Henri Fayol and the family business

Helping to a family business is a difficult task, since we can find more than one family manager in it. It is possible that different family members have different feelings about the process, people, and the vision of the future. It is not easy for employees working in this atmosphere of work due to the obligation to follow the contradictory orders from the corporate directory.

Who is the boss, the mother, the father, brothers, or the supervisor employee? And what about the rules that employees must follow? How do you know if they are right or wrong, if some of them are changed with regularly? How to be efficient if the directory have different point of view about the efficient?

Henri Fayol was a French management theorist whose theories in management and organization of work were very influential at the beginning of the 20th century. It is possible that Fayol can help us find the answer to this great and intricate problem.

Fayol rules are commonly used to solve problems in different topics as: change and organization. Decision- making skills. Improve the basic effectiveness of a manager, or understand that management can be seen as a variety of activities, which can be listed and grouped.

Then we list the 14 principles of management described in his book and industrial General management.

1. Division of work. Specialization allows the individual to build up experience, and to continuously improve his skills. Thereby he can be more productive.
2. Discipline.  Employees must obey, but this is two-sided: employees will only obey orders if management plays their part by providing good leadership.
3. Unit of command. Each worker should have only one boss with no other conflicting lines of command.
4. Authority. The right to issue commands, along with which must go the balanced responsibility for its function.
5. Subordination of individual interest (to the general interest). Management must see that the goals of the firms are always paramount.
6. Unit of direction. People engaged in the same kind of activities must have the same objectives in a single plan. This is essential to ensure unity and coordination in the enterprise. Unity of command does not exist without unity of direction but does not necessarily flows from it.
7. Remuneration. Payment is an important motivator although by analyzing a number of possibilities, Fayol points out that there is no such thing as a perfect system.
8. Centralization or decentralization. This is a matter or degree depending on the condition of the business and the quality of its personnel.
9. Scalar chain (Line of Authority). A hierarchy is necessary for unity of direction. But lateral communication is also fundamental, as long as superiors know that such communication is taking place. Scalar chain refers to the number of levels in the hierarchy from the ultimate authority to the lowest level in the organization. It should not be over-stretched and consist of too-many levels.
10. Team Spirit of Corps. Management must foster the morale of its employees. He further suggests that. “Real talent is needed to coordinate effort, encourage keenness, use each persons’s abilities, and reward each one’s merit without arousing possible jealousies and disturbing harmonious relations”.
11. Equity. In running business a combination of kindliness and justice is needed. Treating employees well is important to achieve equity.
12. Stability of Tenure of Personnel. Employees work better if job security and career progress are assured to them. An insecure tenure and a high rate of employee turnover will affect the organization adversely.
13. Order. Both material order and social order are necessary. The former minimizes lost time and useless handling of materials. The latter is achieved through organization and selection.
14. Initiative. Allowing all personnel to show their initiative in some way is a source of strength for the organization. Even though it may well involve a sacrifice of “personal vanity” on the part of many managers.

We hope that these concepts are useful for solving problems in the world of entrepreneurs and family businesses.

Lic. Claudio M. Pizzi

Director

www.dorbaires.com