Henri Fayol's Principles of Management

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Organizations work best when everything is in balance.

As your career progresses, you may find you do fewer technical tasks and spend more time guiding a team or planning strategy.

While that's often a given today, in the 19th century most companies promoted the best technicians. But Henri Fayol recognized that the skills that made them good at their jobs didn't necessarily make them good managers.

Who Was Henri Fayol?

Fayol was an engineer who worked his way up to become manager of the Compagnie de Commentry-Fourchambault-Decazeville mining company in France, at the tail end of the industrial revolution. Under his watch, the struggling firm prospered.

He wrote, "When I assumed the responsibility for the restoration of Decazeville, I did not rely on my technical superiority... I relied on my ability as an organizer [and my] skill in handling men." [1]

Fayol's 14 Principles of Management identified the skills that were needed to manage well. As well as inspiring much of today's management theory, they offer tips that you can still implement in your organization. Fayol also created a list of the five primary Functions of Management, which go hand in hand with the Principles.

What Is Administrative Theory?

Fayol called managerial skills "administrative functions." In his 1916 book, "Administration Industrielle et Générale," he shared his experiences of managing a workforce.

Fayol’s book – and his 14 Principles of Management – helped to form what became known as Administrative Theory. It looks at the organization from the top down, and sets out steps for managers to get the best from employees and to run a business efficiently.

What Are Fayol's 14 Principles of Management?

It was the reality of Fayol's day-to-day managing, seeing what worked and what didn't, that informed his 14 Principles of Management. By focusing on administrative over technical skills, the Principles are some of the earliest examples of treating management as a profession. They are:

1. Division of Work – Assign each employee a task that they can become proficient at. Productivity increases as employees become more skilled, assured and efficient. Today, experts still warn against multi-tasking   .
2. Authority – Managers must possess the authority to give orders, and recognize that with authority comes responsibility. As well as rank, Fayol argues that a manager's intelligence, experience and values should command respect.
3. Discipline – Everyone should follow the rules   . To help, you can make agreements between the organization and employees clear for all to see. [2]
4. Unity of Command – Fayol wrote that "an employee should receive orders from one supervisor only." Otherwise, authority, discipline, order, and stability are threatened.
5. Unity of Direction – Teams with the same objective should be working under the direction of one manager, using one plan. That, Fayol wrote, "is the condition essential to unity of action, coordination of strength and focusing of effort."
6. Collective Interest Over Individual Interest – Individuals should pursue team interests over personal ones – including managers.
7. Remuneration – Employee satisfaction depends on fair remuneration for everyone – financial and non-financial. Fayol said pay should be fair and reward "well-directed effort."
8. Centralization – Balancing centralized decision making (from the top) with letting employees make decisions. Or as Fayol wrote, "A place for everyone and everyone in his place."
9. Scalar Chain – Employees should know where they stand in the organization's hierarchy and who to speak to within a chain of command. Fayol suggested the now-familiar organization chart as a way for employees to see this structure clearly. [3]
10. Order – Fayol wrote that, "The right man in the right place" forms an effective social order. He applied the same maxim to materials: right one, right place. Academics note that this principle pre-empted the Just in Time   (JIT) strategy for efficient production. [4]
11. Equity – Managers should be fair to all employees through a "combination of kindliness and justice." Only then will the team "carry out its duties with... devotion and loyalty."
12. Stability of Tenure of Personnel – Organizations should minimize staff turnover   and role changes to maximize efficiency. If people are secure and good at their jobs, they are happier and more productive.
13. Initiative – Employees should be encouraged to develop and carry out plans for improvement. As Fayol wrote, "At all levels of the organizational ladder, zeal and energy on the part of employees are augmented by initiative."
14. Esprit de Corps – Organizations should strive to promote team spirit, unity, and morale.

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What are Fayol's Five Functions of Management?

While Fayol's 14 Principles look at the detail of day-to-day management, his Five Functions of Management provide the big picture of how managers should spend their time. They are:

1. Planning – the need "to assess the future and make provision for it." That includes a flexible action plan that considers a firm's resources, work in progress, and future market trends.
2. Organizing – laying out lines of authority and responsibility for employees. This covers recruitment and training, coordinating activities, and making employees' duties clear.
3. Commanding – getting the most from people. So, managers must know their employees' skills, delegate to tap into these skill sets, and set a good example.
4. Coordinating – in a well-coordinated organization, departments know their responsibilities, the needs of other teams, and their obligations to them.
5. Controlling – continually checking that rules, plans and processes are working as well as they should be.

Is Fayolism Still Relevant Today?

You only have to look at the language he used to see that Fayol was writing over 100 years ago. For example, he refers to employees as "men."

But, as Daniel Wren writes, "Without the contributions of these pioneers, such as Fayol, we would probably be teaching industrial engineering, sociology, economics, or perhaps ergonomics to those who aspire to manage. To be doing so would push us back to the 19th century, when technical know-how reigned supreme as a path to managerial responsibility." [5]

And if you look closer, you'll discover that many of Fayol's points are fresh and relevant. Such as:

• His Principles advocate teamwork and working together for the mutual benefit of the business.
• The Five Functions reveal the need for organizations to plan and be agile   in the face of changing market conditions.
• Fayol was one of the first people to recognize that management is a continuous process.
• Before human resources management, Fayol wrote about motivating people by inspiring initiative, commanding respect through values, and ensuring that people have the time and training they need to be happy and productive at work.
• The manager who is respected for their values, leads by example   , makes time to get to know their employees, and gives them the training they need, sounds a lot like a modern manager.

Some of these ideas may seem a bit obvious, but at the time they were groundbreaking. And the fact that they've stuck shows just how well Fayol's Principles work.

Criticism of Fayol's Principles of Management

That's not to say that everyone is a fan of Fayol's Administrative Theory. Some detractors claim that:

It's unscientific – Fayol's critics question whether you can ground a theory in the observations of one person. But Fayol stressed that he was laying a foundation for others to build on.

This is just what Luther Gulick and Lyndall Urwick did in 1937, when they used Fayol's ideas to form their POSDCORB model   for working efficiently. And research shows that more modern critics of Fayol – such as Mintzberg, Kotter   and Hales – in fact use many of his ideas.

It's too prescriptive – If some of Fayol's Principles look dated, there's a reason for that. Many critics argue that one set of Principles can't govern all managers. In fact, Fayol wrote that his list was "incomplete," and that the Principles were flexible and adaptable.

Today, academics have shown how Fayol's work can be updated to complement modern management theorists, such as Porter. [2]

It's cold and inhuman – Critics of historical management theories point to an emphasis on efficiency over the social and psychological needs of workers. But managing with kindness, instilling a sense of initiative, and building morale reveal a level of consideration for workers that was enlightened at the time.