The Industrial Revolution of the 19th Century had paved the way to the development of organized systematic approaches to management. One of the most influential contributors to the management theory is Henry Fayol. He was the first management theorist who used the term ‘administration’. His theory is generally understood as administrative management theory or Fayolism. In his theory, he focused on the top-level management and managers’ actions, divided the activities of an organization into 6 groups and identified 6 managerial qualities for a manager. Importantly, he devised the famous 14 principles of management and 5 elements of management process. After this, people begin to study his theory and accord the full positive evaluation of his contribution until some decades after his death.
This project assignment gives a review about the overview of life and the development of key work of management theorist, Henry Fayol. The aim of the project is to understand his concepts of management that are practical in top-level management. Another goal with the project is to examine his principles and elements of management as guidelines to be applied for all managers. And also, this project assignment gives some points of view about his theory contributes to modern concepts of management and his achievement in his lifetime.
Henry Fayol was a French administrative management theorist and well-known as the father of modern management. He had a extraordinary life. He was born on 29 July 1841 in Istanbul, Turkey. Born that year, his father was an engineer who was appointed superintendent of works to build a bridge over the Golden Horn in Istanbul. A few years later, he and his family returned to France in 1847 when he was a child.
Had a period time, Fayol studied at the mining school ‘Ecole Nationale Superieure des Mines’ in Saint-Etienne of France and eventually graduated in 1860. When he was age of 19, he began working as an engineer at a large mining company which a coal-mining and iron foundry combine, ‘Compagnie de Commentry-Fourchambeault-Decazeville’ in Commentry, France. Through his efforts, he was promoted as mines manager and ultimately became the managing director of the company in 1888. He changed company’s operation with his entrepreneurial approach to management thinking. At that time, the company employed more than 1,000 people. By 1900, the company was one of the largest producers of iron and steel in France and regarded as a vital national industry. In his career, he held that position over 30 years until 1918. Unfortunately, he was dead at age of 84 on 19 November 1925 in Paris, France.
As early as 1900, Fayol formulated and wrote papers about his administrative management ideas from his own experiences. He examined the nature of management and first mentioned the ‘elements’ of administration which came from his book. His book was published in 1916 and was named as ‘Administration Industrielle et Generale’, a comprehensive theory of administration where he described and classified administrative management roles and processes. In 1949, Constance Storrs translated his book in English and entitled ‘General and Industrial Management’ which led to his theory was recognized by others.
Henry Fayol emphasized the importance of taking a wider view on the organization as a whole, but the analytical approaches were similar. In his work, ‘General and Industrial Management’ which was published in English in 1949, he outlined his theory of general management which he believed could be applied to the administration of any industries. He enlightened managers on how to accomplish their managerial duties and the practices in which they should engage. He paid attention to the functions of administration and to this end he presented the principles and elements of management.
As Fayol mentioned in his book: “Everyone needs some concepts of management; in the home, in affairs of state, the need for managerial ability is in keeping with the importance of the undertaking, and for individual people the need is everywhere in greater accordance with the position occupied.” – excerpted from General and Industrial Management.
Firstly, Fayol observed the organizational functioning from manager’s point of view. He found that all activities of an organization could be classified into six groups. These six groups of activities always present in a managerial post and are clearly shown in the following figure 2.
Figure 2: 6 Activities of an Organization
Technical activities relate to production, manufacture and adaptation; Commercial activities involve buying, selling and exchange; Financial activities search for capital and its optimum use; Security activities look for protection of property and persons; Accounting activities include stocktaking, balance sheets, costs and statistics; Managerial activities consist of planning, organizing, commanding, coordinating and controlling.
Fayol pointed out that these activities exist in every organization. He argued that all managers required capability in all six functions. He also insisted that the managerial position determined the level of each function where full covered the total job and varying percentages should be assigned to each function. He further observed these six groups of activities and divided his approach of studying management into three parts: managerial qualities and training, general principles of management and elements of management process.
In managerial qualities and training, Fayol identified the essential qualities required for a manager. According to his observation, the qualities of a manager have to possess under six aspects of qualities. These six aspects of qualities required are clearly shown in the following figure 3.
Figure 3: 6 Managerial Qualities
Physical qualities contain health, vigour and address; mental qualities contain ability to understand and learn, judgement, mental vigour and capability; moral qualities contain energy, firmness, initiative, loyalty, tact and dignity; general education means that having basic common sense; special knowledge means that peculiar to the function being performed; work experience mean that arising practice from the work.
The possession of these qualities differs in degree between a manager and another. The implication is that a manager may be more suited to a post which emphasizes the need for one or other of the six functions.
Fayol listed the need for management training and then identified 14 principles of management to serve as guidelines to help management resolve work problems and manage their affairs more effectively. The 14 principles of management are clearly shown in the following figure 4.
Figure 4: 14 Principles of Management
Division of work is the first principle. Fayol believed that if a person specializes, that person will concentrate in the same matters and acquire a special ability and accuracy that will increase the effectiveness and consequently the productivity.
The right or power to give orders to subordinates is authority. Fayol remarked that authority comes with responsibility and vice versa. A manager should not be given authority without responsibility and should never be given responsibility without the associated authority to get the things done.
Discipline is certainly essential for the smooth running of business. Employees must obey the organizational rules. Good discipline must result from an agreement between firm and employees with fairness and clear understanding of both sides.
Fayol realized that different orders from different bosses may bring the problems and proposed the unity of command which means that an employee should receive instructions from one superior only in order to avoid conflict and confusion.
Fayol explained that unity of direction is organizational activities with the same objective should be guided by one manager, using one plan. It is essential to focus the effort in the same direction and ensure action is properly coordinated.
About subordination of individual interest to general interest, the interests of one employee should not be allowed to become more important than the group. It is important to separate personal and business affairs. While an employee is working, his mind and thoughts should be about the job and business goals.
Every employee is worthy of his salary and it must be totally fair. In the best case, it would satisfy the firm and the employee. Also, rewards should be used as a tool of encouragement. This principle is analyzed by Fayol as the remuneration.
Centralization is about proportion and individual cases. Fayol remarked that the degree of centralization varies according to different cases. This principle refers to how close employees are to the decision-making process. It is important to aim for an appropriate balance.
The line of authority from top to the lowest ranks of management is scalar chain and it is related with the centralization. Fayol pointed out that some procedures need speedy actions and for this reason it is just needed the approval of the immediate superior. Employees should be aware of where they stand in the organization’s hierarchy or chain of command.
Order refers to everything should have its place. Materials and people should be in right place at right time in the workplace. The workplace facilities must be clean, tidy and safe for employees.
Fayol regarded equity as a sense of justice and fairness should pervade in an organization. Managers should be kind and fair to their subordinates at all times, both maintaining discipline as necessary and acting with kindness where appropriate.
Fayol analyzed the stability of tenure of personnel is a reflection of a good running of the business, an employee takes time to adapt to a position and a turnover is not efficient. So, personnel planning should be a priority. Managers should strive to minimize employee turnover and ensure replacements at hand when vacancies arise.
Initiative is commonly known as thinking out a plan and doing what it takes to make it happen. Fayol said that the initiative of all represents a great resource of strength for businesses and a manager should grant satisfaction to subordinates. Management should encourage employees to originate and carry out plans, this will increase their confidence and so they might feel more valuable for the company. This urging tends to boost levels of effort.
Esprit de corps is the last principle. It emphasizes organizations should strive to foster team spirit is the way to construct harmony and unity among employees. Fayol desired the efficient team work by using extensive face-to-face verbal communication in order to accomplish this objective.
It is important to stress that the 14 principles are not rigid and the principles enunciated are not aimed at being exhaustive. Fayol emphasized the universality of such principles and their applications are not only to business but also for the success of all associations.
As Fayol mentioned in his book: “Seldom do we have to apply the same principle twice in identical conditions; allowance must be made for different changing circumstances… Therefore principles…[must be]… flexible and capable of adaptation to every need; it is a matter of knowing how to make use of them which is a difficult art requiring intelligence, experience, decision, and proportion.” – excerpt from General and Industrial Management.
From these principles, Fayol concluded that management should interact with personnel in five basic ways in order to plan and control production. According to him, “To manage is to forecast and to plan, to organise, to command, to coordinate and to control”. He stated that management should be viewed as a process consisting of 5 elements which go hand in hand with the principles. Therefore, the management process was represented by these 5 elements are shown in figure 5.
Figure 5: 5 Elements of Management Process
Planning is one of the most important elements in ensuring business success as it predicts future events that determine the next move of the organization. Planning is related to forecast that examine how the future would be like; foresight, prevent and design actions in advance. It is necessary to identify what are the goals and how to accomplish them through a strategy, considering the realistic capabilities and resources to determine appropriate organizational goals. According to Fayol, “The best of plans cannot anticipate all unexpected occurrences which may arise, but it does include a place for these events and prepare the weapons which may be needed at the moment of being surprised”.
Organizing involves ways which organizational structure is developed as well as the flow of communication and authority. Fayol argued that once a plan of action is designed, management need to put the plan into practice and organize the practicality of achieving those plans. Management also need to provide everything necessary to carry it out; including raw materials, tools, capital and human resources. This can be from recruiting the right staff, to organizing the restructuring of the structure of the company so it operates in an efficient manner.
Commanding is how management direct staffs through effective communication and the use of discipline and remuneration. Management need to implement the plan and have an understanding of the strengths and weaknesses of their personnel. Fayol stated that management must encourage and direct personnel activity. Management must motivate their staff whilst at the same time meet the goals and target that have been set.
Coordinating means that management must work to harmonize all the activities to facilitate organizational success. Communication is the prime coordinating mechanism. Fayol stated that management must make certain that personnel work together in a cooperative fashion. Put simply, things should work together effectively and efficiently. So when planning the structure of the organization, management need to make sure that different sections work and support each other in helping the organization do well.
Controlling is the final element of management process involves the comparison of the activities of the personnel to the plan of action and it is the evaluation component of management. Fayol stated that management should monitor everything occurs in conformity with policy and ensure personnel follow their commands. Management have to make sure that any problems sufficient actions plans are put in place to rectify the problem. At the end of the day, it is management’s responsibility that the organization has done well.
As Fayol mentioned in his book: “The responsibility of general management is to conduct the enterprise toward its objective by making optimum use of available resources. It is the executive authority, it draws up the plan of action, selects personnel, determines performance, ensures and controls the execution of all activities” – excerpted from General and Industrial Management.
Simple term, planning is the most important managerial function. Organizing and commanding function is necessary to execute plans. Coordinating is necessary to make sure that everyone is working together and controlling looks whether everything is proceeding according to the plan.
Fayol believed that management ideas should be taught, managerial ability was required for businesses to succeed and management was a separate activity that applicable to all types of undertakings. He also believed that managerial practices were the key to predictability and efficiency in organizations.
It is important to understand that it really needs intuition to propose such significant ideas in the environment where there are no clear boundaries of worker and management responsibilities, no clear indicate the effective work standards and no clear concepts about how organizations work and how they should be structured or managed. In this case, Henry Fayol offered universal managerial prescriptions for all organizations to solve the problems.
Therefore, Fayol’s main contribution is in the point that he was the first management theorist who devised a complete set of general administrative management theory by suggesting what managers should do and how organizations constitute good management practices. He emphasized on the functionality and organizational structure, dividing the work in functional areas and implementing the general principles of any organization.
Fayol’s theory views management as a profession that can be trained, developed and emphasized the broad policy aspects of top-level management. It underlined all elements necessary to organize and manage organization as a whole. And also, his practical list of principles helps managers learn how to organize and interact with their subordinates in an effective way. At the present, most of managers are using his theory as a guidelines that how they deal with the everyday problems of managing the entire organizations. This explains accurately that his theory is a great contribution to management and business studies.
More than nine decades have passed since Fayol’s theory was proposed. As we are moving into the age of rapid industrial and technological development, we might think the elements and principles of management in his theory are only common sense at present. And even later, some scholars had adopted his theory as the basis and developed new modern management theories. Undoubtedly, Henry Fayol is rightly seen as a key influential contributor to administrative management of thought.
It is essential to remark the achievement of Henry Fayol who through a laudable efforts, developed his labour career in a company in the area of the mining industry in his country, where he entered as engineer by profession at young age after being promoted to mines manager and retired as a managing director. He knew how to reorganize and manage the company, expand its business and at certain point he is credited with turning the company around from a threatened bankruptcy into a strong financial position by the time of his retirement at age 77.
During Fayol’s last few years, he wrote down the classic book, ‘Administration Industrielle et Generale’ based on his personal experiences in his managerial lifetime. His work was a product of more than 50 years of practice and study of management. He dedicated all his efforts to promote the administrative management theory as a fundamental tool for the good performance of all kinds of organizations. He established the nowadays important 14 principles and necessary 5 elements that are management needed.
Fayol’s achievement is as a result of his in depth studies and analysis of the reality of management; studying, analyzing and preparing his conclusions and his work in a personal and independent way. Once again, just as in the case of his excellent and classic works about the problems of the mines, the brilliant managing director and successful managing methods, would take his time to create a new classic success to form a new doctrine: ‘The General Management’.
Hence, it has to be restated that his theory has a significant influence on modern management and lay down the foundation with a simple way of how management interacts with personnel. Nowadays, all organizations consider his theory as a relevant guide to productively managing staffs, in order to manage the organizations more successful.
As we know, management is the process of getting people that work towards to accomplish desired goals and objectives together; its main purpose is to help activities can be completed more efficiently and effectively. In this project, we found that Henry Fayol concentrated on top-level management and viewed management processes from the top down. His administrative management theory gives us comprehensive statements of general management and provides us valuable insights into managing effective and efficient organizations. It is clear that his theory is important and useful knowledge for all students who study about management issues. We students should learn his theory seriously in order to meet practical needs and apply it in our future career life.
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