Management Theories Of Henri Fayol Commerce Essay


This scientific approach paved way to rigid adherence to methods and procedures in which planning and control were exclusively in the hands of managers and the workers had no freedom of choice at work. It also led to increased break-up of labour due to its importance on divisional labour. Many of the human aspects of employment were ignored and it also led to the beginning of boring and repetitive jobs.

Compatibility of Taylor's theory in Today's World

+ Selection, training, employee benefits and motivation, which are areas directly relevant to managing people in today's environment are the major contribution from Taylor's theory. They are still practiced today and have been the base of every management field.

+ However, Taylorism cannot be used widely in today's business environment, where the majority of workforce entails to soft skills. The present generation organization is majorly into automation and it runs on innovative ideas and logical thinking.

Recent stock prices show that Apple Inc. beats Microsoft at Change Management. The reasons behind the stunning turnaround were found to be - the failure of imagination and failure to execute at Microsoft Corporation.

"If you want to have great people in your company you have to let them make decisions and you have to run by ideas, not hierarchy. Best ideas have to win and good people stay in the company." - Steve Jobs, ex-CEO Apple Inc.

These innovative ideas and thinking cannot be weighted on any physical scales. They need to be recognized and evaluated on human aspects and one cannot evaluate it with a scientific approach of Taylorism.

+ Taylor's scientific study of the tasks was to bring standardization to work and to overcome the inefficiency of workers in almost all of their daily acts. But in today's business world the standardization of work for a position is almost set in all the major companies across the globe and employees have the choice of adapting and implementing their skills in the best possible way to achieve the goals of the organization.

+ Division of work develops hierarchical based environment. Though it eases employees and managers to concentrate and work in specified areas, it depreciates the growth of organization to run by new ideas. Current market craves for employees who practice multitasking and have the zest to implement new technologies and eliminates employees who perform single specialized tasks in the same old routine.

Henri Fayol - Father of Administrative Management [1841-1925]

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While scientific development emphasised principles to improve worker effectiveness, another branch within the classical school arose, administrative management, with its main contributor being French industrialist Henri Fayol. He is regarded as the father of administrative management as he proposed fourteen principles of management intended to assist managers in determining what to do to manage an organisation more effectively (Rodrigues, 2001). Fayol's ideas are still valid in today's organisations and his definitions of management are widely used in this field of study.

Compatibility of Fayol's Principles of Management in Today's World

+ Today, employees are much oriented towards challenging and interesting jobs. Though the division of work help employees to specialize specific skills, they seek more challenging opportunity once they expertize on their skills. Also, companies have downsized their staff with people who are multitasking and have the quest to explore beyond their area of expertise. This has helped organizations to stay competitive with best of the employees in the field.

+ Though Managers are authorized and majorly responsible for a project commencement and its completion, companies rely heavily on employee participation and empowerment for the best outcome.

+ Matrix organizational structures have ruled over unidirectional layout of organization. Every department in an organization are heavily depended on each other and this brings together employees and managers from different departments to work toward accomplishing organizational goals.

+ Many of the private organization now practice reward based on performance - referred as performance based pay systems. This has motivated employees to bring out the best of their capabilities and potential.

+ Hierarchical decision making is vanishing in present industries. It has been observed that maximum creativity can be obtained with reduction of hierarchical elements and adapting cooperate culture. Industries now focus on less hierarchical, less formalized and flatter decision making organization structure.

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+ Commitment of an employee is achieved if the organization strongly considers the interest of the employee. In past employees strived for equity, today organizations provide 'sense of ownership' to their committed employees.

+ Stability of personnel tenure doesn't hold much significance in present organization. Downsizing strategies has flattened many middle management positions and enriched lower-level employee's job. This has helped in cost cutting and maintaining committed group of employees.

The Global recession which struck 2008-2012, ILO [International Labour Organization] predicted that at least 20 million jobs were lost by the end of 2009- mainly in construction, real estate, financial services, and the auto. This huge figure sets an example of the instability of personnel tenure today and that it depends on many factors of which global economic influence on the organization is one such reason.

+ Maintaining Esprit de corps is not practical in todays' world. Organizations these days hire more and more of temporary and project contractual basis. Moreover, downsizing strategies and prospects of staff cuts has tended to lower the employee morale.

Fayol was the first to define management which is generally familiar today as 'forecast and plan, to organise, to command, to co-ordinate and to control'. Fayol also gave much of the basic terminology and concepts, which would be elaborated upon by future researchers, such as division of labour, scalar chain, unity of command and centralization.

Many of these principles have been absorbed into modern day organisations, but they were not designed to cope with conditions of rapid change and issues of employee participation in the decision making process of organisations, such as are current today in the early 21st century.

Max Weber - [Maximilian Karl Emil Weber 1864 -1920]

Max Weber, a german sociologist whose bureaucratic studies are found to be very dominant in the present world. Bureaucratic Theory of Management by Weber is said to be the most efficient organizational structure that could be implemented to achieve the best of the organization's goals. Weber's bureaucracy was blueprint of dividing responsibility, authority and accountability.

Compatibility of Weber's Principles of Management in Today's World

+ Bureaucratic organization is a very rigid type of organization. They are bound by rigid controls and can't find themselves adaptable to changing conditions in the marketplace, industry or legal environment.

Vodafone UK's approach to Flexibility & Productivity

"Looking at the business when I arrived, I realised that while Vodafone UK's products and services remained innovative and competitive, its corporate culture was too rigid for the fast-paced market and too autocratic to attract the best new talent." - Guy Laurence, CEO Vodafone UK.

Vodafone UK idea was that if the company expects its customers to buy its products, it should also be willing to use those products .Vodafone UK reformed their organization by bringing a change in their workplace, and change in their work environment like - no assigned offices or desks, no tethered phones or computers, a variety of purpose-built meeting spaces, a tough "clean desk" and lots of coffee. The results were immediate and intense: from a good reduction in the speed of decision-making, meetings, paper, flights and sales cycle times to a high revenue growth and corporate solutions.

+ Though senior level employees in such organizational structures can exercise a great deal of control over organizational strategy decisions, front-line employees may receive less satisfaction, as it will make it practically impossible for them to generate the range of strategic ideas possible in a large, interdisciplinary group. This may result in the increase in turnover rates.

+ Weber's three types of legitimate rule are traditional, charismatic, and legal-rational authority.

Traditional Authority - In this system leaders have a traditional and legitimate right to exercise authorities. Such systems are rigid, do not encourage social change, and are found to be irrational and unreliable.

Charismatic Authority - Authority is with leaders who influence others by their mission or vision. It greatly depends on such leader's outlook and is highly tentative. They are liable to mislead the followers to a great extent, if they don't have strong doctrines.

The US invasion on Iraq

Weber's authority types help to explain the US invading Iraq in March 2003. It was the charismatic authority, personified by US President George W. Bush which lead to this invasion. He was able to influence the American populace for the urgency to attack Iraq. It is also said that, a majority of Americans were effectively influenced by Bush in whatever he did. Though there was a confliction in legal as we as charismatic authority internationally, as Bush exhibited international law and the UN by such an illegal act. Even though this invasion was illegal, the international community and legal authority of the UN were not able to enforce international law or to stop the US invasion.

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Rational Legal Authority - Authority empowered by legal and natural law. This authority has found strong roots in the modern state, city governments, private and public corporations, and various voluntary associations.

Weber as we study was strongly influenced by his mother's moral absolutist's ideas and opinions at a very young age. He followed the universal cultural history very closely and also enjoyed reading the classics. The strong roots of his expression of bureaucracy is visible in the fact that he was bored with his secondary education, that he has often described as very unchallenging.


The various management principles had been laid down since the later part of the 19th century. Applications of the approaches were mostly based on the cultural, political and environmental requirements. The real challenge of implementing the approaches was least witnessed till the late 20th century. The last 10-15 years leaders and managers involved the importance of Change as a practice. While implementing Change management within any organization, two factors that seem to be inevitable are Sustainability and Performance Management.

Sustainability and the need for change:

What does our Organization stand for?

What are we good at, and do we need to change?

How can we change?

Will we change our Organization?

Managers must evaluate their organizations and business by asking and answering to these questions, if they have a regard to sustain in an era that has been largely influenced by strategic thinking. The 2010 United Nations Global Compact-Accenture CEO study (UN Global Compact and Accenture, 2010) found that 93 per cent of CEOs now believe sustainability will be critical to the future success of their companies. A critical mass of business leaders, 80 per cent, believes a tipping point will be reached within the next 15 years when sustainability will be automatically embedded in the core business and strategies of most companies, and 54 per cent believe this tipping point could be reached within the next ten years. There is thus a significant shift in thinking - with profound implications for questions of organisational purpose, strategy, brand, competence and culture - globally.(Journal of Organizational Change Management, Carla Miller, Vol. 25 Iss: 4 pp. 489 - 500, 2012).

Performance Management:

It must be a continuous process and an integrated part of any manager - employee relationship. One of the most important aspect of performance management is setting challenging goals. In practice, as we learn goals in a modern world are contextual or situational.



Journal of Organizational Change Management, Carla Miller, Vol. 25 Iss: 4 pp. 489 - 500, 2012

Bonini, S., Go¨rner, S. and Jones, A. (2010), "How companies manage sustainability", McKinsey Global Survey Results

Hind, P., Wilson, A. and Lenssen, G. (2009), "Developing leaders for sustainable business", Corporate Governance, Vol. 9 No. 1, pp. 7-20.

Patrick Hereford, 2003, Case study on The Eurostar and The Channel Tunnel.

Mohd Dali Nuradli Ridzwan Shah Bin, Mudasir Hamdi Hakeim, Abdul Hamid Suhaila, 2008, International Journal of Islamic and Middle Eastern Finance and Management in Performance of Shariah compliance companies in the plantation industry, Volume: 1 Issue: 2.

Walid El Ansari, Edward Andersson, 2011, Beyond value? Measuring the costs and benefits of public participation in Journal of Integrated Care Volume: 19 Issue: 6

Maria C.A. Balatbat, Cho-Yi Lin and David G. Carmichael, Management Efficiency Performance of Construction Businesses in Australian Data, Sydney, Australia.

Conference Paper

Michel-Alexandre Cardin, 2009, Case Study on the Value of Information and Flexibility in Oil Development Projects, Inspired from the paper by Babajide et al. (2009).

Babajide, A. 2001, Real Options Analysis as a Decision Tool in Oil Field Developments. Master of Science Thesis in Systems Design and Management, Massachusetts Institute of Technology, Cambridge, MA.

Babajide, A., de Neufville, R., and Cardin, M.-A. 2009. Integrated Method for Designing Valuable Flexibility in Oil Development Projects. SPE Projects, Facilities, and Construction. SPE-122710-PA. (In press; posted 19 February 2009).

Electronic Books, Monographs and databases

Electronic Book

Manshu, 2010, what is IRR and how is it calculated? In Investments

Samuel L. Baker, 2000, Perils of the Internal Rate of Return

A Chapter in a book

Chris Hendrickson, 1998, Fundamental Concepts for Owners, Engineers, Architects and Builder in Project Management for Construction; Chapter 6: 6.5


- Investopedia - What are the disadvantages of using net present value as an investment criterion? Chris Gallant March 27,2006

- Investopedia - CFA level 1 Study Guide, Chapter 11, Lesson 11.4