14 Golden Principles of Business Management by Henri Fayol

Henri Fayol was a theorist and a managing director in the 19th century. In 1916, before leaving his position as Director, he introduced the “14 principles of management” in his book “Administratinon Industriell et Générale”. To this day, these classic principles are still taught in most management schools around the world. Let’s join 1Office to review the 14 principles of business administration in this article!

I. 14 Principles of Business Administration for Managers

1. Specialization, Division of Labor

The allocation of work and specialization of each step in a process will lead to skill specialization, boosting workforce efficiency and increasing productivity. This principle of effective business administration applies to both technical and managerial activities.

2. Authority Goes Hand in Hand with Responsibility

To get work done in a business/organization, a leader has the right to give orders to subordinates. Of course, this authority also comes with responsibility.

According to Henri Fayol, authority and responsibility go together like two sides of the same coin. A leader has full authority but must also fulfill the responsibility of ensuring work performance as agreed.

A leader has full authority, but their responsibility in the work is also immense

3. Discipline

Discipline is the next principle mentioned in the 14 principles of business administration. Although it may seem rigid, discipline is considered the lubricant that keeps the business machinery running smoothly. Without discipline – which includes standards, uniformity in action, adherence to rules, management methods, and values – no business can grow.

“The agreement between the company and its employees is essentially expressed through adherence to principles, the application of discipline, and respectful behavior.”

4. Unity of Command

The principle of unity of command means that an employee should receive orders from only one superior and be accountable to that one superior.

In today’s evolving society, more organizational structures have emerged where an employee may have to take responsibility and report to multiple leaders or even clients. This can lead to overlapping commands and conflicts.

5. Unity of Direction

A team of employees with the same objective should work under the direction of one manager and follow one plan. The leader will create the implementation plan and be the one to supervise, delegate, and hold final responsibility for this plan.

Leaders and their teams must have a unified direction

6. Subordination of Individual Interests

There are many areas of interest within a business/organization. However, for the business/organization to operate smoothly, Henri Fayol believed that individual interests must be subordinated to the interests of the group. This applies to all levels of the entire business/organization, including the leaders.

7. Remuneration

Remuneration is closely related to work productivity and the operational activities of businesses/organizations. Principle 7 states that remuneration must always be fair, reasonable, and sufficient to motivate the team to work effectively.

There are two types of remuneration: non-monetary (praise, trust, delegation of responsibility) and monetary (salary increases, cash bonuses, financial support).

8.Centralization

This is an essential principle of any organization and a natural consequence of the structuring process. Even in organizations with flat structures and decentralized power, authority generally remains concentrated in the hands of a few people.

And in these types of organizations, the extent of individual freedom and the consequences of significant power decentralization are always topics of debate.

9. Scalar Chain or ‘Chain of Command’

In management, there must be a ‘chain of command’ from the highest level to the lowest. This principle must be ensured, and the line of authority should not be deviated from, but its application should be flexible, not rigid.

10. Order

H. Fayol believed that every thing and every person has its own place. The right thing or person must be put in the right place. This is an important principle in arranging and utilizing people, tools, and machinery.

Therefore, businesses/organizations need to arrange things so that each employee has their own place and duties that are suitable for the business/organization, allowing them to always feel confident and comfortable in the work environment.

Businesses/organizations need to arrange things so that each employee has their own place

11. Equity

Equity must always be a core value of the business/organization. According to Henri Fayol, employees must be treated with kindness and equality.

Employees need to be in the right place during working hours and perform their job responsibilities correctly. The leader is responsible for supervising and coordinating this process, and they must treat employees fairly, without favoritism.

12. Stability of Tenure of Personnel 

Stability in personnel tenure is a necessary principle in management. It ensures that the departments of the business/organization always operate with clear objectives and that employees have time to adapt and perform their work most effectively.

Unnecessary and unfounded changes will create risks due to instability, accompanied by significant costs for the business/organization.

13. Initiative

Henri Fayol argued that employees should be allowed to express new ideas at work. On one hand, this will encourage employees’ interest in the business/organization’s issues and motivate them to work.

On the other hand, Fayol also advised that managers should ‘sacrifice personal pride’ to allow their subordinates to implement their initiatives. This is because employee initiatives are a great source of strength for the business/organization.

14 . Team Spirit

The final principle means that there is strength in unity, and leaders must always focus on building and maintaining harmony in working relationships. With the unity and cohesion of a team, the business/organization can quickly grow and go further.

II. More Effective and Easier Business Management with 1Office Software

Understanding the challenges businesses face during the digital transformation era, 1Office offers a business management software solution with a suite of digital tools to help businesses improve work efficiency, manage projects and campaigns, thereby saving time, costs, and other resources.

With the Workplace toolkit, departments can easily search and filter information. Managers can easily access and track project progress without needing to be physically present.

Digitizing all images and data helps businesses easily reach and attract potential customers.

Additionally, the HRM toolkit can solve all human resource management issues by quickly digitizing all data.

The process of nurturing, classifying, and screening candidate profiles during recruitment is also carried out in detail with a clear and transparent process.

This helps managers clearly understand the personnel situation and then gain a comprehensive overview of human resource fluctuations to address them promptly.

1Office – Comprehensive business management solution

Furthermore, the data security feature is enhanced, minimizing the risk of information leaks to prevent malicious actors from exploiting it and harming the company’s reputation.

Anyone in the business can easily use the 1Office software.

With simple and easy-to-understand operations, supervisors and employees can interact with each other, freely discuss and share everything via the internal network, saving time and improving work efficiency.

In addition, 1Office has been selected by the Ministry of Information and Communications as a pioneering platform in the national digital transformation program, offering a solution that brings sustainable efficiency to businesses.

If you are facing difficulties in business management, sign up for a trial to receive a consultation. 1Office will help you resolve your challenges quickly!

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Launching the 1Office Business Management Platform at the Ministry of Information and Communications