Henry Fayol (1841-1925) and the Classical Organization Theory

Fayol believed that sound managerial practice falls into certain patterns that can be identified and analyzed. Fayol who was trained as a mining engineer worked his way from a junior executive to director of the French Coal and Iron Combine Company. Fayol often confessed that he did not attribute his success to his personal abilities but rather to the methods that he practised. He strongly believed that management was not a personal talent but a skill like any other and therefore it could be taught or learned. At the time it was generally believed that managers were born! Fayol’s observation on principles of general management first appeared in 1916. He found out that the activities of an industrial undertaking fall into six groups.

        i.    Technical (Production)
        ii.    Commercial (Buying, selling, exchange)
        iii.   Financial (Search for use of capital)
        iv.   Security (Protection of employees property)
        v.    Accounting (Record, stocks of cost, profits, liabilities etc)
        vi.   Managerial

Fayol's main interest was on the last activity. He defined management in terms of five functions:

•    Planning which means choosing a course of action that will help the organization achieve its goals.
•    Organizing meaning mobilising resources to put plans into action
•    Commanding means providing direction to employees and getting them to do their work.
•    Coordination means ensuring harmony in the use of resources
•    Controlling means monitoring the plans to ensure that they are being followed.

Fayol's model of management remains an approach to management today. Fayol also looked into the qualities
that are required by management and concluded that they depended on the level of the person in the enterprise.
These were physical, mental, moral, educational, technical and experience.
Fayol also developed fourteen principles of management which he felt should be applied by managers at the
operational level. He listed these principles as:

i.     Division of labour: Work be divided among workers
ii.    Authority and responsibility: Managers need authority to carry out responsibility
iii.   Discipline: Workers should respect the rules and regulations of the organization
iv.   Unity of Command: An employee would receive commands from only one supervisor.
v.    Unity of Direction: One manager should have one plan for each organizational objective.
vi.   Individual Subordination: The interests of the organization should come before individual interests.
vii.   Remuneration: Pay should be fair and good performance should be rewarded.
viii.  Centralization: There would be one point in the organization that exercises overall control.
ix.    Scalar Chain: Authority should flow downwards from top to bottom through the chain of command.
x.    Order: People and materials should be in the right place at the right time.
xi.   Equity: Managers should be fair in dealing with employees.
xii.   Stability of tenure: Efficiency can be achieved by a stable labour force.
xiii.  Initiative: Employees should be given freedom to act and be innovative.
xiv.  Espirit de Corps: In union there is strength, teamwork should be encouraged. Management is universal among all organizations and Fayol argued that those with a general knowledge of the management functions and principles can manage any type of organization.

He further advocated that these principles/functions can be learned by anybody who is interested. But qualities such as physical health, mental vigour, moral character, which is essential for management, cannot be learned - one must possess them. Any individual who possesses such qualities can acquire managerial skills by learning the principles of management through formal training.