Principles of Administration and Management functions

Fundamentals

According to Fayol, the same six important functions are to be found in all companies, regardless of their size and production: These are the technical, commercial, financial, security, accounting, and management functions. Because the first five functions were well known, Fayol did not discuss them in any detail, but concentrated instead on the management function.

Fayol compared management to the nervous system of an animal. It should be present in all kinds of organizations (though Fayol referred mostly to companies) and at all organizational levels, transmitting information from one level to another. Management is not only a question for managers, Fayol maintained, but for all employees, including the workers. Everyone must possess some management knowledge. The relative importance of this knowledge varies, however, depending on the size of the organization and the position of the employee. It is more important the larger the organization and the higher the position of the employee.

For a large company, Fayol estimated the relative importance of management knowledge to five for workers, 15 for foremen, and 35 for heads of technical departments. For a CEO of a small company, the corresponding number was 25, for a CEO of a large company 40, and for the CEO of a very large company 50. These numbers were based on Fayol’s personal judgment and are open for discussion, however. Fayol emphasized that the meaning of management depends on the specific production of the company and the position of the manager.