1. Division of Work: In practice, employees are specialized in different areas and they have different skills. Different levels of expertise can be distinguished within the knowledge areas (from generalist to specialist). Personal and professional developments support this. According to Henri Fayol specialization promotes efficiency of the workforce and increases productivity. In addition, the specialization of the workforce increases their accuracy and speed. This management principle of the 14 principles of management is applicable to both technical and managerial activities.
2. Authority and Responsibility: In order to get things done in an organization, management has the authority to give orders to the employees. Of course with this authority comes responsibility. According to Henri Fayol, the accompanying power or authority gives the management the right to give orders to the subordinates. The responsibility can be traced back from performance and it is therefore necessary to make agreements about this. In other words, authority and responsibility go together and they are two sides of the same coin.
3. Discipline: This third principle of the 14 principles of management is about obedience. Fayol declares that discipline requires good superiors at all levels, clear and fair agreements and judicious application of penalties.
4. Unity of Command: Every employee should receive order from only one direction. Order should come from top to bottom (subordinates). Subordinates must carry out the order given by only one superior.
5. Unity of direction:The organization should have single plan and action to guide managers and workers. Every employee should know the ultimate goal of the organization. Organization Goal (profit/social welfare) is the destination of an employee. Direction comes from top executive. What the top executive think all the employees should know.
6. Subordination of individual interest to general interest:Subordination of Individual Interest to General Interest” means that the interest of the organization is above the interests of the individual and the group. It can be achieved only when managers in high positions in the organization set an example of honesty, integrity, fairness and justice. It will involve an attitude and a spirit of sacrificing their own personal interests whenever it becomes apparent that such personal interests are in conflict with organizational interests. For the betterment of the organization each employee should have sacrificing mood. For example, Mr. X is the Production Manager of ABC Company. His Brother-in-law sells Raw Material for Yarn. Now Production needs Raw Material. His budget is, say, Tk. 100,000 Now his brother-in-law is selling all the required products in just Tk. 90,000. Now enters another dealer, say, Mr. Z. He is not a relative of the manager but sells all the required products in just 80,000. Now, Our manager is in dilemma. Whether to buy the material from his relative which will help him personally. Or to buy the material from Mr. Z, which will help the organization. This principle explains it perfectly. The Organization is more important. According to this principle, Mr. William is a better choice.
7. Remuneration Remuneration package should be set as per performance. Fayol perceives that remuneration and methods of payment should be fair and also should be able to afford the maximum satisfaction to employee and employer.
8. Centralization:Although Fayol does not use the term, Centralization of Authority, his principle definitely refers to the extent to which authority is concentrated or dispersed in an enterprise. Individual circumstances determine the degree of centralization that gives the best overall yields.
9. Scalar Chain (Ladder)(Chain of Command) (Line of Authority):Scalar chain is the formal line of authority which moves from highest to lowest rank in a straight line. This chain specifies the route through which the information is to be communicated to the desired location/person. Fayol emphasized that every information in the organization must flow according to this chain to facilitate clear communication of orders of the superiors and feelings of the subordinates. This chain must be strictly followed in the organization. Fayol also stated that there should be no overlapping of steps during the communication process. This principle was explained by Fayol with the help of a ladder diagram which showed the flow of information. For example, in an organization there are employees A, B, C, D, E, F, G, H, I, at various posts. If employee ‘C’ has to communicate with employee ‘G’ using the scalar chain, the route should be like C4B4A4F4G. Thus there will be four steps for the information to reach from employee ‘C’ to the employee ‘G’. Due to more clear system of authority and communication, problems can be solved easily, also the accountable person can be held quickly without any confusion and delay. Though this principle is very effective and clear, but it consumes a lot of time. In case of emergency, information will take a lot of time to reach the desired position which may delay the action as well as decision.
9.1 Gang plank: For overcoming this limitation of scalar chain, fayol introduced the concept of ‘Gang Plank’. According to this concept, two executives of the organization of different department at the same level can communicate directly in case of emergency, so that speedy decisions and actions could be taken. In case of the above example, if employee ‘C’ has to contact employee ‘G’, he can easily and directly communicate the information to ‘G’ using this Gang plank (‘C’4‘G’). This reduces a lot of time and helps in effective performance.
10.Order: This organization is the principle, which refers to the arrangement of things and persons in an organization. All the resources should be placed right time and right place.
11. Equity: Fayol perceives this principle as one of eliciting loyalty and devotion from personnel with a combination of kindliness and justice in managers while dealing with subordinates.
12. Stability of Tenure of Personnel: Finding that instability is both the cause and effect of bad management, Fayol points out the dangers and costs of unnecessary turnover.
13. Initiative: Initiative is conceived as the process of thinking out and executing a plan. Since it is one of the keenest satisfactions for an intelligent man to experience, Fayol exhorts managers to sacrifice personal vanity in order to permit subordinates to exercise it.
14. Esprit de corps: This principle implies that union is strength and an extension of the principle of unity of command. Fall here emphasizes the need for teamwork and the importance of communication in obtaining it.