Division of WorkDividing the full work of the organization among individuals and creating departments is called division of work. Division of work leads to specialization, and specialization helps to increases efficiency and efficiency which results improvements in productivity and profitability of the organization.
Balancing Authority and ResponsibilityAuthority must be equal to Responsibility. According to Henri Fayol, there should be a balance between Authority (Power) and Responsibility (Duties). The right to give orders should not be considered without reference to responsibility. If the authority is more than responsibility then chances are that a manager may misuse it. If responsibility is more than authority then he may feel frustrated.
DisciplineOutward mark of respect in accordance with formal or informal agreements between a firm and its employees. Discipline means a respect for the rules and regulation of the organization. Discipline may be Self-discipline, or it may be Enforced discipline. No slacking or bending of rules, not allowed in any organization. The works must respect the rules that run the organization. To establish discipline, good supervision and impartial judgment is needed.
Unity of CommandAccording to this principle, a subordinate (employee) must have and receive orders from only one superior (boss or manager). To put it another way, a subordinate must report to only one superior. It helps in preventing dual subordination. This decrease the possibilities of “Dual subordination” which creates problem is function of managers.
Unity of DirectionOne head and one plan for a group of activities with the same objective. All activities which have the same objective must be directed by one manager, and he must use one plan. This is called Unity of Direction. For example, all marketing activities such as advertising, sales promotion, pricing policy, etc., must be directed by only one manager. He must use only one plan for all the marketing activities. Unity of direction means activities aimed at the same objective should be organized so that there is one plan and one person in charge.
Subordination of Individual Interests to the General InterestThe interest of one individual or one group should not prevail over the general good. The individual interest should be given less importance, while the general interest should be given most importance. If not, the organization will collapse. Interest of the organizational goal should not be sabotaged by the interest of an individual or on group.
RemunerationRemuneration is the price for services received. Pay should be fair to both the employee and the firm. If an organization wants efficient employees and best performance, then it should have a good remuneration policy. This policy should give maximum satisfaction to both employer and employees. It should include both financial and non-financial incentives. Compensation should be based on systematic attempt to reward good performance.
CentralizationIt is always present to a greater or lesser extent, depending on the size of the company and the quality of its managers. In centralization, the authority is concentrated only in few hands. However, in decentralization, the authority is distributed to all the levels of management. No organization can be completely centralized or decentralized. If there is complete centralization, then the subordinates will have no authority (power) to carry out their responsibility (duties). Similarly, if there is complete decentralization, then the superior will have no authority to control the organization. Therefore, there should be a balance between centralization and decentralization. The degree to which centralization or decentralization should be adopted depends on the specific organization, but managers should retain final responsibility but should give subordinate enough authority to do the tasks successfully.
Scalar ChainThe chain of command, sometimes called the scalar chain, is the formal line of authority, communication, and responsibility within an organization. The chain of command is usually depicted on an organizational chart, which identifies the superior and subordinate relationships in the organizational structure. Or it is the line of authority from top to bottom of the organization. This chain implements the unity-of-command principle and allows the orderly flow of information. Under unity of command principle the instructions flow downward along the chain of command and accountability flows upward. More clear cut the chain of command, the more effective the decision making process and greater the efficiency.
Order‘A place for everything and everything in its place’ the right man in the right place. There should be an Order for material/things and people in the organization. Order for things is called Material Order and order for people is called Social Order. Material Order refers to "a place for everything and everything in its place." Social Order refers to the selection of the "right man in the right place". There must be orderly placement of the resources such as Men and Women, Money, Materials, etc. Human and material resources must be in the right place at the right time. Misplacement will lead to misuse and disorder.
EquityWhile dealing with the employees a manager should use kindliness and justice towards employees equally. Equity is a combination of kindness and justice. It creates loyalty and devotion in the employees toward the organization. The equity principle suggests that the managers must be kind as well as equally fair to the subordinates.
Stability of Tenure of PersonnelAlthough it could take a lot of time, Employees need to be given fair enough time to settle into their jobs. An employee needs time to learn his job and to become efficient. The employees should have job security because instability leads to inefficiency. Successful firms usually had a stable group of employees.
InitiativeWithout limits of authority and discipline, all levels of staff should be encouraged to show initiative. Management should encourage initiative. That is, they should encourage the employees to make their own plans and to execute these plans. This is because an initiative gives satisfaction to the employees and brings success to the organization. It allows the subordinates to think out a plan and do what it takes to make it happen.
Esprit De CorpsEsprit de Corps means "Team Spirit". Therefore, the management should create unity, co-operation and team-spirit among the employees. They should avoid dividing and rule policy. Harmony, cohesion among personnel. It's a great source of strength in the organization. It is a quality in every successful business.
These principles are guidelines for every management function. Manager must act according to the 14 principles of management; in order to reach the goal and create surplus.
These 14 management principles of Henri Fayol are universally accepted. they work as a guideline for managers to do their job according to their responsibility.