Maharashtra State BoardHSC Commerce 12th Board Exam
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Answer the following. Explain 14 principles of Henry Fayol in detail. - Organisation of Commerce and Management

Answer in Brief

Answer the following.

Explain 14 principles of Henry Fayol in detail.

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  1. Principle of Division of Work:
    According to this principle, the work is divided into different kinds such as technical, financial, commercial, security operations, accounting, and managerial. It is assigned to employees as per their qualities and capabilities. It helps in improving the efficiency and expertise of employees which ultimately turns into expected productivity level.
  2. Principle of Authority and Responsibility:
    Authority is the right to make decisions. It is necessary to get the things done appropriately from subordinates. Authority always comes with responsibility. If the manager is given the authority to complete a task within a given time, he should be held responsible if he does not complete the work in a given time. Managers should have the proper authority to take managerial decisions on their own with respect to the goal.
  3. Principle of Discipline:
    According to Fayol, discipline is the most essential thing in the organization. Employees must obey and respect the rules that govern the organization. Discipline helps to achieve the goals of the organization. Good discipline is the result of effective leadership. There must be a clear understanding between the management and workers regarding the organization's rules. Basic discipline should be observed at all levels of management.
  4. Principle of Unity of Command:
    Each member of the organization should receive orders from only one superior. This principle helps in managing conflicts and solving disputes among people in an organization. It also helps in avoiding confusion. If an employee receives commands from more than one authority, he will get confused and will not be able to take decisions about whose orders should be followed.
  5. Principle of Unity of Direction:
    This principle states that 'there should be one head and one plan' in every organization. Each group in the organization should have the same objective and the group should be directed by
    one manager using a single plan.

6. Principle of Subordination of Individual Interest to Organizational Interest:
According to this principle, the interest of an individual must be given less importance than the interest of the organization. While taking decisions in the organization the manager should always consider the interest of the whole group rather than the interest of a single employee.
Similarly, the employee should protect the interest of the organization first and his personal interest should be subordinated.

7. Principle of Centralization:
Centralization refers to the concentration of powers and authorities. In some organizations, this power is vested in one hand or a few hands. According to this principle, there must be a proper balance between centralization and decentralization in the organization. This is to be done according to the size of the organization, nature of the activity, etc.

8. Principle of Remuneration:
Appropriate remuneration to staff or employees is the principle to keep them satisfied financially as well as retain them for a long span of time within the organization. The fair remuneration effects on the productivity and efficiency level in total. The remuneration should be fixed by taking into consideration the skill, expertise, knowledge, tenure, cost of living, market trend, the profitability of the organization, etc.

9. Principle of Scalar Chain:
Scalar chain means the hierarchy of authority from the top level to the lower level for the purpose of communication. This helps to ensure the orderly flow of information and communication.
Traditionally, organizations used to frame a large scalar chain which is time-consuming. For avoiding this longer chain and to take speedy decisions cross-communication or direct communication is followed by various organizations that are known as Gang Plank. For direct communication, proper permission of the authorities is necessary.
But to avoid delay or in an emergency situation, there will be direct communication. It is termed as Gang Plank.

10. Principle of Order:
This principle is based on 'A place for everything and everything in its place'. Human resources and materials should be in the right place at the right time for maximum efficiency. Human resources should be placed in the right place and on the right job. The principle focuses on the proper utilization of physical and human resources.

11. Principle of Equity:
Management should be fair as well as friendly to the subordinates. While dividing the work, delegating the authorities, deciding the monetary terms, etc. There should not be any discrimination between the employees. It is also suggested that the remuneration should not depend on the department but at the level on which subordinates are working.

12. Principle of Stability of Tenure:
At the time of recruitment of employees, the management should assure them about the stability of tenure or job security. It plays a very important role in creating a sense of belongingness among the employees. Insecurity in a job always affects the efficiency of employees adversely whereas job security minimizes employee turnover ratio.
13. Principle of Initiative:
The initiative refers to volunteering to do the work in an innovative way. The freedom to think and work on new ideas encourages employees to take initiative while working on a given task. This initiative should be welcomed by the manager including a thorough discussion on those new ideas. It also helps in creating a healthy organizational culture.

14. Principle of Esprit de corps: (Teamwork)
Henry Fayol has given the emphasis on teamwork. Esprit de corps means the union is strength.
Running any organization is a group activity and human resources are the valuable asset of the organization. If all employees are working as a union and with mutual trust, the difficulties can be solved quickly. Therefore, as a leader, managers should create a spirit of teamwork and understanding among employees to achieve the organizational goals easily.

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