Introduction:
This topic paper provides an overview of the life of management theorist Henri Fayol, discusses the development of his key works, and explores the environment that influenced his theories. It also examines the relevance of his theories in today’s context.
Biography:
Born in 1841 in Istanbul, Turkey, Henri Fayol received his education at a mining school in Saint Etienne and graduated in 1860. He initially worked as an engineer in a mining company called Compagnie de Commentry-Fourchambeault-Decazeville in Commentry.
He was later appointed as the Director in 1888 (Wren & Bedeian 2009). Fayol realized that businesses needed managerial ability to succeed and that it should be taught in schools. To develop his management ideas, he drew from his personal experience as Chief Executive and wrote “elements” of administration in “Administration Industrielle et Generale”, which was published in 1961 (Wren & Bedeian 2009). He believed that a manager should possess physical, mental, and moral qualities, as well as general education, specialized knowledge, and experience (Wren & Bedeian 2009).
The lack of management training in schools led Fayol to recognize the necessity for management theory. He developed fourteen principles of management (Fayol, 1949) as a framework to assist managers in solving work-related issues. Additionally, Fayol was the first to delineate the functions of a manager’s job, which encompassed five elements: Planning, organizing, command, coordination, and control (Wren & Bedeian 2009). Planning, in particular, held significant importance by forecasting future events that dictate the company’s subsequent actions.
Organizing includes the development of organizational structure and the flow of communication and authority. Commanding involves managers directing employees through effective communication and the use of discipline and remuneration. Coordinating is the process of creating relationships among the organization’s efforts to achieve common goals, while controlling involves managers evaluating employee performance (Montana & Charnov 2000). Political Factors
The poor working conditions and strikes that occurred in the 1890s and early 1900s were a consequence of extended working hours and inadequate pay. These conditions had a significant impact on Fayol’s development of management theories, particularly his principles of “division of work” and “remuneration”. Prior to 1892, there were no regulations governing employee workdays. However, from 1892 to 1906, laws were enacted to restrict working hours. This resulted in the establishment of standardized work hours, with employees working ten hours per day or sixty hours per week, including a designated rest day. Despite these improvements, workers still organized strikes between 1906 and 1910 to demand higher wages and shorter workdays for themselves (Pierre, 1984).
In response to political unrest, Fayol created his principle of “division of work” to limit resource waste and improve organizational efficiency. He emphasized the importance of workers and managers collaborating on tasks to increase productivity. However, changing work responsibilities can negatively impact output due to the need for adaptation. Fayol also stressed the significance of fair compensation that satisfies both employees and the company, including methods such as hourly rates and profit sharing (Fayol, 1949). These principles consider social factors within the organization.
During a speech in 1900, Fayol emphasized the importance of establishing principles of management within the mineral industry. He compared France’s education system to highlight the limited focus on management education. Emphasis was placed on mathematical and technical skills, while subjects like management skills, accountancy, history, physics, and moral education were either scarcely taught or completely disregarded. The educational approach prioritized passing scientific knowledge to students, which had a negative impact on education and work.
According to Fayol (1930), students perceived school as a waste of time due to the emphasis on mathematical skills. Additionally, managers and engineers expressed the belief that higher mathematical skills were unnecessary in their work. Fayol argued that these skills not only had no practical application in the workplace, but also left younger generations unprepared to take over for retiring engineers. As a solution, Fayol called for a reevaluation of the school curriculum, suggesting the removal of subjects that are not useful in the workplace and the introduction of practical work to better prepare students for their future careers.
According to Fayol (1930), administration is considered an art that involves handling people and perfection comes with practice. The economic conditions during that time greatly influenced Henri Fayol and the development of his theories. The companies located in central France faced tough competition from the east and north of France, mainly due to the increasing development of metallurgical institutions since the 1860s. This competition posed a threat to the profits and even the existence of companies in central France, as stated by Wren, Bedeian, and Breeze (2002). Additionally, in 1871, France suffered a loss in the war against Germany, resulting in significant damage to the French economy (Pierre, 1984).
Between 1882 and 1887, France faced a decline in its iron and steel industry. In 1888, Henri Fayol became the president of Comambault when the company’s performance was deteriorating. By that year, dividends had not been paid since 1885 and the company was experiencing losses. Moreover, the coal reserves at Commentry and Montvicq were depleting rapidly (Wren, Bedeian & Breeze, 2002). Essentially, the company was on the verge of bankruptcy. Nevertheless, under Fayol’s guidance, Comambault managed to succeed by implementing strategies like mergers, centralizing facilities to benefit from economies of scale, hiring specialists, and investing in research facilities.
Comambault was transformed into a specialist steel supplier, as stated by Wren (2009). The historical evidence shows that Fayol’s management methods revived the company after it had declined before 1888. His success was largely due to his development of management theories. The challenging economic conditions and the retention of the same employees throughout the decline and recovery periods provided him with valuable managerial experiences. These experiences during difficult times influenced Fayol’s creation of management theories. Intellectual Influences
Fayol’s management ideas were primarily influenced by his personal experience as a managing director, rather than other intellectual factors. During the late 19th and early 20th century, Frederick W. Taylor’s concept of “scientific management” had a significant impact on industrial policy in Britain, France, Germany, Russia, and Japan. While Taylor’s concepts were widely accepted and implemented, Fayol’s works contradicted Taylor’s ideas, indicating that he was not influenced by the prevailing management trend at the time. This suggests that Fayol’s work was revolutionary and derived from his own experiences as a general manager.
Furthermore, early interpretations distinguished between Fayol’s and Taylor’s work. Taylor focused on management at the technical level (bottom up), while Fayol examined it from the perspective of upper-level administration (top-down) (Wren, 2009). Fayol’s ability to transform personal experiences into principles is evident in his earlier years. During his time as a mining engineer, Fayol diligently maintained a diary in which he documented events that influenced the productivity of the mine.
In 1861, the operations stopped when a horse broke its leg because the stable keeper had no authority to take action without a manager (Wren, 2009). This incident prompted the addition of a “gangplank” to the “scalar chain”, enabling communication between different levels of the organization quickly and without burdening the firm’s scalar chain. In 1908, Fayol mentioned in his personal papers that planning was essential for success and that he anticipated future events while preparing the annual budget (Wren, Bedeian & Breeze, 2002). This suggests that Fayol gained valuable insights into management from his experience performing administrative duties. It is evident that Fayol’s personal experiences as the Managing Director (CEO) of Comambault had a significant influence on him rather than intellectual factors. Furthermore, Fayol’s ideas were also influenced by Stephane Mony, who hired and mentored him in 1860. Under Mony’s excellent leadership, the company experienced substantial growth and development (Witzel, 2003).
Mony, as a mentor and manager, may have had a direct impact on Fayol’s initial thoughts about management concepts. Currently, Fayol’s theories on management continue to be applicable. An example of this can be seen in Bill Gates, the creator of Microsoft, who maintained personal communication with his employees during the early stages of the company. Nevertheless, with the expansion of Microsoft came an increased need for effective management. As a result, Gates implemented Fayol’s five elements of management – planning, organizing, leading, and controlling – to accomplish the organization’s objectives (Mescon et al., 1999).
When IBM sold Lexmark due to downsizing, Lexmark needed to find a way to survive as it was in debt (Grant, 1997). Utilizing the organizational chart derived from the organization structure, Lexmark was able to establish a hierarchical structure of authority and communication, ultimately helping them achieve their goal (Mescon, Bovee & Thill, 1999). The incorporation of Fayol’s scalar chain of command, in the form of organization charts, enabled managers to design the company’s structure and illustrate the flow of communication and authority, a principle that is still widely implemented today.
Conclusion: Fayol, who began as a mining engineer and rose to become a director, shared his extensive management experiences through his key works. His theories were largely influenced by social, political factors, and personal experiences as a manager. Despite being developed nearly a century ago, Fayol’s theory of management remains relevant and widely utilized. Consequently, he is often referred to as the “Father of Modern Management.”
