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Henri Fayol, the Manager

Book · March 2015

DOI: 10.4324/9781315654546

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 INTRODUCTION

In 1916 Henri Fayol (1841–1925) published his book on the theory of business
management, Administration Industrielle et Générale. The work was translated
into English in 1930 by J. A. Coubrough, and then by J. Storrs in 1949 with the
title General and Industrial Management. It has since been regularly re-edited,
lastly by Wren and Sasaki in 2004.1 Fayol writes of the principles of good man-
agement yet these principles cannot be understood if we forget that their author
was the managing director of the Commentry-Fourchambault et Decazeville

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Company – a large mining and steel firm for 30 years. Fayol drew his theory
from his everyday practice of management, with a concern for theorizing such as
that of the scientist who knows that a theory, if it is true, corresponds to a large
number of practical cases. The more general the theory, the wider its applica-
tion. Yet the degree of abstraction used by Fayol has no doubt often hampered
our comprehension of his thought. His theory becomes clearer when it is con-
fronted by the facts and it gains depth and flexibility when we consider how
Henri Fayol himself acted as a manager. For example, Fayol’s theory of ‘planning’
appears rigid, yet his practice shows that he continually adapted his plans as his
vision of the future changed. This management-tool was flexible by necessity.
We examine Henri Fayol’s concrete management actions such as the man-
agement of workers, sales, strikes and the coordination of operations between
geographically dispersed sites. His day-to-day management is similar to what can
be observed in companies today, and while they are a century apart the many simi-
larities with yesterday’s practices help better appreciate how managers work today.
Fayol describes a ‘managerial function’ that anticipates actions (planning),
structures the company (organizing), transmits orders (commanding), ensures
the coherence of actions (coordinating) and verifies the results (verifying ).
To make each of these five ‘elements of management’ more concrete, Fayol
proposed the concept of ‘management tools’,2 each matched to an element of
management. In doing so, he anticipated a large number of today’s management
practices. Management tools help managers anticipate and avoid common mis-
takes. For example, the objective of cost pricing is to ensure that sales prices are
not fixed too low. Meetings of department heads allow leaders to ensure that

–1–

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 2 Henri Fayol, the Manager

orders given to subordinates are feasible. He presented the management tools as

a way of compensating for a manager’s eventual lack of skill. Fayol believed, as
did others at the time, that while a manager must have a large number of quali-
ties, in practice this is rarely the case. He himself, for example, personally lacked
knowledge in steel metallurgy. Fayol also argued that leaders should make up for
their weaknesses by forming a ‘staff ’ of advisers who help them in areas where
their skills are lacking. His ideas were original at the time and are no doubt still
relevant today. We will examine how Henri Fayol personally used and deployed
management tools during his thirty-year tenure as managing director at the
Commentry-Fourchambault et Decazeville Company.
This book follows and builds on the work of others that have studied the
Commentry-Fourchambault et Decazeville Company. Tsuneo Sasaki was the
first to write about the company in 19843 and Donald Reid wrote a historiog-
raphy of the Decazeville coal miners in the nineteenth and twentieth centuries
in which he studied the points of view of the miners and their unions as well as
the role played by corporate management, including Henri Fayol.4 Alain Boscus
studied industry in the Aveyron department at the beginning of the twentieth

Copyright
century,5 widening our understanding of the workings of the Decazeville factory.
Alain Auclair has published several works on companies in the Allier depart-
ment during the nineteenth century, including the Commentry-Fourchambault
Company. He notably analysed the company’s technical and financial evolution
in detail.6 These are all excellent works and are often cited here.
This book takes a wider perspective by considering all establishments irre-
spective of their locality. The period it covers is more restrained, limited to
the twenty-six years between Henri Fayol’s nomination as managing director
in 1888 and the outbreak of World War I in 1914. We have chosen to ignore
the war years as French companies at the time were strictly controlled by the
Ministry of War, thus limiting the freedom of action of managers.
The main difference from previous works is the accent this book places
on the relationship between Henri Fayol’s theory and the actions he took as a
manager. The objective is to describe Fayol’s actions and compare them with his
doctrinal thought. We will see both his scientific method at work in the way
his experiments helped build his theory, and examples that clearly illustrate the
main aspects of his management doctrine.
It is useful to recall some key characteristics of industry at the time. The first
chapter describes the economic, industrial and legal context that French steel
and mining companies operated in at the end of the nineteenth century, far
from today’s globalized economy. These industries were expanding rapidly. Coal
was still the main source of energy, and iron was indispensable for all construc-
tions and in particular for building railways, which were the main means of land
transport and communication. Henri Fayol’s business was of a modest size, and

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 Introduction 3

included several mines and steel foundries spread through France’s Massif Cen-
tral region. Surrounded by agricultural lands, this region had been industrialized
since the start of the nineteenth century, but was less well placed in the following
century compared to the mines and the factories located in the north and the east
of France with their rich deposits of iron ore and coal. The company remained
profitable, while other similar companies had disappeared well before 1900.
After describing the historical industrial context, the book explores the
five ‘elements of management’ identified by Fayol (plan, organize, coordinate,
command and verify) and the six functions of the company (accounting , com-
mercial, financial, technical, security and administration). They are developed
in the following chapters: the financial function, planning, the organization of
managers, the organization of workers, command, coordination, verification
and the accounting function, the sales function, the technical function and the
security function. These ten major aspects of Fayol’s theory structure this work
and are briefly outlined below.
The financial function was the responsibility of shareholders and the Board
of Directors of the Commentry-Fourchambault company. The board named

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Henri Fayol in 1888 after a long selection process during which he benefited
from internal disagreements. He strengthened his authority by perceiving the
unspoken wishes of the majority and gained their trust by generating unex-
pected profits. He prudently reinvested funds to ensure growth and then argued
for capital increases to finance larger and more ambitious projects.
Planning and forecasting were widely practised at Commentry-Fourcham-
bault et Decazeville. Several ten-year plans were presented to the board of
directors that were used to evaluate investment plans. Each year, site managers
submitted their forecasts for the coming year. Such anticipation characterized all
levels of management at Commentry-Fourchambault et Decazeville.
Organizing involved structuring the company through organizational charts
and job descriptions. A study of the facts allows us to answer questions that the
theory ignored: are real organizational charts the same as the examples given in
Industrial and General Management (IGM)? Was the theory of ‘span of control’
really followed? How did organizational charts evolve in practice? How were
people promoted? What influence did the personal desires of employees have on
the drawing of charts? Did people leave when their wishes were not met? Organ-
izing concerned the management of engineers, recruitment, career management
and the retirement of incompetent individuals.
The workers in the factories and in the mines made up the majority of the
workforce and determined production levels in these labour-intensive industries.
The setting of wages was Fayol’s seventh ‘principle of management’ and the elev-
enth principle advanced the notion of equity that directly applies to workers who
Fayol argues should never feel they are victims of discrimination. In practice, Fayol

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 4 Henri Fayol, the Manager

used wages to recruit, retain and manage workers. He also paid careful attention
to strikes that were costly if they lasted too long and described two very different
strikes in the third part of IGM. We compare his account as managing director to
other sources including press reports and the recollections of unionists.
Coordinating, commanding and verifying are examined in a chapter that
also studies the role of the accounting function. We have grouped these ele-
ments together as the management tools used to practice them are often the
same. Meetings of department heads for example were often used to command
by transmitting orders, to coordinate by informing everyone present of each
other’s tasks and to verify through oral reporting in advance of written reports.
The commercial function is vital for any company. Henri Fayol had under-
stood its essential character and he directly negotiated with his biggest customers.
He also built a sales network to limit their influence and sell at the most favour-
able price. Fayol believed, however, that agreements between producers were
more effective than competition. His company was vertically integrated as the
mines sold coal to the steel foundries, although these internal sales only repre-
sented a small share of sales.

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The technical function was essential for his company. Henri Fayol was a skilled
mining engineer and he surrounded himself with specialists for steel metallurgy. He
simultaneously invested in new technologies to lower operating costs and to develop
special steels in the company’s Imphy factory that were adapted for new demands.
The security function is the last function identified by Henri Fayol in IGM
and it was similar to today’s ‘risk management’. Managers must deal with acci-
dents, breakdowns, theft and other incidents in the everyday running of a
company, and the security function involves leveraging this experience to reduce
the occurrence of these events.
Henri Fayol had already confronted his practice with theory in the third part
of IGM. When he published his work in 1916, he announced four parts but only
ever published two of them. He provided titles for the other two parts: ‘Personal
observations and experiments’7 and ‘Lessons of the war’, and said ‘I shall have
occasion to cite some examples in the third part of these studies … I shall show
how I have amassed, in the course of a long industrial career, the material for
this work’.8 Henri Fayol even sketched out the ideas that would be found in this
third chapter in 1908.9 In 1995 Wren demonstrated that Henri Fayol’s theory
came from his industrial experience.10 The text of the third chapter was archived
at the Fondation des Sciences Politiques in Paris.11 It has already been consulted
by other scholars, including Donald Reid12 but was not previously identified as a
part of IGM. It is translated and included here as an appendix.
The third part of IGM is a professional autobiography that follows the course
of Henri Fayol’s career, first as an engineer and then as director of the Commen-
try collieries. He developed what he would later call ‘management tools’, such

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 Introduction 5

as weekly meetings with colleagues, plans, monthly and annual reports, recruit-
ment and training of personnel. He believed that his nomination to managing
director and the deployment of management tools were experiments equiva-
lent to scientific experiments in a laboratory. As the company recovered after
changing only its management, he concluded that management was central to
industrial success. He argued his case in much the same way a clinician would
present the case of a patient who recovered by following a new treatment.
Henri Fayol collected data from a selection of events he encountered during
his professional experience. The way he chose and interpreted them helps us bet-
ter understand his intellectual approach. For example, he mentions strikes and
explains that a good manager should know how to avoid them. He describes
two strikes, one long and one short, in two different sets of circumstances, but
where in both cases he took an inflexible position and did not waver. At the same
time he chose not to describe other strikes, including one that cost the company
dearly. The third part of IGM is incomplete with a number of sections left empty.
We do not know if he lacked the time or the words to describe what may have
been more complex or less flattering cases.

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The second text reproduced in the annex is Henri Fayol’s last publication that
was published in a social Christian publication. It is an interview published in
1925 just before his death, in which the old master dialogues openly with Louis
Marie du Crouzet, who was in reality Louis de Mijolla, a young disciple he had
recruited as an engineer and who would succeed him at the head of the company
seventeen years later. He talks at length of ‘management tools’ before giving his
opinion about the ‘social question’, that of worker poverty, that so revolted the
social Christians that Louis de Mijolla belonged to, and about governance and
shareholder-control of a director’s actions. The interview then moves on to more
familiar themes including his work at reforming public bodies such as the postal
service and the tobacco monopoly. The interview concludes with a discussion of
the League of Nations, whose role, according to Fayol, was to help nations improve
their industry or administration by promoting organizational studies. It is inter-
esting to note that such studies were undertaken in the 1920s in French mines,
after 1945 in industries across Europe and in the 1980s in the civil service under
the aegis of the Organization for Economic Co-operation and Development.
Studying Henri Fayol’s professional activities shows just how concrete his
theory really is. Far from being outmoded, his thought underlies much of today’s
management thinking and practice. The way he named a concept, or the transla-
tion difficulties Fayol’s words have sometimes encountered in other languages,
are no longer important when we can compare the facts and events to the solu-
tions he used to manage them. The situations he found himself in still exist in
business today. The temporal continuity we can see in organizations is what
favours their scientific study, and still make Fayol’s thinking of a century ago
relevant today.

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