Fayol's Remuneration Principle: Definition & Explanation

Instructor: Rebekiah Hill

Rebekiah has taught college accounting and has a master's in both management and business.

In this lesson, you'll learn what the term remuneration means and why it is important. You'll also learn what role the French theorist Henri Fayol played in making remuneration an important management concept.

During a job interview, what is the one piece of information that you want to know more than anything? Is it what hours you will work? Is it what days you will work? Is it what your job title will be? It's more than likely you'll be thinking this one: 'How much will I get paid?' That question is exactly what remuneration is all about.

job interview

Definition of Remuneration

What exactly is remuneration? According to the Merriam-Webster dictionary, the word remunerate means 'to pay an equivalent for a service, loss or expense.' If remunerate means to pay someone, then remuneration means the pay that you receive for a service. We all know that pay is one of the deciding factors when choosing whether or not to accept an offer of employment, but how do we decide what is fair pay? Fortunately for us, the guiding principle for deciding this was established many years ago.

Who is Henri Fayol, and What Does He Have to Do With Remuneration?

Not only was Henri Fayol a management theorist in the late 1800's and early 1900's, but he also spent the majority of his working life in a management position. It was during his years as a manager that Fayol began to feel that the entire concept of management was not very well-defined. There were no real guidelines on what managers should or should not do, nor was there any instruction on the topic of management. Fayol wanted to change this. He wanted management to be better-defined, and for the concept of management to be taught as early as primary school.

Henri Fayol
Henri Fayol

In 1917, a retired Fayol decided to open a facility strictly for the discussion of management, and thus the Centre For Administrative Studies (CAS) was born. The CAS was a place where professors of all areas could meet, discuss, and develop further understanding of the principles of management. It was during one of these discussions that Fayol introduced his 14 principles of management, the 14 things that he believed were needed to make management a concrete science. Of those 14 principles one of those was remuneration.

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