five-functions-of-management

What are the Five Functions of Management? The Five Functions of Management In A Nutshell

Business / By / August 6, 2021

The Five Functions of Management was first described by Henri Fayol in his 1916 book Administration Industrielle et Generale. The Five Functions of Management is a general theory of business administration. It argues that management is comprised of five general functions: planning, organizing, staffing, leading, and controlling.

Understanding the Five Functions of Management

The Five Functions of Management was first described by Henri Fayol in his 1916 book Administration Industrielle et Generale. 

Fayol, a French mining engineer, theorized that five functions were universal to management across various organizations. Each function describes a set of principles advising managers on how they can successfully lead their subordinates. What’s more, the theory helps managers see their role as more than just supervisory in nature.

Today, the five functions are still in use and are often collectively referred to as Fayolism. Let’s take a look at each of these functions in the next section.

The Five Functions of Management

The Five Functions of Management consist of:

  1. Planning – according to Fayol, planning is the hardest of the five functions. Managers must plan for the future and develop appropriate strategies to meet organizational goals. Furthermore, risks must be identified with plans in place to mitigate them. Planning must also be coordinated across different levels and consider the available human and non-human resources. Fayol also stressed the importance of forecasting at daily, weekly, monthly, yearly, five-yearly, and ten-yearly intervals.
  2. Organizing – or the process of assembling physical, financial, and human resources. This involves the identification of necessary activities, assignment of roles and responsibilities, and the delegation of authority. 
  3. Commanding (Directing) – successful managers communicate clearly and honestly and act in a way that reflects company values. Their decisions are based on regular audits and they are capable of motivating and encouraging employees to use initiative.
  4. Coordinating – the fourth function aims to create harmony between the various activities within an organization. For example, spending should be proportional to available resources, production requirements, market demand, or stock levels. Fayol argued that regular meetings were also a good way to solidify relationships between different departments or activities. Harmony is also created by hiring employees who are suitably qualified to carry out their roles.
  5. Controlling – is progress being made toward the goals and objectives stated in the planning phase? If not, management needs to take corrective action.

Limitations of the Five Functions of Management

Despite its obvious advantages, Fayol’s theory has some drawbacks:

  • Based on anecdotal evidence – the Five Functions of Management is based on Fayol’s own experiences during his time as director of a mining company. The theory does not incorporate empirical research and its application may be limited as a result.
  • Inward-focused – with no credence given to the customer, each organization is structured to meet its own needs and not the needs of the much more important end-user.
  • A lack of nuance – Fayol’s theory is rather broad and rigid. Its scope does not extend to the informal, micro-interactions or relationships between managers and subordinates. In more dynamic and modern organizations, the theory may not be able to facilitate effective management.

Key takeaways:

  • The Five Functions of Management is a general theory of business administration highlighting five key areas: planning, organizing, commanding, coordinating, and controlling.
  • The Five Functions of Management provide a framework for effective management. The theory argues that the role of a manager is far more complex than the supervision of subordinates.
  • The Five Functions of Management is broad, rigid, and may lack the nuance required for dynamic businesses. It also lacks any foundation in empirical research and does not focus on meeting the needs of the customer.

Connected Business Concepts To Five Functions Of Management

Toyota Production System

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The Toyota Production System (TPS) is an early form of lean manufacturing created by auto-manufacturer Toyota. Created by the Toyota Motor Corporation in the 1940s and 50s, the Toyota Production System seeks to manufacture vehicles ordered by customers most quickly and efficiently possible.

Scientific Management

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Scientific Management Theory was created by Frederick Winslow Taylor in 1911 as a means of encouraging industrial companies to switch to mass production. With a background in mechanical engineering, he applied engineering principles to workplace productivity on the factory floor. Scientific Management Theory seeks to find the most efficient way of performing a job in the workplace.

Poka-Yoke

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Poka-yoke is a Japanese quality control technique developed by former Toyota engineer Shigeo Shingo. Translated as “mistake-proofing”, poka-yoke aims to prevent defects in the manufacturing process that are the result of human error. Poka-yoke is a lean manufacturing technique that ensures that the right conditions exist before a step in the process is executed. This makes it a preventative form of quality control since errors are detected and then rectified before they occur.

Gemba Walk

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A Gemba Walk is a fundamental component of lean management. It describes the personal observation of work to learn more about it. Gemba is a Japanese word that loosely translates as “the real place”, or in business, “the place where value is created”. The Gemba Walk as a concept was created by Taiichi Ohno, the father of the Toyota Production System of lean manufacturing. Ohno wanted to encourage management executives to leave their offices and see where the real work happened. This, he hoped, would build relationships between employees with vastly different skillsets and build trust.

Dual Track Agile

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Product discovery is a critical part of agile methodologies, as its aim is to ensure that products customers love are built. Product discovery involves learning through a raft of methods, including design thinking, lean start-up, and A/B testing to name a few. Dual Track Agile is an agile methodology containing two separate tracks: the “discovery” track and the “delivery” track.

Scaled Agile

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Scaled Agile Lean Development (ScALeD) helps businesses discover a balanced approach to agile transition and scaling questions. The ScALed approach helps businesses successfully respond to change. Inspired by a combination of lean and agile values, ScALed is practitioner-based and can be completed through various agile frameworks and practices.

Lean Manufacturing

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Lean manufacturing seeks to maximize product value while minimizing waste without sacrificing productivity. According to the Lean Enterprise Research Centre (LERC), 60% of a typical manufacturing process is waste. While the removal of waste is perhaps synonymous with lean manufacturing, the goal of the methodology is the sustainable delivery of value to the customer.

Kanban Framework

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Kanban is a lean manufacturing framework first developed by Toyota in the late 1940s. The Kanban framework is a means of visualizing work as it moves through identifying potential bottlenecks. It does that through a process called just-in-time (JIT) manufacturing to optimize engineering processes, speed up manufacturing products, and improve the go-to-market strategy.

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