The fundamentals of principle management were developed by French management theorist Henri Fayol (1841–1925). The principles of management are underlying factors for successful management.
The 14 principle are based on the fundamental truth and serve as a guideline for decision making and management actions.
- Division of work – This principle of management implies that if the workers are given a specialized task to do, they will become more skilful and efficient rather than in broader range of task. This promotes efficiency of workforce and increases productivity. Division of work helps in increasing the speed and accuracy of the workforce.
- Authority and responsibility – Management should be given authority to give orders to the subordinates, in order to get things done in an organization. Without any authority managers would lack the ability to get the work carried out. 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.
- Discipline – This principle states that discipline is needed to run the organization effectively. Organization rules and structures need to be met at all levels. Discipline is a part of mission and vision for the good conduct and respectful interactions within the organization
- Unity of command – This principle states that every individual employee should receive order from one manager and they are answerable to that manager. If more managers give task to the employees than this may create confusion which leads to conflicts for employees and will hamper the smooth functioning of the organization.
- Unity of direction – According to this principle, each group of activities with the same objectives must have one head and one plan. Ultimately the manager is responsible to carry out this plan and monitors the progress of the planned activities.
- Subordination of individual interest – This principle focuses only on organizational interest rather than subordinate personal interest. Henry Fayol indicates that for smooth functioning of an organization, organization objectives should be given more importance than the interest of any individual employee or group of employees.
- Remuneration – This principle argues that remuneration should be sufficient to keep employees motivated and productive. There are two types of remuneration monetary (compensation, bonus or other financial compensation) and non monetary (a compliment, more responsibilities, credits). Rewarding the efforts of an employee helps in smooth functioning of the organization.
- The degree of centralization – This principle implies decision to be made centrally from top to bottom. Top management has the authority to make decision. The organization should keep good balance in management and authority for decision making process.
- Saclar chain – This principle states the hierarchy of an organization. Hierarchy represents the clear line of authority from top to bottom and all managers at all levels. This leads to clear chain of communication existing between employees and superiors.
- Order – This states that proper use of resources and their effective deployment in a planned manner. In other words right person should be placed at right job and right thing should be placed at right place. There are two different orders material order for physical resources and social order for human resources.
- Equity – This principle implies that every employee should be treated equally. Every organization should have policies outlining what is expected from each staff at all levels. Managers should be fair and impartial while dealing with their subordinates.
- Stability of tenure of personnel – The principle states that for smooth functioning of the organization the manager should minimize employee turnover and to have right staff in the right place. The management should take steps in maintain stability in its management and workforce as possible.
- Initiative – This principle argues that employees should be allowed to express new ideas, experiences and more convenient methods of work. This encourages employees to be involved and interested which leads to add more value for the company.
- Esprit de corps – According to this principle the management should focus on promoting team spirit among employees. Happy and motivated employees are more productive and less absent. In other words, there must be unity of work and employees have mutual trust among each other.