Relevance of classical management concepts in the contemporary era – a case study of Fayol’s principles

Abstract

Purpose

This hypothetical case study aims to revisit the classical model given by Henri Fayol whereby he put forward a set of 14 principles to guide managers in decision-making across organizations. The case study showcases the dilemma in which the top manager of an automobile company finds himself when some of the very basic principles – on which the whole discipline of management is founded – are ignored. It will also serve as an aid for faculty members in B-Schools to teach students the significance of basic management principles postulated many years back which stand relevant even in contemporary times.

Design/methodology/approach

This case study is based on a hypothetical scenario in the corporate world. Different incidents in a fictitious automobile manufacturing firm are presented and the corresponding principles given by Henri Fayol are inferred.

Findings

This case study highlights that decision-making gets complicated if fundamental principles of management are not complied with. The decision taken during each and every situation which has been discussed in this case study is contrary to the correct course of action as propounded by Fayol. Modern-day managers must acknowledge the relevance and importance of these principles for achieving success in business.

Originality/value

This case study underscores that even in this volatile business environment where most of the management practices are technology-driven, we cannot disregard the most elementary rules of management. The managers working at different levels in the organizational hierarchy may be guided to make the right decisions in situations similar to the ones described.

Citation

Sharma, A.K., Goyal, A. and Sharma, A. (2024), "Relevance of classical management concepts in the contemporary era – a case study of Fayol’s principles", IIMT Journal of Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IIMTJM-10-2023-0026

Henri Fayol who is regarded as “The Father of Modern Management Theory” might be turning in his grave when he realizes that the 14 principles which he propounded way back in 1916 have been relegated to just one of the topics of study in management text-books all across the globe. His idea was to provide a set of ideologies which could guide managers in decision-making across different organizations – big or small – but the current trend of managers taking decisions on the basis of “gut feeling” without giving consideration to his 14 tenets is bound to sadden him. This hypothetical case highlights the story of one such manager. It showcases the dilemma in which a top manager of an automobile company finds himself when some of the very basic principles – on which the whole discipline of management is founded – are ignored.

Mr. Ravi Mehta, General Manager, Maxima Motors, was looking out of the glass window of his plush chamber located on the 13th floor of Anshul Heights – the tallest skyscraper along the posh Marine Drive area of Mumbai and contemplating – What went wrong?

A great start

After graduating with a BTech degree in Mechanical Engineering from the prestigious IIT Delhi, Ravi went on to pursue an MBA degree in Marketing from the United States. He was always fond of cars since his childhood and fancied joining the automobile industry. Getting selected by Maxima Motors was a “dream come true” for Ravi and his happiness knew no bounds when he stepped into the Mumbai office of the company. According to him, the “Sales Executive” designation was good enough for him to showcase his selling skills which he had learnt so well in the MBA classroom.

At Maxima Motors, Ravi had been a workaholic and had spent 5 years in this company putting in time and effort and played an important role in catapulting the firm to great heights (Maxima reported a 15% rise in sales in the very first year of Ravi’s joining and accolades were showered on him for this spectacular achievement). He was awarded “Salesman of the Year” trophy for five straight years. Ravi used to spend a lot of time with his client dealers, even dining out with them and their families apart from engaging in official meetings. He also used to invite all of them to celebrate his birthday. No surprise that he became a household name even in their homes. His peers tried to copy his sales skills but couldn’t succeed. Ravi was the cynosure of all eyes and achieved successive promotions in quick time – from Sales Executive to Senior Sales Executive in two years and then to General Manager (Marketing) after three more years.

Trouble begins

No specialization

Till now, Ravi had been subordinate to his “bosses” and obeyed their instructions to achieve the sales targets which were conveyed to him during meetings. But ever since he became a Manager, he has found it difficult to make decisions on his own. Ravi was leading a sales team of 20 comprising both male and female personnel. Mr. Shantanu Ghosh – the Senior Sales Executive – was the most experienced of them all who had spent about 10 years at Maxima Motors. During the first team meeting, Ravi laid out his expectations from each member. Every member was asked to contribute to the ad campaign for the soon-to-be-launched X1 Electric SUV Model. The team members were tasked with collecting information about the competitive moves and sales. Further, they were required to even scan the international car market to explore the “best practices” followed the world over by the big players like Tesla, Toyota, Ford and Nissan, to name a few. Most of the team members were very excited about the “new” responsibilities, but Mr. Shantanu had his reservations, and he raised his point, “I believe as most of the Sales Team members are freshers and new to the job, all of them shouldn't be burdened with so many responsibilities at the outset and should be given time to settle down.” Ravi argued that in the present era of cut-throat competition, every employee must be ready to work to his or her fullest potential right from the first day of entry into the organization and should never make excuses for not working.

Reluctance to delegate

Things were going well for the first few months and Ravi was confident about positive financial results. Mr. Shyam Agarwal – a newly joined Sales Executive – was tasked with the responsibility of exploring new client dealers who could promote and sell the new X1 model in South Mumbai. Shyam was really excited about his first assignment and was successful in convincing Mr. Prem Nautyal of Karseva – a new player in the car dealership market – to sell X1. As a follow-up, Shyam completed all the formalities for the agreement and happily called Ravi on the phone to convey details about the deal but was shocked when Ravi asked him to fix a meeting between himself and Mr. Prem to finalize the deal. Shyam was further disappointed to find that this meeting had no role for Shyam and Ravi took all the credit for the deal. After a few days, when Ravi reached his office and opened his mailbox, he found the resignation mail from Shyam.

Breaking rules

The office timing for employees at Maxima Motors was the ubiquitous 9 to 5. And the same was applicable to all employees working in the Marketing Department. But Ms. Shreya Pandit – the Accounts Executive – was not the one to follow the rules. She was regularly irregular in reporting for work. Moreover, she had failed to meet deadlines for most of her assignments on more than one occasion. Once Maxima nearly lost an important client as the monthly transaction report, which the client required urgently to settle some tax issues, was not submitted by Shreya on time. Although a few of Shreya's colleagues did complain about her behavior to Ravi, but he ignored all of them. Later it was found out that Shreya was a distant relative of Ravi. As was expected, some other fresh recruits of the department took “late reporting” as a norm and they too started coming late for work.

Power-accountability mismatch

Aakash Mathur and Sunil Agarwal were the two best performers in Ravi's sales team. Both were consistently achieving 80–90% of their monthly sales targets. One day, while both of them were having lunch at the canteen, Aakash felt all was not well with Sunil and asked, “Are you okay?” Sunil responded with a wry smile, “I am fine.” After continuous prodding by Aakash, Sunil shared one of his recent experiences. He said, “Last month, apart from routine work, Ravi had assigned me the additional task of designing the new print advertisement for Model X1 after the latest addition of airbags for passenger safety in the car. He also asked me to approach external advertising agencies for any help which I may require. I confidently embarked on the assignment. On the very next day, Ravi called me and shared addresses of three ad agencies – Kriti, Vigyapanam and Ad-join. I visited all three (one on each day) and held detailed discussions with their design managers about our ad requirements. After the third day, I was completely convinced that Kriti would be the best for us as it had designed successful ads for our competitors in the past which had also grabbed a lot of eyeballs in the automobile industry. Also, Kriti was offering us the best deal for negotiating with The Times of India Mumbai edition (Rs. 10 lakhs for a full front page ad) on our behalf while Vigyapanam and Ad-join's quotes for the same were Rs. 12 lakhs and Rs. 13 lakhs, respectively. When I apprised Ravi of my meetings, he said, “I think we must hire Ad-join as they are comparatively new in the ad business and might have fresh ideas to launch the new car. Customers are getting bored with similar car ads and desire to see something new which may create excitement and ultimately lead them to buy X1.” Further, Ravi asked me to submit all my travel bills and advised me to travel by bus instead of cab in future. Before I started work on this assignment, I was sanctioned an advance of Rs. 1,000 by the Accounts Department to meet travel expenses and was told that I was free to choose my mode of travel provided the expenses do not cross Rs. 1,000.” After listening to Sunil's story, Aakash sighed and said, “Life is tough.” Both Aakash and Sunil left Maxima after 6 months and are now together once again at Maxima's competitor – Uva Motors.

Too many cooks!!!

The employees at the Marketing Department at Maxima have been facing a dilemma for quite some time now. Mr. Sujoy Mitra had joined Maxima Motors as the Managing Director. Right from the first week, he started calling Marketing Executives for short meetings at his office. Initially, everyone took it as an introductory tete-a-tete but when these meetings became a regular feature, frustration started creeping in. On more than one occasion, Ravi Mehta – the Marketing Manager – had assigned the executives the task of preparing monthly sales reports, but they couldn't work on it as Mr. Mitra sent an urgent notice for a meeting. Work at the Marketing Department was being hampered and the young executives were confused – Who is the Boss???

Deviation

When all the employees of Maxima were busy putting in their full effort and energy and working day in and day out for a successful launch of the new X1, Mr. Sujoy Mitra set two of Ravi’s sales team members – Kavya Sinha and Priti Singh – on a new project concerned with exploring the location for a new branch office. After initial reluctance, the two ladies had no option but to comply with the official orders. Earlier, Kavya and Priti were very excited to be a part of “Project X1,” but the excitement was shattered once the news broke about their inclusion in the new branch-related project. Ravi was devastated as he had planned to put both Kavya and Priti on the forefront of his negotiation team to handle queries related to X1 and had trained them hard for the same.

Being selfish

The experienced Mr. Shantanu Ghosh was categorically told by Ravi to look into the nitty-gritty of “Project X1” to plug any loopholes whatsoever in the promotional campaign which was to be launched in the next few days. A crucial meeting was scheduled where Mr. Shantanu was to give a presentation on the prospective promotional campaign in order to explain the plan to the top management team. On the morning of the meeting, Ravi received a phone call from Mr. Shantanu who informed him about the arrival of a few guests at home and therefore he couldn't come to the office for the meeting as he had to make arrangements for the guests. Instantly, Ravi lost his temper and asked Shantanu to immediately report to him at the office or else submit his resignation. Within an hour, Mr. Shantanu was at the office in Ravi’s chamber. The two didn’t have a single word about the guests or the resignation. Luckily the clock struck 10 o’clock; it was time for the meeting and the two straightaway barged out of the chamber toward the conference hall where the meeting was scheduled. Mr. Shantanu initiated the presentation and carried on describing all the details about the promotion on different media including digital marketing of Model X1. Ravi could gauge from Shantanu’s presentation that although the detailed plan was being presented by Shantanu, but the spark was missing which obviously was the result of the unpleasant telephonic conversation in the morning. The presentation ended with Shantanu successfully answering all queries from the management team and moving out of the conference hall without saying anything to Ravi who could easily sense the grudge against him in Shantanu’s heart clearly visible on his face while departing.

Unfair treatment

About three months back, Ms. Aastha Jain joined Maxima Motors as a Junior Sales Executive. She was a St. Stephen’s, Delhi pass out and belonged to that present-age ambitious generation whose members possess a lot of enthusiasm and energy to perform and grow in their chosen career. She proved her mettle in the very first month of joining when she was praised for her work in the month-end sales meeting. She was very happy the day the first salary was credited into her account and was planning to go out with her friends for a party after office hours. During the tea break, a conversation broke out between Aastha and Nancy, her colleague, who had also joined Maxima at the same time as Aastha. During this conversation, Aastha came to know about Nancy’s salary which was much higher than hers. Nancy was just a Class XII pass out and that too from Open School whereas Aastha was a graduate. Both had the same work experience and logically, Aastha’s salary should have been higher or at least the same as Nancy’s since both were working as a Junior Sales Executive. After the tea break, Aastha was sad as she had expected fair treatment from a renowned firm like Maxima Motors. In the next few days, her morale and productivity had taken a hit which turned her into one of the low performers at Maxima. Aastha could easily sense the Damocles' sword hanging over her head.

It’s all messed up!!!

A few months back, Mr. Gaurav Tripathi along with Ms. Tanya Sairam and Mr. Vamsi Krishna received offer letters from Maxima for the position of Sales Executive in the Marketing Department. All three readily accepted the offer and reported for work after a week. After the induction programme and a detailed meeting with Ravi, they were ready to begin their “Maxima journey” which each one of them felt would be a big stepping stone in their professional career. Soon they got the first “feel” of the office culture at Maxima Motors. Of late, the work culture at the Marketing Department of Maxima Motors was anything but disciplinary. Late reporting for work had become the norm. When the “freshers” who had just joined Maxima observed their seniors not being punctual, they perceived it as “normal” and jumped on the bandwagon. There was no biometric attendance system installed anywhere at the workplace and everybody seemed to take undue advantage of the lacuna. A “casual” approach was prevalent all over and the seriousness which is associated with the launch of a new product (Model X1 in this case) was nowhere to be seen. Files were piling up at each office desk; meetings were getting postponed without assigning any reason due to which crucial decisions were getting delayed.

A short ride…

Over the years, Maxima Motors has earned goodwill for itself in the automobile industry. This has been made possible by offering “value-for-money” cars. In its ambit, Maxima has a vehicle for every customer – the very basic hatchback model S1 for the middle-class to the high-end luxury SUV A1 for the high-income group. This positive image has helped Maxima Motors to attract some of the most talented candidates for all positions whenever the company has advertised for vacancies. Keeping this in mind, Darshan Tiwari and Prerna Tyagi joined Maxima Motors to catapult their career. Post-joining, they were invited to the informal get-together party at the nearby five-star hotel. During interaction with their experienced colleagues, they found out that the average tenure for most of the employees at Maxima was only one-and-a-half years. The causes for the same ranged from dissatisfaction with the chaotic work culture, centralized decision-making, inequitable remuneration, etc. Both Darshan and Prerna were saddened as one-and-a-half years were too short a duration to establish oneself in the corporate world, and they felt that they too might face similar situations in future. Consequently, they soon got themselves registered on different job portals.

The missing plank

Two months ago, Ramesh – the automobile engineer working on Model X1 – reported to Kishanlal Dahiya, the Production Manager, about a slight roaring sound in the engine of the car which needed to be fixed urgently. A few missing nuts and bolts could easily and quickly rectify the fault. Mr. Dahiya went to Mr. Kapil Kohli, General Manager (Production), but he was on leave for the next one week. After a week, when Mr. Kapil was apprised of the problem, he sent a mail to Mr. Purab Ratan, the Purchase Manager, to buy nuts and bolts of a specific size. This time, Purab was on leave for the next fifteen days, and the whole purchase process came to a halt. The production timeline of Model X1 was hampered as a result. There was no chance that the delivery of the new car could meet the expected deadlines after the launch. This further affected the credibility of the Marketing Department as the “Marketing and Sales Guys” are the face of any organization for the customers, and if the sales staff is not able to fulfill their expectations, it may result in a loss of sales in the near future.

Dousing the fire

Ritu Bajaj was the youngest member of the Marketing Department at Maxima Motors. Her enthusiasm and uncanny knack for making friends easily made her the “go-to” person whenever any employee was under stress. They felt relieved after sharing their problems with her. During her short stay at Maxima Motors, Ritu could easily gauge the high level of stress prevailing in the office. She decided to play her part in resolving the issue and approached Ravi with the proposal to organize regular picnics and group visits to movie shows. Ravi outrightly rejected the idea on the ground that this would distract the employees and asked Ritu to concentrate on her official assignments instead. Ritu was not amused and categorically shared her views on social media about the “dull” life at Maxima Motors where employees are treated like robots. The next day she was fired and Maxima lost a gem of an employee.

Working in silos

There are a large number of group projects within any big organization, and sometimes, employees from different departments need to collectively put in their efforts day in and day out. Coordination and cooperation are the two basic “mantras” for the success of any group project. Ravi’s problem was that since he had been internally promoted at Maxima Motors, he was not taken seriously by his much older peers who were at the helm in the other departments, namely, Production, HR and Finance. After his promotion to the current position of General Manager (Marketing), whenever Ravi tried to share his views during organizational meetings, he was rebuffed by them. For Ravi, the word “Teamwork” is utopian.

Years ago

Maxima Motors had invested a lot of energy, effort and money into building goodwill in the automobile market, especially in the premium car segment. This was a big achievement for a company which was established just a decade back. With a market share of more than 50% in each of the last three years, Maxima was seriously planning to launch a range of premium electric cars in the coming years and the X1 SUV Model was destined to be the first in this series. This was in line with the Indian government’s aim to end the sale of petrol and diesel cars by 2030 and Maxima’s thrust toward a sustainable future. During one of the Board meetings, the top management made its intentions about the new “sustainable” project absolutely clear to all the internal stakeholders. This was the reason Ravi had taken up the launch of X1 as his topmost priority. He was ready to take up this challenge and wanted to demonstrate his prowess as a frontrunner in automobile marketing. However, the events in the last few months were detrimental to the seamless launch of the new car.

Prof. Satyajit Malik had been the favorite Management Teacher for Ravi during his MBA days. It was Prof. Malik, with his insightful teaching style, that the world of management captivated Ravi’s attention. He was one of the top scorers and was fully confident of securing a successful career in the contemporary business world.

After a few months at Maxima, Ravi started experiencing real-life challenges in business. Now, he was sure that the practical business scenario was very different from the concepts and theories learnt in the classroom. Until he was working as a subordinate in the organization that did not cause any major complications; but the unsavory incidents after his promotion as a manager tested his managerial skills. He started making decisions on his own sidelining the management basics that he had studied earlier. This proved to be a turning point in his professional journey. After climbing up the organizational hierarchy to the position of General Manager (Marketing), the series of events which unfolded at Maxima Motors was a testimony of how wrong decisions could be detrimental to the harmonious work culture in the organization. Ravi wondered whether adhering to the 14 principles of management which were proposed by Henri Fayol many years back and taught to him by Prof. Satyajit Malik during his MBA could have helped him in making the right decisions at Maxima Motors.

Future uncertain

Gazing out of the glass window of his office for the last 15 min went on like a flashback in Ravi’s mind. The recent times have been very challenging for Ravi. All this mental stress has taken a toll on his health. He called a mental health specialist on the phone and fixed an appointment for the evening. Before meeting the doctor, he made up his mind to call and seek guidance from Prof. Malik – his Management Teacher. Also, he was carrying his resignation letter with him in his briefcase which took him three hours to write with a heavy heart.

Conclusion

Amongst the many schools of management thought, the classical school is the oldest, and it emphasizes enhancing the workers’ efficiency along with organizational growth. The management principles, based on detailed observations, emerged from the studies undertaken by various management thinkers who played a prominent role in the development of this school. Administrative management theory is one of the most significant outcomes of the research studies done under the classical school, which focuses on the major roles and functions of managers in organizations (Bhat and Kumar, 2016).

An organization is described as a group of people working together to achieve a common goal, and the probability of success for an organization reduces considerably when these personnel do not follow some of the very basic principles on which the whole field of management is founded. The set of these management principles serves as an effective two-pronged technique which aims at enhancing cooperation and coordination amongst members of the most important resources of an organization, i.e. human resources, and at the same time, it also aids in the economic growth of the organization. Years ago, Henri Fayol, a French industrialist and management practitioner, documented the necessity to acknowledge some rules for administrative learning (Koontz and Weihrich, 2017). He identified certain guidelines which can be adopted by all types of organizations, big or small, private or public, for the smooth functioning of managerial activities (Robbins and Coulter, 2017). These guidelines are flexible in nature and can be modified as per the specific requirements of an organization. Managers have incorporated these guidelines known as “Fayol's 14 Principles of Management” as a strategic tool in both routine and strategic decision-making under various challenging situations. Both managers and management gurus have time and again underscored the significance of these principles (Tripathi and Reddy, 2017). The importance of these 14 principles of management cannot be ignored even in case of the present-era startup businesses. Due to the diverse culture and style, some of the principles have to be adapted as per the requirements of these new-age startup organizations (Godwin et al., 2017). Fayol's principles aid managers in seamlessly executing their work and giving direction towards achieving organizational goals in a systematic manner. Fayol also believed that such principles need to be followed on a regular basis in the organization (Stoner et al., 2007). Complications arise in any successful organization when basic principles of management are not adhered to. The same happened in the case of Maxima Motors where certain wrong decisions and not following Fayol's principles derailed the progress of the organization and led to several unsavory incidents. These principles can be deduced from the various incidents described in the case, and important lessons can be learnt for effective administration.

Ravi Mehta, the General Manager (Marketing), and an employee of a new-age automobile company like Maxima Motors failed to realize the significance of Fayol’s principles resulting in conflicts and loss of camaraderie amongst the employees which are very crucial for maintaining a progressive organizational culture. If these principles had been applied in the numerous scenarios included in this case, then this approach could have helped Ravi in avoiding conflicts and other contentious issues prevailing in the company.

Without principles one is in darkness and chaos; interest, experience and proportion are still very handicapped, even with the best principles. The principle is the lighthouse fixing the bearings but it can only serve those who already know the way into port.

– (Fayol, 1949, p. 42)

The characters

1. Sujoy Mitra – Managing Director

2. Ravi Mehta – General Manager (Marketing)

3. Kapil Kohli – General Manager (Production)

4. Kishanlal Dahiya – Production Manager

5. Prem Nautyal – Car Dealer (Karseva)

6. Shantanu Ghosh – Senior Sales Executive

7. Shyam Agarwal – Sales Executive

8. Aakash Mathur – Sales Executive

9. Sunil Agarwal – Sales Executive

10. Kavya Sinha – Sales Executive

11. Priti Singh – Sales Executive

12. Gaurav Tripathi – Sales Executive

13. Tanya Sairam – Sales Executive

14. Vamsi Krishna – Sales Executive

15. Tanmay Anand – Sales Executive

16. Darshan Tiwari – Sales Executive

17. Prerna Tyagi – Sales Executive

18. Aastha Jain – Junior Sales Executive

19. Ritu Bajaj – Junior Sales Executive

20. Shreya Pandit – Accounts Executive

21. Nancy Trivedi – Junior Accounts Executive

22. Prof. Satyajit Malik – Ravi's Management Teacher at B-School