ADMINISTRATIVE

MANAGEMENT
 ADMINISTRATIVE MANAGEMENT
THEORY
• Attempts to find a rational way to design an organization as a whole.
• The theory generally calls for a formalized administrative structure. A clear
division of labor and delegation of power and authority to administrators
relevant to their areas of responsibilities
 HENRI FAYOL (1841-1925)
• Fayol laid the first foundations for modern scientific management.
His principles of management and research were published in the
book General & Industrial Management (1916)

• He believed that the activities of the industrial undertakings could be

divided into 6 groups:
SIX MANAGERIAL ACTIVITIES
Technical Activities Production, manufacture, adaptation
Commercial Activities Buying, selling, exchange
Financial Activities Search for and optimum use of capital
Security Activities Protection of property and persons
Accounting Activities Stock-taking, balance sheet, costs, statistics
Managerial Activities Planning, organizing, commanding,
coordinating and controlling
 HENRI FAYOL: ELEMENTS OF MANAGEMENT
a) Planning: Forethought to the operation of an organization. Experience,
unity, continuity, flexibility precision are features of Good Planning.
b) Organizing: Material organization and human organization (leadership,
organizational structure).
c) Commanding: Rests on certain personal qualities and knowledge of
general management.
d) Coordinating: Coordinating by integrating subordinates and keeping
balance among material, social and functional parts.
e) Controlling: Verifying whether activities take place in conformity with the
plan adopted, instructions issued and principles established.
 14 PRINCIPLES OF MANAGEMENT OF HENRI FAYOL
• These statements are based on fundamental truth
• Serve as guideline for decision-making and management actions
• They are drawn up by means of observations and analyses of events that managers
encounter in practice.

Division of Labor Authority & Responsibility

• Different levels of expertise can be • The right to give orders where

distinguished within the knowledge
areas (from generalist to specialist).
• Work must be divided. Specialization
labour produces more and better
work with the same effort.
• applicable to both technical and
managerial activities.
authority is exercised responsibility
arises.
• The responsibility can be traced
back from performance and it is
therefore necessary to make
agreements about this.

Discipline
• It is often a part of the core values of a mission
and vision in the form of good conduct and
respectful interactions.
• This management principle is essential and is
seen as the oil to make the engine of an
organization run smoothly.
Unity of Command
• One man and one superior.
• It means that an individual employee
should receive orders from one
manager and that the employee is
answerable to that manager.
• If tasks and related responsibilities
are given to the employee by more
than one manager, this may lead to
confusion which may lead to possible
conflicts for employees.
• By using this principle, the
responsibility for mistakes can be
established more easily.
 Unity of Direction Subordination of Individual Interest

• One head and one plan for a group • There are always all kinds of interests in
of activities with the same an organization. In order to have an
objective. organization function well, Henri Fayol
indicated that personal interests are
• All activities must be carried out by
subordinate to the interests of the
one group that forms a team. These
organization (ethics).
activities must be described in a
plan of action. • The interests of one individual or one
group should not prevail over the general
• The manager is ultimately
interest.
responsible for this plan and he
monitors the progress of the
defined and planned activities.
Focus areas are the efforts made by
the employees and coordination.
 Renumeration
• Motivation and productivity are close to
one another as far as the smooth running
of an organization is concerned.
• Pay (motivation) should be fair to both
employee and the firm.
• There are two types of remuneration
namely non-monetary (a compliment,
more responsibilities, credits) and
monetary (compensation, bonus or other
financial compensation).
• Ultimately, it is about rewarding the
efforts that have been made.
The Degree of Centralization
• Management and authority for
decision-making process must be
properly balanced in an organization.
This depends on the volume and size of
an organization including its hierarchy.
• Centralization implies the concentration
of decision making authority at the top
management (executive board). Sharing
of authorities for the decision-making
process with lower levels (middle and
lower management), is referred to as
decentralization by Henri Fayol. He
indicated that an organization should
strive for a good balance in this.
 Scalar Chain
• Henri Fayol’s “hierarchy” management
principle states that there should be a
clear line in the area of authority
(from top to bottom and all managers
at all levels). -
• Fayol’s Bridge or Gang Plank
Order
• According to this principle,
employees in an organization must
have the right resources at their
disposal so that they can function
properly in an organization.
• A place for everything and everything
in its place; the right man in the
right place.
• In addition to social order
(responsibility of the managers) the
work environment must be safe,
clean and tidy.
 Equity Stability of Tenure of Personell

• The management principle of • This management principle

equity often occurs in the core represents deployment and
values of an organization. managing of personnel and this
should be in balance with the service
• According to Henri Fayol,
that is provided from the
employees must be treated kindly
organization.
and equally. Kindness and
Justice towards employees
• Suitable condition should be created
• Employees must be in the right to minimize employee turnover.
place in the organization to do
things right. Managers should
supervise and monitor this
process and they should treat
employees fairly and impartially.
 Initiative
• Henri Fayol argued that with
this management principle
employees should be allowed to
express new ideas.
• This encourages interest and
involvement and creates added
value for the company.
• Within lmits of authority and
discipline, all levels of staff
should be encouraged to show
initiative.
Esprit de Corps
• The management principle
‘esprit de corps’ stands for
striving for the involvement and
unity of the employees.
• Harmony is a great strength to
an organization; teamwork
should be encouraged.
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 MAX WEBER (1864 – 1920)
AND BUREAUCRACY
• German sociologist who influenced classical organization theory.
• Weber developed a model for a rational and efficient large
organization which he termed a bureaucracy.
• Weber described the following as characteristics of legal
authority with a bureaucratic administrative staff
 Office (or position) is the basic organizational unit
designated a specific set of functions with clearly
defined authority and responsibility.
 Members of the organization owe loyalty to the office,
not (as with traditional/charismatic authority) to the
individual
 Candidates for offices are selected and appointed (not
elected) based on their technical capability.
 Officers are organized in a clearly defined hierarchy:
each lower office is under the control and supervision of
a higher office.
 Officials are subject to strict and systematic discipline
and control in the conduct of the office, and
subordinates have a right of appeal.
continuation…
 Administrative acts, decisions, and rules must be reduced to writing
 The office is the primary occupation of the incumbent, who is reimbursed by a fixed salary.
 Promotion is based on the judgement of superiors.
 Officials are not the owners of the organization.

BUREAUCRACY
• This term need not to imply an organization that is mixed in red tape, delay, and inefficiency,
with no concern for the human dimension. Most of Weber’s elements are necessary in any
large organization to assure consistent and reasonably efficient operation. The U.S. Postal
Service or Internal Revenue Service must have the same rules of operation at every local
office, an army must have common procedures so that replacement officers and men can
function quickly on assuming new positions; General Motors, or a large university or hospital, or
the Boy Scouts of America must have fairly uniform structures and rules among their divisions to
function smoothly. The challenge of a large organization is to incorporate into this necessary
structure some flexibility to handle exceptions and an ability to recognize and reward
individual contributions.
 RUSSELL ROBB (1864 -1927)
• Rob was an American electrical engineer and manager whose original contributions on
organization theory have not received the attention they deserve.
• After graduating from MIT, Robb spent most of his career as an executive in the Stone and
Webster Engineering Corporation.
• He expressed his views on organization in three lectures presented to the Harvard
University Graduate School of Business Administration in 1909 and later published.
• Young summarized their import: These three lectures… contain more practical
observations on organizations and concepts of organization theory than Weber. He was a
practicing engineer manager, whereas Weber was a sociologist. His penetrating
observation of organizations as “only means to ends --- it provides a method” and analysis
of principles and concepts make him more a “pioneer of organization theory” than
Weber.
 LYNDALL URWICK
• An Englishman who majored in history at Oxford.
• His contribution lay not in creating concepts of management
functions but in being the first to try to develop a unified body of
knowledge.
• Using Fayol’s management functions as a framework, he analyzed
the wr