Saturday, March 14, 2015

Reinventing Fayol-Gulick-Urwick Legacy: The Unchanging Change of Management

My first exposure to the theory of general management was in the 1972 with the acronym POSDCORB. This acronym signified the functions of management and public administration as set out by Luther Gulick and Lyndall Urwick in their staff paper titled, “Notes on the Theory of Organization” (1937). This, of course, heavily drew from the works of French industrialist, Henry Fayol. POSDCORB denoted the basic functions of management as Planning, Organizing, Staffing, Directing, Co-ordinating, Reporting, and Budgeting. Gulick suggested that the work of a chief executive is nothing but delivering on POSDCORB. Gulick’s POSDCORB is a synthesized and condensed version of Henry Fayol’s fourteen principles of management and five elements of management.

Fayol enunciated the fourteen principles as follows: division of work, authority and responsibility, discipline, unity of command, unity of direction, subordination of individual interest to general interest, remuneration of personnel, centralization, scalar chain (line of authority with peer level communication), order, equity, stability of tenure of personnel, initiative and esprit de corps. Fayol’s five elements of management were: planning, organizing, command, co-ordination and control. Clearly, Gulick drew significantly from Fayol’s principles. Fayol’s work is notable for certain principles of management which are relevant even today but are overwhelmed by the size, scale, scope and globalization complexities of today’s organizations. It would be interesting to see how these factors have brought in some change in the unchanging world of management or how nothing ever changes in the world of management even when change is apparent!

Simple yet complex

The definition of management in terms of its processes and deliverables has become, over the decades, complex yet simple. For example, Gulick was able to reduce the nineteen components of Fayol to seven of POSDCORB. In today’s world, it may be just reduced to two: strategizing and executing. Some may say, executing is the all-encompassing management role while strategizing (along with visioning) is more of a leadership role. Execution, however, has many other components such as organizing, budgeting, monitoring, and performance management. Organizing itself would comprise organizing for resources, people, technology, equipment, external relationships and so on. Monitoring, again, cannot happen without plans and budgets and reports and reviews. It, therefore, emerges that even the most simplistic condensation cannot do away with the basic Fayol principles!

Equally interesting is the qualitative change in certain definitional optics. It is no longer appropriate to consider ‘command’ and ‘control’ as a desired aspect of management. Influence and alignment (and at best, oversight) are seen as more positive definitions of guiding to delivery. The concept of authority coming first followed by responsibility is done away with a new emphasis on accountability. Directing as a concept is replaced by leading and delegation by collaboration. Clarity of vertical line of command and peer level scalar chain is replaced by ubiquitous matrix connectivity. Tenure stability is replaced by performance satisfaction. Thus while the basic objectives of management as enunciated by Fayol-Gulick-Urwick remain undiminished, they are couched in much softer and seemingly democratic shades.    

Time tested or time tests?

At one level, time tested principles emerge softer and unified. That cannot mean that they remain that way when times are testing. For example, when a company is faced with an acute turnaround strategy, strongly directed measures implemented in an environment of total organizational clarity would be required. When a start-up rides its way to success, many principles of management except those related to directing may be ignored. When times are testing, even time-tested principles have to be relied in parts rather than holistically. To make this apparent paradox discernible, management principles may have to be seen and applied contextually. If this were not the case, there would not be a reason why the same management principles give different results for different companies and in different industries.    

Equally, there could be instances of the same company needing to provide differential emphasis on its principles over a longer time horizon. Centralization could be the main principle in the start-up mode while organizing, division of work, authority and responsibility, vertical and horizontal lines of command could become important in growth phase. Thereafter, the organization may settle down to budgeting and reporting in a mature phase. In a declining or volatile environment, esprit de corps to bring out creativity in the face of adversity could be the most dominant principle. Managers who are responsible for line functions and staff functions must be cognizant of business context to set relative priorities and emphases. The relative importance of one principle over the other does not mean that the less emphasized principle is less important.

Muscle analogy

In fact, management principles are like the muscles of a human body. Just as non-use of muscles of a human body leads to atrophy, non-use of management principles leads to organizational atrophy. It is important that all the principles are exercised to some degree or the other, irrespective of the context. The inability of some firms to adjust to varying business contexts is traced to such non-use. Successful firms from micro start-up stage to mega consolidation stage demonstrate this fact. When  Akio Morita and Masaru Ibuka started in 1946 Tokyo Telecommunications Engineering, Corp (what was to later become the famous Sony Corporation), they practised division of work; Ibuka focused on engineering and product design while Morita focussed on marketing, personnel and finance. Start-ups which had early deployment of all management principles tended to achieve enhanced competitiveness and sustainability.

Similar to misuse or overuse of particular muscle groups leading to adverse effects in a human body, misuse or overuse of management principles skews up organizations. In a very gross sense, Fayol implied a 2:3 ratio in his management elements; planning and organizing (the planning elements) versus command, co-ordination and control (the execution elements). As practice teaches us, a fine balance is obtained when a 2:3 or 1:4 ratio is exhibited between planning and execution elements. Misuse occurs when certain task principles are applied in creative environments, and vice versa. For example, unity of command and unity of direction would be a constraining principle for highly creative functions like research while they would be absolutely necessary in a production environment. Teaching and deployment of managerial principles must therefore be taken up in a contextual perspective.

POSDCORB for project management

POSDCORB, in today’s context, seems to be a more relevant construct for project management in a specific manner, rather than general management in a broader sense. All the seven elements of planning, organizing, staffing, directing, co-ordinating, reporting and budgeting fit the project management format perfectly. An infrastructure company which requires licenses prior to carrying out any resource mobilization and project execution should first focus only on planning until it is authorized to operate. Planning emerges to be the most important aspect of infrastructure projects given the huge and massive scale of stakeholder relationships, national and international resource requirements (finances, people, equipment and technologies), the long gestation periods involved and the execution precision required. POSDCORB helps lay the base for targeted infrastructure development where the goals are rigidly set but the path is daunting and subject to delays.

By the same token, POSDCORB would seem to be insufficient in a more dynamic and competitive situation which is market driven. When products have to be developed and launched quickly with optimal cost-quality relationships and aftersales requirements in globally distributed landscape, several other qualitative aspects come into play. Vision and strategy would keep changing rapidly with shortening product lifecycles while collaboration and networking assume importance for a successful go-to-market requirement. As even high-technology products become commoditized, and as investor expectations and global financial flows influence corporate restructuring, management principles which are focused only on internal processes and disciplines such as POSDCORB or Fayol principles and elements would be found wanting. Surely, the basic elements of planning and execution remain but there is a more important subtlety – that is, communication.


The whole set of principles and elements of Fayol, Gulick and Urwick did not include communication as a distinct principle or element of management. This is indeed surprising given that the industrial engineers Frederick Winslow Taylor and Frank and Lillian Gilbreth, in the scientific management period approximately between 1880 and 1920, emphasized communication as an essential component of productivity movement. In the later years, organizational behaviour, of course, gave pride of place to communication. Clearly, much has changed in the business environment over the decades but the principles remain unchanged. Interestingly, planning has had no change in either terminology or content over the decades but execution has had many terms to describe it. All the principles remain as relevant today as they were decades ago. The question is why management remains unchanged in a world where technology, products and services, and life expectations dramatically evolve with time.

The answer lies in the basics of human behaviour which is binary in terms of planning and execution, albeit with some overlap. This has an uncanny similarity to the two basic faculties of human mind, namely thought and action. In both cases, however, expression (or, communication) is the bridge. Increasingly in modern world, appropriate managerial communication is the key to differentiation, and sustainable success.  Despite high educational levels and burgeoning of all types of communication, effective communication continues to be the most important challenge for management and leadership. The need in management for basic and positive communication which is the bedrock of all human living means that while many things keep changing, including management itself, nothing really changes in management or differentiates it from simple human living, for the chief executives as well as common employees.

Posted by Dr CB Rao on March 14, 2015

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