14 Principles of Management
14 Principles of Management by Henri Fayol:
The “14 Principles of Management” formulated by Henri Fayol, a French mining engineer, and management theorist in the early 20th century. These principles are fundamental rules or guidelines that organizations can follow to effectively manage their operations.
1. Division of Work: Specialization allows individuals to build expertise, leading to higher efficiency and productivity.
2. Authority: Managers must have the authority to give orders, and authority should be accompanied by responsibility.
3. Discipline: Employees should respect rules and agreements that govern the organization.
4. Unity of Command: Employees should receive orders from only one manager to avoid confusion and conflict.
5. Unity of Direction: Teams with the same objective should be working under the direction of one manager using one plan.
6. Subordination of Individual Interest to General Interest: The interests of the organization as a whole should take precedence over individual interests.
7. Remuneration: Compensation should be fair and equitable for both employees and the organization.
8. Centralization: The degree to which authority concentrated at higher levels in the organization. It should be balanced with decentralization.
9. Scalar Chain (Chain of Command): A clear chain of command should exist from top management to the lowest ranks to facilitate communication and control.
10. Order: There should be an appropriate place for everything and everyone, and everything and everyone should be in its place.
11. Equity: Managers should be fair and just to their subordinates, fostering mutual respect and trust.
12. Stability of Tenure of Personnel: Long-term employment is important for the development of skills and loyalty, reducing turnover and improving efficiency.
13. Initiative: Employees at all levels should be encouraged to show initiative and creativity in achieving organizational goals.
14. Esprit de Corps: It promotes a sense of unity and team spirit among employees.
Principles of Management:
The word Principle means a fundamental truth which acts as the foundation for action. Henri Fayol first gave the principles of management and stated 14 Principles of Management. Later on, Luther Gullick and Lyndall Urwick modified these principles which cover all aspects of management and are also known as Principles of Management. These may be remembered as PODSCORB:
P = Planning
O = Organising
D = Directing
S = Staffing
CO = Co-ordinating
R = Reporting
B = Budgeting
Planning:
Planning means “deciding on in advance or making preparation for an anticipated event“. It is the most basic or fundamental of all management functions. This primary management function decides in advance what to do, how to do it, where to do it and who is to do it. Planning bridges the gap between the two questions – where we are now? and where do we want to go?
Every organisation have its objectives and mission. It is the tool by which an organization decides how to achieve that objective. Planning may be –
- Short-term (such as – marketing plan, 1-2 years)
- Medium-term (such as – marketing plan, 3-5 years)
- Long-term (such as – product diversification plan, future expansion etc, more than 5 years)
The purposes of planning are –
- Fulfilment of objectives
- Facing the changes
- Proper utilization of resources
- Reduction of cost
- Co-ordination
- Harmony in management
Organising:
According to economics, the four factors of production are land, labour, capital and organization. Koontz and O’Donnell have defined organization as a structural relationship by which an enterprise is bound together. It also acts as a framework in which individual effort coordinated.
Directing:
Directing means instructing and inspiring the persons working in the same organization to achieve common objectives. Planning and Organising and concerned only with the preparation of work performance while directing stimulates the organization and starts working on plans. Thus “directing” may also be referred to as “management in action“. The main objective of direction is to bring harmony and coordination between the efforts of sub-ordinates and the interests of the enterprise.
Staffing:
The objective of staffing is to obtain the best available people for the organization and to develop the skills and abilities of these people. As a part of organizing, we have grouped the like activities to make the organization structure. We have also learnt that each such group of like activities headed by one person, which is known as unity of direction.
Having done all this work, it is now necessary to fill different positions in the organization structure with the personnel, whose concerted effort with help in doing the job of each such group. Thus people recruited according to their skills and experience and engaged in matching jobs in these positions. There may be a requirement for training for these people to get the best of them.
Co-ordinating:
Coordination integrates all the individuals and departments of the organization and helps in the achievement of organizational objectives. We have learnt that an organization should have grouped activities and people working in various positions. It should have a concerted effort to achieve the objectives.
Reporting:
A report is a spoken or written account of something which converts information about an event or situation. Once the organizational structure is set, the people working there are given matching positions, and there exists a coordinated effort among the people for achieving a common goal. It has now become very important to decide which person in a particular position will report to whom?
Budgeting:
Budgeting is the formulation of plans for a given future period in numerical terms. As such, budgets are statements of anticipated results – in financial terms or non-financial terms. Budgeting in financial terms may involve a capital budget, revenue budget, expenditure budget, projected profit and loss account, etc. Budget in non-financial terms may involve direct-labour hours, the quantity of material, physical sales volume or the number of units to be produced.