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Henri Fayol made a major contribution to the theory of management by developing a “common approach” to administration and formulating several principles of administrative theory that define its functions, principles and controls.

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He based his studies on the experience in organization and management he gained in Europe, and more specifically, France. He drew the main attention to the process itself, which he considered as a function of administration aimed at assisting administrative staff in achieving the organization’s objectives.

Fayol proceeded on the premise that every enterprise should have two entities: material and social ones.

The former involves the work itself, means and objects of labor, while the latter is the relation between people engaged in the labor process. These relations had been the subject of Fayol’s research, i.e. he deliberately limited the area of his research.

Fayol argued that administrative functions existed at all levels of the organization and even workers themselves discharged them. Thus, the higher the level of administrative hierarchy is the bigger responsibility the management takes. Henri Fayol made a lot of attempts to formulate the requirements of vocational education and training for workers, directors, supervisors and senior management members.

Furthermore, Henri Fayol is considered as one of the founders of the accounting human factors principles in production and management, as well as one of the first scientists to draw attention to issues of human relations between managers in general and subordinates in particular. This provided an incentive to research the fields of formal and informal relations between organizational subsystems.

Fayol intentionally uses the word “administration” instead of “management.” It is not necessarily because the word “management” is specifically American, while the word “administration” is a French one; though, there is a grain of truth here.

Management is a product of developed market economies, which emerged in the field of private enterprise rather than government or non-profit management. Throughout the 20^th century, it symbolized reduction of government interference in economic regulation.

The term “administration” in European languages is of Latin origin. The Latin language was used by the Romans, who were famous for their rigid, centralized management control systems. Therefore, it indicates the activities of state bodies charged with control functions.

The term “administration” refers to the highest part of administrative hierarchy and management staff in targeted institutions. There is nothing left of business and commerce in this term, but plenty of bureaucracy and command for sure.

According to Fayol, another reason is that the administrative action formed only one part of management. Management itself is a far greater area of activity. To control means to lead the company to its goal, deriving means from all available resources. But leading to the goal denotes maneuvering in product marketing, monitoring market conditions and advertising strategies, increasing capacity, and controlling working capital cycle.

According to Fayol (Fayol, 1949), administration includes six main groups of operations management present in all industrial enterprises, such as:

• Technical and technological group (production, manufacturing and processing);

• Commercial group (purchase, sale and exchange);
• Financial group (formation of capital and its effective management);
• Security group (protection of property and physical bodies);
• Accounting group (inventory, balance sheets, production and statistics expenses);
• Administrative group (advance knowledge, organization, coordination and control).

This operational guidance is referred to as general management. However, not all six groups of operations are the subject of Fayol’s thorough research. He only focused on management, because other six types were well-researched and comprehended.

Technical, commercial, and financial operations were interesting for the researcher, because they were impacted by the administrative function. Therefore  Fayol does not consider them separately.

To a large degree, success of management depends on a leader’s experience, his abilities and talent.

As far as managers’ abilities were concerned, Henri Fayol emphasized that every manager should have “a special knowledge” specific to any function. In general, every manager needs the following qualities and capabilities (Fayol, 1949):

• Physical properties: health, energy, agility;
• Mental qualities: mental energy, ability to understand and learn, make one’s own judgment, and adapt;
• Moral qualities: energy, firmness, willingness to do something on one’s own responsibility, initiative, loyalty, a sense of tact and dignity;
• General knowledge: ability to discuss in broad terms issues that do not belong exclusively to performed function;
• Special knowledge: very specific skills required for technical, commercial, financial, organizational functions, etc.
• Experience: the totality of characteristics, both past and present, that make up a particular quality of a person, place, or people.

Fayol believed that management could not be strictly regulated but should be based on certain principles and rules.

Fayol formulated the concept of the continuity of the management process, which incorporated the following related functions: planning, organization, management (administration), coordination and control.

Up until now, all the textbooks on management and practical consultancy have been largely based on this classic circuit, which has influenced the modern approach to systems analysis and design of modern organizations.

Fayol’s functions are the most common areas, each of them being relatively independent, though correlating with other areas within the management process.

Special attention was paid to working out a long-term projection and plan. Fayol emphasized the need for long- and short-term planning for each organization, as well as the need to plan on a national scale by taking into consideration the needs of the society in general and production in particular.

In addition, Fayol’s merit has been the statement that every member of the society needs to acquire knowledge of the principles of administration.

The researcher set the goal of teaching industrial administrators an important management function that would ensure maximum individual and collective productivity by concentrating laborers’ “will” on one very specific direction mentioned by an entrepreneur. This requires the creation of the science of managing people, based on “a careful study and scientific experimentation”(Fayol, 1949).

In his main work “General and Industrial Management”,  Fayol’s key concept is that every enterprise has two entities. He has tried to make the need for and possibility of making a special science to manage people a part of the general theory of business management.