One of the oldest and most popular approaches, Henry Fayol’s theory holds that administration of all organizations – whether public or private, large or small – requires the same rational process or functions.
This school of thought is based on two assumptions:
Although the objective of an organization may differ (for example, business, government, education, or religion), yet there is a core management process that remains the same for all institutions.
Successful managers, therefore, are interchangeable among organizations of differing purposes. The universal management process can be reduced to a set of separate functions and related principles.
Fayol identifies fourteen universal principles of management, which are aimed at showing managers how to carry out their functional duties.
| 1. Specialization of labor | This improves the efficiency of labor through specialization, reducing labor time and increasing skill development. |
| 2. Authority | This is the right to give orders which always carry responsibility commensurate with its privileges. |
| 3. Discipline | It relies on respect for the rules, policies, and agreements that govern an organization. Fayol ordains that discipline requires good superiors at all levels. |
| 4. Unity of command | This means that subordinates should receive orders from one superior only, thus avoiding confusion and conflict. |
| 5. Unity of direction | This means that there should be unity in the directions given by a boss to his subordinates. There should not be any conflict in the directions given by a boss. |
| 6. Subordination of individual interest to common good | According to this principle, the needs of individuals and groups within an organization should not take precedence over the needs of the organization as a whole. |
| 7. Remuneration | Wages should be equitable and satisfactory to employees and superiors. |
| 8. Centralization | Levels at which decisions are to be made should depend on the specific situation, no level of centralization or decentralization is ideal for all situations. |
| 9. Scale of chain | The relationship among all levels in the organizational hierarchy and exact lines of authority should beunmistakably clear and usually followed at all times, excepting special circumstances when some departuremight be necessary. |
| 10. Order | There should be a place for everything, and everything should be in its place. This is essentially a principle of organization in the arrangement of things and people. |
| 11. Equity | Employees should be treated equitably in order to elicit loyalty and devotion from personnel. |
| 12. Personal tenure | Views unnecessary turnover to be both the cause and the effect of bad management; Fayol points out its danger and costs. |
| 13. Initiative | Subordinates should be encouraged to conceive and carryout ideas. |
| 14. Esprit de corps | Team work, a sense of unity and togetherness, should be fostered and maintained. |
