As opposed to the Scientific Management school of Fredrick Taylor, the Fourteen Principles of Management created by Henri Fayol fall under the Administrative Management school of thought. While many of Fayol's principles seem to simply name common-sense principles, in 1916 they were revolutionary because there were few companies that were large.
FOURTEEN PRINCIPLES OF MANAGEMENT
- Division of Work. Both managerial and technical work can be specialized. When people work on specific tasks, skill at these tasks is developed; therefore, time is not wasted and efficiency is the end product.
- Authority and Responsibility. In order to ensure the efficient and successful operation of a business, there must be people put in positions of authority to direct others. With this authority comes accountability, of course; a manager must take responsibility for his or her actions or failure to act appropriately. Strong, competent leadership is paramount to the success of a company.
- Discipline. Rules must be established and upheld; it follows, then, that there must be consequences for failure to follow rules. Efficiency is greatly reduced otherwise. Furthermore, the unrest of workers may also result as they perceive favoritism or they become confused about how they should perform.
- Unity of Command. The employees should work under only one supervisor in order to eliminate the confusion and frustration that can result from having more than one person tell them what to do.
- Unity of Direction. Each section of activities with some objective must have only one plan and one supervisor. (The old cliché of "Too many cooks spoil the broth" applies here.)
- Individual Interests must be subordinate to the General Interests. The goals of the overall organization are what is most important, rather than the interests of any individual. For example, sometimes certain influential individuals have personal desires that they want fulfilled, but allowing them to direct actions in the company is disruptive to organization and often affects the morale of others as resentment is created.
- Remuneration. Payment for work done must be equitable; both financial and non-financial compensations must be fair or the morale of workers will be negatively affected and production will be reduced.
- Centralization. Authority and power should be concentrated at the upper levels of management. While employees may have input, the decision-making should always come from the upper levels.
- Scalar Chain. A chain of command should be established and followed. Employees must be made aware of the steps of authority and follow them at all times. A scalar chain maintains organization and helps to eliminate partiality (e.g. one employee may not get along with a supervisor, so he/she goes "over the head" of the supervisor to someone at the next level because the next person may grant a request, etc.). Actions that do not follow the chain of command result in disorganization and a break-down of authority.
- Order. The goal of every business is profit. When materials or employees are not both in the required place at the required time, efficiency and production are reduced; wasted time equals wasted money. Also, workplace facilities need to be clean, neat, and safe for employees; an orderly environment leads to production and good morale.
- Equity. A good manager treats every employee with fairness and kindness, recognizing the assets of the employee.
- Stability of Tenure of Personnel. Maintaining a workforce increases efficiency and reduces costs; also, it usually improves morale because employees feel more secure as they work with others they have come to know and they do not become emotionally stressed from fear of losing their jobs. High turnover is not cost effective because new employees need training and are less efficient at jobs. The loss of employees often signals bad management.
- Initiative. Employees should be given the necessary freedom to create and innovate. This freedom makes employees feel they have a vested interest in the company. For example, Honda Manufacturing rewards employees who initiate an idea that improves efficiency or safety of production. If this idea eliminates the employee's particular task, the company finds a better job for him/her.
- Esprit de corps. Just as in the military, a sense of unity with others generates better morale and efficiency. For instance, if one employee is doing something the wrong way or less efficiently, another may suggest a better way and help the employee improve his production. Team spirit clearly improves morale as employees establish relationships with each other and are more content at work and feel more investment in their time at work.