Any sphere of activity demands some governance. Business is not an exception. Organizations require set guidelines, principles that govern the conduct of its members aimed at attaining its goals which can be also called philosophies. A philosophy in essence is a critical position about an issue, a perspective that arises about an event or an object of reality (Carraher, 2014). A philosophy can be considered as a set of moral codes that applicable as a point of reference for making judgment.
Management philosophies are therefore codes of conduct or guidelines along which the management of an organization is based. Organizations need to work along particular frameworks for them to attain their goals (Carraher, 2014). The organization needs to have a standard that guides its practices. As a result, management philosophies most suitable for the organization’s needs are the principle that regulates decision-making in the organization.
Management is characterized by governing, coordination, planning and regulation. Managing the challenges that an organization faces to make the organization stronger, more competitive and better able to attain its vision requires a suitable fundamental operating principle. When an organization attains its goals, it is in a better position to sustain itself in the short and long term (Dent & Bozeman, 2014). The theories that are associated with management philosophy are therefore a critical set of values that are aimed at assisting individuals and organizations to manage themselves and their affairs to attain the goals they have set (Meyers & van Woerkom, 2014).
Theory is a proven or tested hypothesis that is based on the scientific method. Using the scientific method, suppositions are tested rigorously to ascertain their truth through a process that can be verified or repeated and aimed at increasing the body of knowledge on a subject. Management theory is therefore aimed at using tested hypothesis to advice management actions in an organization based on verifiable information.
Literature Review: Administrative Principle
The administrative principle of management is based on the Administrative Management school of thought (in comparison to the Scientific Management School that was advanced by Fredrick Taylor (2016). The key foundation of the administrative principle of management as a management philosophy is its focus on the design and management of an organization. Administrative principle of management is concerned with the development of a rational strategy that designs the entire organization.
The theory is built around the establishment of a formalized administrative structure that involves distinct division of labor, and the delegation of authority to administrators in the areas most suitable to their expertise and responsibilities.
In the modern day, managers have a vast array of resources that are available to them for building skills and improving processes in their organizations. However, the works of early theorists such as Henri Fayol, James D. Mooney and Luther H. Gulick produced knowledge that enabled managers to lead and manage more effectively (Sarpu, 2013). As a result, individuals such as Fayol led to the development of existing management theories and general philosophies of management (What Is Administrative management theory? – Definition & functions).
Fayol’s 14 Principles of Management
Henry Fayol in the book “Administration Industrielle et Générale” outlined his 14 Principles of Management that remain one of the most comprehensive management theories to date (2013). According to Fayol, the Administrative management theory is based on several constructs that can be divided into fourteen broad categories. The organization that sticks to administrative principles of management possesses three key features that include a formalized administrative structure, division of labor and delegation of power and authority.
First of all, a formalized administrative structure should be regarded (Fayol, 2013). Based on this theory, the organization should be created with a formalized structure that has well defined lines of authority that begin from the top down. Such a structure is known as hierarchical. For instance, in a large corporation, the board of directors is at the top and issue instructions to the CEO who in turn passes the instructions to the vice presidents that head each corporate division.
The vice presidents in turn pass on the instructions to their middle managers who pass the instructions to supervisors finally to individual employees. The second meaningful structural component of an organization is a distinct division of labor between its divisions (Fayol, 2013). Individual departments are tasked with a specific facet of the organization’s operations and are focused on attainment of the overall objectives of the organization.
HGC for instance has its production department, marketing department, distribution department, and administrative division. The departments each work on a specific aspect of the organization’s mission. In the production department, goods are manufactured while the marketing department is in charge of publicity and selling of the products. The distribution department is tasked with the supply of products to customers or retailers while the administration is tasked with overseeing all activities of the organization. Another feature is that power and authority should be delegated to administrators in a manner that is proportionate to their responsibilities in the organization (Fayol, 2013).
When administrators lack the power or authority that is required to carry out roles that are needed to attain particular goals related to their job position, the organization stands a difficult chance to attain its overall targets.
The aspects of administrative theory according to Fayol are designed to facilitate the attainment of objectives and include the principles of management, the notion of hierarchy and staff, committees and purposes of management. Fayol’s fourteen principles of management are built upon a fundamental truth. These principles act as a formal guide that facilitates decision making and the actions of management. These are created using observations and studies of happenings that managers run into in practice. From these experiences, Fayol was able to create 14 principles of management after a period of investigation and analysis (Fayol, 2013). The principles are:
- Division of Work: Output in an organization can be boosted when employees are specialized in particular field. Specialization according to research is credited with building skills in staff and as a result highly skilled workers can be highly efficient in their work.
- Authority: It is critical that managers in the organization have the authority to issue orders. In addition, managers need to understand that with authority comes responsibility.
- Discipline: Organizations need to uphold discipline internally. Approaches to discipline may vary. However, there is need for consistency in the application of disciplinary measures. Discipline involves good conduct and respectful relations.
- Unity of Command: Employees should have only one direct supervisor that they report to. As a result, the organization avoids confusion and conflicts for employees. It is easier to establish responsibility for mistakes with unity of command.
- Unity of Direction: For proper coordination of actions, projects that have similar objectives should be managed by a manager and should be operated under a single plan. The manager should monitor the progress and coordinate the activities according to plan.
- Subordination of Individual Interests to the General Interest: The desires or interest of an individual employee should not be allowed to overshadow the needs of the group. Managers are included in this premise.
- Remuneration: Staff satisfaction depends on fair compensation for everyone. Compensation includes monetary and non-monetary rewards.
- Centralization: There is need for a suitable balance that places employees closer to the decision-making process.
- Scalar Chain: All staff should be aware of their position in the organization’s chain of command. There should be a clear line of authority of the organization’s command.
- Order: The organization should have clean, tidy and safe facilities for employees. The employees also have a right to resources at their disposal for them to carry out their functions.
- Equity: Employees have a right to be treated kindly and equally. Employees have to be at the right position in the organization to handle things right.
- Stability of Tenure of Personnel: The rate of employee turnover should be minimized. Managers should address the issues that lead to high employee turnover. The organization should prioritize personnel planning.
- Initiative: Employees should be allowed the required level of freedom to express new ideas to keep them interested and involved in their work and the goals of the organization.
- Esprit de Corps: The organization should work towards involvement and unity of the employees by promoting team spirit and unity.
Fayol’s principles of management can be employed by organizations to forecast, plan, manage processes, mange the organization, make decisions and coordinate and control the organization’s activities. While they may be considered obvious in some quarters in present day management practice in firms, they remain highly practical and logical (Wren, Bedeian, & Breezem, 2002).
Case Study: Hector-Gaming Company
The major problems affecting HGC are as a result of organizational politics, lack of agreed and definite intermediate and long term goals and lack of proper management of internal affairs. In addition, there is no well-defined resource management strategy in place at HGC. As a result, there are conflicts related to the allocation of resources. There is also a lack of synergy among the managers at HGC. They cannot work well together as a result of misaligned thought processes.
The increased demand for its products means HGC should have predicted the availability and allocation of resources. Projects at HGC are also not meeting deadlines and working within the budget. Resource management is therefore a major problem at HGC implying major strategic issues at the company.
Analysis of HGC shows that HGC has several opportunities, strengths, weaknesses and threats that are related to its operation. An understanding of these factors is critical to the establishment of solutions to its problems.
The most important strength that HGC has is its high growth rate that stems from the popularity its products enjoy. The company has grown an average of 80% annually in the last two years. HGC also has staff who are unique specialists in their niche making them valuable assets to production in the organization. The president of HGC, Sally Peters has a strong entrepreneurial spirit that has been recognized by the industry.
The weakness of the company is in running too many projects simultaneously and as a result the resources at the organization are stretched almost to the limit. In addition, there is evidently a lack of proper internal communication channels. Lastly, lack of an agreed strategy has led to conflict of interest.
However, HGC produces unique products that have educational value. Education is a large industry that as a result ensures that the demand of educational products remains high. The company has also built a well-established brand name.
Competitors in the same industry have expressed interest in the talent at HGC. Besides, competitors have upped their efforts and increased elements of competition for HGC in the market. Lastly, HGC faces the persistent threat of competition from substitute products.
Application of Administrative Principle to Case Study
Management is characterized by governing, coordination, planning and regulation. Managing the challenges that an organization faces to make the organization stronger, more competitive and better able to attain its vision requires a suitable fundamental operating principle. For HGC, the administrative principle in particular is important for the organization.
The problems identified at HGC can be related to unity of command, unity of direction, scalar chain, equity, order, discipline and subordination of individual interest to general interest that are all part of the administrative theory of the 14 Principles of Management by Henri Fayol (2013). The president of HGC needs to apply the principles of management as outlined by Fayol to HGC to ensure the organization continues to run in a sustainable manner that enables it overcome challenges and threats such as increased competition.
Recommendations and Conclusion
On the whole, the knowledge of management philosophies is necessary for companies that want to develop. The philosophies and principles unite the experience of previous generations. Its application will help to reduce the mistakes that the companies make on their way to success. The principles of the Administrative theory have proved their efficiency and thus can be recommended for application by organizations from various fields of business.
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Fayol, H. 2013. General and industrial management, Martino Publishing, Mansfield Centre.
Meyers, MC & van Woerkom, M. 2013. ‘The influence of underlying philosophies on talent management: Theory, implications for practice, and research agenda,’ Journal of World Business, vol. 49, pp. 192-203.
Sarpu, RK. 2013. Administrative theories and management thought, PHI Learning, Dehli.
Taylor, FW. 2016. The principles of scientific management, Cosimo Classics, New York
‘What Is Administrative management theory? – Definition & functions.‘ Web.
Wren, DA, Bedeian, AG & Breezem JD. 2002. ‘The foundations of Henri Fayol’s administrative theory,’ Management Decision, vol. 40, no. 9, pp. 906-918.