Introduction This topic paper covers the overview of the life of management theorist, Henri Fayol, the development of his key works, and looks into the environment which influenced Fayol’s development of theories. This paper also gives a review of relevance of his theories in today’s context. Biography Born in 1841 in Istanbul, Turkey, Henri Fayol received his education at a mining school at Saint Etienne and graduated in 1860. He started off as an engineer in a mining company, Compagnie de Commentry-Fourchambeault-Decazeville in Commentry.
He was later appointed as the Director in 1888 (Wren & Bedeian 2009). Fayol realized managerial ability was required for businesses to succeed and should be taught in schools. He therefore developed management ideas through personal experience as Chief Executive, and wrote ‘elements’ of administration in “Administration Industrielle et Generale”, which was published in 1961 (Wren & Bedeian 2009). Key Works Managerial abilities that he felt were essential in a manager include physical, mental and moral qualities, general education, specialized knowledge and experience (Wren & Bedeian 2009).
The absence of management training in schools made Fayol see the need for management theory and identified fourteen principles of management (Fayol, 1949) to serve as guidelines to help managers resolve work problems. Fayol was the first person to identify the functions of a manager’s job. The “management process” was represented by five elements: Planning, organizing, command, coordination and control (Wren & Bedeian 2009). Planning was one of the most important elements in ensuring business success as it predicts future events that determine the next move of the company.
Organizing involved ways which organizational structure is developed as well as the flow of communication and authority. Commanding is how managers direct employees through effective communication and the use of discipline and remuneration. Coordinating is the process of creating relationship among organization’s efforts to achieve common goals and controlling looks at how managers evaluate performance of employees (Montana & Charnov 2000). Political Factors
Poor working conditions in the 1890s and strikes in 1900’s were the cause of long working hours and low wages, which influenced Fayol’s development of management theories, specifically his principal “division of work” and “remuneration”. Before 1892, no regulations were established to govern the number of working hours for workers. From 1892 to 1906, laws were passed to curb long working hours, hence the introduction of standard working hours from ten hours daily to sixty hours per week with a rest day. However, workers created several strikes from 1906 – 1910, as they wanted higher wages and shorter working days for them (Pierre, 1984).
In view of the political unrest, Fayol developed his principle of “division of work” to minimize the wastage of resources, which decreases the efficiency of the organization. Workers and managers always work on the same matters to increase the output of work. However, output was reduced when a change in work leads to a change in adaptation. Fayol also believed that the remuneration of the workers should be fair and provide satisfaction to both the employees and the firm. This includes paying the workers by rates, profit sharing etc (Fayol, 1949). Social Factors
In a speech delivered to his colleagues in the mineral industry at 1900, Fayol addressed the need to create principles of management, and used France’s education system to describe the lack of management education (Wren, Bedizen & Breeze, 2002). Education focused on mathematical and technical skills, which were the main subjects for the enrolment tests. Subjects such as management skills, accountancy, history, physics and moral education were barely taught or excluded. Professors taught subjects for the purpose of passing scientific knowledge to the students, which adversely affected education and work.
Students ended up leaving school as they felt it is a waste of time by emphasizing mathematical skills, while managers and engineers commented that higher mathematical skills were not needed in work (Fayol, 1930). Fayol noted that mathematical skills were not only redundant at work, but also left the younger generations unequipped with the necessary skills to succeed the retiring engineers. He called for a change in the way subjects were taught in school, where subjects not useful at work should be removed, and practical work should be introduced to prepare the students for work.
He believed that administration is an art of handling people where practice makes perfect (Fayol, 1930). Economic Influence The following section seeks to discuss the economic conditions which influenced Henri Fayol and the development of his theories. Since 1860s, the companies in central France were weakened by competition from the east and north of France, with the development of metallurgical institutions. It posed a threat to the profits and existence to companies in central France (Wren, Bedeian & Breeze, 2002). In 1871, France lost the war with Germany, which destroyed the French economy (Pierre, 1984).
From 1882 to 1887, France faced a depression in the iron and steel industry. In 1888, Henri Fayol was appointed president when the company was declining. By 1888, Comambault have not been paying dividends since 1885. Its facilities were making losses, and the coal deposits at Commentry and Montvicq were depleting (Wren, Bedeian & Breeze, 2002). In short, the company was close to bankruptcy. After Fayol took over, he led the company to success through merger, centralization of facilities, gaining economies of scale, hiring specialists and invested in research facilities.
Comambault was repositioned as a supplier of specialty steels. (Wren, 2009) It is evidential in history that Fayol’s management methods revitalized the company from its decline before 1888. His success was greatly attributed to the management theories which he developed. Poor economic conditions, and the use of the same employees from decline to recovery, allowed him to gain vast experiences as a manager. These experiences in managing during trying times influenced Fayol’s development of management theories. Intellectual Influences
Fayol’s management ideas were largely influenced based on his personal experience as a managing director, and not so much by other intellectual factors. In late 19th and early 20th century, Frederick W. Taylor’s concept of “scientific management” influenced industrial policy in Britain, France, Germany, Russia and Japan. Although Taylor’s concepts were widely accepted and practiced, Fayol’s works opposed the ideas of Taylor’s, which shows that he was not influenced by the then popular trend of management; a clear indication that his work was revolutionary and derived through his own experiences as a general manager.
Furthermore, early interpretations made distinctions between Fayol’s and Taylor’s work. To illustrate this point, Taylor approached the study of management from the technical level (bottom up), whereas Fayol approached it from the upper level administration (top-down) (Wren, 2009). Fayol’s ability to translate personal experiences into principles can be seen in his early years. As a mining engineer, Fayol kept a diary and recorded events that impacted the mine output.
In 1861, he observed that operations ceased when a horse broke its leg as the stable keeper had no autonomy to do anything in the absence of a manager (Wren, 2009). This incident is one reason why he added a “gangplank” to the “scalar chain”, which allows communications across levels of the organization in the shortest time without taxing the firm’s scalar chain. In 1908, in Fayol’s personal papers, Fayol related his personal experience about planning as a crucial element to success and noted that he was anticipating future events when he was preparing the Annual budget. Wren, Bedeian & Breeze, 2002) This indicates that Fayol had opportunities performing administrative duties which gave him a keen insight into management. This further proves that Fayol was largely influenced by his own personal experiences during his time as Managing Director (CEO) of Comambault, rather than by intellectual factors. Fayol’s ideas were also influenced by Stephane Mony. In 1860, Stephane Mony hired Fayol and subsequently became Fayol’s mentor. Under Mony’s firm leadership, the company went through sound development and expanded (Witzel, 2003).
As a mentor and manager who lead the Company through sound development, Mony may have directly influenced Fayol in his early thinking of management ideas. Relevance Today Fayol’s management theories are still relevant today. For example, in the early days, Microsoft’s Bill Gates maintained personal contact with his employees. However, as Microsoft expanded, the need to manage increased, therefore Gates implemented Fayol’s five elements of management of planning, organizing, leading and controlling to reach organization goals (Mescon, Bovee & Thill, 1999).
When IBM sold Lexmark due to downsizing, Lexmark needed to survive as it was in debts (Grant, 1997) . The use of organization chart derived from the organization structure helped Lexmark to establish a hierarchical structure of authority and communication which helped Lexmark to acheive its goal. (Mescon, Bovee & Thill, 1999). Fayol’s scalar chain of command in the form of organization charts allow managers to design the company’s structure and show the line of communication and authority flow, a principle which is still widely practiced today.
Conclusion Fayol started as a mining engineer and worked his way up to being director, had gained and shared his vast experiences in management through his key works. Much evidence has shown that Fayol was mostly influenced by social, political factors and personal experiences as a manager in the development of his theories. Today, Henri Fayol’s theory of management continues to be relevant and widely practiced although his theories were developed nearly a century ago. As such, Henri Fayol is also known as the “Father of Modern Management”.