This document outlines Henri Fayol's 14 principles of management and Peter Drucker's theory of management by objectives. Fayol's principles include specialization, authority, discipline, unity of command, and subordination of individual interests. Drucker identified key result areas for objectives including marketing, innovation, human organization, and profit requirements. The document also discusses Fayol's definition of management roles and Drucker's principles of cascading goals and using SMART objectives.

1. Henri Fayol’s 14Henri Fayol’s 14
Principles OfPrinciples Of
ManagementManagement

2. 1. Division Of Work1. Division Of Work
Specialization allows the individual toSpecialization allows the individual to
build up experience, and to continuouslybuild up experience, and to continuously
improve his skills. Thereby he can beimprove his skills. Thereby he can be
more productive.more productive.

3. 2. Authority2. Authority
The right to issue commands, along withThe right to issue commands, along with
which must go the balancedwhich must go the balanced
responsibility for its function.responsibility for its function.

4. 3. Discipline3. Discipline
Employees must obey, but this is two-Employees must obey, but this is two-
sided: employees will only obey orders ifsided: employees will only obey orders if
management play their part by providingmanagement play their part by providing
good leadership.good leadership.

5. 4. Unity Of Command4. Unity Of Command
Each worker should have only one bossEach worker should have only one boss
with no other conflicting lines of command.with no other conflicting lines of command.

6. 5. Unity of Direction
People engaged in the same kind ofPeople engaged in the same kind of
activities must have the same objectivesactivities must have the same objectives
in a single plan. This is essential toin a single plan. This is essential to
ensure unity and coordination in theensure unity and coordination in the
enterprise. Unity of command does notenterprise. Unity of command does not
exist without unity of direction but doesexist without unity of direction but does
not necessarily flows from it.not necessarily flows from it.

7. 6.6. Subordination of individualSubordination of individual
interestinterest
Management must see that the goals ofManagement must see that the goals of
the firms are always paramount.the firms are always paramount.

8. 7. Remuneration7. Remuneration
Payment is an important motivatorPayment is an important motivator
although by analyzing a number ofalthough by analyzing a number of
possibilities, Fayol points out that there ispossibilities, Fayol points out that there is
no such thing as a perfect systemno such thing as a perfect system

9. 8. Centralization (Or8. Centralization (Or
Decentralization)Decentralization)
This is a matter of degree depending onThis is a matter of degree depending on
the condition of the business and thethe condition of the business and the
quality of its personnel.quality of its personnel.

10. 9.9. Scalar chainScalar chain (Line of Authority)(Line of Authority)
A hierarchy is necessary for unity ofA hierarchy is necessary for unity of
direction. But lateral communication isdirection. But lateral communication is
also fundamental, as long as superiorsalso fundamental, as long as superiors
know that such communication is takingknow that such communication is taking
place. Scalar chain refers to the number ofplace. Scalar chain refers to the number of
levels in the hierarchy from the ultimatelevels in the hierarchy from the ultimate
authority to the lowest level in theauthority to the lowest level in the
organization. It should not be over-organization. It should not be over-
stretched and consist of too-many levelsstretched and consist of too-many levels

11. 10. Order10. Order
Both material order and social order areBoth material order and social order are
necessary. The former minimizes lost timenecessary. The former minimizes lost time
and useless handling of materials. Theand useless handling of materials. The
latter is achieved through organization andlatter is achieved through organization and
selection.selection.

12. 11. Equity11. Equity
In running a business a ‘combination ofIn running a business a ‘combination of
kindliness and justice’ is needed.kindliness and justice’ is needed.
Treating employees well is important toTreating employees well is important to
achieve equity.achieve equity.

13. 12.12. Stability of Tenure ofStability of Tenure of
PersonnelPersonnel
Employees work better if job security andEmployees work better if job security and
career progress are assured to them. Ancareer progress are assured to them. An
insecure tenure and a high rate ofinsecure tenure and a high rate of
employee turnover will affect theemployee turnover will affect the
organization adversely.organization adversely.

14. 13. Initiative13. Initiative
Allowing all personnel to show theirAllowing all personnel to show their
initiative in some way is a source ofinitiative in some way is a source of
strength for the organization. Evenstrength for the organization. Even
though it may well involve a sacrifice ofthough it may well involve a sacrifice of
‘personal vanity’ on the part of many‘personal vanity’ on the part of many
managers.managers.

15. 14. Esprit de Corps14. Esprit de Corps
Management must foster the morale of itsManagement must foster the morale of its
employees. He further suggests that: “realemployees. He further suggests that: “real
talent is needed to coordinate effort,talent is needed to coordinate effort,
encourage keenness, use each person’sencourage keenness, use each person’s
abilities, and reward each one’s meritabilities, and reward each one’s merit
without arousing possible jealousies andwithout arousing possible jealousies and
disturbing harmonious relations.”disturbing harmonious relations.”

16. What Is Management?What Is Management? (According(According
To Fayol)To Fayol)
Fayol'sFayol's definition of management roles and actions distinguishesdefinition of management roles and actions distinguishes
betweenbetween Five ElementsFive Elements ::
 PrevoyancePrevoyance .. (Forecast & Plan). Examining the future and drawing up(Forecast & Plan). Examining the future and drawing up
a plan of action. The elements of strategy.a plan of action. The elements of strategy.
 To organizeTo organize.. Build up the structure, both material and human, of theBuild up the structure, both material and human, of the
undertaking.undertaking.
 To commandTo command .. Maintain the activity among the personnel.Maintain the activity among the personnel.
 To coordinateTo coordinate .. Binding together, unifying and harmonizing all activityBinding together, unifying and harmonizing all activity
and effort.and effort.
 To controlTo control.. Seeing that everything occurs in conformity withSeeing that everything occurs in conformity with
established rule and expressed command.established rule and expressed command.

17. Application Of Fayol’s PrinciplesApplication Of Fayol’s Principles
 Change and Organization.Change and Organization.
 Decision-making.Decision-making.
 Skills. Can be used to improve the basicSkills. Can be used to improve the basic
effectiveness of a manager.effectiveness of a manager.
 Understand that management can beUnderstand that management can be
seen as a variety of activities, which canseen as a variety of activities, which can
be listed and grouped.be listed and grouped.

18. Peter Drucker’sPeter Drucker’s
Management By ObjectivesManagement By Objectives

19. 8 Key Result Areas Where Managers Must
Pursue Clear Objectives - Kotelnikov, 2008
•MarketingMarketing
In order for a business to create a customer, there needs to be a
market.
•InnovationInnovation
New ideas are required by a business in order to create a demand for
a product.
•Human organizationHuman organization
•Financial resourcesFinancial resources
•Physical resourcesPhysical resources
According to Drucker, 2007 the above three Key Result Areas are
interlinked and all businesses depend on them. These are known as
the factors of production.

20. 8 Key Result Areas Where Managers Must
Pursue Clear Objectives Continued….
 ProductivityProductivity
Resources must be used productively and the productivity must
grow in order for the business to survive.
 Social responsibilitySocial responsibility
A business exists in a society therefore it has certain obligations
towards the community and is responsible for its impact on the
environment.
 Profit requirementsProfit requirements
Profit is essential for a business to succeed. It is one of the main
reasons behind the existence of a business and without it there
would be no way of covering the risk of potential losses, financing
future projects and most importantly none of the other above areas
would exist without profit.

21. Management By Objectives -Management By Objectives -
PrinciplesPrinciples
 Cascading of organizational goals andCascading of organizational goals and
objectives.objectives.
 Specific objectives for each member.Specific objectives for each member.
 Participative decision making.Participative decision making.
 Explicit time period.Explicit time period.
 Performance evaluation and feedback.Performance evaluation and feedback.

22. SMART MethodSMART Method
 SSpecificpecific
 MMeasurableeasurable
 AAchievablechievable
 RRealisticealistic
 TTime-relatedime-related
Management by Objectives alsoManagement by Objectives also
introduced the SMART method forintroduced the SMART method for
checking the validity of thechecking the validity of the
objectivesobjectives.

23. BibliographyBibliography
 14 Principles of Management.14 Principles of Management. (2008, Aug 29).(2008, Aug 29).
Retrieved 10 2008, from www.12manage.com:Retrieved 10 2008, from www.12manage.com:
http://www.12manage.com/methods_fayol_14_prhttp://www.12manage.com/methods_fayol_14_pr
inciples_of_management.htmlinciples_of_management.html
 Drucker, P. (2007).Drucker, P. (2007). Management Tasks,Management Tasks,
Responsibilities, Practices.Responsibilities, Practices. New Jersey:New Jersey:
Transaction Publishers.Transaction Publishers.
 Kotelnikov, V. (2008).Kotelnikov, V. (2008). Management byManagement by
Objective.Objective. Retrieved 10 2008, fromRetrieved 10 2008, from
www.1000ventures.com:www.1000ventures.com:
http://www.1000ventures.com/business_guide/mhttp://www.1000ventures.com/business_guide/m
gmt_mbo_main.htmlgmt_mbo_main.html