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Henri Fayol’s Ideas on Managing Staff and Keeping Workers Happy
Human Resources Management · Chapter 3: How Management Theories Shape the Way Jobs Are Built and OrganizedSection 3.3 · lesson 13 of 9114 min · free with a free account
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In this lesson
Use the functions and people principles as a diagnostic vocabulary.
- Describe the 5 functions
- Apply the people-focused principles
- Diagnose leadership and initiative
- Recognize the framework’s limits
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How Management Theories Shape the Way Jobs Are Built and Organized
Henri Fayol and the Manager’s Work
Henri Fayol approached management from the director's office, rather than from the individual workbench. He was a mining engineer, whose career included running a large industrial company. His question concerned what the activity of managing actually contains, across the organization. The answer complemented Taylor's task-focused work, rather than competing with its study of methods. This lesson introduces five functions, linking each to an identifiable HR activity. We then examine five people-focused principles, drawn from Fayol's fourteen management principles. Remuneration, equity, tenure, initiative, and common purpose offer a vocabulary for diagnosing workplace problems. Discipline also matters, as a reciprocal obligation influenced strongly by the quality of leadership. The fictional support-team case distinguishes treating turnover directly, from investigating the absence of employee initiative. Finally, we assess why the framework remains useful, despite being prescriptions rather than testable findings.
A Different Vantage Point
Management Is a Distinct Activity
Fayol observed that technical business work was easy to name, but management lacked an agreed definition. Making products, selling, and recording accounts were recognizable activities, while management seemed a personal quality. He instead identified six groups of activity, within an industrial undertaking's overall work. Technical activity concerns production. Commercial activity concerns buying and selling within the business. Financial activity raises and uses capital, while security protects people and property. Accounting records and reports what happens. Managerial activity sits alongside these five, as specialized work. Placing it there makes a substantive claim: management can be described, taught, and improved. Scientific management asks how a task should be performed; Fayol asks what managing the whole requires. The two describe different levels, so an operation can use both approaches simultaneously. Measured standards at the shop floor can coexist with Fayol's functions in management meetings.
5 Functions
Each Function Houses HR Work
Planning examines the future, choosing objectives, the time available, and the resources needed. Workforce planning sits within that function, anticipating people required to deliver the intended activity. Organizing supplies structure, people, and materials, deciding which roles exist and how they relate. Job design and organizational structure are HR activities within that organizing function. Commanding sets people to work and maintains activity, through supervision and clear direction. The word has aged badly. Directing or leading usually expresses that function in current usage. Coordinating connects separate efforts, so units support each other rather than creating conflicting demands. Employee relations and cross-unit alignment provide related HR work within that coordinating function. Controlling checks performance against plans and instructions, identifying deviations so they can be corrected. Performance management supplies information for the next planning round. If that connection fails, the loop is broken.
Remuneration
Fair to Employees and Sustainable for the Business
Remuneration concerns payment fair to employees and the organization, without exceeding what the business can sustain. Fayol considered time rates, piece rates, bonuses, and profit sharing, rather than endorsing one universal method. Each method has a purpose and a failure mode. Choice should follow the nature of the work. That position is more nuanced than the caricature of classical management treating any incentive as sufficient. Time-based pay, output incentives, and shared profits create different relationships between contribution and reward. The principle anticipates modern pay-structure design, method selection, and review processes within HR. Fairness in Fayol's account is an administrative judgment, rather than a statement of legal compliance. Modern pay requirements and equal-employment obligations operate separately, limiting which arrangements can be used. A manager cannot answer a statutory question merely by declaring a chosen method fair. Use the principle to evaluate the design, while assessing applicable legal duties through the appropriate process.
Equity
Kindliness and Justice Must Work Together
Equity combines kindliness with justice, requiring consistent rules and attention to individual circumstances. Both halves matter, because applying either alone produces a predictable failure in treatment. Justice without context can enforce rules rigidly, even when an unusual case falls outside their original purpose. Kindliness without consistency can become favoritism, giving similar cases different outcomes through personal sympathy. The bureaucratic tradition protects against that favoritism, while Fayol's emphasis adds recognition of circumstances. Modern discipline and grievance practice lives within this tension, rather than eliminating one side of it. A documented procedure makes the route consistent, and provides a basis for review or appeal. Attention to the case's circumstances then supports judgment, without letting personal relationships decide the result. Consistency checks ask whether relevantly similar cases were treated alike, rather than assuming discretion was harmless. Equity is therefore a disciplined combination, not permission either to ignore rules or to ignore people.
Stability of Tenure
Turnover Can Cause Poor Performance
Stability of tenure recognizes that employees need time, within a role, to become effective. Avoidable turnover creates organizational cost, rather than simply requiring the vacancy to be filled again. Recruitment consumes resources, and a replacement's learning period reduces output compared with established performance. Colleagues spend time training, while the remaining team experiences another period of instability. Fayol also reverses the familiar explanation: instability can cause poor performance, rather than only follow it. A manager who cannot keep employees should therefore be examined, instead of repeatedly resupplied with new workers. Modern descendants include retention analysis and exit interviews. Onboarding design and internal-mobility policies also reflect this principle. Real analysis needs appropriate evidence, rather than invented universal figures about what turnover costs. The Bureau of Labor Statistics publishes separations and quits through the Job Openings and Labor Turnover Survey. Use data for the relevant period and industry, while examining the local conditions producing the departures.
Initiative and Esprit de Corps
Capability and Common Purpose Need Room
Initiative allows employees to conceive and carry out plans, rather than waiting for every decision from above. A manager doing everything personally forfeits the capabilities of the people below them. Fayol explicitly required some surrender of personal vanity, recognizing why capable managers can resist delegation. Autonomy, delegation practice, and suggestion or improvement schemes carry that principle into modern HR work. Esprit de corps concerns harmony and common purpose, built deliberately rather than assumed from shared employment. Team development, internal communication, and engagement measurement reflect that emphasis in current organizations. Fayol warned managers not to divide staff, merely because division makes control easier. He also favored verbal business where possible, rather than allowing written communication to replace relationships. The warning applies readily to workplaces operating largely through written channels, where connection requires deliberate attention. Both principles treat people as sources of capability and cooperation, rather than only recipients of instructions.
2 Further Principles
Reciprocal Discipline, Legally Bounded Interests
Discipline means obedience to the agreements between the organization and its people, and the obligation is reciprocal. Employees are bound by those agreements, but the employer must honor its side as well. Fayol argued that a unit's discipline depends chiefly on the quality of its leadership. A pattern of rule-breaking concentrated in one team therefore prompts investigation of supervision, before individual character. Subordination of individual interest concerns preventing one employee or group from prevailing over the organization as a whole. That statement needs qualification, rather than becoming a general instruction to sacrifice people to business convenience. Reconciling personal and organizational claims is a permanent managerial difficulty, not something solved by issuing an order. Modern legal limits provide a further boundary: organizational interests do not override an employee's statutory rights. When a business preference appears to conflict with a legal entitlement, the question has become legal. Counsel should then assess the duties, rather than the manager reasoning from Fayol's principle alone.
Composite Case
Amara’s Team at Calder Systems
Amara manages twelve technical-support staff at fictional Calder Systems, in the composite case constructed for instruction. Seven leave over eighteen months, leading her director to suspect pay is uncompetitive. A salary survey finds normal pay for the roles, while exit conversations reveal another pattern. Amara reviews every customer response, reallocates tickets herself, and requires approval for every goodwill credit. Staff describe her as supportive and available. They also say they have no decisions of their own. Stability of tenure directs attention to retention, suggesting pay, career paths, or counter-offer processes. Initiative instead treats turnover as a symptom, asking whether the role prevents capable employees from originating anything. The managerial ceiling may therefore matter more than the job's formal scope or salary. Amara's review demonstrably reduces customer-facing errors, so removing it transfers genuine risk to the business. The decision must preserve important protections, while giving employees meaningful authority within an explicit boundary.
Bounded Initiative
Replace Universal Approval With a Defined Boundary
The accepted change retains review for credits above a set value, reserving those decisions for Amara. It also retains review for two accounts, whose contracts require escalation through a defined route. Other decisions are released to employees, giving initiative room within the role's ordinary work. A monthly sample audit replaces case-by-case approval, monitoring results without taking every decision away again. The error rate is expected to rise slightly, which means the choice accepts a real cost. That cost is judged smaller than losing a trained engineer every ten weeks, under the existing arrangement. The solution does not abandon control. It replaces universal approval with boundaries and later review. It also distinguishes a turnover remedy from a diagnosis, addressing the role design that encourages departure. The case combines planning, organizing, direction, coordination, and control, rather than isolating one function from the others. Fayol's vocabulary makes the trade-off easier to name, without mechanically producing a risk-free answer.
Standing Criticism
Prescriptions Are Not Scientific Findings
The standing criticism is that Fayol's principles are prescriptions, rather than propositions that can be disproved. Kindliness and justice, for example, do not specify what evidence would show the principle itself mistaken. If performance is poor, one can always argue the principle was not applied sufficiently. That makes the fourteen principles unlike a scientific theory, with clear conditions for disconfirmation. The criticism is fair. It does not remove every useful part of the framework. The five functions describe managerial activity, rather than claiming which treatment always produces success. Their durable vocabulary helps identify what a process does, and where a management connection is missing. The principles also provide specific diagnostic questions, improving on intuition when a situation is failing. A framework can aid structured thinking. It does not prove causal laws about every organization. Use it for that purpose, while avoiding claims of scientific certainty the principles cannot support.
Apply the Framework
Start With the Leadership Pattern
The reverse problem describes six distribution-center teams, doing identical work under the same terms and conditions. Two teams account for most attendance problems, most grievances, and all the recent resignations. Reciprocal discipline directs the first question toward leadership quality, rather than characterizing those employees as deficient. Ask what supervision, agreements, and daily treatment differ, despite the shared site and formal terms. The concentration of problems makes a workforce-character explanation weaker than investigating the local management pattern. This is a diagnostic starting point, rather than proof that a particular supervisor caused every outcome. Fayol's five functions identify the activities through which managers organize people and resources. The people principles ask about payment, equitable treatment, tenure, initiative, and deliberately built common purpose. Use both to define the problem and the trade-off, with legal duties assessed through appropriate advice. The next lesson examines Fayol's remaining principles, governing structure, authority, and the division of work.
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Human Resources Management (Business 306) is a self-paced online course of 91 video lessons in 12 chapters, from what HR does and how jobs are designed to hiring, training, performance reviews, pay and benefits, safety, employment law, unions, global staffing and remote work. It carries a NCCRS credit recommendation for 3 semester credits.
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About Henri Fayol’s Ideas on Managing Staff and Keeping Workers Happy
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