Henri Fayol’s 14 Principles of Management with Examples

Henri Fayol, a French engineer and manager, developed a set of management principles in the early 20th century that became foundational for modern management practices. The Principles of Management are rules applied to various types of organizations, including businesses, nonprofits, and governmental agencies, to improve efficiency and effectiveness in management. In this blog, we will discuss the 14 principles of management by Henri Fayol.

In 1916, Henri Fayol published his work "Administration Industrielle et Générale," in which he postulated the 14 principles of management for general use that are still followed by businesses and organizations today. Listed below are Henri Fayol’s 14 Principles of Management with Examples -

1. Division of labor
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual Interest
7. Remuneration
8. Degree of Centralization
9. Scalar Chain
10. Order
11. Equity
12. Stability of Tenure of Personnel
13. Initiative
14. Esprit de Corps

Who Was Henri Fayol? Why His Principles Are Still Relevant?

Henri Fayol was a mining engineer who worked for the French mining company Commentry-Fourchambault and Decazeville, first as an engineer, then promoted to general manager and then director of administration from 1888 to 1918. He wrote his famous “General and Industrial Management” as a director. He developed theories on management and work organization that were widely influential in the early 20th century; his school of thought is known as the Classical Theory of Management.

Image - Henri Fayol (Image source – Wikipedia)

Henri Fayol’s 14 principles of management helped early 20th-century managers manage work and interact with employees efficiently. The 14 Principles of Management significantly influenced the present management theory.

At this time, organizations started to realize the necessity for structured management approaches to ensure efficiency and productivity. His insights provided early 20th-century managers with a comprehensive framework to manage work and interact with employees in a much more organized manner. This list of principles is still relevant and comprehensive because his general theories can be applied to all levels of management and every department. Even with the advent of so many concepts and theories, Fayol is considered one of the most influential contributors and pioneers of the modern management concept.

Fayol put forward the principles of clear authority and responsibility, the division of labor, and the need for discipline in the workforce. His principles advocate unity of command and direction, wherein employees know their roles and responsibilities within the organizational structure. This helps avoid confusion and conflict, making for a more harmonious working environment. Another principle talks about Fayol's emphasis on equity and stability of tenure underscores the importance of justice and job security to maintain morale and employee loyalty. Let us check these principles of management in detail.

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Henri Fayol’s 14 Principles of Management with Examples

Below is a detailed description of each principle of management, along with practical examples to help you understand their application in real world.

1. Division of Labor

Division of labor is a management principle, which involves the segmentation of activities within an organization into special roles or teams. The system increases efficiency and productivity through the concentration of people in one area of activity as suited to their skills and competence. When work is spread over a number of individuals or groups, each individual or group develops a better understanding and becomes more competent in their special area, leading to improved quality and quicker turnaround times.

Example: To explain it more straightforwardly, let’s take any fast food joint like McDonald’s or Burger King. Here, one person takes the order, the second assembles the burger, the third prepares the fries, the fourth readies the drink, and the first serves the entire order.

2. Authority and Responsibility

Fayol defines authority as “the right to give orders and obedience,” where the worker must be responsible for complying with the order. Both authority and responsibility must be balanced. The managers should be able to ensure their tasks are being done without fail.

Example: A company manager orders his employees to go to work the next day at an item exhibition. Therefore, they are responsible for complying with the request and showing up on time for the event.

3. Discipline

The discipline principle of management follows the previous principle and depends on obedience and compliance with established rules, that is, on behaving correctly. A culture of mutual respect must be created within teams so that discipline doesn’t feel imposed but should be a part of the organizational flow. Good supervision forms the base of the discipline.

Example: If the employees mentioned in the previous example arrive late or wear inappropriate clothing to the event, this principle will not be complied with.

4. Unity of Command

The chain of command within the teams needs to be clear. Unity of command means that every worker will always receive orders from a single boss or superior to avoid duality of information, that is, receiving two contradictory orders and not knowing which one to obey. The unity of command will help ensure no conflicts of authority.

Example: Priya is a secretary in a small family business with two owners, Raj and Mahesh. Five minutes before the end of his workday, Raj asks her to print some sales reports. Shortly after, Mahesh tells him she must go to the bank to deposit some checks. 

Who should Priya listen to? 

This would be an example of the duality of information, and the “unity of command” principle would not be fulfilled.

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5. Unity of Direction

Unity of direction suggests that all employees work towards the goal. All activities must be led by a manager responsible for the plan. Unity of direction is dependent on good organizational skills and planning. There cannot be unity of command without unity of direction. 

Example: Production activities within a production unit should be supervised and managed by one manager, while its marketing activities, such as advertising, pricing, policy, etc., must be directed by only one manager.

6. Subordination of Individual Interest

In any organization, the company’s interests must always be privileged over the particular interests of the owners and employees. This is called subordination of individual interest against the company’s interest. It will always be necessary to give more importance to what happens in the company than personal issues.

Example: Mini was responsible for meeting with a potential client for an event in a community hall on 10th August. Instead, she used that community hall to celebrate her birthday party. This way, she not only missed out on a potential client for her company but also put her reputation at stake.

7. Remuneration 

The salary paid to staff (remuneration) must be equitable, fair, and guaranteed so that all company employees can perform the same task.

Remuneration is a critical principle in management that emphasizes the importance of fair and equitable pay structures within an organization. According to Henri Fayol, remuneration should not only be competitive but also reflect the value of the work performed by employees. This principle asserts that all employees performing similar tasks should receive comparable compensation, which would foster a sense of fairness and motivation among the workforce.

Example: A company’s salespeople are paid a 3% commission as a sales award, but a newly hired employee is paid only 2%. In other words, this principle would not be fulfilled in this case.

It is also good to emphasize that there are still salary inequities due to gender issues, where women often earn less than men for the same positions and responsibilities.

8. Degree of Centralization

Example: Centralization is very common in SMEs (small and medium-sized enterprises), where the owners generally make most of the decisions. They do not delegate them or involve middle management or other employees.

9. Scalar Chain

The scalar chain principle of management suggests that hierarchy is the order in the command lines from the highest levels. In this hierarchy, the directors and managers are at the top, the middle managers (bosses and supervisors), and the lower-level employees. Hierarchy defines authority and responsibility.

Example: The lines of the hierarchy are evident in defence services with different degrees of importance. For instance, in the army, the hierarchy is as follows – Field marshal, General, Lieutenant general, Major general, Brigadier, Colonel, Lieutenant colonel, etc.

10. Order

The principle of order suggests that there should be a fixed place for everything and everyone, and everything and everyone should be in its place. This will lead to improved productivity and efficiency.   

This aligns with the scientific management theory.

Example: In a company dedicated to manufacturing auto parts in the workshop, tools and equipment are not ordered. The staff also does not have a fixed place of work assigned, and each does different tasks without an assigned role. This example defies all the components of the principle or order.

11. Equity

In any company, consistently to achieve the employees’ loyalty, it will be necessary to treat the employees in a friendly manner, without any preferences, and fairly. Equity is a combination of kindness and justice. Equity also makes it essential to talk about the importance of gender equality. This means men and women can access a position and receive the same salary.

Example: Maxine is a manager at a production workshop. She allows an employee with whom she plays golf on weekends to choose the simplest job, and she allocates a more challenging job to another colleague with whom she doesn’t get along. 

Considering that Maxine is biased in her professional behaviour, the Fayol principle of equity would not be fulfilled in this situation.

12. Stability of Tenure of Personnel

Fayol argues that it is essential to ensure that employees remain stable in their positions with the company for a long time and avoid staff turnover as much as possible. The idea of the stability of tenure of personnel is to inculcate a sense of job security and loyalty in the teams so they don’t think of leaving the organization. The sense of job insecurity is directly proportional to low labour efficiency and the high cost of training a new person to carry out their tasks. 

Example: Info Edge India Limited awards its employees for their contribution after they achieve a benchmark period (five years, ten years, and so on). This fosters loyalty toward the organization and encourages the employees to contribute their best.

13. Initiative

Fayol defines initiative as “the ability to see a plan and ensure its success.” Extending this definition, we can add that initiative is linked to people’s ability to propose, develop, or devise projects that improve current situations and the chances of meeting business goals with lesser costs and time.

Example: Alex is a production manager in a textile factory. He devised a plan to improve the manufacturing process and reduce costs by 2%, thereby taking an initiative to achieve business goals more efficiently.

14. Esprit de Corps

Esprit de Corps is a French term that means “Team Spirit.” Therefore, the management should create unity, cooperation, and team spirit among employees. Managers are responsible for fostering an environment of mutual trust, understanding, and empathy. Working as a team will achieve more meaningful results than independently. Therefore, it will be essential to achieve unity and harmony among employees.

Example: The best example of Esprit de Corps is in military combat units. These units take pride in inspiring enthusiasm and devotion and working together to defeat their counter units.

Conclusion

Fayol’s 14 principles of management are a comprehensive set of guidelines that can help managers improve the performance of their organizations. These principles are still relevant, particularly in organizational structure, employee relations, and operational efficiency. For instance, the manufacturing sector consistently applies the division of work and scalar chain principles, optimizing production efficiency. In contrast, technology firms often emphasize initiative and decentralization to stay agile and innovative. 

We hope this article on Henri Fayol’s 14 principles of management with examples helped you understand how you can manage your teams, plan, organize, control, coordinate, and make better decisions toward a common business objective.