Administrative Management and Henri Fayol's 14 Principles of Management

Summary

Henri Fayol, a pioneer in modern management, is celebrated for his administrative theory that emphasizes administrative over technical skills in leadership. His 14 principles of management, including division of work, authority and responsibility, discipline, and unity of command, are foundational to organizational success. Fayol's insights, such as the importance of initiative and cooperation, continue to guide effective management practices today.

Takeaways

• 👨‍💼 Henri Fayol is recognized as one of the fathers of modern management, emphasizing the importance of administrative ability over technical skills in leadership.
• 🏭 Fayol's turnaround of Comambault from potential liquidation to a leading French firm underscored the impact of effective management over technical expertise.
• 🛠️ Fayol introduced the administrative theory, focusing on the functions of management: planning, organizing, leading, and controlling.
• 🔢 He established 14 principles of management that are still influential in contemporary organizational practices.
• 👷 The division of work, or labor, is the first principle, advocating for specialization to enhance proficiency and efficiency.
• 📋 Authority and responsibility should align, where those with authority are also held accountable for their decisions.
• 🚦 Discipline involves creating clear rules and procedures for all levels of an organization to ensure order and proper conduct.
• 🔄 Unity of command dictates that each worker should have one supervisor to avoid confusion and conflicting directives.
• 🎯 Unity of direction stresses the importance of a common goal for all members of an organization.
• 🤝 The subordination of individual interests to general interests is essential for the success of the organization as a whole.
• 💰 Renumeration should be fair, taking into account various factors like labor supply and business profitability.
• 🌐 Centralization vs. decentralization is a balance, with Fayol advocating for necessary centralization while encouraging employee initiative.

Q & A

Who is Henri Fayol and why is he considered one of the fathers of modern management?

Henri Fayol is considered one of the fathers of modern management due to his significant contributions to the field. He was a French management theorist who developed the 14 principles of management and the five functions of management, which are still widely recognized and applied today.

What was Fayol's initial role at Comambault, and how did his tenure transform the company?

Fayol was hired as the managing director, equivalent to a CEO, to oversee the liquidation of Comambault, a French steelmaker. Instead of liquidating it, he developed a plan to restore the company's financial health, and within twelve years, Comambault became one of the most valuable firms in France.

What did Fayol attribute the success of Comambault to, and how did this shape his management philosophy?

Fayol attributed the success of Comambault to his administrative ability to manage people and get work done through others, rather than his technical ability. This realization led him to develop principles and theories that emphasized the importance of administrative skills in management.

What are the five functions of management that Fayol identified?

Fayol identified the five functions of management as planning, organizing, leading, and controlling. These functions are foundational to the administrative process and are still recognized in modern management practices.

Can you explain the first principle of management according to Fayol, the division of work?

The first principle of management, the division of work or division of labor, suggests that separating work into smaller tasks allows workers to develop expertise in specific areas, leading to increased proficiency over time.

What does Fayol's second principle of management, authority and responsibility, entail?

Fayol's second principle states that a manager's authority should be consistent with their level of responsibility. Authority is the right to give orders, while responsibility is being accountable for those orders.

How does discipline, the third principle of management, relate to organizational effectiveness?

Discipline, as the third principle, involves creating clear rules and procedures for employees to follow, which establishes order and ensures good behavior in the workplace. Fayol advocated for penalties to incentivize rule adherence.

What is unity of command, and why did Fayol consider it the most fundamental principle?

Unity of command is the principle that each worker should report to and receive orders from just one supervisor to reduce misunderstandings and create a clear expectation of roles within the organization.

How does unity of direction contribute to an organization's success according to Fayol?

Unity of direction ensures that all individuals and teams in an organization pursue a common goal or objective, which is critical for the organization's success.

What does the principle of subordination of individual interests to general interests mean in the context of management?

This principle means that in successful organizations, individuals must put aside their personal interests and prioritize the interests of the group or organization as a whole.

How did Fayol view the role of renumeration in motivating workers?

Fayol believed that fair and equitable pay practices, considering factors like labor supply and business conditions, were essential to motivate workers to align their interests with those of the team.

What is the balance Fayol suggested between centralization and decentralization in decision-making?

Fayol suggested that organizations should only use a level of centralization that is necessary and focus on allowing individual workers the freedom to show initiative, which can vary depending on the organization's size and scope.

Outlines

00:00

👨‍💼 Henri Fayol: Father of Modern Management

Henri Fayol is recognized as one of the fathers of modern management, known for his administrative theory. He believed that administrative ability was more crucial for a leader's success than technical skills. Fayol's experience as the managing director of Comambault, a French steelmaker, led him to this conclusion. He turned the company around from the brink of collapse to one of France's most valuable firms. Fayol attributed this success to his management skills rather than his engineering background. He introduced the functions of management—planning, organizing, leading, and controlling—and developed 14 principles of management to guide effective organizational management. The first principle, division of work or labor, suggests that breaking down tasks can increase worker proficiency. The second principle, authority and responsibility, aligns a manager's authority with their level of accountability. The third principle, discipline, emphasizes the importance of clear rules and procedures for maintaining order and good behavior in the workplace. Fayol also advocated for penalties to encourage rule adherence.

05:01

🔄 Principles of Management Continued

The fourth principle, unity of command, is considered the most fundamental by Fayol, advocating that each worker should report to only one supervisor to avoid confusion and conflict. The fifth principle, unity of direction, emphasizes the importance of the entire organization pursuing a common goal. The sixth principle, subordination of individual interests, requires individuals to prioritize the group's interests over their own. The seventh principle, renumeration, stresses fair pay practices influenced by factors like labor supply and business conditions. The eighth principle, centralization, discusses the concentration of decision-making authority, with Fayol advocating a balance to encourage initiative. The ninth principle, the scalar chain, refers to the organizational hierarchy, aiding in understanding reporting structures. The tenth principle, order, promotes a clean and organized work environment for efficiency and safety. The eleventh principle, equity, underlines the importance of fair treatment of workers for commitment and effort. The twelfth principle, stability of tenure, focuses on minimizing employee turnover to reduce costs and disruptions. The thirteenth principle, initiative, encourages workers to take on new responsibilities for skill development and managerial efficiency. The fourteenth principle, spirit of cooperation, highlights the importance of teamwork and communication for morale and unity. Despite being over a century old, Fayol's principles continue to be influential in modern management practices, shifting the focus towards administrative abilities in leadership.

Keywords

💡Henri Fayol

Henri Fayol is considered one of the fathers of modern management. His work wasn't widely recognized in the United States until 1949. Fayol's administrative theory emphasizes the importance of administrative ability over technical ability in the success of an enterprise. His experiences as the managing director of Comambault, a French steelmaker, led him to this conclusion. The video discusses Fayol's 14 principles of management, which are still widely followed today.

💡Administrative Theory

Administrative Theory refers to the set of principles and concepts developed by Henri Fayol to guide the management of organizations. It is based on his belief that administrative ability is more critical to organizational success than technical ability. The theory includes the 14 principles of management that Fayol identified, which are discussed throughout the video.

💡Division of Work

The division of work, also known as the division of labor, is the first principle of management discussed in the video. It suggests that separating work into smaller tasks allows workers to develop expertise in specific areas, leading to increased proficiency over time. Fayol believed this principle could help workers excel in their assigned tasks.

💡Authority and Responsibility

Authority and responsibility are the second principle of management. Authority is the right to give orders, while responsibility is being accountable for those orders. Fayol claimed that a manager's authority should be consistent with their level of responsibility, ensuring that those with authority are also held accountable.

💡Discipline

Discipline, as discussed in the video, involves creating clear rules and procedures for employees to follow. It is meant to establish order and ensure good behavior in the workplace. Fayol advocated for the use of penalties to incentivize employees to follow these rules.

💡Unity of Command

Unity of command is a fundamental principle of management that states each worker should report to and receive orders from just one supervisor. Fayol believed this would reduce misunderstandings and create an environment where employees know what is expected of them.

💡Unity of Direction

Unity of direction suggests that all individuals and teams within an organization should pursue a common goal or objective. Fayol argued that aligning everyone towards the same goal is critical for organizational success.

💡Subordination of Individual Interests

The subordination of individual interests to general interests is about prioritizing the goals of the organization over personal interests. Fayol believed successful organizations require individuals to put aside their self-interests for the benefit of the group.

💡Renumeration

Renumeration represents fairness in an organization's pay practices. Fayol believed that factors such as labor supply, cost of living, and business profitability should be considered when determining a worker's rate of pay to maintain fairness and equity.

💡Centralization

Centralization refers to the concentration of decision-making authority in the hands of a few people. Fayol discussed the benefits of centralization for accurate decision-making but also acknowledged the need for decentralization to allow employees to show initiative.

💡Scalar Chain

The scalar chain represents the organizational hierarchy, which helps employees understand their position and reporting structure within the company. It is essential for maintaining clear lines of communication and authority.

💡Equity

Equity in management refers to the fair treatment of workers by management. Fayol believed that treating workers equitably was crucial for achieving long-term commitment and effort towards organizational goals.

💡Stability of Tenure

Stability of tenure of personnel is about minimizing employee turnover. Fayol argued that turnover can be costly for organizations, so management should strive to retain productive workers to maintain stability.

💡Initiative

Initiative, in the context of Fayol's principles, refers to encouraging workers to undertake new responsibilities and develop new skills. This not only benefits the individual but also frees up management to focus on other tasks.

💡Spirit of Cooperation

The spirit of cooperation is the final principle discussed by Fayol. It emphasizes the importance of teamwork and communication in fostering a sense of unity within an organization, which contributes to effective management practices.

Highlights

Henri Fayol is considered one of the fathers of modern management.

Fayol believed administrative ability was more important than technical ability for leaders.

Fayol's success at Comambault was due to his management skills rather than his engineering background.

Fayol identified the functions of management: planning, organizing, leading, and controlling.

Fayol developed the 14 principles of management for effective organizational management.

The first principle is division of work, which improves worker proficiency.

Authority and responsibility should be aligned according to Fayol.

Discipline involves creating clear rules and procedures for employees.

Unity of command means each worker should report to one supervisor to reduce confusion.

Unity of direction emphasizes the pursuit of a common organizational goal.

Individual interests should be subordinated to the general interests of the organization.

Renumeration should be fair and consider various factors such as cost of living and business conditions.

Centralization is about the concentration of decision-making authority.

The scalar chain represents the organizational hierarchy and reporting structure.

Order is essential for efficiency and safety in the workplace.

Equity in treatment is crucial for long-lasting worker commitment.

Stability of tenure of personnel minimizes costly employee turnover.

Initiative encourages workers to undertake new responsibilities and develop new skills.

The spirit of cooperation is about improving morale and promoting unity through teamwork and communication.

Fayol's principles are still widely followed over a century later.

Fayol's work shifted the focus towards training managers for administrative abilities.

Transcripts

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.