Administrative Theory of Management

Cite this article as:"Administrative Theory of Management," in The Business Professor, updated April 1, 2020, last accessed June 5, 2020, https://thebusinessprofessor.com/lesson/administrative-theory-of-management/.

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What is the Process School or Administrative Theory of Management?

The Administrative Theory of Management was first generalized by Henri Fayol (1841-1925) with his work and publications, “Fayol’s 14 Principles of Management (1888)” and “Administration Industrielle et Generale” (1916). Fayol was a French Mining Engineer who recorded his industry methods. He ultimately became a management theorist with perhaps the greatest effect of all prior management theorists. Fayol is considered the father of Administrative Management Theory, often called Process Theory or Structural Theory.

As a member of the classical theory movement, Fayol’s work was unique from that of Taylor, who focused on worker efficiency. Instead, Fayol focused on organization and structure of work tasks. He looked specifically at how management and workers are organized within a business to allow for the completion of task. He proposed the creation of work groups and functional departments where distinct activities are performed. These activities contribute to the accomplishment of greater tasks in furtherance of company objectives.

Fayol follow a top-down approach to organizational efficiency. He believed that the effective organization of management would ultimately have an effect on the productivity of operational-level workers. This is in contrast to the scientific approach, which posited that worker efficiency would lead to greater managerial efficiency.

What are Fayol’s 14 Principles of Management?

Fayol’s 14 principles of management provided specific guidance on the necessary organizational elements necessary for effective management. These principles can be summarized as follows:

  • Division of Labor – The division of labor within an organization allows for specialization. Individuals can become more proficient in the accomplishment of a limited set of activities – thus improving their output.
  • Authority – Managers must have the authority to issue commands, but with that authority comes the responsibility to ensure that the work gets done.
  • Discipline – There must be a clear line of authority. Subordinates must fully obey instructions from superiors. Managers must have the ability to instill discipline through punishment.
  • Unity of Command – There should be only one boss from whom a worker receives instructions?
  • Unity of Direction – Each workgroup or department is working under a singular plan that coordinates efforts. Work efforts should be guided by one supervisor.
  • Subordination of Individual Interest – The interests of individuals are subordinate to the general interests of the group or department or company.
  • Remuneration – Compensation is used to incentivize worker performance. Remuneration can include both financial and non-financial forms of compensation.
  • Centralization – Decision making should be either centralized (management makes all decisions) or decentralized (employees also make decisions) depending upon the characteristics of the organization and worker competency.
  • Line of Authority (Scalar Chain) – There must be a hierarchy of authority that places workers below managers in the reporting structure. The degree of authority is higher at each stage of the organizational hierarchy. The organizational hierarchy should be well understood throughout.
  • Order – There must be well-defined rules and standards for the work environment and work responsibilities. A safe and orderly environment leads to greater coordination.
  • Equity – The organization must be run based upon principles of fairness. Employees should be treated with a “combination of kindliness and justice.”
  • Stability of Tenure – Organizations need low turnover. This allows employees time to learn their jobs, develop skills, and acquire loyalty.
  • Initiative – Managers must promote initiative by allowing employees to create plans and carry them out.
  • Esprit de Corps – Establishing a sense of belonging within the organization creates a sense of unity and moral.

Remember, the objective of Fayol’s principles was to guide managers to efficiently organize and interact with employees.

What are Fayol’s Functions of a Manager?

The individual functions of a manager may vary widely depending upon the type of manager and the nature of the manager’s responsibilities. As such, categorizing the functions of a manager helps understand what are the responsibilities of a manager.

Henri Fayol, in his classic 1916 book “Administration Industrielle et Generale”, Fayol laid out an informative categorization of managerial functions. These functions include:

  • Planning
  • Organizing
  • Commanding
  • Coordinating
  • Controlling

The functions of commanding and controlling have generally been collapsed under the function “Leading”. The result is the modern-day P-O-L-C framework of managerial functions.

It is important to note that these categories are broad in nature. They represent the universal responsibilities of a manager, regardless of the task or industry-specific responsibilities that a manager may face, such as government, non-profit, accounting, finance, marketing, etc.

Planning – Fayol defined managerial planning as:

  • forecasting future conditions,
  • setting objectives, and
  • developing means to attain objectives.

Notice that the planning function is flexible in nature to allow for contingencies that arise in the process.

Organizing – Fayol defined organizing as structuring activities and organizing individuals within the firm. This includes recruiting, equipping, and training individuals.

Commanding – According to Fayol, commanding as a managerial function concerned the:

  • Direct supervision of employees, and
  • Motivating their efforts toward a common objective.

Fayol recognized the need for managers to recognize and understand the behaviors of employees and to set an example for them.

Coordinating – Fayol identified coordination as identifying, arranging, and scheduling all activities carried out by subordinates. This coordination allows for the collective accomplishment of plans.

Controlling – Concerns the constant supervision of activities to identify accomplishment or goals and objectives. Derivation from the identified plan allows the manager to take corrective action.

Who are the Major Contributors to the Administrative Theory of Management?

The Administrative Theory of management is still very much integrated into our modern understanding of organizations and management practice.

Numerous theorists have contributed to Administrative Management Theory. These theorists develop numerous process-based approaches that identified management activities as sets of independent functions. These functions take place at all levels of the organization, regardless of the industry or nature of the manager’s responsibilities.

Noteworthy administrative theorists include:

  • Max Weber (1864-1920) – Weber is credited with developing “Bureaucracy Theory”. This theory was a contemporary of Scientific and pre-dated Administrative Management theory. As such, we discuss Weber’s work as a section of Management Theory.
  • James D. Mooney (1884-1957): Mooney contributed to administrative management theory through is book,  Onward Industry! (1931), later republished as The Principles of Organization. In his text, he applied administrative management theory to organizations in various domestic and international contexts.
  • Luther H. Gulick (1892-1993): Gulick was a physician, administrator, and health educator. He applied administrative management theory principles to government and private organizations.
  • George Terry (1909-1979) – Terry published the first text entitled, Principles of Management. He adopted Fayol’s Functions framework. He combined commanding and controlling into “actualizing”. He defined a principle as “a fundamental statement providing a guide to action” to be applied through scientific methods.
  • Harold Koontz (1909-1984) – Koontz approached management theory through the lens of Human Relations within the organization. He advocated treating employees “tactfully” as a management approach within the organization. He co-authored the book Principles of Management with Cyril J. O’Donnell.
  • Cyril O’Donnell (1900-1976) – As a theorist, professor, and consultant, he published management papers and his text with Harold Koontz defining management as a combination of functions.
  • Ralph Davis (1894-1960) – Davis was an academic and consultant who expanded upon Fayol’s management functions model. He published a text, “The Fundamentals of Top Management” (1951), in which he introduced a rational-planning perspective to Fayol’s model. As such, his impact was primarily in the field of management strategy.
  • Henri Mintzberg (1939 – Present) – Mintzberg is a modern-era theorist who critiqued Fayol’s work as incomplete and impractical. He expanded upon the P-O-L-C framework by focusing on the roles that managers assume within the organization. The impact of his work has been substantial and is discussed as a separate section of Classical Management Theory.
  • Robert L. Katz (1933- 2010) – Katz expanded upon the functions of managers by addressing the individual’s skills that managers must possess at various levels within the organization. This work spanned scientific and administrative theory as is discussed as a separate section of classical management theory.

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