Principles of Management

When it comes to understanding the Principles  of Management invariably one is inclined to go by the theory propounded by Henry Fayol, an authority in Systematic Management.  He was a successful Managing Director of a mining company and what he says is based on his personal experience and expertise.  He developed the generic principles of management to help organizations achieve optimum performance working toward their goals.

His 14 principles are widely acclaimed and accepted in management.  These are:-

• Division of Labor: For achieving maximum efficiency of labor through specialization across all areas of a company (commercial, financial/accounting/managerial) rather than technical activities alone.
• Establishment of Authority: Having the authorized power to issue orders.  Authority arises from both from official and personal level.  Experience, integrity, leadership ability are indispensable for a manager.
• Enforcement of Discipline: It is a core activity in an organization.  Discipline can be enforced through warnings, penalty, demotion and even dismissals.
• Unity of Command:  Every employee should receive orders from a single source of authority and be accountable to one authority.  Otherwise, there will be confusion of command.
• Unity of Direction: A common activity is essential for unity of action and to focus on the efforts.
• Subordination of Individual Interest to the Interests of the Organization: To reconcile general interest with the group`s and organizational interests.
• Centralization of Control and Authority: The level of centralization is a matter of proportion as is the division of labor.  So also centralization versus de-centralization.
• Adoption of a `Scalar` Chain:   It is the chain of supervision that connects the Managing Director to the lowest level of employee.  When quick response is required a system of delegated authority that facilitates horizontal communication should be in place.
• Fair Remuneratin for All: Employee satisfaction is dependent on the mix of both financial and non-financial factors.
• A Sense of Order and Purpose: Fayol advocated a detailed organizational chart where job descriptions are made clear and well laid out.
• Equity and Fairness: Justice and kindness must be practiced by managers while dealing with the employees.  Equity and balance must be practiced too.
• Stability of Jobs and Position: Personnel planning, management development and turnovers are considered as one activity.  Necessary time should be given to staff/managers to familiarize with new work habits and situations.
• Development of individual activity: Initiative should be extended to all levels through delegated authority.
• Esprite-de-corps: Morale and unity must be maintained among all employees. `Divide and Rule` is counter-productive.

There is, no doubt, the pros and cons of the above principles have been under discussion with criticism that these have not taken into account the external environment at all, etc. There are also other models developed by other management experts.

Questions:

• Discuss any of the 5 Principles of Management developed by Fayole.