How relevant are Fayol's ideas on managing groups and individuals in today's business world?

University Degree Business and Administrative studies

Almost 90 years after Fayol published his most studied work, Administration Industrielle et Generale, the field of management appears to be undecided on its relevance. The great advances in all aspects of commercial enterprise which have occurred since 1916, have taught us many things. Just how relevant are Fayol’s ideas on managing groups and individuals in today’s business world? Small parts of Fayol’s work are certainly not as relevant as they may have been in 1916, and general knowledge now tells us, quite simply, some of the ideas are wrong. However, to discredit the entire work on the basis of several minor sections would be regrettable. The majority of Fayol’s work on management is still of great relevance to today’s business world. The intention of management theory in general, is to provide an understanding of the function, allow education and therefore improvements in the role of manager and improve the effectiveness of organisations. I do not wish to endorse Fayol’s ideas as a whole, as simply relevant, or not, to today’s economic climate. By examining his ideas individually, the 14 principles, then five elements, I feel a better appreciation will be gained for their relevance today.

Fayol stressed that the 14 principles were by no means exhaustive, and wished for them to be interpreted in a flexible manner (Fayol 1949, 19). In examining these 14 principles, it will become obvious that they do not all hold the same level of relevance to today’s business world. Even in devising a contemporary version of these 14 principles, Rodrigues

suggests that ‘research is also likely to reveal that many modern organizations do not apply all 14 contemporary principles, and that many organizations apply some principles more intensively than others’ (Rodrigues 2001, 885-6).

On the production lines of today’s large manufactures, one will still experience specialisation. Like anything, moderation is the key, and negative consequences are to be expected if division of work is excessive. Fayol himself recognised this, ‘division of work has its limits which experience and a sense of proportion teach us may not be exceeded’ (Fayol 1949, 20). Today this concept stands true.

The emphasis placed on authority in the 21st century appears to have decreased since the publication of Fayol’s work, especially in western countries with low power distances. While the relevance of these ideas may be less substantial, to say that authority and responsibility are no longer applicable today, would be inaccurate.

Regardless of how much importance is placed on the well-being of employees in today’s environment, discipline (based on standing agreements) is still important. As Fayol noted, the rights of employees were on the rise, with workers’ associations playing a large part (Fayol 2000, 23). So although organisations have lost some freedom in regards to the sanctions they may impose, discipline is, to a greater or lesser extent, found in all organisations today.

The principle of unity of direction is still as informative today as when first penned by Fayol almost 90 years ago. ‘One head one plan’ (Fayol 1949, 25) stresses the importance of coordination of effort, which is no less applicable today than in 1916. The significance of this principle was supported by the Institute of Administrative Management (I.A.M 2000), who devised a list of ten principles for effective administrative management in the 21st century, in which unity of direction was included. The list was based on interviews with senior members of the Institute of Administrative Management-UK.

Firmness, a good example by superiors, fair agreements and constant supervision, according to Fayol (1949, 26), are the best means of effecting subordination of the individual interests to the general interest. Employees today appear to have more flexibility and freedom and as a result constant supervision in many situations no longer seems appropriate. Changes to the political climate in the past 90 years have influenced the extent to which this principle can be enforced, its relevance though is still apparent to the effective operation of any organisation.

Fayol (1949, 26-32) spends over six pages discussing remuneration, by far ...

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Fayol (1949, 26-32) spends over six pages discussing remuneration, by far the most detail of all 14 principles. The discussion includes time, job and piece rates, bonuses, profit sharing and non-financial incentives. Fayol concludes that there is no one best option in relation to remuneration, it is dependant on a variety of factors. Today this is still the case, for example, much debate in the media particularly, arose from incentives paid to top executives. Motivation, or ‘ensuring keenness’ as Fayol (1949, 27) put it, is particularly appropriate to organisations operating in today’s competitive world.

A recipe for disaster in today’s fast moving world is how I.A.M (2000, 8) has described Fayol’s principle of centralisation, which leaves the impression that Fayol was rigid, requiring or even suggesting a certain level of centralisation. ‘The question of centralization or decentralization is a simple question of proportion, it is a matter of finding the optimum degree for the particular concern’ (Fayol 1949, 33). This best describes and confirms the validity of Fayol’s discussion on the matter. Stability and complexity of the environment, size and geographical dispersion, and experience and competence of low level managers are all factors which influence the level of centralisation present, or appropriate to, different organisations (Robbins et al 2003, 280). In today’s fast changing world, this emphasis on proportion has seldom been as crucial.

Fayol described order in relation to physical materials as ‘a place for everything and everything in its place’ and with respect to employees ‘a place for everyone and everyone in his place’ (Fayol 1949, 36). Elements of Fayol’s ideas on order have been used to great effect in recent times, particularly by the Japanese, with systems such as JIT (Just In Time) management (Archer 1990, 19).

Equity was also included in the I.A.M in its list of ten principles (I.A.M 2000). ‘Equity results from the combination of kindliness and justice’ (Fayol 1949, 38). Today society in general expects higher standards of equity than it did in the past, ensuring this principle is as relevant as ever.

If Fayol’s work had been written today, greater emphasis may have been placed on the importance of the stability of tenure of personnel. It was common practice in years gone by, as was the case with Fayol himself, to be employed at the completion of one’s formal education and remain with the same company until retirement. It is widely accepted today that very few individuals will be employed by the same company, or even in the same occupational field, for their entire career. This is a reality of today’s business environment. As a result, organisations must devote more time and resources to develop strategies to cope with increasing levels of employee turnover. This being the case, Fayol’s ideas on this topic may have more significance today, than they did at the turn of last century.

Initiative is and will forever continue to be crucial to the success of all organisations, never more so than in today’s fiercely competitive environment. Initiative was the third of Fayol’s principles included in I.A.M list (I.A.M 2000).

The central idea of esprit de corps is ‘Harmony, union among the personnel of a concern, is great strength in that concern’ (Fayol 1949, 40). Team building exercises are an extremely popular tool today in developing team strength and morale. Trust and unified commitment and mutual understanding are all characteristics of effective teams, and can be developed and fostered by such team building activities, which have their foundation in the principle of esprit de corps (Robbins et al 2003, 432-434). Archer (1990, 20) strengthens this argument: ‘The use of quality circles, disciplinary training, exercise sessions and other group interaction activities common to the Japanese management style conform remarkably to the conceptual intent of the principle of esprit de corps’.

The five elements of management introduced by Fayol (1949) are covered in reasonable detail, but due to the years of literature based on these elements, they seem to be generic in nature. A testament to the relevance of the five elements is the fact that much of the detail contained within Fayol’s writing, seems to be general knowledge today. For example, I.A.M (2000, 8) suggested ‘the five ‘elements’ are still recognised as relevant and appropriate for managers of today and tomorrow’. In recent times Fayol’s elements of management have been applied and brought about exceptional results in circumstances as diverse as the management of a refugee camp in Tanzania, to the management of a professional baseball team in the United States (Mintzberg 2001 & Puerzer 2003).

Fayol faced a much different world in the early 20th century than we do today. Although considered stable by today’s standards, the economic climate of the coal and iron industry at the time, was fiercely competitive and presented a variety of uncertainties, risks and challenges to Fayol and Comambault (Wren 2001). This has no doubt contributed to the importance Fayol placed on planning. Unity, continuity, flexibility, and precision are all crucial to a good plan of action (Fayol 1949, 45). Today, the case is no different. The significance of flexibility has been amplified as a result of the high degree of change in the current business environment, resulting from such phenomena as globalisation and advances in information and communications technology. Planning takes on greater importance in times of great change and uncertainty. Those who anticipate change, and are thus prepared when it occurs, will have an improved chance of success, as indicated in the I.A.M study:

Good managers embrace change as a core element of their jobs. They don’t resent it. They welcome it and even seek it out, to safeguard the long term future of their organizations (I.A.M 2000, 9).

Fayol (1949) spends some effort using his own experiences with Comambault to provide an example of how planning can be undertaken, its advantages and shortcomings. Lammond goes as far as to say that in regards to planning, Fayol ‘recognises the benefits of what we would call today ‘benchmarking’’ (Lamond 1998, 5).

Fayol’s initial definition of organising a business is ‘to provide it with everything useful to its functioning: raw materials, tools, capital, personnel’ (Fayol 1949, 53). Yet most of the detail in this section documents the hierarchical structure of an organisation. These ideas tend to be in line with the mechanistic structure of an organisation, a structure not adhered to by many of today’s companies. A higher level of relevance is present in the nature of the organisational chart discussed by Fayol, which is in wide use throughout the world today. Total Quality Management is a popular contemporary philosophy, with strong significance today, later sections of Fayol’s work on organising appear ‘to foreshadow the total quality management (TQM) movement’ (Lamond 1998, 6).

Fayol’s understanding of command is of great relevance today, perhaps more so than when first written. The purpose of command is explained as ‘to get the optimum from all employees of his unit in the interest of the whole concern’ (Fayol 1949, 97). Several aspects of command are detailed, all of some significance today, only two will be discussed here. First, the principle of ‘Periodic audit of the organisation’ (Fayol 1949, 100-101), has great significance today. ISO quality standards, and compliance to, are of great importance to most large organisations throughout the world. The fact that formal bodies have been established around this concept, confirms its relevance today. Secondly, ‘do not become engrossed in detail’ (Fayol 1949, 102) is an essential efficiency concept for all managers dealing with the information overload of today.

As a whole, the discussion on co-ordination is still very much relevant. Fayol (1949, 103) describes the term as ‘to facilitate its working and its success’. No organisation can exist today without effective co-ordination. Competition and the need to be cost effective, requires a need ‘to accord things and their actions their rightful proportions’ (Fayol 1949, 103). Conferences, or teams meetings, and in particular their structure and purpose follow in the discussion. Co-ordination and co-operation between departments, and problem solving are only a few of the benefits of such meetings, which today, are religiously adhered to by the majority of the corporate world.

Although not a detailed section of work, the relevance of Fayol’s work on control is no less evident. With today’s high quality standards, and the ever-present desire for increased efficiency, it is crucial that ‘everything occurs in conformity with the plan adopted, the instructions issued and principles established’ (Fayol 1949, 107). Although the method of control may have changed in the last 100 years, especially with technological advancements, as suggested by Buhler (1998, 18), the idea or element of control is just as important today. Lammond’s discussion of control goes further in saying ‘there is a strong sense of total quality management and the learning organisation in Fayol’s principles here’ (Lammond 1998, 7).

It has been the dynamic changes in organisational structure and the success of contemporary organisational designs which have contradicted Fayol’s theories on unity of command and scalar chain. The variety of applications for teams in today’s environment, from self managed to project and matrix structures, make them a crucial element for effective operation in many organisations. Fayol’s ideas on unity of command and line of authority are incredibly rigid. In today’s environment, the rigidity of these ideas are their undoing. Numerous organisations throughout the world have successfully implemented varying types of team management. New York Life Insurance, implemented team management in 1991, Executive Vice President, Lee M. Gammill Jr commented that the beneficial results of such structure, ‘makes hierarchy for its own sake obsolete’ (Gammill 1992, 63).

Much of the debate on the validity Fayol’s work arises from an apparent need to have one, all encompassing, absolute, management model applicable to all situations, environments and climates. Fayol’s work has often been discredited on the basis that it does not provide a ‘one size fits all’ solution to all management problems. Numerous authors including Baker (1991) appear to have been looking for a missing key that would open the door, providing the answers to all of the complex issues of management. In describing Fayol as someone who put up ‘accurate sign posts’ on the management process, Baker went on to say that ‘since those signs went up we have managed to rewrite them, to add to them, to reposition them, and in some cases to ignore them; but nothing has worked, we cannot find the right road.’ (Baker 1991, 6). Fayol himself understood the diversity of the management position: ‘There is no limit to the number of principles of management, every rule or managerial procedure which strengthens the body corporate or facilitates its functioning has a place among the principles so long, at least, as experience confirms its worthiness’ (Fayol 1949, 19). Fayol’s elements and principles are the basis of, entrenched in, or form part of nearly all management ideas present today. Even if we were to reject Fayol’s ideas on management, it would be impossible not to acknowledge the underlying understanding he provided. There are today, many who support the relevance of Fayol’s ideas including Carroll and Gillen (1987) and Fells (2000). The latter feels, that in fact, ‘The Fayol model appears to be very much supported and reinforced by contemporary models’ (Fells, 2000, 7 of mine). The ideas provided by Fayol (1949) almost 90 years ago still today provide excellent descriptions on much of the management role. Although small parts are no longer entirely compatible with today’s business world, the large majority of the work is as relevant as it was when first written.

Reference List

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