23-5-17
Henry Fayol (1841-1925) (French) (Father of General Management)
1. Division of work
Fayol always recommended specialization. He proposed that if a task is done by a trained specialist, it will reduce the cost of production and thereby improve profit. He recommended that to achieve specialization
A. Divide work in small tasks
B. Each task to be performed by a specialist.
Intention behind this principle is to produce more and better (efficient and effective output) with same effort.
Henry Fayol (1841-1925) (French) (Father of General Management)
14 Principle
has been taken from his book ‘General and Industrial Management’. These 14
principles are considered classic management theory
1. Division of work
Fayol always recommended specialization. He proposed that if a task is done by a trained specialist, it will reduce the cost of production and thereby improve profit. He recommended that to achieve specialization
A. Divide work in small tasks
B. Each task to be performed by a specialist.
Intention behind this principle is to produce more and better (efficient and effective output) with same effort.
Ex: In a company there
should be separate departments for finance, production, marketing and human
resources (employees) development.
Case study Ex –
If we have to make a movie we should
have finance department which will look for inflow and outflow of money needed
to produce and promote the movie. There will be one department (Human
resources) which will arrange actors, actress, musician, directors,
technicians, helpers and other people required to create the movie. There will
be one department (production) which will actually make the movie. Then there
will be one department (marketing) to inform prospective viewer that film is
ready to watch. There may be more department as per the need of the project.
Instance: Henri Fayol graduated
in mining engineering and worked in a mining company. He divided mining task in
Technical, Commercial, Financial, Security and Accounting and managerial
departments.
24-5-17
2. Authority and Responsibility
According to Fayol Authority means –
A. Right to give order
B. Obtain obedience (To punish a subordinate for willfully not obeying legitimate order)
Whereas Responsibility means - to perform the task efficiently and effectively
According to Fayol Authority and responsibility are coexisting. If authority is given to any one he should be responsible for the success or failure of the task. Similarly if responsibility is given to any one he should have sufficient authority to perform the task as per the expectation.
24-5-17
2. Authority and Responsibility
According to Fayol Authority means –
A. Right to give order
B. Obtain obedience (To punish a subordinate for willfully not obeying legitimate order)
Whereas Responsibility means - to perform the task efficiently and effectively
According to Fayol Authority and responsibility are coexisting. If authority is given to any one he should be responsible for the success or failure of the task. Similarly if responsibility is given to any one he should have sufficient authority to perform the task as per the expectation.
Ex: A sales manager has Authority to give 60 days’ credit to a buyer
if the order is 50 crore or more else he can allow only 40 days credit. Responsibility
here is that the sales manger should bring orders.
Case study Ex –
A production manager was assigned a task to produce 5,000 Shirt in 15 days. In 10 days production department could produce only 3,000 shirts. Manager passed two orders. He ordered existing workers to increase over time by 2 hours and to hire 100 new tailors. He could not pass these orders unless he had the authority from his superiors. However his order was defied by 5 existing workers. He heard their reasons of escaping orders and later fired 2 of them for not obeying willfully but other three were spared as they had genuine unavoidable personal problem.
A production manager was assigned a task to produce 5,000 Shirt in 15 days. In 10 days production department could produce only 3,000 shirts. Manager passed two orders. He ordered existing workers to increase over time by 2 hours and to hire 100 new tailors. He could not pass these orders unless he had the authority from his superiors. However his order was defied by 5 existing workers. He heard their reasons of escaping orders and later fired 2 of them for not obeying willfully but other three were spared as they had genuine unavoidable personal problem.
Facts: Fayol had divided Authority as -
A: Official authority
(group manager) and personal authority
(one manager)
B: Formal Authority
(permanent) and Informal authority
(temporary)
25-5-17
3. Discipline:
According to Fayol Discipline means –
A. Obedience to organizational rules (by the employees)
B. Obedience to employment agreement (by the management)
According to Fayol Discipline is must for the expected working of the organization. Without discipline the whole company will collapse and every one will be suffered including employees. Company may not be able to earn profit, whereas employee may not get pay, or have to accept less pay. Some employee may lose their job.
Fayol suggested three things to maintain discipline -
1. Good (unbiased) superiors at all levels
2. Clear and fair agreement
3. Judicious application of penalties (only defaulters punished)
Ex- ‘Rules’ word is important. If rule are followed, there is discipline in the company. If Rules are not followed, there is no discipline in the company. If Rule word is not there look for the word ‘Agreement’.
3. Discipline:
According to Fayol Discipline means –
A. Obedience to organizational rules (by the employees)
B. Obedience to employment agreement (by the management)
According to Fayol Discipline is must for the expected working of the organization. Without discipline the whole company will collapse and every one will be suffered including employees. Company may not be able to earn profit, whereas employee may not get pay, or have to accept less pay. Some employee may lose their job.
Fayol suggested three things to maintain discipline -
1. Good (unbiased) superiors at all levels
2. Clear and fair agreement
3. Judicious application of penalties (only defaulters punished)
Ex- ‘Rules’ word is important. If rule are followed, there is discipline in the company. If Rules are not followed, there is no discipline in the company. If Rule word is not there look for the word ‘Agreement’.
Case study Ex –
A
company was running in loss. Management and labor union entered into an
agreement. As per agreement workers agreed to work extra hours without any
additional payment to revive the company out of loss. In return management
promised to increase the wages of the workers if the mission is accomplished.
After one year company made profit. Management increased the pay of workers.
In this case study – workers followed Discipline
by working extra hours. Management followed Discipline by increasing the
pay of workers by honoring the agreement.
9-6-17
4. Unity of Command:
According to Fayol Unity of Command means –
There should be one and only one boss for every individual employee.
In other words an employee should receive order from one superior only. If he gets orders from two superiors he will be confused. He may fail to execute either both or one of the orders he receives. It will be very difficult to find out, who is responsible for the loss.
Violation of this principle ‘Unity of Command’
may lead to
A. Violation of Authority
B. Violation of Discipline
C. No execution of order
D. Threat to stability of company
9-6-17
4. Unity of Command:
According to Fayol Unity of Command means –
There should be one and only one boss for every individual employee.
In other words an employee should receive order from one superior only. If he gets orders from two superiors he will be confused. He may fail to execute either both or one of the orders he receives. It will be very difficult to find out, who is responsible for the loss.
Ex- Suppose a sales person is ordered by
marketing manager to allow maximum 10% discount to clinch (get) a deal. But
Finance Manager orders him/her to allow Maximum 5% discount to obtain a deal.
Now this is very confusing for the sales person. There is no unity of
command here
A. Violation of Authority
B. Violation of Discipline
C. No execution of order
D. Threat to stability of company
Case study Ex –
A leading soft drink company was lagging
behind in sales target. It increased its advertisement on various channels
including print as well as electronic media. The national production manager
asked every state unit to step up production to meet growing demand because of
advertisement campaign. One local production manager of south India unit had
different view. He had old unsold stock. He thought if production goes on with
normal speed even then the future demand will be met. So he ordered to produce
as usual. Now the production supervisor was confused. He, however, decided to
follow local production manager. The consequences were devastating. Local unit
failed to meet the rising demand and company suffered revenue loss together
with a dent to its image that the company is a poor supplier.
16-6-17 5. Unity of Direction: Fayol advised that all the units of the organization should be moving towards the same objective through coordinated and focused efforts. To achieve this, he proposed there should be one head and one plan.
Fayol suggested that if there are two units in the organization each one should have its own in-charge. If two units have one in-charge only, work of one of the units is defiantly going to be suffered in the long period.
Ex- Suppose a company is manufacturing Motor cycle as well as cars then it should have two separate divisions for both of them. Each division should have its own in-charge, plans and resources. In no circumstance work of two division should over lap.
Case study Ex –
Hamdard Laboratories is a 113 years old renowned organization which makes traditional medicine as well as Rooh afza syrup. Company had touched 500 crore revenue in 2010. Hamdard aimed for 1,000 crore revenue. For it company hired a consultant. The consultant advised the company to create two lateral divisions (Hamdard) 1 - H1 and (Hamdard) 2 - H2. The Hi came to be FMCG wing of the company and comprised of 190 crore flagship (main) brand Rooh afza along with Sualin, Safi, Roghan badam shirin and other such products. H2 department is to deal with traditional medicines including chinkara, masturin, joshina etc.
Company created two separate departments because before the division its lead brand Rooh afza was taking lion’s share and other products (medicine) were not getting due attention. Company was lagging behind in medicine format. After the division both medicine and syrup will get rational attention and company can achieve the revenue target of 1,000 crore. (All the units of the organization will be moving towards the same objective (1,000 crore revenue) through coordinated and focused efforts by following one head and one plan.)
16-6-17 5. Unity of Direction: Fayol advised that all the units of the organization should be moving towards the same objective through coordinated and focused efforts. To achieve this, he proposed there should be one head and one plan.
Fayol suggested that if there are two units in the organization each one should have its own in-charge. If two units have one in-charge only, work of one of the units is defiantly going to be suffered in the long period.
Ex- Suppose a company is manufacturing Motor cycle as well as cars then it should have two separate divisions for both of them. Each division should have its own in-charge, plans and resources. In no circumstance work of two division should over lap.
Case study Ex –
Hamdard Laboratories is a 113 years old renowned organization which makes traditional medicine as well as Rooh afza syrup. Company had touched 500 crore revenue in 2010. Hamdard aimed for 1,000 crore revenue. For it company hired a consultant. The consultant advised the company to create two lateral divisions (Hamdard) 1 - H1 and (Hamdard) 2 - H2. The Hi came to be FMCG wing of the company and comprised of 190 crore flagship (main) brand Rooh afza along with Sualin, Safi, Roghan badam shirin and other such products. H2 department is to deal with traditional medicines including chinkara, masturin, joshina etc.
Company created two separate departments because before the division its lead brand Rooh afza was taking lion’s share and other products (medicine) were not getting due attention. Company was lagging behind in medicine format. After the division both medicine and syrup will get rational attention and company can achieve the revenue target of 1,000 crore. (All the units of the organization will be moving towards the same objective (1,000 crore revenue) through coordinated and focused efforts by following one head and one plan.)
NOTE: This case study also shows the importance of
principle Division of work
COMPOSED BY PATHAK SIR @pathaksirbst ( at twitter)
To be continued.....
