Administrative Theory of Management – Definition, Functions, Principles, Contributors, Contributions, & Limitations

Definition of Administrative Management Theory

Administrative management theory is concerned with the management of the whole organizational structure.

It consists of making a formal structure, maintaining managerial hierarchy, creating different departments, determining key functions & responsibilities, and division of labor in the workplace.

It focuses on creating different work and functional groups and assigning them required duties and responsibilities based on their capabilities which ensures greater organizational outcomes.

Administrative management theory follows the top-down approach meaning that it first focuses on bringing efficiency to top-level management of the organization believing that the effectiveness of top management ultimately ensures the productivity of lower-level managers.

As scientific management was focused on bringing efficiency to lower employees, administrative management is focused on the top level.

This theory is propounded by Henri Fayol (1841-1925) who gave us a comprehensive framework of management that applies to all organizations.

He was a mining engineer by profession and a French industrialist. His contribution is taken as one of the revolutionary actions in modern management literature.

That is why Henri Fayol is also known as the father of modern management. This theory is a member of the classical movement.

In 1916 Fayol published a book in his native language and later on it was translated into English as “General and Industrial Management”. In his book, he has developed different 14 principles which are commonly known as principles of management.

He divided a manager’s job into five functions and stated every manager must have certain skills to better perform the given task, and he classified the entire business activities into six categories.

Let’s discuss the functions managers have to perform, the skills needed, business activities, and principles of management according to administrative management theory.

Functions of Management

According to the administrative management of Henri Fayol, a manager has five functions to do in the organization. Henri Fayol’s management functions are shortly anointed POCCC, they are:

• Planning – Planning is the first function of a manager, to begin with. It is about forecasting future events, setting goals, and developing means to achieve the goals.
• Organizing – Organizing is building structure and assigning duties to individuals. This includes creating departments, designing jobs, and harmonizing the workplace.
• Commanding – It involves giving orders and instructions to subordinates by superiors. It also includes direct supervision of subordinates and motivating them toward organizational goals.
• Coordinating – It is the action of bringing together all the organizational elements to push their collective efforts towards goal achievement.
• Controlling – It is the continuous reviewing of the performance of activities and identifying the variation to ensure the planned performance meets with the actual.

Industrial Activities

Henri Fayol divided all the industrial activities into six categories and stated what was included in these activities. They are:

• Technical Activities – Includes production and manufacturing.
• Commercial Activities – Includes buying, selling, and exchanging.
• Financial Activities – Includes collection and utilization of funds.
• Security Activities – Protection of organizational property and employees.
• Accounting Activities – Stock-taking, cost statistics, and balance sheet making.
• Managerial Activities – These activities include recently discussed management functions of planning, organizing, commanding, coordinating, and controlling.

Skills Managers Need According To Administrative Management Theory

Henri has also stated that a manager must have some skills and qualities to perform the organizational task so he will be able to realize the desired goals.

He stated six skilled managers are needed. They are:

• Physical Skills – A manager must have a well-maintained body, good dress-up, healthy body, and energy to perform the given task.
• Mental Skills – He must have the mental ability to analyze different situations and extract the positives from them. He should have the ability to understand the situation and adapt it properly.
• Educational Skills – Managers should also have certain educational skills and knowledge about the functioning of organizations.
• Moral Knowledge – Managers should be ethical and should know what is right or wrong in the workplace.
• Technical Knowledge – Managers should have the technical knowledge to use the necessary tools and machinery in the organization.
• Related Experience – The last one is, that managers should also have some related experience with the tasks given to complete.

Related: What are Managerial Skills?

Principles of Administrative Management

The 14 principles of administrative management theory are the widely accepted principles that are most commonly referred to as the only principles of management.

These are the guidelines Henri Fayol has provided through his experiences and experiments to effectively manage organizational activities.

A concise summary of 14 principles of management are mentioned below:

1. Division of Labor – Work is divided into smaller tasks to increase specialization. This improves efficiency and enables employees to become experts in their specific roles, leading to higher productivity.
2. Authority and Responsibility – Managers must have the authority to give orders and ensure tasks are completed. However, this authority must be balanced with responsibility to prevent misuse and ensure accountability.
3. Discipline – Discipline is essential for smooth organizational functioning. Employees must respect the rules, follow instructions, and maintain decorum to ensure tasks are completed efficiently.
4. Unity of Command – Each employee should report to only one superior to avoid confusion, conflicts, and delays in decision-making. This ensures clear lines of communication and authority.
5. Unity of Direction – Activities with the same objectives must be coordinated under one plan and one leader. This ensures consistency and alignment with organizational goals.
6. Subordination of Individual Interest to General Interest – Organizational objectives should take precedence over personal interests. Employees should align their goals with the organization’s vision to achieve collective success.
7. Remuneration – Employees should receive fair compensation that reflects their efforts, meets market standards, and motivates them. This includes both financial (salaries) and non-financial rewards (recognition, benefits).
8. Centralization – Decision-making authority should remain with top management, but some delegation to subordinates is necessary for efficiency. Striking the right balance between centralization and decentralization is crucial.
9. Scalar Chain – There should be a clear hierarchy of authority, enabling effective communication and command flow from top to bottom. Shortcuts in communication (gangplank) can be used for efficiency when necessary.
10. Order – Resources, people, and tasks must be organized systematically. “A place for everything and everything in its place” ensures smooth operations and avoids chaos.
11. Equity – Employees should be treated fairly and respectfully without discrimination. This fosters trust, loyalty, and a positive workplace environment.
12. Stability of Tenure – Job security should be ensured to reduce employee turnover and build long-term efficiency. Frequent hiring and firing lead to instability and decreased morale.
13. Initiative – Employees should be encouraged to take the initiative and contribute their ideas. Empowering them boosts morale and fosters innovation within the organization.
14. Esprit de Corps – Team spirit and unity among employees strengthen cooperation. A positive and collaborative atmosphere ensures organizational success through combined efforts.

Contributors of Administrative Management Theory

Here are five main contributors to the Administrative Theory of Management and their contributions:

Henri Fayol (1841–1925)

Henri Fayol, the father of modern management, is the most prominent contributor to the administrative theory of management.

His work focused on creating a comprehensive framework for managing organizations systematically. Key contributions include:

• 14 Principles of Management: A set of universal guidelines for organizational efficiency and effectiveness, such as division of labor, unity of command, and equity.
• Management Functions: Fayol identified five core functions of management – Planning, Organizing, Commanding, Coordinating, and Controlling (POCCC) – which form the foundation of modern management studies.
• Business Activities: He categorized business operations into six activities: technical, commercial, financial, security, accounting, and managerial.

Max Weber (1864–1920)

Max Weber contributed to administrative management by introducing the concept of bureaucracy as an ideal organizational structure. His key ideas included:

• Hierarchy of Authority: Clearly defined authority levels in the organization.
• Formal Rules and Regulations: Standardized procedures for ensuring consistency and fairness.
• Impersonality: Decisions should be made based on rules rather than personal preferences.
• Meritocracy: Promotions and hiring based on qualifications and performance rather than nepotism.

Mary Parker Follett (1868–1933)

Mary Parker Follett introduced human-centric aspects to administrative management, emphasizing relationships and collaboration. Her contributions include:

• Coordination as the Essence of Management: Follett highlighted the importance of harmonizing efforts across departments and individuals.
• Conflict Resolution: She advocated for constructive conflict resolution through dialogue and mutual understanding.
• Decentralization: Suggested empowering employees at lower levels to take initiative and contribute to decision-making.
  Follett’s ideas laid the groundwork for participative management and human relations theories.

Luther Gulick (1892–1993)

Luther Gulick extended Fayol’s work by refining and elaborating management functions into the POSDCORB framework:

• Planning, Organizing, Staffing, Directing, Coordinating, Reporting, and Budgeting (POSDCORB).
• He emphasized the importance of specialization, division of work, and formal structures in administration.
  Gulick’s framework remains a critical tool in public administration and organizational management.

Chester Barnard (1886–1961)

Chester Barnard introduced a more behavioral approach to administrative management, focusing on the human elements within organizations. His contributions include:

• The Concept of Authority: He argued that authority depends on employee acceptance, marking a shift from rigid top-down approaches.
• Informal Organizations: Barnard emphasized the role of informal networks within formal organizations in fostering cooperation and communication.
• The Functions of the Executive: He outlined the role of executives in maintaining communication, securing essential services, and formulating organizational purpose. Barnard’s work bridged the gap between classical and modern management theories.

Contributions of Administrative Theory of Management

The idea of administrative management theory is very much applicable to modern business practices.

Some of the contributions of administrative management can be pointed out below:

• This theory proposes five management functions as the foundation of the study of management. They are planning, organization, commanding, coordinating, and controlling. Such functions are common in any organization.
• This theory provides fourteen universally applicable principles of management which are taken as basic principles of management in all organizations.
• This theory advocates various skills and knowledge for managers to operate organizations more efficiently and effectively. Thus, managers get encouragement to acquire skills like physical, mental, moral, educational, technical, and work-related experiences.
• Fayol classified the whole business activities into six categories technical, commercial, financial, security, accounting, and managerial. This helps to identify activities to be done to attain organizational goals and get the right man at the right job.
• It has provided a venue for modern management theories applicable in this complex and dynamic business environment.

Limitations of Administrative Theory of Management

Some limitations of administrative management are pointed out below:

• This theory has limited application for complex and dynamic business.
• Fayol’s principles cannot be applied universally in all situations as he claimed.
• Human behavior and relations in the organization are ignored in this theory but these things are more crucial in maintaining good industrial relations.
• Workers were treated as tools rather than resources. This theory is also mechanistic, in nature.

Read Next: What is Scientific Management Theory?