Refined by Henri Fayol during his time as a senior executive and mining engineer. His theory thoroughly examined an organization from the lens of an administrator or manager. From this unique perspective, he developed numerous case-studies to serve as a guide for leadership.
Fayol strongly believed that leaders had six primary functions. These functions were to forecast, plan, coordinate, command, and ultimately control the outcome.
Further developing his understanding of these functions as he observed them, he developed key principles for organizing and interacting corporate players. From top-to-bottom, an organization could be refined into a well-oiled profit-making machine. However, Fayol insisted that the use of these principles should remain flexible and not become too stringent. This was to allow the manager or leadership to determine how to leverage their use as effectively as possible.
Henri Fayol’s principles are defined below:
Initiative – The personal prerogative employees have to complete their duties. This means they are not compelled or disciplined into behaving a certain way whatsoever.
Unity of direction – This principle states that each department should have no more than one manager. This is to ensure that coordination efforts remain grounded towards completing singular objectives. Conversely, too many managers could create confusion and hinder productivity.
Equity – Equity relates to a workplace culture and how everyone is treated. Fayol’s equity principle strongly advocated for equality, fairness, and a general environment of benevolence.
Scalar chain – A scalar chain suggest that communications flow from the very top to the utmost bottom within an organization. To this end, there should be supervisors at every level, who can help emphasize the importance of these communications between different departments. The actual method of ensuring that the communications were received and understood however, was left open for consideration. This is likely due to the varied nature of workplace cultures (ex: what may work well in one organization, might not work in another).
Discipline – An organization must outline its own regulations and rules. There must also be a reward-punishment system in place, which all employees are aware of. By design, these structures promote a healthy workplace. Employees have incentive to be both respectful and obedient toward one another.
Authority and responsibility – There must be a balance in the authority invested into leaders. Every management theory states that the need for commands and decision-making must coexist with the rights of the worker. A balanced authority and responsibility understands the obligations of the employees.
Unity of command – This refers to the structure of authority. Orders must be doled out by one central figure. Employees receiving this order must be able to focus on one immediate supervisor, who will hold them accountable.
Renumeration of personnel – This principle states that there must be both monetary and non-monetary compensation for employees. This should be based entirely on performance levels. Ideally, this act promotes the relationship between the organization and the employee.
Subordination of individual interests to general interests – The collective interests of the organization must always come first. However, some priority must also be given to the interests of the individual who operates within the organization. This includes paid holidays, sick leaves, and other gestures of goodwill towards a general workforce.
Division of work – Actions undertaken by management must remain subjectively divided and focused by necessity. One department must focus on quality, another on production, and another on administration. This creates a body or total structure for the workforce. The organization can now dole out responsibility based on merit and capability. Such a structure is the basis for virtually every company today. It allows for a dynamic and engaged workforce to operate sensibly.
Stability of tenure – This principle states that every employee must enjoy security within their employment. This ensures that they can perform at their best throughout their tenure.
Centralization of authority – The highest levels of the organization must consolidate authority. This centralizes the top levels of leadership and management. Through centralization of powers important decisions can be readily made on an informed basis, using the best resources available.
Order within – Every organization must assign the correct individual or team to the appropriate job. This ensures that the organization can run efficiently and effectively.
Espirit de corps – This principle states that a unified team effort is the greatest ideal to pursue. A collective effort is always greater than any individual performance.