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Henri Fayol'S Theory of General Management

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P.hD 2nd Semester “Management Theories” By Dr.

Ayaz Sb Qurtuba University Hayatabad


Peshawar

HENRI FAYOL'S THEORY OF GENERAL MANAGEMENT

 The growing size and complexity of public and private institutions in the late 1800s and early
1900s created a simultaneous awareness in Europe and the United States of the importance of
management.

 Establishing management as a distinct profession supported by a body of research-based


knowledge was increased.

Fayol’s argument

 The real reason for the absence of management teaching in our vocational schools is absence of
theory.

 Without theory no teaching is possible.

 Fayol develop a theory— specifying sound administrative principles and the methods for putting
them into practice.

 He published his theory in 1916 (General and Industrial Management )

 In 1918 he established the Center of Administrative Studies to encourage ongoing discussion of


management issues

Components of Fayol’s Theory

 Fayol's theory is comprised of four components:

1. Organizational activities,

2. Management functions,

3. Administrative principles,

4. Methods for putting principles into operation.

1. Organizational Activities

 Governing an organization is not the same as managing it.

 Governing involves six kinds of activities, and managerial activities comprise only one of these
six.

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P.hD 2nd Semester “Management Theories” By Dr. Ayaz Sb Qurtuba University Hayatabad
Peshawar

 Five governing activities. Among industrial concerns, the five are:

1. Technical activities (relating to the production of goods and services),


2. Commercial activities (relating to buying and selling),

 Financial activities (relating to raising and expending capital),

 Security activities (relating to the protection of property and persons),

 Accounting activities (relating to the tracking of profit and losses).

2. Managerial Functions.

In Fayol's words, "to manage is to forecast and plan, to organize, to command, to coordinate and to
control”.

Fayol encapsulates the first modern statement of management's essential functions.

3. Administrative principles.

 Fayol’s 14 administrative principles:

1. Authority and responsibility.

2. Discipline. Obedience, loyalty, and dedication

3. Unity of command. An employee should receive orders from only one supervisor.

 Dual command undermines authority, discipline, and order.

4. Unity of direction. There should be one leader and one plan for a group of activities.

5. Centralization. Directives must always come from a central source.

 Optimal balance between centralization and decentralization must be determined for each
organization separately.

6. Scalar chain. Complex organizations require a chain of superiors from the highest to lowest
levels of authority; communications normally must ascend and descend through each level.

7. Order. Smooth organizational functioning requires a place for everything and everyone, and
everything.

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P.hD 2nd Semester “Management Theories” By Dr. Ayaz Sb Qurtuba University Hayatabad
Peshawar

 Everyone and everything must be in its appointed place.

8. Equity. Retaining devoted and loyal employees requires that they be treated with
kindliness and fairness.

9. Initiative. Individual initiative stimulates motivation;

 Allowing employees freedom to propose and carry out their own ideas, within the limits of
authority and discipline.

10. Esprit de corps. To establish and maintain cohesion among personnel.

 Dividing enemy forces is clever, but dividing one's own team is a grave error.

4. Administrative Methods.

Survey An investigation that produces a description of the organization's history, its current resources
and needs,

To know prevailing social, political, and economic circumstances that are likely to affect it in
the future. (Forecasting)

 Action plan. Establishes the direction of the organization, its objectives, and the general means
by which it intends to achieve them.

 Statistical reports. Daily, monthly and yearly reports. These reports are essentially control
mechanisms.

 If the reports reveal problems, administrators may demand corrective action from those
responsible.

 Minutes. Are the records of the weekly meetings of the various department heads through which
coordination is achieved

 They record discussions of results obtained and difficulties encountered in each department.

 Chief executives can refer to these records to obtain insights about what is occurring in the
various work units.

 Organization charts. Illustrates the hierarchy of organizational units, establishing the functions
performed by each unit and clarifying who reports to whom.

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P.hD 2nd Semester “Management Theories” By Dr. Ayaz Sb Qurtuba University Hayatabad
Peshawar

 These charts, also provide important clues about structural faults:

 Structural faults: duplication of effort, overlapping responsibilities, unstaffed functions, and


lack of functional unity in the services provided by a particular unit.

Overview of Fayol’s Theory

 The four components of Fayol's theory comprise an integrated whole ---- a system approach as
opposed to Taylor’s individualistic philosophy.

 The hypothesized means-ends relationships among these components may be stated as follows:

 Administrative principles guide functional decisions;

 Administrative methods provide the means for carrying them out.

 Dependant variable. The implicit dependent variable is organizational effectiveness.

 Fayol believed that administrators who perform the five management functions,

 Follow sound administrative principles in doing so,

 Use appropriate methods will meet with greater success than those who do not.

 Fayol's fourteen principles dealt with psychological and behavioral as well as structural issues.

 Equity and esprit de corps, for example, relate to management's responsibility for establishing
positive employee relations.

 By contrast, administrative management theory in the United States tended to focus more
narrowly on organizational structure.

JAMES D. MOONEY'S THEORY OF ORGANIZATION

 James D. Mooney and Alan C. Reiley's Onward Industry! The Principles of Organization and
Their Significance to Modern Industry, was published in 1931.

The book is based on the thesis that there are fundamental principles of organization

 These functions are structural in character, which may be identified in every form of human
association,

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P.hD 2nd Semester “Management Theories” By Dr. Ayaz Sb Qurtuba University Hayatabad
Peshawar

 Orderly correlation of these principles furnishes the key to their more efficient application in all
fields of collective human effort.

 Mooney and Reiley struggled to expose the principles of organization" by analyzing historical
examples, including the Roman Republic, the Catholic church, and the French and German
armies.

 Frederick Taylor had shown how to increase production line efficiency, but this alone could not
guarantee success.

 Principles of efficiency must be applied to the structure of the entire organization.

 Only by establishing a formal structure based soundly on universal principles can an organization
hope to coordinate its internal activities efficiently and effectively.

 It protects the organization from the forces of disintegration.

Definition of organization

 In popular usage, organization refers to a group of individuals who work together to achieve a
common purpose.

 They noted that a mob has a common purpose but no organization.

Mooney’s definition

 Mooney’s definition relates to the degree and kind of order imposed on group activities.

 Organization in this sense refers to the specific form adopted by an enterprise to attain its
purpose.

 It refers to the formal structure—the sum total of institutionalized relationships, methods, and
procedures—that allows an enterprise to coordinate and control its internal activities.

 Organizational performance depends upon achieving a good fit between form and purpose,

 Structural decisions must be guided by fundamental organizational principles.

Mooney’s three universal principles

1. Coordinative Principle. Management is "the vital spark which actuates, directs and controls the
plan and procedure of organization,“.

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 A formal structure consistent with the organization's essential purpose must exist before the vital
spark can be applied.

This is accomplished by organizing according to certain principles, the most fundamental


of which is the coordinative principle.

 All complex organizations must coordinate

 The activities of many individuals if they are to attain their objectives.

 According to Mooney and Reiley coordination is the all-inclusive, master principle;

 All others are the principles through which coordination is achieved.

 Mooney and Reiley define authority as the source of coordinating power.

 It resides with chosen leaders who are responsible for issuing rules and procedures and directing a
truly coordinated effort.

 Coordination is achieved largely through the exercise of formal authority up and down the chain
of command.

2. The scalar Principle

 All complex organizations must have a means by which the supreme coordinating authority can
operate from the top to the bottom of the organizational structure.

 This is the scalar principle, or the principle of hierarchy.

Scalar chain

 As Fayol had done earlier, Mooney and Reiley refer to the vertical division of labor as a scalar
chain.

 It comprises a scale of duties graduated according to degrees of authority and corresponding


responsibilities.

 The scalar chain is made up of a series of superior-subordinate relationships.

 These relationships are arranged vertically throughout the organization and through which
communications flow up and down.

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P.hD 2nd Semester “Management Theories” By Dr. Ayaz Sb Qurtuba University Hayatabad
Peshawar

 The scalar chain is created through the process of delegation.

 This entails conferring a specific grant of authority by a higher official upon a lower official.

 According to Mooney and Reiley, higher officials must delegate authority and responsibility
when their workload becomes too great to handle themselves.

 But they always remain accountable to their superiors for the actions of their subordinates.

 The subordinate is always responsible to his immediate supervisor for doing the job.

 The superior remains responsible for getting it done.

 This relationship, based on coordinated responsibility, is repeated up to the top leader, whose
authority makes him responsible for the whole.

 Delegated authority usually includes the right to command persons at the next lower level of
authority.

 In such instances an official not only delegates functional responsibilities but also the right of
delegation itself.

 This is what creates and lengthens the scalar chain.

 However, within each organizational unit, and in the organization as a whole, the scalar chain
eventually comes to an end.

 This is the point "where authority ceases to delegate its own authority over others and simply
delegates or assigns specific functions.“

 The scalar chain ultimately exists to allow for the coordination of these functional activities.

Mechanisms of delegation of authority

 The test of a true leader, lies in the way authority is delegated.

1. One type of leader delegates authority so easily that he or she effectively abdicates all
responsibility.
2. A second type refuses to delegate any real authority for fear of losing control over task
performance.

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P.hD 2nd Semester “Management Theories” By Dr. Ayaz Sb Qurtuba University Hayatabad
Peshawar

 Such individuals are finally "crushed and fail to under the weight of accumulated duties that they
do not know and cannot learn how to delegate."

 The third type, the true leader, understands the necessity of delegating but remains ever
conscious of the fact that the ultimate responsibility of office cannot be delegated.

 These leaders delegate tasks as soon as the total task begins to exceed their own unaided powers
and then hold subordinates accountable for the performance of their delegated responsibilities.

Exception principle

 Mooney and Reiley also identified a specific principle governing the superior-subordinate
relationship.

 Frederick Taylor and others called it the exception principle.

 It states that subordinates should refer only the few unusual and difficult problems to their
superiors while handling all easy and routine problems themselves.

 However, just as leaders vary in their willingness to adhere to the delegation principle,
subordinates vary in their willingness to adhere to the exception principle

Functional Principle

 Whereas the scalar principle calls for vertical differentiation based on degrees of authority, the
functional principle calls for horizontal differentiation based on kinds of duties.

 To use an analogy suggested by Mooney and Reiley, the difference between generals and
colonels is scakr, whereas the difference between infantry and artillery is functional.

 Functional principle involves dividing the organization's work into discrete activities according to
their functional purposes and assigning those activities to specific organizational units.

 Functional differentiation is a universal feature of complex organizations.

 It is a means of ensuring that the work activities of each individual and organizational unit mesh
with all other work activities.

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P.hD 2nd Semester “Management Theories” By Dr. Ayaz Sb Qurtuba University Hayatabad
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Functional differentiation

 Functional differentiation clarifies the nature of each person's duties and how those duties
contribute to the attainment of organizational goals.

 Once the functional framework is established it is the responsibility of those in the scalar chain to
coordinate work activities efficiently.

 "Reason and evidence," according to Mooney and Reiley, "combine to prove that exactitude in
functional definition is a necessity in the creation of a true collective harmony."

Line & staff principle

 Moony and Reily argue that the staff phase of functionalism which they name as the line and staff
principle facilitates both vertical and horizontal coordination.

 It refers to the creation of staff units to advise or support line authorities in the performance of
their duties.

 Their functional roles are to inform line managers of things they should know before making their
decisions, advise them based on that information, and supervise the details of implementation.

 So as not to violate the unity-of-command principle, Mooney and Reily insisted that staff units
not be delegated command authority over fine units.

 In the words of Moony and Reily, "The line plans, the line executes, the line does everything.

 In the line alone rests the authority to determine plans, the authority to execute such plans, and
the responsibility for what is done.

 The staff units merely function to assist and support the fine in these matters.

Moony & Reily’s theoretical proposition

 Mooney and Reiley's work contains the theoretical proposition that organizational effectiveness is
highly dependent on the fit between structural arrangements and organizational purpose.

 Rather than claiming that there is "one best way" to organize, they insisted that different
purposes call for different structural arrangements.

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P.hD 2nd Semester “Management Theories” By Dr. Ayaz Sb Qurtuba University Hayatabad
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 They described how the ancient Romans developed a vertically and horizontally decentralized
administrative system to maintain control over their expanding empire.

 Early Catholic Church, by contrast, adopted a highly centralized structure so that it could
integrate all churches into a single spiritual system.

Crux of Moony & Reily Theory

 They argued that management's primary task is to find the optimal balance between the horizontal
division of labor and the vertical division of authority required to maintain coordination.

Three Core Principles

 Although Mooney and Reiley were not familiar with Fayol and his writings, they reached a
similar conclusion:

 Coordination, hierarchy, and functional differentiation may be universal principles but their
application is not.

 As Mooney and Reiley put it, "The discovery and identification of these principles will not of
course solve all problems of organization.

 Principles, as such, must be ever present, and are certain to be applied in some fashion,

 But their efficient application is the task of the organizer."

 Administrative management theory relies upon direct supervision for purposes of coordination
and control.

 Greatest amount of attention is given to the direct supervision of lower officials by higher
officials through a highly formalized chain of command.

 Indeed, administrative management theorists have often been derided for their fixations with
organization charts and reporting relationships

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Comparison of administrative management theory with Scientific Management and


Bureaucracy

 Nonetheless, there is not quite the same emphasis on close supervision and standardization of
work processes that is found in the writings of Frederick Taylor.

 Nor is there quite the same emphasis on strict discipline that is found in Weber's theory of
Bureaucracy

 Administrative management theorists attached importance to individual initiative, and their


preference for leaving administrative decisions to technical experts, indicates a willingness to rely
on standardization of worker skills as well as direct supervision for purposes of coordination and
control.

 Workers who possess the knowledge and skills required to perform their duties effectively require
less formal supervision

Six Mechanisms for Coordinating and Controlling Work Activities

1. Mutual adjustment. Workers consult with each other informally about what needs to be
accomplished and how.

 Responsibility for coordination and control rests with those who do the work.

2. Direct Supervision. A supervisor is assigned to take responsibility for a group of workers and a
managerial hierarchy is established to integrate the efforts of all work groups.

 The supervisor issues personal instructions and monitors individual performance.

3. Standardization of work processes.

 Work is programmed in advance of its execution by developing rules and standard operating
procedures specifying how everyone is to perform assigned tasks.

 Coordination is built into the work process itself and control is achieved by strictly limiting each
worker's discretion

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4. Standardization of work outputs.

 Work outputs are programmed in advance by providing each work group with product
specifications or performance goals

 Allowing members considerable latitude in determining how to achieve them.

 Control is exercised by collecting output data.

5. Standardization of work skills

 Workers are employed who possess the knowledge and skills needed to make appropriate
decisions.

 Educational institutions and professional associations are relied upon to provide standardized
training.

 Professionally trained workers are largely self-coordinating and self-controlling.

6. Standardization of values.

 Organizational leaders communicate and act upon a clear vision of what the organization exists to
do, where it should be headed, and what values should guide it.

 Coordination and control is facilitated by commitment of organizational members to shared,


internalized values and ideals.

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