Operational management theory- Henry Fayola

Operational management theory- Henry Fayola

Henry Fayol started his career as a junior engineer in a coal mine company in France and became its General Manager in 1880. He wrote a book titled on “General and Industrial Management “ in 1916 which was published in English in 1949.

The contributions of Taylor and others are aimed mostly at workshop level and did not concentrate on the development of overall organisation structure. At about the same time, the real contributions to the promotion of management at the organization level are given by Fayol that is why he is known as Father of Modern Operational Management.

Henry Fayol observed that management was an activity common to all human undertakings whether in the home, business, Government. He divided all activities of a business enterprise into six categories.

  1. Technical activities – production.
  2. Commercial activities – buying, selling.
  3. Financial activities – search for and optimum use of capital.
  4. Security activities – protection of property and persons.
  5. Accounting activities – including statistics.
  6. Managerial activities.

Functions of Management :

Fayol used the term’administration’ instead of ‘management’ . He divided the key functions of administration into five sub groups such as –

Planning – to forecast and provide means for the future.

Organising – provides everything useful to its functioning.

Co-ordinating – binding together, unifying and harmonizing all activities.

Commanding – leads the personnel in a better way.

Controlling – ensuring every thing goes as per plans.

General Principles of Management

Fayol has provided fourteen principles to manage the organisation successfully and to build up an effective organisational structure. They are enumerated as follows –

  1. The Division of work – The work is divided into parts, and one person does only one things rather than doing every thing himself. It is to be adopted to take advantages of specialization. It gives maximum productivity and efficiency.
  1. Parity between Authority and Responsibility – Authority and responsibility go side by side and should be commensurate to each other.
  1. Discipline – Discipline is in essence. It refers to respect for agreements which are directed at achievements, obedience, energy and respect.
  1. Unity of Command – One person should receive order from one superior only. There should not be multiple bosses to one subordinate because it will lead to division of responsibility and escapism.
  1. Unity of Direction – Fayol observed without unity of direction, unity of action, Coordination of strength and focusing of effort cannot be achieved. According to this one plan.
  1. Subordination of Individual interest to general interest – Management should make efforts to reconcile individual interests with common interests must be sacrificed to common interest, if there is a conflict between these two.
  1. Fair remuneration – Fayol wanted the remuneration to be paid to employees to be fair and equitable to provide the maximum possible satisfaction to employees and employer.
  1. Centralisation – It refers to concentration of authority in the hands of few i.e., top management. There must be good balance between centralization and decentralization of authority.
  1. Scalar Chain – Fayol was of the opinion that a hierarchie channel called scalar chain is necessary to ensure unity of command and effective communication. Scalar chain is a chain of superiors and subordinates from the highest ranks to the lowest ranks. Command and Communication must go through this chain.
  1. Order – It means the right man in the right job and right material in the right place.
  2. Equity – Fayol was of the opinion that to encourage workers to fulfil their duties with devotion and loyalty, management should deal with workers with equity- based on kindness and justice.
  1. Stability of tenure – It means the long term existence of people in the organisation. Fayol felt that instability of personnel is both the cause and effect of bad management so these should be a stability in tenure.
  1. Initivative – Initiative is regarded as thinking out and execution of a plan. Employees should be given the chance and opportunity in taking initiative in deciding and implementing the plans.
  1. Esprit do corps – It refers to harmony and mutual understanding among the members of the organization.

According to Fayol, manager should require the following qualities –

I. Physical health

II. Vigour

III. Mental ability

  1. Moral energy
  2. Firmness
  3. Willingness to accept responsibility.

VII. Educational qualifications.

VIII. Technical qualifications.

IX. Experience.