Management PDF

Principles Of management by Henry Fayol
Books:
• P.C Tripathi P.N,Reddy,”Principle of Management”,Mcgraw hill Education 6th
Edition.
• C.B Gupta “Management principle and Practice” Sultan Chand & Sons 3rd
edition.
Henri Fayol
Father of the general principle of management, Henry Fayol was a French industrialist. He
joined a French mining company in 1860 as an engineer and rose to the position of its
managing director in 1888. At that time, his company was at the stage of bank insolvency.
With broad administrative experience, ‘Fayol’ contributed a lot to his company. When he
retired in the year 1918, the company was in excellent condition. Henri Fayol recognized the
need for principles of management. He identified 14 principles of management. These
principles are:
Principles of Management by Henri Fayol:
• Techniques of management are methods or approaches

involving several steps to be followed to reach the desired goal.
Principles on the other hand are a set of rules that needs to be
taken care of while practicing technique in order to work
efficiently. Similarly, principles should also be distinguished from
values. Values are beliefs or morals that are based on human
behaviour and help individuals to behave morally in society. On
the other hand, principles are formed on the basis of the work
situation. However, the values and the morals cannot be ignored
while practicing the principle of management in an organization
as this organization has to fulfill all kinds of responsibilities
whether they are social or ethical.
. Esprit de corps
• According to this principle “one unit means one plan” that is the
efforts pf all the members and employees of organization must be
directed towards one direction that is the achievement of
common goal.
• If this Principle is applied it leads to coordination.
• For example if an organisation is producing different lines of
products: cosmetic,medicines,confectionery items has its own
market and its own business environment
• Each division must plan its target and every employee of that
division must put his efforts towards the achievement of plan of
their division under the direction of one head.
It implies that there should be one head and one person for proof of activities having the
same objectives. According to this principle, all the activities should be carried under the
direction of one head, and there should be effective coordination in all the activities. This
principle ensures unity of action and avoids unnecessary duplication of work.
For example, if an organization has four departments for different activities, then each
department must be directed by one superior, and its employees should give their whole
efforts to achieving the plan of the organization. Each division should
have its in charge, plans, and execution resources. There should not be an unnecessary
duplication of efforts and a waste of resources.
Subordination of individual interest or
general interest
Subordination of individual interest or general interest:
According to this principle, the interest of the organization as a whole must prevail
over the interest of the individual. It must be the interest of the organization that
should be placed above the interest of employees. It is the duty of the manager to
reconcile or adapt them. A manager must sacrifice his interest. Manager can achieve
their objectives when the organization recovers from financial crises.
For example, there is a company that wants maximum output from its employees by
providing less salaries. There are employees on the other hand who want to get the
maximum salary while working the least. In both situations, the interests of the
company will supersede the interest of any one individual. As the interests of the
workers and stakeholders are more important than the interests of any one person.
7. Remuneration of Employees:
7. Remuneration of Employees:
According to this principle, remuneration should be fair and satisfactory to both employees
and the organization. This principle leads to harmonious relations in the organization. Fair
remuneration should be determined based on government rules related to wages, financial
position of the organization, nature of work, and cost of living. Employees should be paid
reasonable wages for their service, which should provide them with a moderate standard of
living.
For example, if an organisation earns higher profits, then it should share some of its part
with the employees in the form of bonus.
8. Centralization and Decentralization:
Centralization refers to the concentration of authority at the top level, and

decentralization means distribution at all levels of management. According to this
principle, there should be a proper balance between centralization and decentralization.
The degree of centralization and decentralization depends on various factors, such as
experience of the employees, ability of subordinates, size of the organization, etc. Too
much centralization lead to loss of control of top management. Therefore an optimum
balance should be maintained according to the need of the organization.
For example, Authority to take vital decisions must be given to the top management,
whereas authority related to operational activities must be given to the middle and lower
level.
Scalar chain:
The scalar chain was developed by Henri Fayol. In modern management theory, the ’14
Principles of Management’ developed by Henri Fayol have been a significant influence.
1.Scalar chain is the chain of all supervisors from the top management to the person
working in the lowest rank.
2.Scale chain identifies the path along which communication has to flow in order for the
communication to be effective in an organisation.
3.Effective communication is most important in an organisation to achieve any its
objectives.
4.As per the principle of scalar chain, the flow of any information has to follow a pre-
defined path, that is to avoid any kind of ambiguity, information has to flow from
supervisor to the one in lowest position.
5.This pattern must be followed in any department of an organisation, if the
communication has to be effective.
According to this principle, there is a scalar chain of authority and communication
that moves in a straight line from the superior to the lowest subordinate. Henri Fayol
permitted a shortcut of chain in case of urgency known as gang plank. Gang plank
allows direct communication between two employees of the same level.
The advantages of Scalar Chain are given below:
1.Whenever there is a problem, every employee knows whom to approach to sort
out the problem.
2.Top management will be able to communicate the required message to the entire
organisation.
3.Supervisors at each level will become responsible and execute the orders of the top
management.
4.Chaos in the organisation will be avoided.
For example, E wants to communicate with I for some important work. The message
should orderly move from E to D, then to C, B, A, and then down from A to F then to
G, H and finally to I. This will take lots of time so to avoid this delay in work, Fayol
suggested this concept of Gang Plank. In this concept ‘E’ can communicate directly
with ‘I’ on an urgent matter, the gang plank allows two employees of the same level
to communicate directly with each but each must enforce to its superior.
10. Order:
“Systematic order of man and material”

According to this principle, there should be a proper place for everything and everyone.
Henri Fayol emphasized on two types of order: material order and social order. In material
order, there must be a plan for everything. It ensures fix a place for various material tools.
Whereas in social order, there must be an appointed place for every employee, which
ensures a proper and fixed place/cabin for each employee.
For example, there should be specific place for foremen in a factory so that the work can be
done easily.
Positive Effects of Principle of order
• No wastage of time in search of men or material.
• Smooth and Systematic working of organisation.
Consequence of violation of this principle.
• Wastage of time and energy in search of men and material.
• Not able to contact the people at the right time.
11. Equity:
According to this principle, there should not be any discrimination
amongst the employees based on religion, caste, language, or nationality.
Equity ensures coordinated relations between superior and subordinate.
It leads to the smooth and successful working of the enterprise. It
improves satisfaction and motivation of the employee, creating relation
between manager and employees.
For example, workers doing similar jobs in the same organization should
be paid same wages irrespective of their sex, caste, religion and
language.
12. Stabilin of tenure of Personnel:
• The principle stability of tenure of personnel refers to job security in the

organization. It states that in the organization there should be job security
and stability in the position.
• According to this principle the management must provide the feeling of job
security because the feeling of job insecurity the employees can not
contribute their maximum.
• Frequent turnover of employees is bad for organisation.
Initiative:
According to this principle, workers should encourage and should be given an

opportunity to take initiative in making and executing the plan. Henri Fayol suggested
that employees at all levels should be encouraged to take initiative in work. It
motivates employees to work better and to take more interest in the organization.
The initiative is a powerful motivator of human behaviour and a source of strength
for the organization. This increase the mental growth and feeling of belongingness in
employees. It increases the commitment of employees toward the organization. Lack
of initiatives may create an atmosphere of non-cooperation.
For example, organizations must have an employee suggestion system so that they
have feeling of belongingness.
14. Esprit De Corps(working in group):
According to this principle, management should take reasonable steps
to develop a sense of belongingness and a feeling of team spirit
amongst employees. In order to achieve the best possible result,
individual and group efforts need to be integrated. Production is a
teamwork and it requires the full support of all members. For this
purpose, a manager should replace ‘I’ with ‘We’ in his conversations to
bring a team spirit among the employees. This will develop an
atmosphere of mutual trust. It will help in achieving group goals,
leading to cordial relations between management and workers.
For example, authority and responsibility meant empowering
managers, but now it means empowerment of employees because of
flat organizational structures that are gaining ground.

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Principles Of management by Henry Fayol

• Techniques of management are methods or approaches

Centralization refers to the concentration of authority at the top level, and

“Systematic order of man and material”

• The principle stability of tenure of personnel refers to job security in the

According to this principle, workers should encourage and should be given an

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