Although his work wasn't widely known in the United States until 1949, Henri Fayol is considered
to be one of the fathers of modern management.
Often referred to as the administrative theory, Fayol believed that the success of an enterprise
was more dependent on the administrative ability of its leaders than on their technical ability.
He came to this conclusion after reflecting on his own experiences as the managing director
of a French steelmaker known as Comambault.
You see Fayol was hired on as managing director, which was basically the equivalent of CEO,
to oversee the liquidation of Comambault.
Instead, Fayol put together a detailed plan on how to bring Comambault back to financial
solvency.
Within twelve years, Comambault had risen from its almost certain demise, and became
one of the most valuable firms in all of France.
While reflecting on his experiences, Fayol realized this success wasn't due to his engineering
background, but rather his ability to manage people and get work done through others.
In addition to founding the functions of management, which we now know as planning, organizing,
leading, and controlling, Fayol developed the 14 principles of management.
These principles were what Fayol believed would help organizations engage in effective
management.
And many of these principles have become common practices in organizations today.
The first principle of management is the division of work, commonly referred to as the division
of labor.
Fayol believed that by separating work into smaller tasks it would allow workers to develop
an expertise in a certain area.
Since workers would perform only a series of specific tasks instead of a larger collection,
it is rather safe to say that over time workers would become more proficient in these tasks.
In addition, some workers are not suited for certain tasks.
So by divided the work into a smaller set of tasks workers can be placed in areas where
they can ultimately excel.
The second principle is one of authority and responsibility.
Fayol claimed that a managers authority should be consistent with his level of responsibility.
While authority is viewed as the right to give orders, responsibility is seen as being
accountable.
Thus someone with authority in an organization, at least according to Fayol, should also be
held accountable for the orders that are given.
The third principle is discipline.
Discipline is often described as the practice of training people to obey rules.
In the case of Fayol's administrative theory, discipline involves creating clear rules and
procedures for employees at all levels of the organization to follow.
These rules were meant to establish order as well as insure good behavior in the workplace.
And in order to establish an incentive for employees to follow these rules, Fayol advocated
that penalties should be used.
The fourth principle of management is unity of command.
Fayol believed that unity of command represented the single most fundamental principle in all
of these principles of management.
From this principle, Fayol claimed that all of the other principles originated.
Fayol strongly believed that no one can serve two masters at the same time.
What this often does is cause confusion amongst the workers and conflict among supervisors
as they struggle over who's direction should be followed.
So Fayol argued that each worker should report to and receive orders from just one supervisor.
This would reduce misunderstandings and ultimately lead to an environment in which all employees
knew exactly what was expected of them.
The fifth principle of management is unity of direction.
Instead of individuals and teams pursuing their own goals that may be in conflict with
one another, Fayol claimed that the entire organization should be pursuing a common goal
or objective.
Getting everyone in the organization working towards the same goal is absolutely critical
to an organization's success.
Somewhat in line with this principle is the sixth principle of management, which is the
subordination of individual interests to general interests.
Successful organizations require all individuals to put aside their own self-interests and
pursue only what is in the best interest of the group.
So any one interest of an individual should certainly not take priority over the interests
of the organization as a whole.
The seventh principle of management is renumeration.
Renumeration represents fairness in the pay practices of an organization.
Fayol believed that variables such as labor supply, cost of living, business profitability,
and general business conditions should all be considered when establishing a worker's
rate of pay.
If organization's do not maintain fair and equitable pay practices it will make it more
difficult to encourage workers to abandon their own interests for the sake of those
of the team.
The eighth principle of management is one of centralization.
Centralization represents the degree to which decision-making authority is concentrated
in the hands of a few people, or spread throughout the organization to employees at different
levels.
A centralized organization by its very nature establishes that only a few key individuals
have the authority to make decisions.
Opposite to a centralized organization is one that is decentralized, which means that
decision-making authority is given to employees at lower levels of the organization within
certain boundaries.
Although Fayol agreed that a centralized form of distributing authority allowed for more
accurate decisions to be made since those who may lack experience are prevented from
making decisions, he also believed that employees should given some freedom so that they can
show what he called initiative.
Since all organizations vary in terms of size and scope, Fayol claimed that the degree of
centralization or decentralization used is largely dependent on the organization itself.
However Fayol did claim that organizations should only use a level of centralization
that was absolutely necessary, and instead focus on allowing individual workers with
the freedom necessary to show individual initiative.
The ninth principle of management is the scalar chain.
The scalar chain represents the organization's hierarchy, which is commonly illustrated through
an organization chart.
The presence of a scalar chain allows employees to be familiar with where they stand in the
organizational hierarchy, as well as who they report to and who they should approach if
they have questions.
The tenth principle of management is order.
For the sake of efficiency and coordination, Fayol claimed that there should be a place
for everything and everything should be in it's place.
The creation of a clean and orderly work environment is important to productivity, but also has
implications for safety on the job.
The eleventh principle of management is Equity.
Fayol believed that an important element to successful management in an organization was
the equitable treatment of workers by management.
If management intends to achieve long-lasting commitment from workers, it's important that
workers are treated fairly.
Otherwise, workers may not pursue the goals of the organization or expend the appropriate
amount of effort to achieve those goals.
The twelfth principle of the management is stability of tenure of personnel.
This principle refers to management's task of minimizing employee turnover.
Turnover, whether voluntary or not, can be very costly to an organization.
In addition to recruiting, selection, and training costs, organization's also have to
deal with disruptions in output that can be caused by employee turnover.
So in order to minimize these issues, Fayol claimed that management should make every
attempt to retain productive workers.
The thirteenth principle of management is initiative, which represents investing in
the development of an organization's workers.
Fayol believed that management should encourage worker initiative, meaning the undertaking
of new responsibilities.
This allows workers to acquire new skills, while also freeing up management to perform
other tasks.
The fourteenth and final principle of management as established by Henri Fayol is what is often
referred to as the spirit of cooperation.
This principle refers to managements responsibility to improve morale and promote a sense of unity.
In order to accomplish this, Fayol emphasized the importance of teamwork as well as communication
in an organization.
Together these fourteen principles constituted effective management practices.
And although it has been over one hundred years since Fayol wrote of these principles
in his book entitled General and Industrial Management, these principles are still widely
agreed upon and followed today.
But perhaps an even greater contribution to modern day management was Fayol's insistence
that the success of an organization was determined more so by the administrative ability of its
leaders as opposed to their technical ability.
As a result, focus began to shift towards training and educating managers for the administrative
demands of today's organizations.
Well that's all for this video.
In our next video, we'll discuss the work of German sociologist Max Weber.
For questions please leave them in the comment box below and I'll do my best to get back
to those in a timely fashion.
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Thanks for watching.