Classical organization theory modified

Henri Fayol (1841-1925)

Henri Fayol A greater sense of practical realism can be seen in the work of Henri Fayol (1949) who outlined a series of 'principles of management' by which an organization might be effectively controlled.

1. Division of work. Fayol saw specialization as a natural human process, seen in every society. Repetition of the same function brings speed and accuracy, thus increasing output. If work is divided according to skill and technical expertise, each item of work can be given to the employee most able to deal with it.
2. Authority and responsibility. Fayol defined authority as 'the right to give orders and the power to exact obedience.' He emphasised the importance of linking authority to responsibility, which together required increasing judgement and morality at senior levels. He justified higher pay for commercial managers in comparison with senior civil servants since, in his view, the latter exercised authority without responsibility. In general, he concluded that 'responsibility is feared as much as authority is sought after, and fear of responsibility paralyses much initiative and destroys many good qualities.'
3. Discipline. Defined as obedience, application, energy, behaviour and outward marks of respect. Fayol regarded discipline as essential for for the smooth running of business without which an enterprise is unable to prosper. He attributed discipline to good leadership
4. Unity of command. 'For any action whatsoever, an employee should receive orders from one superior only. Such is the rule of unity of command (...) Should it be violated, authority is undermined, discipline is in jeopardy, order disturbed and stability threatened.' We will find in our later discussion that many modern concepts of organization are totally contradictory to Fayol's principle. Fayol regarded 'dual command' as one of the greatest sins of management, leading to uncertainty and hesitation on the part of subordinates and conflict between managers.
5. Unity of direction. 'One head and one plan for a group having the same objective.'
6. Subordination of individual interests to the general interest. There should be no conflict of interest between individual ambition and the well-being of the organization as a whole. This principle requires a firm but fair hand from superiors who should set a good example. It requires constant supervision.
7. Remuneration of personnel. Fayol looked for some basic principles in the method of payment that remain contentious:
• it shall assure fair remuneration;
• it shall encourage keenness by rewarding well-directed effort;
• it shall not lead to over-payment going beyond reasonable limits.
8. Centralization. Part of the 'natural order', Fayol considered that an element of centralization must always be present. He regarded the debate betwen centralization and decentralization to be one which had no precise solution.
9. Scalar chain (line of authority). The unity of command can lead to excessively chains of authority which hinder communication. Hierarchic organizations regularly insisted that departments communicated with each other only through their heads. This meant that the volume of work handled by a department mushroomed as items went up and down the chain in a game of 'pass the parcel'. Fayol rightly condemned this as inefficient and advocated a 'gang plank' arrangement whereby juniors involved in regular interactions with other departments dealt directly with each other, cutting out the hierarchy. Unwittingly, Fayol provided a key to modern organizations which he could not have conceived. As will be seen later, electronic gang planks have become so efficient that networked organizations are possible which no longer have any requirement whatsoever for layers of management.
10. Order. 'A place for everyone and everyone in his place.' For Fayol, this presupposed the resolution of 'the two most difficult managerial activities: good organization and good selection.' He saw the basic problem as the balancing of an organization's requirements with its resources. The larger the business, the more difficult this became: 'when ambition, nepotism, favouritism or merely ignorance, has multiplied positions without good reason or filled them with incompetent employees, much talent and strength of will and more persistence ... are required in order to sweep away abuses and restore order.'
11. Equity. In order to obtain commitment from employees, they must be treated equally and fairly.
12. Stability of tenure of personnel. A matter of proportion, but employees need a period of stability in a job to deliver of their best.
13. Initiative. Being allowed to think through a problem and implement a solution is a rewarding experience which increases motivation. Fayol cautions managers against the personal vanity which prevents them from allowing this opportunity to their subordinates.
14. Esprit de corps. 'Dividing enemy forces to weaken them is clever, but dividing one's own team is a grave sin against the business.'

Key criticisms of classical organization theory

References:

Fayol, H. (1949) General and industrial management, translated from the French edition (Dunod) by Constance Storrs, Pitman.