Henri Fayol’s Administrative Theory of Management

Management theory has played a crucial role in the running and success of modern organization. This concept has evolved over the years, and quite a number of theories have emerged to explain how organizations use their personnel to allocate resources optimally so as attain their organizational goals. Management theory is a set of well-defined principles that guide management practices; planning, controlling, directing, etc (Parker and Ritson 2005). This paper will explain one of the theories as put forward by Henri Fayol. Henri Fayol’s management theories were first proposed in the early 1900s.  Despite many criticisms, Fayol’s theories still form the basis of management practices and teachings in the 21st century. The main points that will be discussed in this paper include: Fayol’s theory in perspective, the six elements of Fayol’s theory and the relevance of Fayol’s theory in management practices and teachings in the 21st century.

The Administrative Theory of Management

Henri Fayol came up with the administrative concept of management (Wren 2001). This concept involves management through people. As the CEO of Commentry-Fourchambault (Comambault) mines and mills in the early 20th century, Fayol played the role of and administrative manager. It is then that he started the idea of managing through people. The company was then facing the threat of bankruptcy and Fayol was chosen as the CEO so as to restore the company. Although he was an engineer, he was talented with administrative roles and appreciated the role of management in organizations. He reckoned that it is the responsibility of organization’s management to work towards the achievement of organizational goals through an optimum use of the available resources (Wren 2001, p. 482). He used the available mines, mills and financial resources to restore the success of Commentry mines and mills Company.

In his position, he applied the administrative role where he reckons that a Company’s management draws plans to guide actions, selects personnel establishes performance and controls operations (Wren, 2001). As the CEO of his company, his role was to oversee the formulation of the organization’s goals, plans and strategies. He also worked though other people so as to ensure that all the administration activities were implemented (Wren 2001, p. 482). This idea of administration theory is also applied in the 21st century.

Current leaders run through organizational goals and set up plans of action for their organizations and control activities to achieve those goals. In Fayol’s theory of management, three concepts are clear. First, Fayol believed that organizations are composed of six activities: Technical, Commercial, Financial, Security, Accounting, and Management. Secondly, he identified five functions of management: planning, organizing, coordination, command and control. Finally, he came up with fourteen principles of management (Parker and Ritson 2005, p.176). These concepts are all relevant in the modern setting of management.

Six Key Activities of Management

In this theory, managers administrate the activities of the organization irrespective of its size and the industry within which it operates (Davidson and Griffin, 2000). In this regard, Fayol recognized that organizations operate within the framework of six key activities namely: technical activities, commercial activities, financial activities, security activities, accounting activities, and managerial activities (Mclean 2008, p.32).

  1. Technical Activities: The technical activities include production and manufacturing which form part of today’s industrial company’s’ main activities.
  2. Commercial activities include market exchanges through buying and selling. Security activities refer to protection of staff and the organizations’ property.
  3. Accounting activities on the other hand involves such processes as: drafting a statement of financial position, stocktaking, recording sales and purchases and preparing financial statements.
  4. Managerial Activities: Finally, organizations engage in managerial activities such as planning, coordinating, directing, organizing and controlling.
  5. Financial Activities: Includes activities of funding projects and activities in the organization, such as raising equity capital, debts, and investment analysis
  6. Security Activities: Ensuring that resources of the organization are safe and secure.

Application of These Activities

These activities are all part of today’s managers’ considerations in undertaking their managerial duties in their organizations. As people climb the ladder to the managerial posts, they lose their technical skills and gain managerial skills. Mclean (2011, p.32) stresses the need for managers to acquire relevant knowledge and skills to carry out their managerial roles efficiently. This stresses the need for managerial education as suggested by Fayol in his theory ((Pryor and Taneja, 2010). In the 21st century, managerial education has increased as most management students use various theories in their learning, including Fayol’s theory. For instance, the book “Principles of Management” has been used by most students worldwide to acquire knowledge and skills of management.

Mclean (2011) suggests that of Fayol’s theory of management has been applied to most modern organizations, especially in what she calls ‘Fayol’s five functions’. Fayol’s five functions as suggested by Mclean (2011) form basis of the modern applicability of Fayol’s theory in the 21st century. Parker and Ritson (2005) argue that as managers assume top management positions, their technical abilities decline as their managerial skills and abilities increase.

The Five Functions of Management

Fayol suggested that people in such managerial positions are characterized by the ability to plan, organize, command, coordinate and control people and their activities in organizations (Pugh and Hickson 2007, p.96). This later formed the basis of the definition of management according to Fayol theory and was referred to as the ‘five functions of management’. These five functions of management have been applied in modern organizational management to boost organizational goals and objectives. They include: functions of management: planning, organizing, coordination, command and control.

1) Planning

According to Mclean (2011), the first element of the five functions of management as postulated by Fayol is to plan. This means forecasting through an analysis of the future and designing a plan. In the 21st century, managers apply this function through an analysis of the environment and an appraisal of the organization’s microenvironment (Hall and McShane, 2008).

2) Organizing

Organizing involves the process of endowing the organization with the required human and financial resources as well as implementation of organization’s system, procedures and processes. Brunsson (2008) suggests that organizing is the act of establishing authorities and responsibilities to facilitate the flow of activities. Setting strategies and planning have therefore become crucial aspects of today’s managerial functions. This has been further enhanced by the current global transfer of knowledge and international competitions (Mclean, 2011). It therefore seems correct to argue that organizing as part of Fayol’s five functions of management is an important function of managers in their quest to achieve organizations’ goals.

3) Command

Fayol also used the term ‘command’ to define management. This refers to the process of leading and directing employees’ towards the attainment of organizational goals and objectives (Pugh and Hickson, 2007). However, in the 21st century, the term ‘command’ is viewed from a different perspective. Hall and McShane (2008) replace the term ‘command’ with leadership which refers to the process of directing, influencing and motivating employees to align their activities towards the achievement of organizational objectives. Fayol’s assertion that managers should know about their employees can also be envisaged by managers in 21st century by engaging their employees in contracts that directly identifies them to their jobs and organizations (Mclean 2011).

4) Coordination

‘To coordinate’ and ‘to control’ are also important functions of managers as put forward by Fayol In his administrative theory of management. According to Brunsson (2008), coordinating involves the establishment of sequence of tasks within an organization. In regards to coordination, Fayol argued that it is the responsibility of managers to bring together and unify organizations’ operations and efforts (Mclean, 2011). In the 21st century, management practices include the function of coordination.  Managers in the modern world coordinate activities within their organizations so as to create and maintain synergy between them. This is a good way of working as a system towards the achievement of organizational goals.

5) Controlling

Controlling involves a continuous monitoring and evaluation of the tasks as they progress. It was defined by Fayol as a manager’s function of ensuring that all operations are carried out in accordance with the established rules and directions (Pugh and Hickson 2007, p.100). The 21st managers exercise the controlling function through their leadership skills by ensuring that all tasks within their organizations are carried out according to plan and within the set time, budget and with the available resources (Mclean, 2008). Managers in the modern organizations ensure that nothing goes against what was initially planned. Therefore, a well-controlled organization in the 21st century is most likely to achieve its objectives. This is because the means by which those objectives are achieved are provided for within the plan, and controlling ensures that activities conform to such plans.

The Fourteen Principles of Management

Finally, Fayol stresses the use of fourteen principles by managers to enhance good management within their organizations.

  1. According to Parker and Ritson (2005), the first principle is Division of work which involves the reduction of a person’s effort span to suit his specialization.
  2. Authority refers to the ability to give orders while
  3. Discipline refers to an employee’s level of respect as he accords his seniors and as depicted from the outward behavior.
  4. The fourth principle is unity of command and the
  5. Fifth principle is unity of direction.
  6. The sixth principle is subordination. The manager should also be able to subordinate interests of individuals to the general interest of the organization.
  7. Another principle of management is remuneration. The manager should motivate employees through motivation.
  8. Centralization is the eighth principle of management; also another principle which managers should envisage in their management in the 21st
  9. The ninth principle is the Scalar Chain which refers to the line of an organization’s authority from top to bottom.
  10. The tenth principle is Order; ‘a place for everything and everything for its place’ (Parker and Ritson 2005, p.176).
  11. The next principle is Equity which refers to kindness and justice towards workers.
  12. Stability of tenure of personnel is the twelfth principle which suggests that employees should be given time to settle to their job.
  13. The second last principle is Initiative, which means being able to take action and come up with something unique. Initiative should be within the laid down authority.
  14. And the last principle of management is Esprit de corps. This refers to harmony and teamwork spirit within the organization

These principles are often used by modern managers to run their organizations’ affairs.

Criticisms of Fayol’s Administrative Theory of Management

Despite these contributions of Fayol’s theory, criticisms have also been brought forward to challenge it. Some of these criticisms include (Larsen and Häversjö, 2001 and Nørreklit, 2003). Nørreklit (2003) argue that Fayol’s management theory propositions are vague and can be interpreted differently by different managers and scholars. They also allow for alterations to suit certain situations and circumstances. They are also viewed as representations of old habits used by organizations to legitimize their processes. Some researchers consider Fayol’s theory as an old theory which plays no part in modern management (Parker and Ritson, 2005).  However, Brunsson (2008) claim that these criticisms only manifest modern empiricism which attempt to recommend what management should be rather than what it is. Therefore, as people criticize general management theory of Fayol, it is clear that it has played a major role in the modern management of organizations. This does not necessarily mean that Fayolism has influenced how management I the current period do, but is significant in the current period as it was in the past.

Conclusion

It has been noted so far that Fayol’s theory of management includes the fourteen principles of management, the six activities of organizations and the five functions of management. These concepts of management have been noted to have played a crucial role in the modern management of organizations (Mclean, 2011).  It is also noted that Fayol’s theory has been used in education and learning throughout the world in the 21st century. However, criticisms have emerged to disclaim the assertions of the theory. From the literature provided, it is evident that Fayol’s theory has been applied by most managers in the 21st century in one way or another. This therefore disputes the claims of critics that the theory is a ‘rubbish bin’ of management history. Fayol’s theory is indeed the base for the 21st century management practices and learning.

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