What Are Principles Of Management? (With 14 Types)

Updated 6 September 2023

The process of management involves achieving business goals through steps such as planning, organising, coordinating and controlling. It involves working with people and other resources to achieve organisational objectives. The Fayol theory, established by Henri Fayol, offers a new way of considering management at all levels. In this article, we understand what the principles of management are and go through each one of them in detail.

What are the principles of management?

Understanding the principles of management can help attain a positive work environment and optimise employee performance. The principles of management are a set of values by Henri Fayol, which assists managers in an organisation to achieve better results. It uses a top-down approach to divide the tasks using a framework called POLC, namely planning, organising, leading and controlling.

14 principles of management

Here are the 14 principles of management:

1. Division of work

This principle states that individuals who receive specialised work become more skilled and efficient as compared to when they receive a broad scope of tasks. It is therefore more efficient to have everyone fill a specific role. For instance, rather than having one person manage an entire marketing campaign, employers can assign different employees the task of managing social media, where one employee can manage market research, another employee can focus on brand strategy and so on. As a result, each employee can focus on a specific area and achieve better results more quickly and accurately.

2. Parity of authority and responsibility

This principle emphasises authority and responsibility. Authority facilitates the work of management, while responsibility requires the management to be accountable for the work it oversees. Individuals who gain authority at work are likely to have more responsibilities. In the view of Henri Fayol, authority and responsibility require a balance.

Employees grow frustrated when authority exceeds responsibility. In a similar manner, the management feels frustrated when they have more responsibilities than authority. A lack of authority may lead to irresponsible behaviour and an absence of responsibility may result in inefficiency.

3. Centralisation and decentralisation

A top-down management model entails centralisation of authority and consolidation of responsibility among a few individuals. Decentralisation refers to the distribution of authority and responsibilities across the organisation. According to the size and nature of the organisation, the types of activities and its structure, management determines the degree of centralisation and decentralisation. Organisations cannot possess either a completely centralised or a totally decentralised structure.

4. Unity of command

This principle stipulates that every employee has only one direct manager. In this way, employees are aware of whose instructions to follow and who to contact if they have concerns. When an employee receives directions from multiple managers, it may undermine authority, stability and discipline. Additionally, this may render management structures ineffective and result in employee burnout. Unity of command usually does not disrupt a company hierarchy, since every employee reports to a single manager.

5. Unity of direction

The unity of direction principle states that all employees who work on the same task have the same objective. When a company has a variety of marketing activities, for instance, advertising, budgeting, brand strategy, sales and promotion, it is necessary for one manager to handle all the marketing activities. The concept extends to both company-wide and smaller project-based goals. Managers who emphasise this principle are likely to communicate clear directions and goals to their employees and ensure they work towards them.

Unity of command relates to personnel, while the unity of direction relates to the organisation, departments and sub-departments that comprise the organisation.

6. Discipline

Discipline is essential for an organisation to function effectively. It is the manager's responsibility to ensure their employees follow company rules and regulations. This is fundamental to maintaining the smooth operation of any business. A competent manager also exemplifies discipline through their own behaviour. As noted by Fayol, discipline entails following the rules and regulations of a company, being a sincere employee and obeying authority. It is the responsibility of management and their subordinates to maintain a culture of discipline.

7. Order

Under this principle, it is important to allocate resources such as manpower, equipment and money in a systematic manner. Choosing the right employee for each task and effectively managing them is an integral part of maintaining order in an organisation. A well-organised workplace can boost productivity and create a positive working environment.

8. Initiative

It is important that management encourages employees to take initiative. Innovative programs make employees feel more engaged in their organisations and offer them a higher level of satisfaction. Furthermore, employee initiative often enhances organisational performance. It is essential for employers to listen to the concerns of their employees and to encourage them to plan and carry out improvement measures. Employees feel motivated and respected if they have the ability to provide input on how to best complete their tasks. To encourage employee participation, management can also offer both monetary and non-monetary rewards.

9. Fair remuneration

Remuneration refers to the price paid for a service. Essentially, it pertains to how much employers pay employees to do their job. A fair remuneration system for all employees, both financial and non-financial, is essential to employee satisfaction. Fayol highlighted the importance of a fair remuneration system to a well-directed effort. Both employers and employees benefit from fair compensation, with a system that rewards good performance and competency.

Fair compensation promotes employee happiness, which can lead to better productivity and loyalty. Compensation rates that are rational and appropriate may reduce tension and conflict between employees and management, resulting in a harmonious working environment. Remuneration is determined by taking into account the cost of living, assigned work, the financial position of the company and current compensation rates. Additional benefits may include medical care, education and housing.

10. Stability of tenure

According to this principle, employment stability occurs when an employee feels they are in a secure position. Job insecurity can reduce employee morale, which may affect the quality of work. It is necessary for companies to reduce staff turnover and role changes to maximise efficiency. It is also essential that managers allow employees enough time to adjust to new roles and learn how to complete tasks effectively.

In addition, there is a need for a clear and effective plan for handling vacancies when they arise, since training new employees takes time and money. The benefits of stability include improved performance, loyalty and profitability.

11. Scalar chain

Scalar chains, also known as the chain of command, describe the organisation's hierarchy and communications. In this principle, Fayol emphasises that the hierarchy steps are from the highest to the lowest. Every employee requires to be aware of their immediate manager and be able to contact them as required. This principle outlines the responsibilities of each position.

For instance, an organisation's scalar chain might comprise an intern in marketing, an assistant marketing manager, a marketing manager and a chief executive officer (CEO). Scalar chains allow every employee to know who to contact in certain situations, which improves communication within an organisation.

12. Subordination of individual interest to general interest

According to this principle, the interests of an organisation take precedence over the interests of individuals or groups. An organisation is larger than an individual, so it is essential for the interests of the enterprise to take precedence. Rather than considering the interests of only one employee, management makes decisions for the benefit of all employees. If a conflict arises, it is important for management to resolve it quickly to keep operations running smoothly.

13. Equity

This principle incorporates kindness, justice and fairness. Fair and equal treatment for employees is an important responsibility for management. Employers are responsible for ensuring that no employee receives preferential treatment or experiences discrimination. As a result, employees become loyal and dedicated to an organisation.

14. Esprit de corps

The phrase 'Esprit de corps' is French for team spirit. It refers to the collective pride or loyalty amongst members of an organisation. It states that management can foster a sense of unity among employees and strive to create a positive atmosphere in the workplace. Managers can motivate employees by creating a positive work environment.

Managers can promote 'Esprit de corps' by creating friendly relationships among employees, motivating them with enthusiasm and rewarding them for their competency at work. Employees who are aware of how important their work is to the team feel valued, trusted and motivated to do their best.