Administrative Management Theory

 A theory that attempts to find a rational way to design an organization as a whole. It generally calls for a formalized administrative structure, a clear division of labor, and delegation of power and authority to administrators relevant to their areas of responsibilities.

This theory was presented by Henri Fayol. He focused his attention on manager rather than worker. He emphasized the training of the managers for improving an organization. He defined administration in terms of five functions which are planning, organizing, commanding, coordinating and controlling.

Fayol’s 14 Principles of Management

1. Division of Labor, The more people specialize, the more efficiently they can perform their work. The principle is epitomized by the modern assembly line.

2. Authority, Managers must give orders so that they can get things done. While their formal authority gives them the right to command, managers will not always compel obedience unless they have personal authority (such as relevant expertise) as well.

3. Discipline, Members in an organization need to respect the rules and agreements that govern organization. Discipline will result from good leadership at all levels of the organization, fair agreements (such as provision for rewarding superior” performance), and judiciously enforced penalties for infractions.

4. Unity of Command, Each employee must receive instructions about a particular operation from only one person. When an employee reported to more than one superior, conflicts in instructions and confusion of authority would result.

5. Unity of Direction, Those operations within the organization that have the same objective should be directed by only one manager using one plan. For example, the personnel department in a company should not have two directors, each with a different hiring policy.

6. Subordination of Individual to the Common Good, The interests of employee should not take precedence over the interests of the organization as a whole.

7. Remuneration, Compensation for work done should be fair to both employee and employers.

8. Centralization, Managers should retain final responsibility but also need to give their subordinates enough authority to do their jobs properly. The problem is to find the best amount of centralization in each case.

9. The Hierarchy, The line of authority in an organization often represented today by. The neat boxes and lines of the organization chart-runs in order of rank from top managers to the lowest level of the enterprise.

10. Order, Materials and people should be in the right place at the right time. People in particular should be in the jobs or positions most suited for them.

11. Equity, Managers should be both friendly and fair to their subordinates.

12. Stability of Staff, A high employee turnover rate is not good for the efficient functioning of an organization.

13. Initiative, Subordinates should be given the freedom to conceive and carry out their plans, even though some mistakes may result.

14. Esprit de Crops, Promoting team spirit will give the organization a sense of unity. Even small factors may help to develop this spirit. Fayol suggested the use of verbal communication instead of formal, written communication whenever possible.