Henri Fayol's Management Theory

Well I just thought I would like to do some review on classical business theories that are studied by marketing management to which I remembered Henri Fayol.

Five functions of management:

1. to forecast and plan,
2. to organize
3. to command
4. to coordinate
5. to control

Thoughts:

It must be understood that management has the five functions as mentioned above.

A good manager forecasts and plans because he/she seeks to minimize error to the lowest possible margin and minimize losses.  He/she is also organized, meaning everything comes in order, does things by a proper schedule and though while in flexibility, still makes sure everything is in proper sequence.  The task to command is in fact necessary- without the delegation of this function, it becomes extremely centralized and there is no share in decision making.  A manager coordinates everyone to the goals of the company and has control, meaning that he/she makes sure that people follow the rules and regulations while being aware of the fact that he/she is still a subordinate to the rules despite position.

Henri Fayol's 14 Principles:

1. Division of work. This principle is the same as Adam Smith's 'division of labour'. Specialisation increases output by making employees more efficient.
2. Authority. Managers must be able to give orders. Authority gives them this right. Note that responsibility arises wherever authority is exercised.
3. Discipline. Employees must obey and respect the rules that govern the organization. Good discipline is the result of effective leadership, a clear understanding between management and workers regarding the organization's rules, and the judicious use of penalties for infractions of the rules.
4. Unity of command. Every employee should receive orders from only one superior. like from top to bottom in an organization.
5. Unity of direction. Each group of organisational activities that have the same objective should be directed by one manager using one plan.
6. Subordination of individual interests to the general interest. The interests of any one employee or group of employees should not take precedence over the interests of the organization as a whole.
7. Remuneration. Workers must be paid a fair wage for their services.
8. Centralisation. Centralisation refers to the degree to which subordinates are involved in decision making. Whether decision making is centralized (to management) or decentralized (to subordinates) is a question of proper proportion. The task is to find the optimum degree of centralisation for each situation.
9. Scalar chain. The line of authority from top management to the lowest ranks represents the scalar chain. Communications should follow this chain. However, if following the chain creates delays, cross-communications can be allowed if agreed to by all parties and superiors are kept informed.
10. Order. People and materials should be in the right place at the right time.
11. Equity. Managers should be kind and fair to their subordinates.
12. Stability of tenure of personnel. High employee turnover is inefficient. Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies.
13. Initiative. Employees who are allowed to originate and carry out plans will exert high levels of effort.
14. Esprit de corps. Promoting team spirit will build harmony and unity within the organization.

Thoughts:

Unity and division are needed in a case-to-case basis.  Division of work and authority are needed in order to implement discipline and order in the company.  Despite the division of work that is assigned, there is the oneness despite differences like how different systems of the body may differ yet they have one goal, one direction and are united in compatible differences.  Also the unity of command prevents the company from becoming a multi-headed monstrosity.

Every employee must be paid in due fairness.  That is, the more difficult the work, the more they ought to be paid.  One cannot afford to pay employees low in order in the name of profit.  That is, the more work is performed, the more pay they ought to get.  It would be downright unfair to let an employee work beyond eight hours and not pay them for overtime.  This will create demotivated employees.  Only a total idiot would remain blindly loyal to unfair wages.

The chain of command and delegation of authority needs centralization and a proper scalar chain.  Sometimes decision making needs to be centralized and sometimes it needs to be decentralized.  After all, the company is made up of different departments- marketing, finance, technical and administrative yet they go back to unity and division.  Despite their divisions, they ought to agree with each other in harmonic differences, not irreconcilable differences.  For example, the technical department would say they need a new equipment then the financial department reveals the costs- then the marketing and administrative will help in finding affordable and effective equipment to balance everything out.  As for the scalar chain, there has to be chain of communication that nobody should be left uninformed because every single person in the company is a vital element.  

The last five are the values practiced by all.  Without order, there will be confusion and non-productivity so this must be enforced strictly like production and delivery must be on time.  Without equity, subordinates tend to become demotivated and they could rebel compared to if they are treated fairly.  The stability of tenure of personnel must be kept in check to minimize delays since aside from resignation- death, disability and retirement do come and sometimes some employees will be too sick for work so job rotations are necessary.  Employees must be given a limited amount of initiative and be encouraged to do so, rather than expect initiative without any encouragement and conditioning.  That way, employees can do their jobs as humans and not as automations.  Eventually by motivation in team spirit, people will not fight over who's more important but will rather move forward for the better.