1. Division of labor: The most people specialize, the more efficiently they can perform their work. This principle is epitomized by the modern assembly line.
2. Authority: Managers must give orders so that they can get things done. While their formal authority gives them the right to command, managers will not always compel obedience unless they have personal authority (such as relevant expertise) as well.
3. Discipline: Members in an organization need to respect the rules and agreements that govern the organization. To Fayol, discipline results from good leadership at all levels of the organization, fair agreements (such as provisions for rewarding superior performance), and judiciously end forced penalties for infractions.
4. Unity of Command: Each employee must receive instructions from only one person. Fayol believed that when an employee reported to more than one manager, conflicts in instructions and confusion of authority would result.
5. Unity of Direction: Those operations within the organization that have the same objective should be directed by only one manager using one plan. For example, the personnel department in a company should not have two directors, each with a different hiring policy.
6. Subordination of individual Interest to the Common Good. In any undertaking, the interests of employees should not take precedence over the interests of the organization as a whole.
7. Remuneration: Compensation for work done should be fair to both employees and employers.
8. Centralization: Decreasing the role of subordinates in decision making is centralization; increasing their role is decentralization. Fayol believed that managers should retain final responsibility, but should at the same time give their subordinates enough authority to do their jobs properly. The problem is to find the proper degree of centralization in each case.
9. The Hierarchy: The line of authority in an organization – often represented today by the neat boxes and lines of the organization chart runs in order of rank from top management to the lowest level of the enterprise.
10. Order: Materials and people should be in the right place at the right time. People, in particular should be in the jobs or positions they are most suited to,
11. Equity: Managers should be both friendly and fair to their subordinates.
12. Stability of the staff: A high employee turnover rate undermines the efficient functioning of an organizing.
13. Initiative: Subordinates should be given the freedom to conceive and carry out their plans, even though some mistakes may result.
14. Esprit de corps: Promoting team spirit will give the organization a sense of unity. To Fayol, even small factors should help to develop the spirit. He suggested for example, the user of verbal communication instead of formal, written communication whenever possible.
Home depot: America’s largest home improvement retailer, practices much of what Follett had in mind. Before Home depot opens a new store, all employees receive about four weeks of training. To maintain contact and to reinforce information about the company, the retailer holds quarterly Sunday morning meetings for its 23,000 employees using satellite TV hook ups in each store. The sessions are known as “Breakfast with Bernie and Arthur” (the founders of Home Depot). The telecast is interactive, allowing for exchange of information and permitting employees to phone the company’s top executives to ask questions. Home depot also has an in house TV station that produces programs designed to teach the Home Depot “service spirit” to new store employees.
Home depot also educates customers. Stores offer clinics, taught by staff or by supplier representatives, on how to do a variety of home improvement projects. Home Depot also strives to make improvements based on customer experience and suggestions. For instance, when contractors requested a special checkout area near the lumber racks, Home Depot complied, finding that the change speeded “front of store” check out. The team spirit sharing of information and quality customer service that define Home depot has made it the dominant power in the $115 billion home improvement industry. In 1993, among 404 major corporations in the US, Home depot was ranked as the second most admired company.