Definition: The Administrative Theory was proposed by Henry Fayol, who studied the organizational problems from the manager’s viewpoint and found organization’s activities can be classified as Technical, Financial, Commercial, Security, Accounting and managerial.
Henry Fayol’s 14 Principles of Management
- Division of Work: The work should be divided among the individuals on the basis of their specializations, so as to ensure their full focus on the effective completion of the task assigned to them.
- Authority and Responsibility: The authority and responsibility are related to each other. Authority means the right to give orders while the responsibility means being accountable. Thus, to whomsoever the authority is given to exact obedience must be held accountable for anything that goes wrong.
- Discipline: The individuals working in the organization must be well-disciplined. The discipline refers to the obedience, behavior, respect shown by the employees towards others.
- Unity of Command: According to this principle, an individual in the organization must receive orders from only one supervisor. In case an individual has the reporting relationship with more than one supervisor then there may be more conflicts with respect to whose instructions to be followed.
- Unity of Direction: Unity of direction means, all the individual or groups performing different kinds of a task must be directed towards the common objective of the organization.
- Subordination of Individual to General Interest: According to this principle, the individual and organizational interest must coincide to get the task accomplished. The individual must not place his personal interest over the common interest, in case there a conflict.
- Remuneration of Personnel: The payment methods should be fair enough such that both the employees and the employers are satisfied.
- Centralization: Fayol defines centralization as the means of reducing the importance of subordinate’s role in the organization, and the extent to which the authority is centralized or decentralized depends on the organization type in which the manager is working.
- Scalar Chain: This means there should be a proper hierarchy in the organization that facilitates the proper flow of authority and communication. It suggests that each individual must know from whom he shall get instructions and to whom he is accountable to. Also, the communication either going up or down must pass through each level of authority.In certain circumstances where the quick flow of communication is required, the rigidity of a scalar chain can pose problems. Thus, Henry Fayol has suggested “gang plank” which means anybody in the hierarchy can interact with each other irrespective of their authority levels.
- Order: This principle is related to the systematic arrangement of things and people in the organization. This means every material should be in its place, and there should be a place for every material. Likewise, in the case of people, a right man should be in the right job.
- Equity: All the employees in the organization must be treated equally with respect to the justice and kindliness.
- Stability of Tenure: The employees should be retained in the organization, as new appointments may incur huge selection and training cost.
- Initiative: The manager must motivate his subordinates to think and take actions to execute the plan. They must be encouraged to take initiatives as this increases the zeal and energy among the individuals.
- Esprit de Corps: This means “unity is strength”. Thus, every individual must work together to gain synergy and establish cordial relations with each other.
Thus, Henry Fayol emphasized on the managerial activities and classified these further into five sub-activities Viz. Planning, Organizing, Directing, coordinating and controlling and for the better understanding of these he had proposed 14 principles of management.