Consequences
of this
Positive principle
Effects of
this
principles

Fast decisions
Benefits of
and strict
centralisation as Delay in Misuse of
control by
well decision authority
operational &
decentralisation
top level
 Principle of Scalar Chain

Scalar chain means line of authority or chain of supervisors from highest

to lowest rank. Fayol insists that this chain must be followed strictly in
the organisation. Every information must pass through every key of this
chain, no skipping of any one key should be allowed.
If this chain is broken then there are chances of communication gap in
the organisation but sometimes following scalar chain becomes a long
process and if some important information has to be passed, it get
delayed so in case of emergency and urgent information, Fayol permitted
a short cut in chain which is called “Gang Plank”.
 Principle of Scalar Chain

Consequences
of this
Positive principle
Effects of
this
principles

No No clarity in
Systematic There may be
communication authority
flow of communication
gap in the responsibility
information gap
organisation relationship
 Principle of Order

In this principle order does not mean command but it refers to orderly
arrangement of men and material that is a fixed place for everything and
everyone in the organisation.
Fayol insists that there must be a fixed place to keep every thing used in
the organisation and fixed place or seat or cabin for every employee of
the organisation so that no time and energy is wasted in search of any
material or any person.
 Principle of Order

Consequences
of this
Positive principle
Effects of
this
principles

No wastage of Wastage of Unable to

time in search Smooth/systematic time & energy contact the
of operation in search of people at the
men/material men/material right time
 Principle of Equity

This principle sates that workers performing similar job should be provided with
same working conditions, wage rate and incentives. There should be no
discrimination against anyone on account of sex, religion, language, caste, belief
or nationality etc.
“Good sense and experience are needed to ensure fairness to all employees, who
should be treated as fairly as possible,” according to Fayol. Employees will put
their maximum efforts only when they are treated with kindness and justice.
Equity does not mean equal salary to a peon and supervisor but equity means
application of same disciplinary rules in the same way irrespective of their grade,
position and gender.
 Principle of Equity

Consequences
of this
Positive principle
Effects of
this
principles

Dissatisfactio
Employees get Motivate the Increase in
n in
satisfied employees turnover
employees
 Principle of Stability in
Tenure of Personnel

It refers to no frequent transfer and termination of employees. According to this

principle the management must provide the feeling of job security among the
employees because with the feeling of insecurity for the job, the employees can
not contribute their maximum. Frequent turnover of employees is bad for
organisation and such decision must be taken when they are almost unavoidable.
Not only turnover but frequent transfer or rotation should also be avoided
because it takes some time to a person to learn and get settled on a job and by
the time he get settled and he receives transfer order then it will be wastage of
resources and employee will not be able to contribute his best for organisation.
Personnel should be selected and appointed after due and rigorous procedure.
But once selected they should be kept at their post/position for a minimum fixed
tenure. They should have stability of tenure.
 Principle of Stability in
Tenure of Personnel

Consequences
of this
Positive principle
Effects of
this
principles

Improves Wastage of
Dissatisfaction
efficiency No wastage of resources in
among
level of time/resources learning the
employees
employees new job
 Principle of Initiative

Initiative means taking the first step with self-motivation. It is thinking out
and executing the plan. Fayol suggested that employees in the
organisation must be given an opportunity to take some initiative in
making and executing a plan. So managers must welcome the
suggestions and ideas of employees before framing the plan.
But it does not mean going against the established practices of the
company for the sake of being different. A good company should have an
employee suggestion system whereby initiative/suggestions which result
in substantial cost/time reduction should be rewarded.
 Principle of Initiative

Consequences
of this
Positive principle
Effects of
this
principles

Employees will
Develops Employees Demotivation
not work to the
feeling in achieve the among the
best of their
employees target on time employees
ability
 Principle of Esprit de Corps

According to this principle management should promote a team spirit of

unity and harmony among employees. Fayol insists on team work. He
suggested that every employee in the organisation must consider him as
a part or member of a team and try to achieve the team goal. Management
must develop a feeling of belongingness among the employees. A
manager should replace ‘I’ with ‘We’ in all his conversations with workers
to foster team spirit. This will give rise to a spirit of mutual trust and
belongingness among team members. It will also minimise the need for
using penalties.
 Principle of Esprit de Corps

Consequences
of this
Positive principle
Effects of
this
principles

Develops team Achievement of Team goal may

No team sprit
sprit group goal not be achieved