The administrative principles of management, created in the early 20th century by French industrialist Henri Fayol, changed the way that many view management.
Fayol’s principles focused mainly on the management teams of businesses and helped establish a top to bottom hierarchal system to produce a more structured organization (Brunsson, 2008; Yoo, Lemak, & Choi, 2008; Fells, 2000). This essay will focus on four of the 14 key principles of administrative theory – unity of command, subordination of individual interest for the interest of the organization, esprit de corp. nd remuneration – and analyze how they have been applied in a leading New Zealand company, Pumpkin Patch Limited (Ltd. ) (Samson & Daft, 2009, p. 64; Wren, Bedian, & Breeze, 2002). This essay will argue that although Fayol’s administrative principles were devised in the early 20th century, they are still relevant in contemporary businesses today and how, like Pumpkin Patch, they have been developed to fit their organizational structure. Fayol’s most influential principle is arguably unity of command.Unity of command is where every worker, whether it be a factory worker, a supervisor or the Chief Executive Officer (CEO) only receive orders from one superior source (Fells, 2000; Parker & Ritson, 2005; Samson & Daft, 2009).
This stops confusion in the work place over what has to be done and therefore the organization is able to increase productivity thereby allowing the organization to reach their goals in a shorter time frame. This principle led to management teams being more structured as well as increasing work place efficiency which is still needed in today’s contemporary business. Pumpkin Patch Ltd.
as well as many other businesses around the world, use this principle with great effect. Pumpkin Patch’s management runs from the Board of Directors right down to the shop assistants in stores such as Takapuna (Pumpkin Patch Limited, 2008). The structure of their management allows clear orders to be sent down the ranks and allows for company goals to be achieved through workers understanding of a task to be done.
This has helped Pumpkin Patch become the leading-edge children’s brand it is today with stores in Australia, the United Kingdom, the United States and New Zealand (Brookes, Shepherd & Nicholson, 2008).The fact that what started out as a small family run New Zealand business is now an multinational company shows that clear management structures are indeed a major factor in the contemporary business as it allows workers, managers and employees to achieve the company objectives (Pumpkin Patch Limited, 2008; Hall, 2009 ). Subordination of individual interest of general interest, another of Fayol’s 14 principles, relies on the unity of command.
Subordination of individual interest of general interest is when individual employees sacrifice their own opinions and interest for the greater good of the company (Rodrigues, 2001; Wren et al. 2002). This requires a high level of commitment from the employees. However when it comes to management, the top managers of the organization such as in Pumpkin Patch, have to decide what is best for the company. In times of difficulties such as a recession, managers need to be able to decide what will be best way forward for the company while maintaining a good profit margin. If this means that staff members will have to be retrenched or stores closed they have to be able to make that decision. The Pumpkin Patch Ltd. anagement team made this decision earlier on this year when they decided to close 20 of their 35 stores in the United States (Hall, 2009).
This was because their stores on the East Coast, many of which were the newest stores to open in the United States for the company, were not achieving targets due to poor brand recognition (Slade, 2009). The management team made a decision to lose a few stores and employees, instead of allowing the company’s margins to be eroded which could result in the company going into receivership.This shows that Fayol believing that the managers, and the employees should put the company first, is still applicable to today’s contemporary organizations. Although it has been adapted from Fayol’s original idea, subordination of individual interest of general interest, it is still present in Pumpkin Patch Ltd. In a company that is downsizing, and even when it is not, Esprit de Corp is a principle that plays a major factor in contemporary organizations today. Esprit de Corp is when a business creates, and maintains, employee harmony, unity and morale (Fells, 2000; Rodrigues, 2001).
This allows for a happy working environment, and a happy employee means that they are more likely to achieve productivity and efficiency outcomes. Pumpkin Patch Ltd. has adapted this to fit their family environment that they feel the company has (Pumpkin Patch Limited, n. d. ).
The company believes in a balance between work, leisure and flexibility as well as providing an in-house kindergarten for employees’ children (Pumpkin Patch Limited, n. d). This, although fairly minor, is a prime example of how contemporary businesses have adapted one of the founding principles of management and adapted it to fit their organization.As well as this Pumpkin Patch have organized their business into teams such as the information technology (IT) team and the design team who are an integral part of the organization in helping attain their goals and aims ( Brookes, et al. , 2008).
As Pumpkin Patch has consistently produced profits, apart from the first half of the 2009 financial year, this is evidence that the employees, the management and the organization as a whole are doing something right. If the employees were not happy then this result would not be possible, (Pumpkin Patch Limited, 2007, 2008, 2009).This reinforces that Fayol’s principle has stood the test of time and is definitely still relevant in today’s organizations, such as Pumpkin Patch, through adaptation to fit the business. Remuneration is a way to let employees know that they are appreciated for the job they are doing and is the fourth principle that this essay will discuss. This principle was originally to pay employees a fair wage for a particular job that was agreed upon by the employees and the organization upon employment (Fells, 2000; Parker & Ritson, 2005).However, in many contemporary organizations today, the remuneration is shown through performance-based pay or added incentives (Rodrigues, 2001). Pumpkin Patch has adopted the more modern interpretation on Fayol’s principle giving employees raises, performance bonuses, company car incentives and various undisclosed benefits as an employee payment package (Pumpkin Patch Limited, 2008). This is also applicable to the Pumpkin Patch Ltd management team where some top managers and executives had their salaries cut between 2007 and 2008 due to the company’s poor performance and not reaching organizational goals (Pumpkin Patch Limited, 2007, 2008).
This was a revolutionary principle that makes employees’ feel needed and treasured. They do not want to feel as if they are dispensable and only there to do a job, but feel as though they are a valuable member of the team and that their job is important. This means that there will be a greater chance that the employees will work harder thereby increasing productivity and efficiency. This allows the company targets to be reached on time, if not before, and may even achieve a bigger margin.The fact that Fayol’s principle of remuneration is still the basis of many pay structures in modern day businesses shows the longevity of his revolutionary management ideas. This essay has discussed how four of Fayol’s fourteen management principles – unity of command, subordination of individual interest of general interest, Esprit de Corp and remuneration – are relevant, if not essential, for businesses to function smoothly and achieve their organizational goals in the contemporary business world of today.In the case of Pumpkin Patch, without these four key principles, that they have adapted to fit their company’s structure and aim, they would not have been able to open up stores in Australia, United Kingdom and the United States. Their management team and structure from the original family owned business would not have been able to handle the managerial and market pressures that the organization is subject to today.
This reinforces the fact that these early 20th century principles and theories designed for factories by Henri Fayol have stood the test of time and have been adapted to fit businesses of the early 21st century.Not only did this French industrialist make people think about how they were managing their factories in the 1900’s, he was able through his 14 principles, to change the way management was looked at, a view which is still held today. Reference List Brunsson, K.
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