Abstract
This paper focuses on the principles of Henry Fayol, one of the founding fathers of management principles and education with a view towards determining the relevance of these principles for the modern age. It finds that each of the principles still has some relevance but that work would need to be undertaken to account for the existence of flat management structures and decentralised companies. There are a few other changes that need to be made to bring Fayol's principles in to the 21st century but these are largely small modifications. These alterations reflect changes in the motivation of staff.
Introduction
Henry Fayol could be called one of the founders of Management education as we know it and indeed management practice. As with many things though, what our fathers and founders thought is no longer particularly relevant to this new, more advanced, broader, more global, more technologically advanced world in which we live.
The remarkable turn of events here though is that principles designed over 100 years ago are still as relevant to companies now as they were then. Fayol had his detractors in Mintzberg and a range of other academics who believed that his ideas existed in some kind of fantasy world, completely removed from the actual actions managers take. Arguing that while a manager will quote the principles taught to him in Management school, their actions will not reflect these.
Instead of developing his principles in the halls of academia though, Fayol devised his principles, theories and methods while the CEO of a vertically integrated mining concern. Starting his career as a mining engineer, he would jot down things that reduced the productivity of the mines he worked in. Advancing this process as moved higher in management positions, attempting to redirect the company to focus on proper administration, proper record keeping and effective principles of management that all staff could understand and be guided by.
This paper explores Fayol's concepts, theories and principles, determining how Fayol developed them and attempting to find any relevance for these principles to the modern company. The findings suggest that the concepts are still relevant for students and for corporations today though focus has to be shifted and de-centralised and globalised companies need to be taken in to account to make these principles more relevant.
Henry Fayol started his career as an Engineer and this training gave him a unique way of looking at a companies structure which he applied to management of the company and the development of the management field in general.
Fayol did what those before him had failed to do and realised the universality of management. The concept that in order to run a company, the leader need not be an expert in the field in which the company worked, instead they need to be an expert in the management or the administration of a company.
According to Fayol there are six areas into which the business processes are classified. These are technical activities, accounting activities, commercial activities, and financial activities. Each of these activities is present in varying levels in every role, but the higher up the chain a worker moves, the more he has to master these activities. Managers such as this provide five functions according to Fayol, namely: To forecast and plan, to organise, to command, to co-ordinate and to control.
In addition to these, Fayol also developed 14 principles of management. These principles were created to determine the role of Managers in an organisation, they are: Division of work among workers, Authority of the superiors, disciplines among the different levels of hierarchy, general interest in the organization over individual choices and preference, monetary benefits, decision making at the centre of an organization, scalar chain, order, equity, stability of tenure of personnel, Initiative and Esprit de corps. Much of the argument as to the relevancy of Fayol's work in this day and age can be laid squarely at the feet of these principles and his explanation of each.(Daft, 1995)
Fayol was essentially the first proponent of management education, supporting the idea that managers did not need to be experts in specific companies or industries, insisting instead that they be experts in business administration, in the organisation and effective characterisation of problems within a company and the ability to effectively communicate this to the staff.
Changes from Fayols Time to Now
Fayol came to prominence in his professional career around the turn of the 20th century, though much of his work only gained prominence in the academic world once it was translated from French to English later in the early 20th century. He is considered a founding father of the classical management school of thought but his world was very different to the one we currently inhabit.
Fayol was operating in the time of the industrial revolution and now we are situated in the technological revolution. The ability to communicate, to travel to transport and to create have all increased at a rapid pace, reducing the time lag that existed in older practices. This means that companies and industries are growing and changing at a much greater pace than they were in Fayol's time.
Relevance of Fayol and his 14 Principles Now
The question that is brought to the fore by these changes is whether or not theories and practices developed over a century ago, in a world that would be unrecognisable today are still relevant today. We will look through Fayol's 14 principles of management and determine how relevant these are. It is argued that they are all still relevant to a degree, but the focus for them has changed.
Many of Fayol's principles are undeniably still relevant. Division of work, the idea of specialisation, was famously utilised by Henry Ford in his factories and has since been adopted by a range of organisations. This extended in the work to Unity of Direction, where one person should be responsible for activites undertaken with the same purpose, this is in use in companies now with manufactures like General Motors creating global heads for specific activities. There is often talk of people attempting to 'pass-the-buck' in different organisations though companies by and large agree that responsibility should be taken for consequences arising from actions taken and this should accumulate with the one giving the orders, supporting the concept of Authority. Often failures or misbehaviour that broke the trust between staff and the company will require some form of Punishment, which still takes place today in business places with warnings and other systems.
These warnings are taken seriously as the idea that the Subordination of individual interests the general interest still exists. The needs of the company outweigh the needs of the few. In turn, the company must fairly Remunerate it's employees. This has been a heated topic of discussion with the pay of CEOs following the GFC but is still a relevant principle. This is largely because employees and prospective employees still demand Equity from their employer, wanting to be treated with respect and kindness. The greater social equity a company has, the more likely they will be able to achieve Order, putting the right person in the right job, still a driving desire for companies. A strong reason for this is that the right person can create new Initiative and innovate, which companies are supporting with greater alacrity now that technology giants such as Google and Virgin have thrown their resources in this direction.
While Fayol's other principles are not completely irrelevant now, they have been challenged somewhat and can be seen to be adapting. For instance, the concept of Unity of command. The idea that each man would have only one superior to which he would report. With the flattening of management structures this is often no longer the case. In many companies, one person can have a range of different managers that they have to answer to, each with competing deadlines and requirements. This leads to the process of De-Centralisation, something never considered in Fayol's principles. Many companies are focusing on decentralisation, using the internet to remove the need for large office buildings, as such, centralisation may no longer be a requisite part of a company. This change has largely been driven by new abilities unlocked due to the information age, or the age of the internet.
This de-centralisation and flattening has in turn reduced the effectiveness and relevance of the scalar chain. This change in management style has been one of the major divergences in management styles since Fayol's time. Though this style isn't prevalent through every company, it is becoming more and more common in technology companies, where everyone is able to drive change, spur innovation and push the company in new directions. The requirement of companies to keep up with technology and other short term requirements has led to the erosion of the stability of tenure of personnel as well. The idea that staff should be given enough time to become accustomed to their roles. The increasing rate of short term labour, contractors and consultants being used to fill temporary vacancies or capacity short falls suggests this principle is being given less credence than it once was. These workers are brought in to perform a function and are expected to be able to perform the second they are in the door. A decrease in tenure means a decrease in Esprit de corps as well. The encouragement of harmony and team work is a great strength to an organisation. This principle seems to have fallen to the wayside somewhat with many companies promoting direct competition between employees to outdo others through Key Performance Indicator measurements and a range of other metrics.
One of the major criticisms levelled against Fayol's work is by Mintzberg, suggesting that Fayol described what managers claimed to do and that if they were observed, that their actual actions would differ greatly from what Fayol described. Despite this animosity, many academics drew a range of parallels between their works.
Conclusion
Fayol was in many ways ahead of his time. Not only in the idea of managers being educated as managers and companies having strong administration practices put in place in order to operate effectively but as well as promoting initiative and innovation from all levels of the company rather than only following initiative driven from the CEO.
Despite the breadth of changes in technology and society in the last 100 years, the principles and ideas that Fayol came up with still have relevance in todays work place. With a few small changes, each of the principles Fayol describes can be fit to any modern company. Areas such as the top down structure of companies and the idea that all employees will work in harmony with one another have been challenged as have several others through flattening management structures and de-centralised companies.
With that said, every Management student the world over is still taught lessons that stem from Fayol's studies, principles and ideas of what Management is and should be. There are several ways these principles can be adjusted to suit the modern age. Shifting the focus from a sole spotlight on a centralised top down organisation and casting a broader beam over differing organisation types including de-centralised, flat management structures would make these principles more cohesive and coherent with the current realities of companies and organisations.
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