Theory of Administrative Management: Definition, History, Principles, Contributions, and Criticisms

What is Administrative Management Theory?

Henri Fayol, a French Industrialist and a Mining Engineer by profession developed the theory of administrative management. This theory concerns the comprehensive conceptual framework, general organization, and leadership that are applicable in all organizations.

This theory argued that for the achievement of organizational goals, there should be proper management of departments, and work should be classified into different groups so that the tasks can be done effectively.

Administrative management is also known as modern management. In 1916 Fayol published his book “Administration Industrielle et. General”. Later on, this book was translated into English version as “General and Industrial Management.”

This concept is a contemporary of Taylor’s scientific management. Scientific management only concentrates on shop floor levels like job design and payment of workers whereas administrative theory is concerned with the entire range of managerial performance. Fayol suggests that management involves many functions like forecasting, planning, organizing, commanding, coordinating, and controlling.

Another difference, administrative management theory mainly focuses on improving the efficiency of management so that higher-level employees understand correctly and the tasks can be done in a standardized way. Whereas, the scientific management theory first focuses on improving the efficiency of operations-level employees/workers which can lead to enhancing management later. So, comparing, administrative theory follows top-to-bottom level management whereas scientific management theory follows the bottom-to-top approach to management.

History of Fayol’s Administrative Management

Henri Fayol, a Frenchman born in 1841, transformed management with his administrative theory. In 1916, he wrote a book called “Administration Industrielle et Générale,” where he explained five important management functions: planning, organizing, commanding, coordinating, and controlling.

Fayol is one of the contributors to classical management theories. He focused on hierarchy, clear communication, and everyone has one boss. His theory made management more organized and efficient.

Today, his ideas are still relevant and help guide modern management. Businesses use his principles to make things run smoother, use resources better, and have effective leaders. Fayol’s legacy reminds us how important it is to have good management practices in the complex world of business.

Related: Top 10 Theories Of Management

Henri Fayol’s Industrial Activities

Henry Fayol divided all industrial activities into six groups. These activities are key components for effective management in organizations.

1. Technical Activities: These involve the production and manufacturing of products within a business. It includes the processes and operations needed to create the goods.
2. Commercial Activities: Commercial activities refer to the buying and selling of products. This includes activities such as marketing, sales, and distribution.
3. Financial Activities: Financial activities are related to managing and utilizing funds within a business. It involves searching for funds, collecting them, and making the best use of the collected funds.
4. Security Activities: Security activities focus on protecting the organization’s property and ensuring the safety of its people. This includes measures such as implementing security systems, maintaining a safe working environment, and safeguarding assets.
5. Accounting Activities: Accounting activities involve tasks like stock-taking, keeping track of costs and expenses, and preparing financial statements such as balance sheets. It helps in monitoring the financial health of the organization.
6. Managerial Activities: Managerial activities encompass the core functions of planning, organizing, commanding, coordinating, and controlling. Managers use these activities to set goals, allocate resources, give instructions, ensure teamwork, and monitor progress toward achieving objectives.

What are Fayol’s 5 Functions of Management?

In Henri Fayol’s Administrative Management Theory, managers have various responsibilities depending on their role and the nature of their work. To understand these responsibilities better, Fayol categorized the functions of a manager in his influential 1916 book, “Administration Industrielle et Generale.”

Fayol defined the following functions of management, these functions also referred to shortly as POCCC.

1. Planning: This involves setting goals, outlining strategies, and developing action plans to achieve desired outcomes. Planning helps managers anticipate future needs and make informed decisions.
2. Organizing: Organizing is about arranging resources, tasks, and people in the most effective way. It includes creating a structure, assigning roles and responsibilities, and establishing communication channels within the organization.
3. Commanding: Commanding refers to providing clear instructions and guidance to employees. Managers lead and motivate their teams, ensuring everyone understands their roles and responsibilities to work towards common objectives.
4. Coordinating: Coordinating involves harmonizing efforts across different departments or teams. Managers facilitate collaboration, resolve conflicts, and ensure a smooth workflow to achieve organizational goals.
5. Controlling: Controlling is the process of monitoring performance and comparing it with set standards. Managers assess progress, identify deviations, and take corrective actions to ensure targets are met efficiently.

Fayol’s management functions form a roadmap for managers. They help plan, organize, guide, coordinate, and control, enabling effective performance and organizational success. Following these functions empowers managers to contribute to their organization’s achievements.

It is important to note that Fayol’s functions are not meant to be rigid or strictly sequential. They are dynamic and adaptable to different managerial roles and situations. Managers may emphasize certain functions more than others based on their specific responsibilities and organizational needs.

Also Read: Henry Mintzberg’s Management Roles: 10 Roles of a Manager

What are Fayol’s Principles of Management?

Henri Fayol developed the 14 principles of management which are universally applicable in all types of organizations on the basis of his experiences and investigations. These principles, developed by Henri Fayol, provide guidelines for effective management practices, ensuring efficient operations, employee motivation, and overall organizational success.

1. Division of Labor: Specialization improves efficiency as individuals focus on specific tasks, increasing productivity and expertise.
2. Authority: Managers must have the power to give orders and ensure work is completed, carrying the responsibility that comes with it.
3. Discipline: Clear lines of authority and obedience to instructions establish a disciplined work environment, with consequences for non-compliance.
4. Unity of Command: Each worker should have a single supervisor to avoid conflicting instructions and maintain clarity in the chain of command.
5. Unity of Direction: Departments or workgroups should align efforts under a common plan, guided by one supervisor, to achieve organizational goals.
6. Subordination of Individual Interest: Individual interests must align with the overall interests of the group, department, or company.
7. Remuneration: Compensation, both monetary and non-monetary, motivates employees and enhances performance.
8. Centralization: Decision-making can be centralized or decentralized, depending on the organization’s characteristics and employee competency.
9. Line of Authority (Scalar Chain): The hierarchy of authority should be clearly defined, ensuring proper reporting relationships and understanding throughout the organization.
10. Order: Well-defined rules and standards create a safe and organized work environment, facilitating coordination and efficiency.
11. Equity: Fairness in treatment and management practices fosters a positive work culture, balancing kindness with justice.
12. Stability of Tenure: Low employee turnover allows for skill development, loyalty, and job proficiency, contributing to organizational stability.
13. Initiative: Encouraging employees to take the initiative, plan, and implement ideas promotes innovation and growth within the organization.
14. Esprit de Corps: Establishing a sense of belonging and unity among employees enhances morale, teamwork, and organizational cohesion.

What are Fayol’s Managerial Skills?

Henri Fayol in his theory of administrative management has also mentioned 6 managerial skills that managers need in the organization.

Related: The 3 Management Skills

• Physical Skills: Managers should maintain a healthy and energetic body, dress appropriately, and take care of their physical well-being.
• Mental Skills: Managers need the ability to analyze situations, extract positives, and adapt effectively to different circumstances.
• Educational Skills: Managers should possess relevant educational knowledge about organizational functioning and management principles.
• Moral Knowledge: Managers must uphold ethical standards and have a clear understanding of what is right and wrong in the workplace.
• Technical Knowledge: Managers should have the necessary technical expertise to utilize tools and machinery within the organization.
• Related Experience: Having prior experience in tasks assigned to them enables managers to better understand and fulfill their responsibilities.

Contribution of Administrative Management Theory

Major contributions of the administrative theory are given below:

• Fayol’s theory laid the groundwork for studying essential management functions such as planning, organizing, staffing, directing, and controlling.
• This theory provided a framework for analyzing and understanding the management process, offering valuable insights into managerial practices.
• Fayol introduced fourteen principles of management that are universally applicable, serving as fundamental guidelines for effective management in all organizations.
• Fayol’s theory serves as a guide for modern management, emphasizing the five foundational functions and the importance of acquiring diverse skills and knowledge.
• Fayol’s classification of business activities into six categories aids in identifying and prioritizing tasks, ensuring the right people are in the right roles.
• The theory’s contributions continue to be relevant in today’s complex and dynamic business landscape, providing a foundation for modern management theories.

Limitations of the Theory of Administrative Management

Some limitations of administrative management theory are as follows:

• The administrative theory lacks proper attention to understanding human behavior within an organization, which is crucial for effective management.
• This theory fails to consider situational factors, leading to inconsistencies in its application across different contexts.
• The theory lacks a clear distinction between the structure and process of an organization, which limits its applicability in complex and dynamic business environments.
• Fayol’s principles cannot be universally applied in all situations as claimed, as they do not fully account for the complexities of human behavior and industrial relations.