Henri Fayol

(Istanbul, 29 July 1841 Paris, 19 November

1925) was a French mining engineer and
director of mines who developed a general
theory of business administration that is often
called Fayolism. He and his colleagues
developed this theory independently of
scientific management but roughly
contemporaneously. Like his
contemporary, Frederick Winslow Taylor, he is
widely acknowledged as a founder of modern
management methods.
 (1) Division of Work: This principle of Fayol tells us that as far as possible
the whole work should be divided into different parts and each individual
should be assigned only one part of the work according to his ability and
taste rather than giving the whole work to one person. When a particular
individual performs the same job repeatedly, he will become an expert in
doing that particular part of the whole job. Consequently, the benefits of
specialization will become available.
For example, a furniture manufacturer gets an order for manufacturing 100
lecture stands. He has five workers who will do the job. There are two ways
to complete this order. First, every worker should be asked to complete 20
lecture stands. The second method can be distributing different parts of the
lecture stand-legs, top board, centre support, assembling and polishing-to
all the five workers in a manner that only one worker does the same job for
all the 100 lecture stands. Here, Fayols indication is to the second way to
do this job and not the former one.
The principle of division of labor applies not only to the workers but also
equally to the managers. For example, if a manager is tuned to work on the
same kind of activities for a long period of time, he will certainly be an
expert in his particular job. Consequently, more and beneficial decisions can
be taken in a comparatively less time by him.
Positive Effect: Advantages of specialization are obtained, such as increase
in the quality of work, increase in the speed of production, decrease in the
wastage of resources.
Violating Effect: The above mentioned positive effects of specialization will
not be available.
 (2) Authority and Responsibility:- According to this
principle, authority and responsibility should go hand in
hand. It means that when a particular individual is given a
particular work and he is made responsible for the results,
this can be possible only when he is given sufficient
authority to discharge his responsibility. It is not proper to
make a person responsible for any work in the absence of
authority. In the words of Fayol, The result of authority is
responsibility. It is the natural result of authority and
essentially another aspect of authority and whenever
authority is used, responsibility are automatically born.

For example, the CEO of a company has doubled the sales

target of the sales manager for the coming year. To
achieve this target, authority for appointing necessary
sales representatives, advertising according to the need,
etc. shall have to be allowed. In case these things are not
allowed the sales manager cannot be held responsible for
not
 (3) Discipline: Discipline is essential for any successful
work performance. Fayol considers discipline to mean
obedience, respect for authority, and observance of
established rules.
Discipline can be established by providing good
supervision at all levels, clearly explaining the rules,
and implementing a system of reward and
punishment. A manager can present a good example
to his subordinates by disciplining himself.
For example, if the employees break their promise of
working up to their full capacity, it will amount to the
violation of obedience. Similarly a sales manager has
the authority to do business on credit.
But in case he allows this facility not to the general
customers but only to his relatives and friends, then it
will amount to ignoring his respect to his authority.
(Note: Both these examples give a message of
indiscipline which is an undesirable situation.)
 (4) Unity of Command: According to the principle
of unity of command, an individual employee
should receive orders from only one superior at a
time and that employee should be answerable
only to that superior. If there are many superiors
giving orders to the same employee, he will not be
able to decide as to which order is to be given
priority. He thus finds himself in a confused
situation.
Such a situation adversely affects the efficiency of
the subordinates. On the other hand, when there
are many superiors, every superior would like his
orders to be given priority. This ego problem
creates a possibility of clash. Consequently, their
own efficiency is likely to be affected.
 (5) Unity of Direction: Unity of direction means that there
should be one head for one plan for a group of activities
having the same objective. In other words, there should be
one plan of action for a group of activities having the same
objective and there should be one manager to control
them.
For example, suppose an automobile company is
manufacturing two products, namely, scooters and cars,
hence having two divisions.
As each product has its own markets and problems
therefore each division must have its own targets. Now
each division must plan its target as per its environmental
conditions to get better results. It is necessary to
distinguish between the meaning of the unity of command
and the unity of direction.
Unity of command means that there should be only one
manager at a time to give command to an employee, while
the unity of direction means that there should be only one
manager exercising control over all the activities having
the same objective.
Basis for
Unity of Command Unity of Direction
Comparison

Unity of direction is a
Unity of command refers to a principle of
management principle which
management which states that one
Meaning implies that all the activities
incumbent should get orders from and
with same objective must
report to one boss.
have one head and one plan.

Purpose To prevent dual subordination. To prevent activities overlap.

Focuses on Single employee Entire organization

The principle results in

The principle leads to effective functioning
Outcome coordination of work of
of the subordinates.
various employees.

Represents relationship of
Represents relationship between superior activities, as per
Relationship
and subordinate. organizational plans and
goals.

It is needed to fix the responsibility of each It is needed for sound

Need
person in the organization. organization of activities.
 (6) Subordination of Individual Interest to General Interest:
This principle can be named Priority to General Interest
over Individual Interest. According to this principle, the
general interest or the interest of the organisation is above
everything. If one is asked to place individual interest and
the general interest in order of priority, definitely the
general interest will be placed at the first place.
For example, if a manager takes some decision which
harms him personally but results in a great profit to the
company, he should certainly give priority to the interest of
the company and take the decision accordingly. On the
contrary, if some decision helps the manager personally but
results in a great loss to the company, then such a decision
should never be taken.
For example, a purchase manager of a company has to
purchase 100 tonnes of raw material. His son happens to be
a supplier along with other suppliers in the market. The
manager purchases the raw material from the firm of his
son at a rate higher than the market rate. This will profit the
manager personally, but the company will incur heavy loss.
This situation is undesirable.
 (7) Remuneration to Employees: Fayol is of the opinion that
the employees should get a fair remuneration so that the
employees and the owners find equal amount of
satisfaction. It is the duty of the manager to ensure that
employees are being paid remuneration according to their
work. If, however, they are not paid properly for their work,
they will not do their work with perfect dedication, honesty
and capacity.
As a result, the organisation shall have to face failure.
Proper remuneration depends on some factors like the cost
of living, demand of labour and their ability. Fayol feels that
in order to motivate the employees, apart from general
remuneration, they should be given some monetary and
non-monetary incentives.
For example, suppose that the things are getting dearer
and dearer and the company is getting good profits. In such
a situation, the remuneration of the employees should be
increased even without their asking. If this is not done, the
employees will leave the company at the first opportunity.
Expenses shall have to be incurred on new recruitment
which shall bring loss to the company
 (8) Centralization and Decentralization: According to this
principle, the superiors should adopt effective
centralization instead of complete centralization and
complete decentralization. By effective centralization, Fayol
does not mean that authority should be completely
centralized.
He feels that the superiors should keep the authority of
taking important decisions in their own hands, while the
authority to take daily decisions and decisions of less
importance should be delegated to the subordinates.
The ratio of centralisation and decentralisation can differ in
different situations. For example, it is advantageous to
have more centralisation in a small business unit and more
decentralisation in a big business unit.
For example, the decisions in respect of determining the
objectives and policies, expansion of business, etc. should
remain in the hands of the superiors. On the other hand,
authority for the purchase of raw material, granting leave
to the employees, etc. should be delegated to the
subordinates.
 (9) Scalar Chain:
(i) Meaning of Scalar Chain:
It refers to a formal line of authority which moves from highest to the lowest ranks in a straight line,
(ii) Fayols Opinion:
This chain must be followed in a strict manner. It means each communication must move from top to
bottom and vice versa in a straight line. The important condition here is that no step (post) should be
overlooked during communication.
(iii) Fayols Ladder:
Fayol has explained this principle with the help of a ladder.
For example, in a company the employee F wants to have contact with the employee P. According
to the principle of scalar chain F shall have to reach A through the medium of E,D,C,B and then
having contact with L,M,N,0 shall reach P. Thus F shall have to take the help of all the nine steps
(posts) to have business contact with P.
(iv) Utility:
Due to more clear system of authority and communication, problems can be solved faster.
(v) Gang Plank:
It is the exception of the principle of scalar chain. This concept was developed to establish a direct
contact with the employee of equal rank in case of emergency to avoid delay in communication.
For example, as shown in the diagram employee F can have direct contact with employee P. But for
doing so employees F and P shall have to seek the prior permission of their immediate bosses E
and O. The details of their talk also shall have to be given to them.
Gang Plank: A Special Note
Gang Plank can only be established with the employees of the equal or same level. For example, in
the present example no gang plank can be established between F and O.
For example, an employee working in a factory should know the place or source from where he can
get his tools in case of need. Similarly, he should know the place where his supervisor will be
available in case of any need.
 (10) Order: According to the principle of order, a right person
should be placed at the right job and a right thing should be
placed at the right place. According to Fayol, every enterprise
should have two different orders-Material Order for Physical
Resources and Social Order for Human Resources.
Keeping the physical resources in order means that a proper
place for everything and everything in its right place. Similarly,
keeping the human resources in order means a place for
everyone and everyone in his appointed place.
Maintaining these two orders properly will ensure that everybody
knows his workplace, what he is to do and from where he would
get his required material. Consequently, all the available
resources in the organisation will be utilised properly.
It is, however, important to note that it is not sufficient to have
an allotted place for a toolbox and for the supervisor but the
availability of both at their decided place is absolutely important.
If this is not the case, it can lead to a heavy loss as a result of
damage to the machines.
 (11) Equity: This principle tells that the managers
should treat their subordinates in a just and kind
manner so that they develop a feeling of
dedication and attachment for their work. All the
employees should be treated equally and
impartially.
Fayol tells us in connection with this principle
that there should not be any equality of
treatment between a person whose work is really
good and a person who is a shirker by nature.
Rather, the latter should be treated sternly. Doing
so would be equitable. It is because of this point
of view that Taylor has presented his differential
remuneration method.
 (12) Stability of Personnel: From the point of view of management
it is absolutely harmful to change the employees frequently as it is
a reflection of inefficient management. Therefore, according to
this principle there should be stability of tenure of the employees
so that the work continues efficiently.
Fayol thinks that instability in the tenure of employees is a cause
of poor management and results. High rate of labour turnover will
result in increased expenses because of selecting them time and
again, and giving them training afresh.
It also lowers the prestige of the organisation and creates a
feeling of insecurity among the employees which keeps them busy
in finding out new avenues of work. Consequently, the sense of
dedication cannot be created among them.
For example, it is true that if the workers in a company are not
treated well and the atmosphere in the company is also unhealthy,
the employees will not stay for a long time. In other words, they
will leave the company at the first opportunity available. This
situation is absolutely harmful.
For example, a labourer completes 10 units of goods in a day.
Another labourer who happens to be a relative of the supervisor
completes 8 units but both get equal remuneration. This violates
the principles of equality. The second labourer should get less
remuneration than the first one.
 (13) Initiative: Initiative means the capacity to work while
expressing ones thoughts. According to Fayol, it is the duty of
the manager to encourage the feeling of initiative among his
employees for doing some work or taking some decision but
within the limits of authority and discipline.
It will be possible only when the manager will welcome the
thoughts of his/her subordinates. By doing so the subordinates
will present new and useful ideas time and again and gradually
they will become an integral part of the organisation. In order to
make this process a success a manager will have to abandon his
false sense of prestige.
For example, a salesman suggests to his sales manager to
implement a new advertisement technique. The sales manager
sends him away by telling him that it is not possible and ignores
the suggestion altogether.
In such a situation the salesman, who has been admonished and
belittled, will never venture to offer any suggestion in future
because his desire of taking initiative has been suppressed.
On the contrary, if his suggestion had been listened to carefully
(even though not to be implemented) he could have taken the
courage to offer some suggestion in future. Such an action would
simply have encouraged his initiative.
 (14) Esprit de corps: As per this principle, a
manager should continuously make efforts to
develop a team spirit among the
subordinates. To do this, he/she should use
the word We instead of during the
conversation with subordinates.
 1. Development of Science for each part of mens
job (replacement of rule of thumb)
a. This principle suggests that work assigned to
any employee should be observed, analyzed with
respect to each and every element and part and
time involved in it.
b. This means replacement of odd rule of thumb
by the use of method of enquiry, investigation,
data collection, analysis and framing of rules.
c. Under scientific management, decisions are
made on the basis of facts and by the application
of scientific decisions.
 2. Scientific Selection, Training & Development of
Workers
a. There should be scientifically designed
procedure for the selection of workers.
b. Physical, mental & other requirement should be
specified for each and every job.
c. Workers should be selected & trained to make
them fit for the job.
d. The management has to provide opportunities
for development of workers having better
capabilities.
e. According to Taylor efforts should be made to
develop each employee to his greatest level and
efficiency & prosperity.
 3. Co-operation between Management & workers
or Harmony not discord
a. Taylor believed in co-operation and not
individualism.
b. It is only through co-operation that the goals
of the enterprise can be achieved efficiently.
c. There should be no conflict between managers
& workers.
d. Taylor believed that interest of employer &
employees should be fully harmonized so as to
secure mutually understanding relations between
them.
 4. Division of Responsibility
a. This principle determines the concrete
nature of roles to be played by different level
of managers & workers.
b. The management should assume the
responsibility of planning the work whereas
workers should be concerned with execution
of task.
c. Thus planning is to be separated from
execution.
5. Maximum Prosperity for Employer & Employees
a. The aim of scientific management is to see
maximum prosperity for employer and
employees.
b. It is important only when there is opportunity
for each worker to attain his highest efficiency.
c. Maximum output & optimum utilization of
resources will bring higher profits for the
employer & better wages for the workers.
d. There should be maximum output in place of
restricted output.
e. Both managers & workers should be paid
handsomely.