1.

Division of Work
Dividing the full work of the organization among individuals and creating
departments is called the division of work.

Division of work leads to specialization, and specialization helps to increases

efficiency and efficiency which results in improvements in the productivity and
profitability of the organization.

2. Balancing Authority and Responsibility

Authority must be equal to Responsibility. According to Henri Fayol, there
should be a balance between Authority (Power) and Responsibility (Duties).
The right to give orders should not be considered without reference to
responsibility.

If the authority is more than responsibility then chances are that a manager
may misuse it. If responsibility is more than authority then he may feel
frustrated.

3. Discipline
Outward mark of respect in accordance with formal or informal agreements
between a firm and its employees. Discipline means a respect for the rules
and regulation of the organization. Discipline may be Self-discipline, or it may
be Enforced discipline.

No slacking or bending of rules, not allowed in any organization. The works

must respect the rules that run the organization. To establish discipline, good
supervision and impartial judgment are needed.

4. Unity of Command
According to this principle, a subordinate (employee) must have and receive
orders from only one superior (boss or manager).

To put it another way, a subordinate must report to only one superior. It helps
in preventing dual subordination. This decrease the possibilities of “Dual
subordination” which creates a problem is a function of managers.

5. Unity of Direction
One head and one plan for a group of activities with the same objective. All
activities which have the same objective must be directed by one manager,
and he must use one plan.

This is called Unity of Direction.

For example, all marketing activities such as advertising, sales promotion,
pricing policy, etc., must be directed by only one manager.

He must use only one plan for all the marketing activities. Unity of direction
means activities aimed at the same objective should be organized so that
there are one plan and one person in charge.

6. Subordination of Individual Interests to

the General Interest
The interest of one individual or one group should not prevail over the general
good. The individual interest should be given less importance, while the
general interest should be given most importance.

If not, the organization will collapse. The interest of the organizational goal
should not be sabotaged by the interest of an individual or on the group.

7. Remuneration
Remuneration is the price for services received. Pay should be fair to both the
employee and the firm. If an organization wants efficient employees and best
performance, then it should have a good remuneration policy.

This policy should give maximum satisfaction to both employer and

employees. It should include both financial and non-financial incentives.

Compensation should be based on systematic attempt to reward good

performance.

8. Centralization
It is always present to a greater or lesser extent, depending on the size of the
company and the quality of its managers. In centralization, the authority is
concentrated only in a few hands.

However, in decentralization, the authority is distributed to all the levels of

management. No organization can be completely centralized or decentralized.

If there is complete centralization, then the subordinates will have no authority

(power) to carry out their responsibility (duties). Similarly, if there is complete
decentralization, then the superior will have no authority to control the
organization.

Therefore, there should be a balance between centralization and

decentralization.
The degree to which centralization or decentralization should be adopted
depends on the specific organization, but managers should retain final
responsibility but should give subordinate enough authority to do the tasks
successfully.

9. Scalar Chain
The chain of command, sometimes called the scalar chain, is the formal line of
authority, communication, and responsibility within an organization.

The chain of command is usually depicted on an organizational chart, which

identifies the superior and subordinate relationships in the organizational
structure.

Or it is the line of authority from top to bottom of the organization. This chain
implements the unity-of-command principle and allows the orderly flow of
information.

Under the unity of command principle, the instructions flow downward along
the chain of command and accountability flows upward.

More clear-cut the chain of command, the more effective the decision-making
process and greater the efficiency.

10. Order
A place for everything and everything in its place’ the right man in the right
place. There should be an Order for material/things and people in the
organization.

Order for things is called Material Order and order for people is called Social
Order. Material Order refers to “a place for everything and everything in its
place.”

Social Order refers to the selection of the “right man in the right place”. There
must be the orderly placement of the resources such as Men and Women,
Money, Materials, etc. Human and material resources must be in the right
place at the right time. Misplacement will lead to misuse and disorder.

11. Equity
While dealing with the employees a manager should use kindliness and
justice towards employees equally. Equity is a combination of kindness and
justice.

It creates loyalty and devotion in the employees toward the organization. The
equity principle suggests that the managers must be kind as well as equally
fair to the subordinates.
12. Stability of Tenure of Personnel
Although it could take a lot of time, Employees need to be given fair enough
time to settle into their jobs. An employee needs time to learn his job and to
become efficient.

The employees should have job security because instability leads to

inefficiency. Successful firms usually had a stable group of employees.

13. Initiative
Without limits of authority and discipline, all levels of staff should be
encouraged to show initiative. Management should encourage initiative.

That is, they should encourage the employees to make their own plans and to
execute these plans. This is because an initiative gives satisfaction to the
employees and brings success to the organization. It allows the subordinates
to think out a plan and do what it takes to make it happen.

14. Esprit De Corps

Esprit de Corps means “Team Spirit”. Therefore, the management should
create unity, co-operation, and team-spirit among the employees.

They should avoid dividing and rule policy. Harmony, cohesion among
personnel. It’s a great source of strength in the organization. It is a quality in
every successful business.

These principles are guidelines for every management function. The manager
must act according to the 14 principles of management; in order to reach the
goal and create a surplus.

These 14 management principles of Henri Fayol are universally accepted.

they work as a guideline for managers to do their job according to their
responsibility.

Different management experts have explained different principles on the basis

of their research. Henry Fayol, a famous industrialist of France, has described
fourteen principles of management in his book General and Industrial
Management.

Image Courtesy : staffingstream.wpengine.netdna-cdn.com/wp-

content/uploads/management.jpg

Explaining the difference between ‘principles’ and ‘elements’ he makes it clear

that the principles of management are fundamentally true and establish a
relationship between cause and effect, while the ‘elements’ of management
point towards its functions.
While presenting the principles of management Fayol has kept two things in
mind. Firstly, the list of the principles of management should not be long but
should be suggestive and only those principles should be explained which
become applicable in most of the situations.

Secondly, the principles of management should be flexible and not rigid so

that changes can be made in them in case of need. The fourteen principles
given by Fayol are as under:

(1) Division of Work:

ADVERTISEMENTS:

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 specialisation 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, Fayol’s indication is to the second way to do this job and
not the former one.

The principle of division of labour 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 specialisation 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 specialisation will not

be available.

(2) Authority and Responsibility:

ADVERTISEMENTS:

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.

Unity of Command & Unity of Direction

In this connection Fayol feels that for the efficient running of an organisation
the unity of direction is important, while the unity of command is important to
enhance the efficiency of the employees.

ADVERTISEMENTS:

(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. Direito administrativo brasileiro hely lopes
meirelles download pdf.

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) Centralisation and Decentralisation:

According to this principle, the superiors should adopt effective centralisation

instead of complete centralisation and complete decentralisation. By effective
centralisation, Fayol does not mean that authority should be completely
centralised.

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.

Positive Effect

(i) Decrease in the workload of superiors

(ii) Better and quick decisions

(iii) Increase in the encouragement to the subordinates

Violating Effect

(i) Unnecessary increase in the workload of the superiors in case of

centralisation and of the subordinates in case of decentralisation

(ii) Impatient and wrong decisions by the superiors in case of complete

centralisation and weak decisions by the subordinates in case of complete
decentralisation

(iii) Decline in the encouragement to subordinates in case of complete

centralisation

(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) Fayol’s 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)Fayol’s 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.

(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.

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.

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 one’s 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.

Positive Effect

(i) Increase in the thinking power of the employees

(ii) Cooperation of the employees in implementing decisions

(iii) Increase in the sense of attachment to the organisation Violating Effect

(iv) Decline in the thinking power of the employees

(v) An atmosphere of non-cooperation

(vi) Decline in the employees’ attachment to the company

(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.