Fayol's Administrative Management Theory || Business Studies || Chapter 2 || Class 12 || NEB

Principles of Fayol's Administrative Management Theory

Fayol has developed 14 principles of management based on his experience. He has assumed that management principles should be flexible. The principles of management developed by Fayol can be described as:

1. Division of Work

   This principle focuses on the division of work based on the nature of work, size of work, and organizational structure. One type of work should be assigned to an employee so that they can achieve job specialization. The objective of division of work is to obtain the benefits of job specialization that are beneficial to employees and the organization as well.

2. Unity of Command

   According to this principle, one employee should be responsible only to one superior. Therefore, an employee should receive orders and instructions from only one superior. If an employee receives orders and instructions from two or more superiors, it will lead to indiscipline, confusion, and work delays.

3. Unity of Direction

   According to Fayol, there should be 'one head and one plan' for similar activities with the same objective. This principle states that each group of activities with the same objective must have one head and one plan. In other words, similar activities should be guided in a similar way. This principle coordinates the activities of the organization.

4. Subordination of Individual Interest to General Interest

   According to this principle, individual interests should not conflict with organizational interests. If there is a conflict between individual interests and common interests, common interests should be given priority.

5. Remuneration of Personnel

   Remuneration and the method of payment should be satisfactory to employees and the organization. According to Fayol, in addition to financial benefits, non-financial benefits should be provided to employees if possible. The rate of remuneration is to be calculated based on the cost of living, employee productivity, and the financial capacity of the organization.

6. Centralization

   According to Fayol, managers retain the final authority, and subordinates should be given enough authority to perform the activities of the organization. The authority and responsibility should be equally provided to the employees. There should be a balance of authority centralization and decentralization. The degree of centralization and decentralization is based on the size, nature, and structure of the organization.

7. Scalar Chain

   Scalar chain refers to the chain of superiors ranging from the top to the lowest rank. According to this principle, orders or communication should be passed through the proper scalar chain. To communicate between two different chains, a gangplank is created by passing the prescribed lines of authority. The gangplank allows employees at the same level in the organization to deal directly with each other without violating the scalar chain. It helps for speedy decisions and saves time.

8. Orders

   This principle is related to the arrangement of materials and people. It ensures the proper placement of a person in an organization. Having the right person and the right tools in the right job is very important for the successful functioning of an organization.

9. Equity

   Equity means kindness and justice for employees. Employees expect equity from the management. It ensures a healthy industrial relationship between management and labor. Management should deal with employees with justice.

10. Stability of Tenure

    Employees must have job security. Frequent changes should be avoided. Insecurity can lead to low morale, and employees may not perform their jobs effectively. Stability of tenure helps to develop loyalty and attachment on the part of employees.

11. Initiative

    It is concerned with the implementation of plans. Managers should encourage their employees to take initiative within the limits of their authority. It is a powerful tool to provide self-motivation among workers and makes them more dedicated to the organization.

12. Esprit de Corps

    This is the principle of union and the strength of an organization that lies in the cooperation and harmony of individual efforts. If there is any misunderstanding among employees, then the management should take timely steps to eliminate them.

13. Authority and Responsibility

    The right to give orders and power is called authority. On the other hand, responsibility means an obligation to perform the work in the manner desired and directed by superiors. Authority without responsibility leads to irresponsible behavior, while responsibility without authority makes a person ineffective. The success of management depends on both authority and responsibility.

14. Discipline

    Discipline implies obedience and respect for authority. It is essential for the smooth running of an organization. According to Fayol, discipline can be maintained if supervision at all levels is good, rules are clearly defined, and a rewards and punishment system is established.