Fayol's Principles of Management

(1) Division of Work:

Fayol suggested that dividing work into small jobs lead to specialization that further results in effective and efficient output. It becomes the basis of departmentation in the organization and can be used for technical as well as managerial work.

(2) Authority and Responsibility:

According to Fayol, “Authority is the right to give orders and obtain obedience”.

Responsibility means the obligation to do the work assigned. There can be two types of authority i.e. official authority, which is the authority to command, and personal authority which is the authority of the individual manager.

Authority is both formal and informal. There should be a balance between authority and responsibility. Authority in excess of responsibility will lead to misuse of position whereas responsibility in excess of authority will lead to over burden of work.

(3) Discipline:

Discipline is the obedience to organizational rules and employment agreement which are necessary for the working of the organization. For proper discipline there must be good superiors, proper agreements and use of penalties.

(4) Unity of Command:

An employee should have one and only one boss to receive orders from and to report to. In the absence of unity of command there can be confusion in the minds of superiors as well as subordinates, possibility of disputes causing problems in bringing and maintaining the stability of the organization.

(5) Unity of Direction:

For proper achievement of goals, the ultimate objectives of all the units of the organization should be same, with all the employees working in coordination for the same common goals. There should be only one head for one plan.

 

Fayol's Principles of Management

(6) Subordination of Individual Interest to General Interest:

Whenever there is clash between the Individual Interest and General Interest, Interest of the organization should be given preference because larger interest of all concerned is more important than the interest of an individual.

(7) Remuneration of Employees:

According to Fayol the overall pay and compensation should be fair to both employees and the organization. The employees should be paid fair wages for a reasonable standard of living but within the paying capacity of the company. Remuneration should be just and equitable that helps in maintaining good relations between workers and management.

(8) Centralization and Decentralization:

According to Fayol, “There is a need to balance subordinate involvement through decentralization with managers’ retention of final authority through centralization.”

Centralization means concentration of authority at top level and decentralization means dispersal of authority at all levels up to the lowest level of management. So, there must be a balance between these two.

(9) Scalar Chain:

According to Fayol, “Organisations should have a chain of authority and communication that runs from top to bottom and should be followed by managers and the subordinates.”So, the chain of authority must be followed from the top level up to the lowest level of management. But in case of emergency managers at the same level can communicate directly, using a shorter route known as gang plank.

(10) Order:

According to Fayol, “People and materials must be in suitable places at appropriate time for maximum efficiency.” For proper place of material and machinery he used Physical order and for men he used social order. Both of these are necessary to save time and effort in locating the things and persons.

 

Fayol's Principles of Management

(11) Equity:

According to Fayol all the employees should be treated fairly, without any discrimination on the basis of sex, religion, language, caste belief or nationality. There should be kindliness and justice in the behavior of managers, but he did not rule out the use of force to penalize lazy workers.

(12) Stability of Personnel:

“Employee turnover should be minimized to maintain organizational efficiency” as suggested by Fayol. An employee should be given enough time to show the results of his work and efforts. This is necessary to reduce the cost of recruitment, selection as well as the cost of training.

(13) Initiative:

Initiative means taking the first step with self-motivation. Fayol suggested that workers should be encouraged to develop and carry out their plans for improvements by giving rewards for time and cost reducing suggestions.

(14) Espirit De Corps:

Fayol was of the opinion that management should cultivate team spirit rather than divide and rule. It would lead to improvement of trust and understanding there by reducing the use of penalties.

 

Principles of Management – Keywords and Brief Notes

MCQs to Revise Business Studies Class 12

Identify the Principle of Management: