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Centralization: Fayol's Principle, Overview

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  • 0:00 Jules Henri Fayol
  • 1:12 Fayols' 14 Principles…
  • 2:00 Centralization &…
  • 2:49 Lesson Summary
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Lesson Transcript
Instructor: Ryan Hultzman
In this lesson, we will review Fayol's background and his 14 management principles. We will also discuss what centralization & decentralization mean and why they're relevant today.

Jules Henri Fayol

Jules Henri Fayol (1841-1925) was born in Istanbul, the capital of the Ottoman Empire. Fayol is known as the 'Father of Modern Management.' His ideas, which were revolutionary during his time. have continued to influence management thinking to this day. After finishing high school, Fayol followed in his father's footsteps and became an engineer, going to work for a company that owned coal, steel, and iron mines.

From 1860-1866, Fayol improved techniques for fighting underground coal fires. Because he worked so hard, he was rewarded with a promotion to management. Six years later, he was again promoted to Chief Executive Officer (CEO). As the CEO, he was responsible for improving operations for the company.

Although Fayol's training was in engineering, he realized that managing thousands of employees at different locations required skills that he had not learned in school. He viewed management as more than just supervising people. For Fayol, management involved all of the activities associated with producing, distributing, and selling products. He also realized that a manager needed to be able to strategize, organize equipment, deal with people, and much, much more.

Fayol's 14 Principles of Management

Fayol believed that all employees of his company, from the foremen to the CEO, should receive some type of managerial training. He developed a list of principles of management. He believed that there were more than 14 of them, but chose to focus on those he found to be the most useful in his own career. The 14 principles that Fayol concentrated on were:

  1. Division of work
  2. Authority & responsibility
  3. Discipline
  4. Principle of one boss
  5. Unity of direction
  6. Subordination of individual interests to the general interest
  7. Fair remuneration
  8. Centralization & decentralization
  9. Scalar chain
  10. Order
  11. Equity
  12. Stability of tenure of personnel
  13. Initiative
  14. Esprit de corps (building harmony and unity)

Fayol's Centralization and Decentralization Principles

Centralization means that top management retains most of the decision-making authority. Decentralization means that decision-making is distributed among all levels of the organization. This means that information is shared from the top of management downwards.

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