Henry Fayol is popularly known as the father of modern management theory since he laid down the theory of general management apply equally to all kinds of administration and to all fields whether social, political, or economic. Henry Fayol started his career as a coal mine engineer in 1860 in a French coal mine and was its chief executive (Managing Director) from 1883 and 1918, during which he brought the enterprise from the verge of bankruptcy to high success. As a manager, he came to the conclusion that there was a single administrative science applicable to all types of organizations. In the year 1916, he published his well-known work in French entitled “Administration Industrielle et Generale” (Industrial and General Administration). However, no English translation of his work was available until the year 1929, and in that year also only a few hundred copies were distributed in the U.K.
Fayol divided all activities of industrial enterprises into the following six groups:
1. Technical activities concerning production;
2. Commercial activities of buying and selling;
3. Financial activities intended to seek optimum use of capital;
4. Accounting activities pertaining to final accounts, costs, and statistics;
5. Security activities relating to the protection of property; and
6. Managerial activities.
The first five are quite well known and as such his work is largely devoted to the description and explanation of managerial activities. He referred to the functions of management as its elements and grouped them around the activities of planning, organizing, commanding, coordinating, and controlling. Fayol observed that the importance of managerial ability increases as one goes up the echelons of the management hierarchy. He also emphasized the need for training in management for which the development of management theory is essential. On the basis of his experiences and foresight into the field of management, Fayol suggested the following fourteen principles of management.
1. Division of Work: So as to produce more and secure better performance with the same effort.
2. Authority and Responsibility: Whenever authority is used responsibility arises, and the two are co-extensive.
3. Discipline: To ensure obedience and respect for superiors.
4. Unity of Command: An employee shall receive orders from one senior only.
5. Unity of Direction: A group of activities with common objectives shall have one head and one plan.
6. Subordination: Subordination of individual interest to the general interest.
7. Remuneration: It should be fair and afford maximum satisfaction to the firm and employees as well.
8. Centralization: Top management should decide the extent to which authority is to be dispersed in the organization or retained at higher levels. Centralization or decentralization should be viewed as a question of proportion.
9. Scalar Chain: It refers to superior-subordinate relations throughout the organization. It should be shortcircuited and not be carried to the extent that it proves detrimental to the business.
10. Order: There must be a place for everything, and each thing must be in its appointed place. Similarly, there must be an appointed place for each employee and every employee must be in his appointed place.
11. Equity: Management must have the desire for equity and equality of treatment while dealing with people. Equity is the combination of kindliness and justice in a manager.
12. Stability of Tenure of Personnel: Management should strive to minimize employee turnover.
13. Initiative: It refers to thinking out and executing a plan.
14. Espirit de Corps: This principle emphasizes the need for teamwork and the importance of effective communication in obtaining it.
Fayol described the above principles as a matter of convenience. He did not intend to close the list or make the principles inflexible.