14 Principles of Management by Henri Fayol with Case Study


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Detailed explanation of the 14 Principles of Management propounded by Henri Fayol. Presentation is accompanied with a Case Study of 'Tata'

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14 Principles of Management by Henri Fayol with Case Study

  1. 1.  Batch : 2014  Course Code : 50121106  Course Name : (Principles of Management I)  Roll No. : 720  Assignment No. : A 112
  2. 2. Emphasizing more on Tata Beverage Group
  3. 3.  1 – Division of Work We know that TATA Group is an umbrella that covers various business industries. Considering this, it only makes sense to divide work by allocating it to different employees, thereby enabling them to build up experience and continuously increase and improve their skills. This leads to increased productivity and ultimately higher profits. For instance, Tata Beverage Group recruits for the following areas :-  Plantation Management  Finance  Sales and Distribution  Brand Marketing  Information Technology  Medical Professionals
  4. 4. 2 – Authority Authority, as defined by Fayol, is the right to give orders and the power to exact obedience. Tata Group realizes that MNCs decision making and conflict resolution follow a straight line. It believes that if decisions are held up due to conflicting viewpoints, the issue is expected to speedily traverse up the line for a resolution. Sometimes there is no empowerment. For instance - An employee of a Tata Beverage Group is entrusted with confidential/insider information. He shall not use or proliferate information that is not available to the investing public. By doing this, the company provides authority to its employees of holding such information. At the same time, responsibility is exacted by the employees that this information will remain confidential throughout their term with the company. Such insider information might include - Raising of finances, Restructuring plans., Asset revaluations, Financial information such as profits, earnings and dividends etc.
  5. 5.  Discipline Goes without mentioning, successful organization requires the common effort of workers, even if judicious use of penalties are required to exact this effort. Tata has drafted its own ‘Code of Conduct’ to guide the behavior of its employees. Highlights of this Code of Conduct :-  “Every employee of a Tata company, including full-time directors and the chief executive, shall exhibit culturally appropriate deportment in the countries they operate in, and deal on behalf of the company with professionalism, honesty and integrity, while conforming to high moral and ethical standards.  Every employee of a Tata company shall preserve the human rights of every individual and the community, and shall strive to honour commitments.  Every employee shall be responsible for the implementation of and compliance with the Code in his / her environment. Failure to adhere to the Code could attract severe consequences, including termination of employment.” – [Penalty]
  6. 6.  Unity of Command Workers should receive orders from only one Manager. The Management team for each department within Tata Beverage Group has been clearly defined. Each employee under his/her respective department should receive orders from the manager of the department. Various managers of different departments are as follows –  Hameed Huq – Managing Director  M D Kumar - Executive Director – Finance  T Radhakrishnan - Vice-President – ICD Operations  A.S. Muthanna - Vice-President – Plantations
  7. 7.  Unity of Direction The entire organization should be moving towards a common objective in a common direction. Tata Beverage Group cooperates with other Tata companies including applicable joint ventures, by sharing knowledge and physical, human and management resources, to achieve common goals and objectives. The entire Tata Group as a family, has a single direction. Also, as mentioned in the code of conduct, a Tata company shall recommend to its board of directors the adoption of policies and guidelines periodically formulated by Tata Sons. This provides an example of how a policy framework laid down by the superior body guides and directs the companies to a common objective.
  8. 8.  Subordination of Individual Interest to General Interests – The interests of one person should not take priority over the interests of the organization as a whole. The Code of Conduct of Tata Beverage Group clearly states that an employee or director of the company shall always act in the interest of the company. He/she should ensure that any business or personal association which he / she may have does not involve a conflict of interest with the operations of the company and his / her role therein. The Code of Conduct cites 3 areas of actual or potential conflict of interests. One of the highlights warns employees that the interest of the company or group cannot be compromised. Any personal interest that may potentially influence company interest should be disclosed. Failure to do so can lead to suitable disciplinary action.
  9. 9.  Remuneration Worker‟s rate of pay is subject to several variables such as cost of living, general business conditions etc. Tata Group follows this principle. For instance, Since the Economic Value Added (EVA) targets for the third quarter of FY 2007-2008 were not met, TCS announced its plans to slash 1.5 percent of the variable component of employee salaries. [The variable part of the salary was arrived after considering business unit EVA, corporate EVA, and also individual performance EVA.]
  10. 10.  Centralization and Decentralization  Tata Group is a decentralized family of companies grouped into seven sectors. Tata Beverage Group -  Human resources and communications, information technology, finance, production, procurement and research are handled at a global level.  A global executive office is situated in London, comprising of Chief Executive and Deputy Chief Executive who oversee global operations, including factories and production, tea and coffee buying, and procurement.  Sales and Marketing operations have been decentralized. These operations have become the responsibility of 6 specific regions.  The 6 key regions handling Sales and Marketing are - UK, Africa, US, South Asia, Canada and South America. Each region is led by a President.
  11. 11.  Scalar Chain Official Chain of Command that has to be strictly followed in an organization. According to the Tata Group‟s Code of Conduct – “Every employee of a Tata company shall promptly report to the management, and / or third-party ethics helpline, when she / he becomes aware of any actual or possible violation of the Code or an event of misconduct, act of misdemeanor or act not in the company‟s interest.” The specified Managerial Chain of Command is as follows – 1 - Hameed Huq (Managing Director) 2 - M D Kumar (Executive Director - Finance) 3 - T Radhakrishnan (Vice-President – ICD Operations) 4 - A.S. Muthanna (Vice-President - Plantations) 5 - Christine F Jamal (Vice President - Corporate) 6 - M K C Pai (company secretary)
  12. 12.  Order According to the Code of Conduct, “a Tata Company shall maintain its Financial reports in an orderly manner. Internal accounting and audit procedures shall reflect, fairly and accurately, all of the company‟s business transactions and disposition of assets. All required information shall be accessible to company auditors and other authorized parties and government agencies. No employee shall make, authorise, abet or collude in an improper payment, unlawful commission or bribing.”
  13. 13.  Equity Tata Group promises to provide equal opportunities to all its employees. According to the Code of Conduct, “Human resource policies shall promote diversity and equality in the workplace, as well as compliance with all local labour laws, while encouraging the adoption of international best practices. Everyone has the right to be heard and equal opportunity is provided to those eligible and decisions are based on merit.”
  14. 14.  Stability of Tenure of Personnel Tata Group believes in “Concurrent Employment”. Accordingly, the company bars its employees to accept any other form of employment or a position of responsibility, paid or unpaid, unless an official permission has been furnished by the company itself. This keeps the Employees associated with the company on a long term basis and helps the company extract long term service. This saves the company the cost of recruiting and training fresh employees.
  15. 15.  Initiative To instill and encourage initiative in employees, Tata Group has come up with „Tata Innovation Day‟, also known as ‘Tata Innovista’ in 2010. On this day, following awards are given to innovation teams that come up with the best innovations –  Promising Innovations – Given to the most successfully implemented innovations during the year.  Dare to Try – Award given to that team which made a valiant attempt for a major innovation, but failed. The award felicitates their spirit and encourage future initiative.  The Leading Edge – Award given for most innovative Business idea. Sub- categories – 1. Innovative idea for one's own company 2. Innovative idea for a different Tata Company 3. Innovative idea that is new to the Group
  16. 16.  Espirit De Corps Tata Sponge Iron Ltd. offers its employees the following to encourage and promote team spirit.  A work culture which stimulates innovation, team work & freedom to excel.  Reward & Growth that is performance-driven.  Most contemporary perks & other amenities.  Continuous training and development opportunities at all levels.