14 Principles of Management by Henri Fayol

One of the signs of a successful football team is its almost uncanny ability to work as a single unit, with the efforts of individual players blending harmoniously together. When this level of teamwork exists, amazing things happen.

Business, I believe, is a team sport! And management is a process that makes similar synergy come to action.

Yet, what does effective management look like?

To answer this question, let us go back to the early 20th-century French industrialist, Henri Fayol.

The Frenchman is known to be the father of Modern Management. In 1916 Fayol formed 14 core principles of management. Those concepts are still relevant today.

Let us explore each of those principles and analyze them in the modern context.

1. Division of work

The first principle of management is based on the assumption that if each employee is assigned a specific task to do, they will become more efficient and skilled in it. In other words, specialization promotes efficiency.

In the modern business process, division of work is fundamental. Much of the prosperity in our world now is derived from dividing the work process into ever smaller tasks. In fact, this can be considered a golden role to manage any business system despite its complexity.

Just imagine an international corporation functioning without departments, sub-departments, and specialized teams.

You won’t be able to find any companies today that are not dividing the work of the organization among individuals and creating departments.

Division of work increases the effectiveness of a business enterprise. As a manager, your goal is to give each employee a task that best suits their skills, thus saving money and time.

2. Authority

The second principle outlined by Henri Fayol is authority. It states that a manager needs to have some level of authority in order to ensure that his instructions are executed by employees.

In contemporary business processes, authority can be translated in terms of a formal, institutional, personal or legal power in a particular job. Some type of the above-mentioned authority is necessary to influence the behavior of others.

But having the authority is only one part of the equation!

Just imagine, that your boss instructs you and gives tasks, but he never takes the responsibility for the results.

Or, even worse - he/she gets credit for achievements but never feels responsible for mistakes. You would be frustrated, wouldn’t you? According to Fayol, there should be a balance between authority and responsibility.

3. Discipline

The third states a simple but at the same time crucial concept. Discipline is required for any organization to run effectively. So, to have disciplined employees & managers must show mutual respect and adhere to the company’s culture and values.

Often, top management neglects this golden rule. Nothing is worse than a manager who is always late, never responds on time, and breaks all rules.

As a good manager, you should be able to set out rules and regulations for your team. This will ensure high morale, good relationships, and order among employees. But, as a good manager, you also shouldn’t forget to follow those rules yourself.

4. Unity of command

The Unity of Command principle states that employees should receive orders from and be responsive directly to one direct supervisor only. Avoiding conflict and confusion is much easier when orders come from one person.

Today, in some complex establishments, staff belonging to one team would likely take orders from various coordinators at a time. This often happens in small organizations, where employees need to do multiple tasks at the same time.

As a manager, ensure that your employees know who their direct line managers are. Create a clear system of communication and determine who should be giving orders to whom.

5. Unity of direction

Everyone in an organization should have one direction, and move toward the same objectives through coordinated and focused efforts.

This principle is highly relevant to today’s business management. In well-functioning companies, each group of activities having the same objective must follow one plan. A good manager is responsible for providing the vision of that grand plan.

Even the perfect execution of tasks will not lead to desired results if the overall vision is false, or it does not reflect reality.

6. Subordination of individual interest

This principle simply emphasizes that a staff interest must not supersede that of the organization.

Have you heard of the notion of "conflict of interests"?

I am sure you have. Each and every respected company demands the signing of a conflict of interest statement from employees.

In this way, an organization can assure that employees' personal interests will not supersede the interests of the organization.

Let’s bring an example. You should not hire an unqualified relative to provide services your company needs. Securing a job for your family member might be in your interests, but the organization’s goal to perform efficiently is always superior.

7. Remuneration

This principle is about the employee’s right to get paid for what s/he provides for the company. In other words, employees should be paid fair wages for the work that they carry out.

Remuneration should be determined based on the job role of the employee, financial state of the organization, cost of living, etc. This reduces tension in the workplace, increases productivity, and prevents conflict.

This principle is well known to successful companies. That’s why many organizations have transparent internal mechanisms for promotions and salary increases.

Fair compensation can inspire employees to give their very best! keeping your top performers engaged and encouraging others to engage more. It also improves happiness and job satisfaction, which can lead to lower turnover and higher retention.

8. The degree of centralization

This principle asserts that management and authority for the decision-making process must be properly balanced in an organization.

Most large companies have several strategic business units/departments which in a way form decentralization. This means that respected departments have a certain level of freedom, and thus are more flexible and effective.

Balancing between centralization & decentralization is more a political decision, rather than a management one. It largely depends on the trust level between the CEO and heads of divisions.

9. Scalar chain

The chain of command! Also known as the scalar chain is the formal line of authority, communication, and responsibility within an organization. It is a hierarchy principle that is essential to initiate unity of direction.

For large corporations, it is highly common to have a very strict hierarchy line and communication system. However, in smaller companies and startups this structure is conventional. This allows employees of the organization to have direct communication with their supervisor's boss.

Personally for me, adhering to a transparent chain of command is very important. My former boss was constantly going directly to my subordinates to get answers. This was not only tarnishing my reputation but oftentimes caused a lot of confusion.

10. Material and social order

This principle clarifies that there should be an effective placement of resources (manpower, money, materials, etc.)

The prime goal of each manager is to ensure that the team has all the necessary resources at its disposal. You can’t expect your employees to deliver high-quality work if they don’t have the needed equipment and proper working environment.

A good manager must know how to build a team. Nothing causes more damage to a company than hiring the wrong staff. On the other hand, when the right people are at the right places, surprising things happen.

11. Equity

The 11th principle of effective management is equity. Fayol was a big advocate of the equitable treatment of all workers by management. He believed that this is an essential element to successful management in any organization.

If you ask managers about their organization’s greatest asset, most will unhesitatingly respond, “our people.” Then, why not treat them fairly and equitably?

Every company should invest equally in their employees, dozens are not. Those who don’t will keep losing. Loyal employees should be valuable for every business. A good manager must ensure that workers have the feeling of belonging to the company. If employees are treated unfairly, you can’t expect long-lasting commitment and motivation from them.

12. Stability of tenure

For a minute, let’s go back to the importance of loyal employees and fair treatment.

12th principle of Fayol states that a good manager must minimize employee turnover, as it leads to low employee morale.

In the era of globalization, it has been regarded to be a key issue to deal with employee turnover for any business organization.

A good manager must give employees reasonable time to adjust to a new working environment and learn job duties and procedures.

I’ve been working in marketing for 12 years and consider myself a professional. However, even I need some time to familiarize myself with the nuances of a new company.

13. Initiative

Henri Fayol argued that employees should feel free to express new ideas, innovative visions, and their own thoughts. This encourages interest and involvement and creates added value for the company.

There are no bad ideas. And certainly, there is nothing bad about listening to alternative visions of your employees. A good manager must encourage all workers to take initiative, grow personally and make sure they are inspired.

14. Esprit de corps

Esprit de Corps means “Team Spirit”.

I started this article by emphasizing the importance of teamwork. I will finish this article with the same subject.

I believe that the prime mission of every manager is to create unity, cooperation, and team spirit among the employees.

It is simple: If you want people to feel better about themselves and the job they’re doing, get them to work together. Create a sense of belonging, the sense of a second family where everybody helps and supports each other.

To sum

We had quite a drill down didn’t we? But I believe that it was a journey worth taking.

Even though Henri Fayol wrote 14 principles of management more than 100 years ago, those principles are globally accepted and continuously used.

I know it is true that there is not a ready-to-go formula for effective management. However, these principles will give you a solid foundation to think about approaches that work the best for your team and organization.