ManagementStudyGuide

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2. Henri Fayol’s – 14 Principles of Management

3. Course Objectives Introduction Centralization Division of work Scalar Chain Authority Order Discipline Equity Unity of Command Stability of Tenure Personnel Unity of Direction Initiative Subordination of individual interest to general interest Espirit De’ Corps Remuneration

4. Principles of Management Management principles are a set of fundamental truths based on logic which provides guidelines for managerial decision making and other actions. These principles are derived: • On the basis of observation and analysis i.e. practical experience of managers. • By conducting experimental studies

5. History – Henri Fayol Henri Fayol was born in Istanbul in 1841. When he was 19, he began working as an engineer at a large mining company in France. He eventually became the director, at a time when the mining company employed more than 1,000 people. Fayol began to develop what he considered to be the 14 most important principles of management. Essentially, these explained how managers should organize and interact with staff. In 1916, two years before he stepped down as director, he published his "14 Principles of Management" in the book "Administration Industrielle et Generale" . Fayol also created a list of the six primary functions of management, which go hand in hand with the Principles. Fayol's "14 Principles" was one of the earliest theories of management to be created, and remains one of the most comprehensive.

6. Authority – Definition and Meaning The term ‘authority’ implies the right and power of a person to exercise discretion to make decisions, to issue orders, to use organizational resources and to hire and fire employees. It is the sum of rights and powers entrusted to a person to enable him to perform the assigned tasks “The right to give order and the power to exact obedience” – Henri Fayol

7. Sources of authority A person may get his authority from 3 sources Formal authority Competence authority Acceptance authority It is the authority of knowledge. A person having specialized knowledge and skill commands influence over others It is official authority given to an individual by his boss. For example, shareholders delegate authority to the Board of Directors which in turn delegates to Chief Executive It is the authority which an individual gets when others accept or obey his orders and instructions. A person’s command may be accepted when he can give rewards and penalties

8. Example of Unity of Command Unity of Command Manager Assistant Manager Supervisor Executive Workers

9. Elements of Direction Communication A manager has to tell the workers what to do, how to do it and when to do it. He is also required to provide continuous guidance to the workers in the performance of their task Leadership Leadership is the ability to build up confidence and zeal among the people and to create an urge in them to be led Motivation While directing, the manager has to create in his subordinates the willingness to pursue the goals of the organization enthusiastically Supervision Supervision means overseeing the subordinates at work. Effective supervision ensures greater output of high quality Coordination It is the process of directing the activities of various persons in unison to attain objectives

10. Decentralized approach vs. Centralized approach Bottom-to-top-approach Top-to-bottom-approach Level 3 Level 1 Level 2 Level 4 Decentralized approach Centralized approach

11. Scalar Chain and Gang Plank In the figure, the scalar chain in an organization is represented by two ladders, A to F and A to P Scalar chain & Gang Plank A Any communication from F to P has to flow upwards to A through E, D and C and B then downwards through L, M, N and O. It will obviously take a long time B L C M D N So in order to minimize the delay involved in communication, a gang plank between F and P may be created as shown by the dotted line. E O F P However, the Gang Plank should not be a normal practice as it undermines the established line of authority

12. Fayol principle on Order For social order Fayol demands “the right man in the right place”, in order to achieve the maximum possible outcome of the employee’s applied skills Modern corollaries of how this principle can be applied can be found in the fact that every larger company today has a human resources department that to the largest part deals with the question of how to find the right employees S T R A T E G Y The modern answer to Fayol’s problem to find the “right man” is a specialized department that addresses this aspect of social order

13. Various types of Inputs and Outcomes Friendship opportunity Personal development Efforts Time Education Experience Training Ideas Ability Pay Promotion Recognition Security Benefits

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