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© Éditions ESKA, 2016

LE TOURNANT FAYOLIEN

THE GLOBAL FAYOL: CONTEMPORARY

MANAGEMENT AND ACCOUNTING TRACES

by Lee D. PARKER School of Accounting

RMiT University, Melbourne, Australia

Malgré la diffusion internationale de ses travaux, Henri Fayol a long- temps souffert d’une pauvre réception par les tenants des sciences de gestion. Tronquée, stéréotypée ou encore réduite à son opposition avec le taylorisme, l’originalité de sa pensée est restée pour partie mécon- nue. Cependant, en prise avec des changements organisationnels et environnementaux majeurs, Henri Fayol a contribué à la formation de concepts précurseurs pour les sciences de gestion. On retrouve chez lui certaines intuitions qui sont au cœur de l’école des relations humaines ou de l’école de la contingence, ainsi que des notions qui anticipent les préoccupations les plus contemporaines.

H e n r i F a y o l h a s l o n g b e e n acknowledged as one of the founding fathers of the scientific management and classical management schools of thought. From his home base as a pre-eminent French histo- rical industrialist and management thinker, his ideas that were originally formulated in the early 20th century French environment later spread far beyond its shores. However in contemporary management literature his name is often passed over in favour of innovators and writers of contemporary focus. Yet what is remarkable about him is the durability and prescience of many of his ideas and concepts which, recognised and

unrecognised, permeated later management thinking and practice in many countries, right through to the present day. Not only did his thinking feature on these wider stages, but it extended also into accounting and financial management thought and practice.

This paper sets out to revisit Fayol’s work and thought with a view to identifying his unique multidimensional profile and exploring his anticipation of subsequent management schools of thought as well as his contributions to the world of accounting and financial management internationally. While he has been traditionally identified

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as a scientific management pioneer1, that stereotype has not necessarily served his legacy well. Instead, this paper examines his broader conceptual and practice thinking to consider his management theories that went beyond the confines of the scientific manager categorisation. In doing so, we acknowledge his unique and lasting contributions to contemporary management theorisation and practice. Based on Fayol’s foundational writings and drawing on the observations and analyses of management theorists and historians who have followed and who have revisited his work, this paper re-introduces him to his contemporary management and accounting peers.

The paper commences with a brief reflection on his profile and work as well as the manner in which he has been classified and represented in today’s literature, and his dissemination beyond the shores of France. In addition, given the internationally dominant profile of Frederick Taylor as a scientific management founder, Fayol’s unique compa- rative profile and contribution is presented. The paper then moves on to reflect upon Fayol’s identity as an early theorist in management and then draws out some of the key management themes of today that his early work anticipated. Finally the paper examines the traces of Fayolian concepts and thinking to be found in accounting and financial management theory and practice today.

1. PROFILE, PRESENTATION AND DISSEMINATION

Trained as a mining engineer and rising through management ranks to become managing director of the French coal mining and iron foundry combine Commentry-Fourchambault, Henri Fayol was a longstanding and leading French industrialist, founder of his Centre of Administrative Studies, and consultant to the French public sector. As such he was a multidimensional figure: mining engineer, geologist, industrial leader, management thinker and proselytiser. The management principles he articulated arguably formed the most formalised and significant set of concepts presented by any European management writer of his day. Fayol was notable for his foundational development of “administrative theory”, as well as for his exemplifying management and leadership in practice, and for his experimentation with new management ideas and techniques across both private and public sectors2. Having also established early European management research and education resources, Fayol can also be regarded as having exemplified an all-round management practitioner, theorist, educator and proselytiser3. Indeed he was well recognised in his time, earning such honours and awards as Chevalier of the Legion of Honour in 1913, the Delesse Prize of the Academy of Sciences, the gold medal of the Société d’Encouragement pour

1 L. F. Urwick and E. F. L. Brech, Thirteen Pioneers, London, Sir Isaac Pitman & Sons Ltd., 1951. 2 Fayol’s General and Industrial Management was first published in France in 1916. (Here: H. Fayol, General and industrial management, London, Pitman Publishing, 1949). L. F. Urwick and E. F. L. Brech, Thirteen Pioneers, op. cit. A. G. Bedeian, The administrative writings of Henri Fayol: A bibliographical investigation, Monticello, Ill., Vance Bibliographies, 1979. J. Merkle, “Excerpts from Romantic Rationalism and the Growth of French Scientific Management”, in J. C. Wood & M. C. Wood (eds.), Henri Fayol: Critical evaluations in business and management, London, Routledge, 2002, vol. I, p. 125-137. L. D. Parker and P. Ritson, “Revisiting Fayol: Anticipating Contemporary Management”, British Journal of Management, 16(3), 2005, p. 175-194. 3 J. D. Breeze, “Henri Fayol’s centre for administrative studies”, Journal of Management History, 1(3), 1995, p. 37-62. M. B. Brodie, Fayol on Administration, London, Lyon, Grant and Green, 1967.

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l’Industrie Nationale and Commander of the order of the crown of Romania4.

What was also distinctive about Fayol, but to this day not entirely understood by many, was his complex professional identity and profile5. Most commonly he has been seen as a chief executive officer and strategist. Arguably his success in these roles came through a combination of French mining and steel industry conditions, his techno- logical strategies and his strategic financial management6. Of course his concept of planning was fundamental to his execution of these roles, and much has been written on his approach by writers who have followed him7. Fayol’s views on management theory were also conditioned by his experience as CEO in his organisation and his successful efforts at redefining that role to include strategic leadership as well as redefining the CEO’s relationship with the board8. However, he was much more than this.

In his earlier career Fayol exhibited all the features of a field researcher. This

included the conduct of geological field experiments, detailed studies of coalfield deposits, daily note taking and reflection as a manager, and clearly employed inductive theorising from his management experiences in his organisation9. He was also a change manager who worked in a volatile national environment of major and on-going change, socially, politically and industrially. His theories were forged in this fast changing environment and thereby reflected a dynamic rather than static orientation10. Not content with this array of roles and identities, Fayol was also a human resource manager, arguing against authoritarian industrial paternalism and instead granting greater autonomy to the workforce, recognising the value of worker representation, and responding to the growth of trade unions11. Finally and not least among these, Fayol was an early management educator. It was a foundation for his own career and he returned to champion it later in his life, especially through his Centre for Administrative Studies. For him, management was both a practical and academic discipline12.

4 L. F. Urwick (ed.), The Golden book of management: A historical period of the life and work of seventy pioneers, London, Newman Neame Ltd., 1956. D. Wren, The evolution of management thought, New York, The Ronald Press, 1972. 5 L. D. Parker and P. Ritson, “Revisiting Fayol: Anticipating Contemporary Management”, art. cit. 6 J. D. Breeze, “Harvest from the archives: the search for Fayol and Carlioz”, Journal of Management, 11(1), 1985, p. 43-54. L. D. Parker and N. R. Lewis, “Classical management control in contemporary management and accounting: the persistence of Taylor and Fayol’s world”, Accounting, Business & Financial History, 5(2), 1995, p. 211-236. 7 M. B. Brodie, Fayol on Administration, London, Lyon, Grant and Green, 1967. C. S. George Jr., The history of management thought, 2nd ed., Englewood Cliffs, NJ, Prentice Hall, 1972. D. Wren, The evolution of management thought, op. cit. H. R. Pollard, Developments in management thought, London, Heinemann, 1974. H. Mintzberg, The rise and fall of strategic planning, New York, The Free Press, 1994. 8 J. D. Breeze, “Harvest from the archives: the search for Fayol and Carlioz”, art. cit. D. Reid, “Fayol: From experience to theory”, Journal of Management History, 1(3), 1995, p. 21-36; D. Reid, “Reading Fayol With 3D Glasses”, Journal of Management History, 1(3), 1995, p. 63-71. 9 M. B. Brodie, Fayol on Administration, op. cit. J. D. Breeze, “Henri Fayol’s centre for administrative studies”, Journal of Management History, 1(3), 1995, p. 37-62. D. A. Wren, “Henri Fayol: learning from experience”, Journal of Management History, 1(3), 1995, p. 5-12. L. D. Parker and N. R. Lewis, “Classical management control in contem- porary management and accounting: the persistence of Taylor and Fayol’s world”, art. cit. 10 Ibid. D. A. Wren, “Henri Fayol: learning from experience”, art. cit. 11 M. B. Brodie, Fayol on Administration, op. cit. D. Reid, “Fayol: From experience to theory”, art. cit. 12 M. B. Brodie, Fayol on Administration, op. cit. N. Cuthbert, “Fayol and the principles of organization”, in A. Tillett, T. Kempner, and G. Wills (eds.), Management Thinkers, London, Penguin, 1970. J. D. Breeze, “Henri Fayol’s centre for administrative studies”, art. cit.

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Fayol’s ideas were argued by Reid13 to have not had the immediate currency in his own country that contemporary commen- tators have assumed, and were somewhat overshadowed both in France and overseas by Frederick Taylor’s ideas, especially through their promotion in France by Henry-Louis Le Chatelier and Charles de Fréminville who were leaders of the Taylorist movement in France14. Arguably World War I impeded the immediate diffusion of Fayol’s theories beyond France15. Charles de Fréminville did publish a tribute to Fayol in 1927, and John Adair Coubrough produced an English language translation in 1929. No English translation was made available in the USA, the first promotion of Fayol’s ideas being taken on by Luther Gulick and his staff, particularly through Gulick’s POSDCORB concept that was adapted from Fayol’s writing. It was not until the availa- bility of the Constance Storrs’ translation in 1949 that Fayol’s ideas came to the wider attention of and had significant impact on North American management educators and practitioners16. Fayol was accorded further recognition outside France through Urwick and Brech’s book17 on the thirteen pioneers of scientific management. However such categorising efforts as those of Urwick and Brech can be said to have contributed to a stereotyping effect upon Fayol and his ideas

in contemporary management literature. He is often regarded as having constructed an inflexible set of generalist scientific management principles to be pursued irrespective of changing or differing circums- tances, and having advocated an authoritarian model of management. Furthermore his mining engineer field background and his later management theorist, educator and public sector consultant profile are often ignored by contemporary management textbook writers18. For many, Fayol has been seen as an inflexible, narrowly focussed classical management advocate whose relevance today is marginal at best. This is a serious miscalculation.

2. FAYOL IN A TAYLORIST WORLD

Fayol and his lifetime endeavours lived in the long shadow of Frederick Taylor and his scientific management disciples. As observed above, even in his home country of France, Fayol’s ideas arguably struggled for air in the pervasive dominance of the Taylorist world, with many of Fayol’s ideas failing to gain traction amongst his own peers in France19. In some senses, as argued by Parker

13 D. Reid, “Reading Fayol With 3D Glasses”, art. cit. 14 G. G. Humphreys, Taylorism in France, 1904-1920: the impact of scientific management on factory relations and society, New York, Garland, 1986. D. A. Wren, “The Influence of Henri Fayol on Management Theory and Education in North America”, Entreprises et Histoire, n° 34, December 2003, p. 98-107. 15 D. A. Wren and A. G. Bedeian, The evolution of management thought, Hoboken, NJ, John Wiley & Sons Inc., 2009, p. 211-227. 16 N. M. Pearson, “Fayolism as the Necessary Complement of Taylorism”, The American Political Science Review, 39(1), 1945, p. 68-80. M. B. Brodie, “Henri Fayol: Administration Industrielle et Générale – a reinterpretation”, Public Administration, 40, 1962, p. 311-317. D. A. Wren, “The Influence of Henri Fayol on Management Theory and Education in North America”, art. cit. 17 L. F. Urwick and E. F. L. Brech, Thirteen Pioneers, op. cit. 18 L. D. Parker and P. Ritson, “Revisiting Fayol: Anticipating Contemporary Management”, art. cit. L. D. Parker and P. Ritson, “Accounting’s latent classicism: Revisiting classical management origins”, art. cit. 19 D. Reid, “Reading Fayol With 3D Glasses”, art. cit. D. A. Wren, A. G. Bedeian and J. D. Breeze, “The foundations of Henri Fayol’s administrative theory”, Management and Decision, 40(9), 2002, p. 906-918. L. D. Parker and P. Ritson, “Accounting’s latent classicism: Revisiting classical management origins”, art. cit.

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and Lewis20, Taylor and Fayol experienced similar macro-environmental conditions. Both worked in the metallurgical industry, their ideas being forged in a highly compe- titive national and international marketplace. Their industries were witnessing significant episodes of technological change that both embraced and reflected community and organisational interest in greater efficiency21. Yet despite some apparently common environmental context, perspectives and interests in organisational management, Fayol did offer something different to Taylor. While these have been well rehearsed in the management literature, they bear briefly revisiting here.

S o m e o f t h e s e d i f f e r e n c e s w e r e indeed alluded to by Fayol himself. Fayol focussed upon senior executive organisa- tional leadership whereas Taylor focussed upon front-line management, and technical production. Thus Fayol’s ideas spoke more to higher level organisational management issues while Taylor’s rhetoric addressed more the technical detail of organising the shop floor. As Merkle22 has argued, to some extent these differences in focus, scope and style also reflected Fayol’s positioning in a long term stable organi- sational relationship and development

process, and Taylor’s positioning in rapidly changing multi-organisational environ- ments where disruptive technologies were at work and social relationships between management and workforce were in flux. From Fayol’s viewpoint, the problems in applying Taylorism stemmed from the need for achieving an appropriate combination of technical and administrative ability in managers. It was Fayol’s view that adminis- trative expertise was in scarcest supply and there lay his focus23.

The differences between Fayol and Taylor did not end there. While being top-down compared to Taylor’s bottom-up system, Fayol’s theoretical articulation allowed for more flexibility of interpre- tation and implementation than the Taylor system, being a much more contingent view of the management process24. Taylor looked to managers to be technical experts who could even outperform their workers at the same tasks, while Fayol took a different view, envisaging managers as organisational experts educated in the management of organisations overall25. Furthermore, Taylor was prepared to countenance different super- visors for different aspects of an employee’s job. Fayol could not countenance this, seeing it as risking disorder, instead preferring a

20 L. D. Parker and N. R. Lewis, “Classical management control in contemporary management and accounting: the persistence of Taylor and Fayol’s world”, art. cit. 21 Indeed, as Parker and Lewis (1995) have argued, much of Fayol and Taylor’s historical environment bore resem- blance to our contemporary global industrial, economic and market conditions. 22 J. Merkle, “Excerpts from Romantic Rationalism and the growth of French Scientific Management”, art. cit. 23 M. B. Brodie, Fayol on Administration, op. cit. 24 M. G. Pryor and S. Taneja, “Henri Fayol, practitioner and theoretician – revered and reviled”, Journal of Management History, 16(4), 2010, p. 489-503. 25 K. H. Brunsson, “Some effects of Fayolism”, International Studies of Management and Organization, 38(1), 2008, p. 30-47.

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clear chain of hierarchical responsibility and control26. In doing so however, Fayol also favoured reversing the trend towards division of labour by returning authority and responsi- bility for some functions from specialists to shop floor work groups, harnessing their adaptability, initiative and potential produc- tivity contributions27.

O’Connor28 argues that even in how they derived and argued their theories, Taylor and Fayol differed. Taylor sought to develop laws, at times using quantitative evidence, and aiming to prove the truths he propounded. Fayol didn’t necessarily resort to legitimising sources, but rather developed and argued doctrines involving ranks, order, spans of control, communication patterns and processes, offering detailed articula- tions as a means of convincing the reader. For Taylor, the derivation of his laws was a central concern, while for Fayol the form and appearance of his prescriptions were centre stage.

Appreciating Fayol today, in compa- rison to the unidisciplinary Taylor, there is ample justification for recognising Fayol as an early interdisciplinarian29. His work and thinking suggest an implicit social science orientation rather than the more overt engineering orientation exhibited by Taylor. It did so in its anticipation of elements of later emergent theoretical perspectives in the field of management such as systems theory, human relations and knowledge management

that will be further discussed in this paper. Yet despite such a unique profile, Fayol has remained classified in the scientific management school and stereotyped as a classical management writer closely related to elements of Taylorism30. This stereotype he has never substantially escaped and was most likely first established through his inclusion by Urwick and Brech in their influential book on the thirteen pioneers of scientific management31. Yet he was a sophis- ticated management thinker who included contingency and flexibility in his theore- tical concepts and practice prescriptions, aiming to embrace notions of authority and control while incorporating consideration of employee welfare, equity and decision- making contributions to organisational life32.

3. A PRESCIENT AND MULTIDIMENSIONAL THEORIST

Fayol regarded managerial ability as fundamental to organisational management and considered that educationalists should pay attention to providing managerial training. To this end, he believed that management theory was essential to provide managers with foundational knowledge that could serve them in many spheres, rather than them being reliant only on their own

26 D. Reid, “Reading Fayol With 3D Glasses”, art. cit. 27 Ibid. 28 E. S. O’Connor, “Lines of authority: readings of foundational texts on the profession of management”, Journal of Management History, 2(2), 1996, p. 26-49. 29 L. D. Parker and P. Ritson, “Revisiting Fayol: Anticipating Contemporary Management”, art. cit. 30 L. D. Parker and P. Ritson, “Fads, stereotypes and management gurus: Fayol and Follett today”, Management Decision, 43(10), 2005, p. 1335-1357. 31 L. F. Urwick and E. F. L. Brech, Thirteen Pioneers, op. cit. 32 L. D. Parker and P. Ritson, “Fads, stereotypes and management gurus: Fayol and Follett today”, art. cit.

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local level past experiences33. Accordingly he built his theories based on his field derived observations34, analysing these and inducing cause and effect relationships focussed on management principles and practices that could be applied in different circums- tances35. Unlike Taylor, Fayol did not set out to produce a complete prescriptive theory of management36, but rather to propose concepts that might trigger reflection and discussion and the gradual emergence of a theory of management over time, shared between all levels of organisational members (rather than the Taylorist gospel of confining it to the senior levels of management)37.

In comparing Fayol’s theories to contem- porary management schools of thought38, Parker and Ritson have identified aspects of Fayol’s concepts that were precursors to later emerging theoretical perspectives in the management discipline. While the human relations movement has generally been considered a reaction against the authoritarian approach of the classical management school with which Fayol has been identified, Fayol in fact argued for management occurring through all levels of an organisation, with devolved authority and decentralised decision-making39, and

that workers throughout the organisa- tional hierarchy should be provided with management education. Downplaying Taylorist financial incentive schemes, Fayol anticipated aspects of Maslow’s hierarchy of needs and Herzberg’s two factor theory of motivation, focussing on employee inter- personal interaction, collaboration, harmony, and co-ordination between staff and limited forms of worker representation40.

Fayol’s theories also anticipated aspects of systems and contingency theories. His explanations employed biological metaphors41, he focussed upon interdepen- dencies that became a hallmark of systems theorising, and his ideas recognised the importance of situational factors and associated contingencies. This has been argued both by Lamond and by Parker & Ritson42. In addition, Fayol’s planning theory was clearly a forerunner of contingency based planning, being a highly adaptive approach to planning, including allowance for significant adjustments for changing external condi- tions, flexing for environmental uncertainty, and strategizing to cope with and adjust to changing conditions both within and outside the organisation43. Indeed44, Pryor and Paneja see Fayol’s ideas as exhibiting strategic

33 D. A. Wren and A. G. Bedeian, The evolution of management thought, op. cit. 34 A practice he had continued from his earliest days as a mining engineer (M. B. Brodie, Fayol on Administration, op. cit.). 35 J. D. Breeze, “Henri Fayol’s centre for administrative studies”, art. cit. D. A. Wren, “Henri Fayol: learning from experience”, art. cit. 36 J. R. Schemerhorn, J. Campling, D. Poole and R. Wiesner, Management: An Asia-Pacific Perspective, Milton, Queensland, John Wiley & Sons, 2004. 37 L. D. Parker and P. Ritson, “Revisiting Fayol: Anticipating Contemporary Management”, art. cit. 38 Ibid. 39 L. D. Parker, “Fayol and Follett: Messages for contemporary management and accounting”, art. cit. 40 Ibid. L. D. Parker and P. Ritson, “Revisiting Fayol: Anticipating Contemporary Management”, art. cit. 41 N. Cuthbert, “Fayol and the principles of organization”, art. cit. 42 L. D. Parker and P. Ritson, “Revisiting Fayol: Anticipating Contemporary Management”, art. cit. D. Lamond, “Back to the future: lessons from the past for a new management era”, in G. Griffin (ed.), Management Theory and Practice, South Yarra, Macmillan Education Australia, 1998, p. 3-14. 43 L. D. Parker and P. Ritson, “Revisiting Fayol: Anticipating Contemporary Management”, art. cit. 44 M. G. Pryor and S. Taneja, “Henri Fayol, practitioner and theoretician – revered and reviled”, art. cit.

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thinking and potentially contributing to the implementation of Porter’s generic compe- titive strategies. This in part reflected Fayol’s long history as a strategist and strategic manager in charge of delivering a major strategic turnaround in his Commentry- Fourchambault company45.

We can also see traces of knowledge management thinking in Fayol’s articulated ideas. While he valued explicit knowledge more than tacit knowledge, Fayol recognised both and critiqued their relationship. His was a mission, however, of replacing manager’s variously experienced and inconsistently applied tacit knowledge with a more generally applicable and reliable body of explicit knowledge. In doing so, Fayol articulated six qualities and forms of requisite knowledge. Thus somewhat reminiscent of today’s knowledge management practi- tioners, Fayol inductively and systematically captured tacit knowledge in order to derive an explicit body of codified knowledge46. That body of knowledge still stands scrutiny today. As Fells’ extensive analysis47 of Fayol’s theories in comparison with more contemporary theories of management48 has argued, elements across all four theories show signs of being interrelated, despite various differences in terminology and perspectives. Accordingly he argues for Fayol’s continuing potential relevance to management theory and practice today.

4. ACCOUNTING AND MANAGEMENT CONTROL FOUNDATION

For Fayol, accounting lay at the centre of his philosophy of business management. He termed it a thermometer of the state of the business and its health, to be continually monitored49. His approach to accounting information access and monitoring was democratic in that he argued for every level of the organisation to be informed of results for which they are responsible. This is the essence of today’s concept of responsibility accounting. Furthermore he required the production of reliable accounting information and a speed of accounting information report delivery to facilitate timely control actions and management decision-making. In Fayol’s view, decision information reaching managers too late for decisions they must make was ineffective and wasted the time of all involved in its production and receipt. Such a perspective was decades in advance of accounting and accountability concepts that subsequently became part of contem- porary accounting conventional wisdom today50. One further indicator of the impor- tance that Fayol attached to the accounting function can be found in his specification of key abilities required by managers, allocating it an average score of 20 %, ranging from 5 % of a workman’s abilities to 10 % of a foreman’s abilities, to 20 % of a manager’s abilities. Furthermore, he advocated its

45 D. A. Wren, “Henri Fayol as strategist: a nineteenth century corporate turnaround”, Management Decision, 39(6), 2001, p. 475-487. D. A. Wren, “The Influence of Henri Fayol on Management Theory and Education in North America”, art. cit. 46 L. D. Parker and P. Ritson, “Revisiting Fayol: Anticipating Contemporary Management”, art. cit. 47 M. J. Fells, “Fayol stands the test of time”, Journal of Management History, 6(8), 2000, p. 345-360. 48 H. Mintzberg, The nature of managerial work, New York, Harper and Row, 1973. J. P. Kotter, The General Managers, New York, The Free Press, 1982. C. P. Hales, “What do managers do? A critical review of the evidence”, Journal of Management Studies, 23(1), 1986, p. 88-115. 49 D. A. Wren, A. G. Bedeian and J. D. Breeze, “The foundations of Henri Fayol’s administrative theory”, art. cit. 50 Ibid. L. D. Parker and P. Ritson, “Accounting’s latent classicism: Revisiting classical management origins”, art. cit.

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formal inclusion in training programs for managers51.

Accounting control concepts still current today owe much of their early development to Fayol’s conceptualisation. This was parti- cularly evident through the 1960s and 1970s, and while many accounting writers did not directly reference Fayol, Parker’s52 research has revealed strong similarities between later authors’ articulations of control and Fayol’s earlier work. Indeed Hofstede, in his famous book The Game of Budget Control53, explicitly attributed Fayol as having been the founder of the contemporary approach to budgetary control for the business54. The formality of Fayol’s approach to embedding budgetary control in his scheme of management has been echoed in the decades of management accounting literature and practice to this day, Parker and Lewis55 having argued that much of this contemporary accounting literature and thinking evidences the strong influence of early classical management theorising to which Fayol made a profoundly significant contribution.

A prominent control concept bequeathed by both Frederick Taylor and Henri Fayol to accounting today was the concept of exception control. Fayol saw it as enshrined in the practice of regular summary performance reports delivered to managers highlighting

significant variances of actual outcomes from performance control standards or targets. It is the significant variances from planned targets that are to be highlighted in such management reports – focussing manager attention and responses upon them. This remains one of the most dominant control concepts and practices maintained by accountants today56.

Underpinning that concept was the notion of goal congruence and its related concept of co-ordinative control. Parker57, for example, attributes the classical management concept of co-ordinative control to Fayol’s early theorisation whereby he saw a relationship between unity of command, unity of direction and subordination of individual interest to general interest. Unity of command stated that each staff member should receive instructions from only one supervisor. Unity of direction required that a set of activities pursuing a common objective should have one head and one plan. Co-ordination was deemed by Fayol to be essential for balancing business unit heads’ interests and promoting collaboration between departments, thereby maintaining equilibrium within the organisation58. Parker and Ritson59 have also argued that Fayol’s related notion of co-ordination involved more than simply a functional process but extended to include management’s attitude of mind. This involved encouraging harmonised

51 H. Fayol, General and industrial management, op cit. M. B. Brodie, Fayol on Administration, op. cit. L. D. Parker, Developing Control Concepts in the 20th Century, New York, Garland, 1986. Republished Abingdon, Routledge, 2014. 52 L. D. Parker, Developing Control Concepts in the 20th Century, op. cit. 53 G. H. Hofstede, The game of budget control, London, Tavistock Publications, 1968. 54 L. D. Parker, “Henri Fayol, accounting and control: an environmental reflection”, The Accounting Historians Notebook, 9(1), 1986, p. 19-26. 55 L. D. Parker and N. R. Lewis, “Classical management control in contemporary management and accounting: the persistence of Taylor and Fayol’s world”, art. cit. 56 Ibid. L. D. Parker, “The classical model of control in the accounting literature”, The Accounting Historians Journal, 13(1), 1986, p. 71-92. L. D. Parker and P. Ritson, “Accounting’s latent classicism: Revisiting classical management origins”, art. cit. 57 L. D. Parker, “The classical model of control in the accounting literature”, art. cit. 58 L. D. Parker, “Henri Fayol, accounting and control: an environmental reflection”, art. cit. 59 L. D. Parker and P. Ritson, “Accounting’s latent classicism: Revisiting classical management origins”, art. cit.

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operations between organisational units, warehouse being informed of production supply requirements and timing, finance funding operations as required, all units understanding their share of overall opera- tional tasks, and the facilitating of mutual assistance between organisational units. All of these required constant monitoring and adjustment to suit changing environmental circumstances. These Fayolian concepts together laid the foundation for the contem- porary concept of goal congruence that emerged in the accounting literature in the 1960s and 1970s60.

L a t e r e m e r g i n g c o n t e m p o r a r y management control approaches such as feedforward control also had precursors in Fayol’s prescient theorisations and practice recommendations. This concept considered that errors, inefficiencies, and potential diver- gences from plans should be identified and acted upon as soon as possible, preferably in advance of significant variations from plan developing. In this way, Fayol aimed to address emergent issues in advance, rather than patching up larger scale problems after the event. He saw effective control as preventing undesirable environmental changes and surprises that could become major catastrophes61. So Fayol’s control approach was one of rapid response: the sooner the better. For him this was not simply a set of recommended implementation steps, but a required attitude of mind. This idea of both functional practice steps and managerial attitude of mind was a constant theme in Fayol’s prescriptions.

5. PLANNING, BUDGETING AND FINANCIAL MANAGEMENT

Fayol’s attention to planning was also prescient of contemporary strategic planning and budgeting practices advocated and practised in today’s accounting environment. He talked in terms of their offering weapons in readiness for addressing surprises that may occur for an organisation from time to time. He was concerned to integrate the forecasting and management of opera- tions, finances, technology and overall resources62. Accounting and finance were essential ingredients of Fayol’s general approach to planning. They included reports on past budgetary period results, antici- patory summaries of activities and results for the next budgetary period (essential to his anticipation of the concept of feedforward control), and constant revisions to accounting and finance components of yearly forecasts. Thus Fayol’s annual plan was a forerunner of the overall corporate budget63. In this sense, Fayol integrated both planning and control, through his incorporation of accounting and finance planning and control through the budgetary system concept64.

It is important to note here that Fayol’s approach to planning was not exclusively financial. It encompassed both operational and financial/budgetary planning – including technical, commercial and financial aspects in the overall corporate plan. Based upon ten year, one year, monthly, weekly and daily forecasts, the budget was to be constructed on a one year time frame, with lesser periods as

60 L. D. Parker, “Henri Fayol, accounting and control: an environmental reflection”, art. cit. 61 L. D. Parker and P. Ritson, “Accounting’s latent classicism: Revisiting classical management origins”, art. cit. 62 L. D. Parker, “Fayol and Follett: Messages for contemporary management and accounting”, art. cit. 63 L. D. Parker, “Henri Fayol, accounting and control: an environmental reflection”, art. cit. 64 L. D. Parker and N. R. Lewis, “Classical management control in contemporary management and accounting: the persistence of Taylor and Fayol’s world”, art. cit.

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required by management65. Forecasting and budgeting were distinct concepts: the former alluding to the anticipation and projection of future events and outcomes, while the latter related to the deliberate setting of budget targets, being intended outcomes to be achieved through management’s proac- tively managing the organisation’s internal and external environment. Furthermore, from Fayol’s perspective, the budget should allow for flexibility in managing contingencies and possible unanticipated deviations from planning targets. Nonetheless it was to still be firmly oriented towards assisting management to employ organisational resources for the pursuit of its objectives66.

Fayol’s approach to organisational management, planning and control had a distinctive financial management edge to it, oftentimes ignored by subsequent management and business historians. Yet in his General and Industrial Management text, Fayol categorised six major activities that constituted his definition of management. Three of these were “commercial activities”, “financial activities” and “accounting activities”. This leaves the reader in no doubt as to his prioritisation of accounting and financial management.

The management of costs and efficiency was clearly a key focus of Fayol’s attention. Essential to cost efficiency and ultimate profit in Fayol’s view was the management of labour cost and efficiency. A prime component of this was the tracking and management of labour cost which included aiming at fairness for both employees and employer. His related principles included fair remuneration, avoiding overpayment,

and the reward and motivation of effort67. To this end, Fayol also paid attention to bonuses, management remuneration packages and profit sharing. On one hand he saw potential in all these forms of financial remuneration, but on the other hand counselled regarding their risks and limitations68. Ultimately, Fayol saw the relationship between wage levels, staff motivation, productivity and organisational profits. This he considered to be a complex relationship borne of remune- ration schemes and levels, environmental influences, and attitudes.

6. ENGAGING HISTORICAL AND CONTEMPORARY ENVIRONMENTS

The prescience, relevance and durability of Fayol’s concepts for today may in part be explained by some similarities between the environment of his day and recurring aspects of the global business environment in more contemporary periods. This arguably extends to similarities in management preoccupations, social ethos and economic environments then and now. Economically rational management, formalised strategic and business planning, developing and maintaining internal and external organisa- tional accountability systems, and focusses on measuring and evaluating efficiency and effectiveness have all been contemporary phenomena observable in both the private and public sectors in many countries. Yet these were environments and concerns that surrounded Fayol and his peers at the time of his theorising69. The global economic

65 L. D. Parker and P. Ritson, “Accounting’s latent classicism: Revisiting classical management origins”, art. cit. 66 Ibid. 67 Ibid. 68 Ibid. 69 L. D. Parker and N. R. Lewis, “Classical management control in contemporary management and accounting: the persistence of Taylor and Fayol’s world”, art. cit.

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environment today also bears resemblance to the internationally competitive environment that Fayol and his organisation faced so long ago. These have included workforce casua- lisation, industry restructuring, corporate search for cheap labour supply, wage-pro- ductivity calculations and bargaining, performance related senior management salary packaging and bonus payments, and executive profit sharing schemes70. All of these environmental dimensions sit within a general context of highly compe- titive international marketplaces. Fayol and Commentry-Fourchambault faced these in the early 20th century and many contem- porary organisations face similar globally competitive pressures today. Fayol’s employment of his concepts of planning, control and financial management along with his adaptation to his economic, industry and market environment served him well in his day, and this integration offers on-going relevance for organisational managers today71.

IN CONCLUSION

Particularly for international audiences and for contemporary practising managers, accountants and their scholarly fellow travellers, Henri Fayol merits rediscovery. He offers much more today than suggested by the confines of his historical stereotype. As management practitioner, consultant, theorist and educator, he brought a multidimensional approach to building the foundations of contemporary management and accounting control. Indeed, as a management leader and thinker of his day, he was notable in his experience as a CEO, organisational change agent and manager, human resource manager

and financial manager. As a management theorist, in today’s terms he was the consummate field researcher, drawing on his geological traditions to develop an inductive approach to his theorising from the practice world in which he engaged and which he observed. In many respects he might be best be represented in today’s terminology as an action researcher and a grounded theorist. These categorisations would come far closer to fairly portraying his approach and work than traditional Lyndall Urwick inspired characterisations of him as a scien- tific manager or classical management writer. In his day, Fayol stood in the now largely vanished tradition of organisational leaders and managers who also developed and contributed to research and theorising in the management and accounting disciplines. His was an engagement and intersection between practice and theory seldom found amongst the ranks of management and accounting practitioners and researchers today.

As a European pioneer in the development of management as a discipline, Fayol had to await later recognition than the internatio- nally dominant Frederick Taylor. However recognition did indeed come, and interna- tional influence came even later. Yet Fayol’s reputation and recognition has moved with the tides of time: slow to be achieved initially, then arguably receding through contemporary management’s lack of acknowledgement or references to his founding influence. It is through the work of more recent management and accounting historians, and such special journal issues as this journal is presenting, on which some hope of his rehabilitation rests. Fayol merits rediscovery by the management and accounting community internationally. He was a unique figure who offered a diffe- rentiated profile, perspective and contribution to Frederick Taylor. This reflected Fayol’s

70 L. D. Parker and P. Ritson, “Accounting’s latent classicism: Revisiting classical management origins”, art. cit. 71 L.D. Parker, “Henri Fayol, accounting and control: an environmental reflection”, art. cit.

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experience as a long term organisational leader, his instinctive interdisciplinarity, and the flexibility and contingency of his management theorising. Fayol’s legacy is that of a management theorist. He was a precursor to elements of a variety of subse- quently emerging management schools of thought: human relations, systems theory, contingency theory, strategic management and knowledge management.

Fayol has also had a formative influence on several key aspects of accounting and financial management. Once more, these have not been readily recognised by today’s accounting community internationally and yet traces of his early concepts are apparent in some of the conventional wisdom of accounting practice today. Corporate and business planning, budgeting, cost management, management control and responsibility accounting all owe elements of their designs and practices to Fayol’s foundational ideas. The concepts and related

practices of goal congruence, budgetary control, budgetary reporting, management by exception, as well as feedback and feedforward control all bear his imprint. From an organisational planning and control perspective, Fayol also demonstrated one of the earliest articulated understandings of the interrelationship between forecasting and budgetary planning.

Across the past century, Fayol has achieved a quiet global influence in both management as well as accounting theory and practice. As his successors, we stand in his long shadow, owing much to his pioneering of foundations for the many developments in our disciplines that have emerged in his wake. While he is by no means an all-en- compassing, omniscient founder, it would be remiss of today’s generation of management practitioners and researchers to ignore his traces so evident in our contemporary work and thinking.

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EntrEprisEs Et HistoirE, 2016, n° 83, pages 3 à 4 3

Rachelle Belinga est doctorante de sciences de gestion au Centre de Gestion Scientifique (CGS) de MINES ParisTech-PSL. Sa thèse, sous la direction de Blanche Segrestin, porte sur « Actionnaires et nouveaux régimes de solidarité : l’engagement actionnarial ».

Stéphanie Billonneau est responsable des Archives historiques de la banque HSBC France. Article récent : « État des sources sur la Première Guerre mondiale conservées par le service des Archives historiques de HSBC France », in Fabien Cardoni (dir.), Les banques françaises et la Grande Guerre, Paris, Comité pour l’his- toire économique et financière de la France, 2016, p. 251-255.

François Duffaut est l’ancien directeur Recherche & Développement de Imphy SA. Il est aujourd’hui engagé dans la promotion du patrimoine industriel de Nièvre et est membre de la Société Nivernaise des Lettres, Sciences et Arts et de la Société Académique du Nivernais. Il a notamment publié « Innover pour vivre », in Francis Dreyer (dir.), La Nièvre, le royaume des forges, Nevers, Musées de la Nièvre, 2006, p. 37-43.

Gabriel Galvez-Behar est maître de confé- r e n c e s d ’ h i s t o i r e c o n t e m p o r a i n e à l’Université Lille III. Il mène des recherches sur l’histoire de la valorisation de la recherche et de la propriété scientifique. Il a codirigé le n° 82, avril 2016, d’Entre- prises et Histoire sur « Le management de la propriété industrielle ».

Anne-Françoise Garçon est professeure d’his- toire des techniques à l’Université Paris I. Elle y dirige le Centre d’Histoire des Techniques. Livre récent : L’imaginaire et

la pensée technique. Une approche histo- rique, Paris, Classiques Garnier, 2012.

Armand Hatchuel est professeur de sciences de gestion à MINES ParisTech-PSL Research University. Il codirige la Chaire de théorie et méthodes de la conception innovante. Dernier ouvrage (en collaboration) : La société à objet social étendu, Paris, Presses des Mines, 2015.

Odile Henry est professeure de sociologie à l’Université Paris VIII. Spécialiste de la sociologie historique des métiers d’ingé- nieurs et d’experts, elle a récemment publié « L’entreprise, le marché et l’ordre. Ingénieurs et ingénieurs-conseils en quête de modèles d’organisation professionnelle (1922-1944) », in Antoine Derouet, Christel Palant-Frapier, Simon Paye (dir.), La production de l’ingénieur. Contributions à l’histoire sociale d’une catégorie profes- sionnelle, Paris, Classiques Garnier, 2014.

Pascal Le Masson est professeur de sciences de gestion à MINES ParisTech-PSL Research University, dont il dirige le Centre de Gestion Scientifique. Ses travaux portent sur les théories de la conception et les nouvelles formes d’organisation de l’inno- vation. Livre récent (en collaboration) : Théorie, méthodes et organisation de la conception, Paris, Presses des Mines, 2014.

Ellen S. O’Connor est aujourd’hui senior research fellow à l’Institute for Leadership Studies de la Dominican University of California. Livre récent : Creating new knowledge in management: Appropriating the field’s lost foundations, Stanford, Stanford University Press, 2011.

Lee D. Parker est professeur de management et de contrôle de gestion-comptabilité à RMIT University à Melbourne. Article récent :

ONT COLLABORÉ À CE NUMÉRO

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ONT COLLABORÉ À CE NUMÉRO

“Corporate social accountability through action: Contemporary insights from British industrial pioneers”, Accounting, Organizations and Society, 39, November 2014, p. 632 – 659.

Jean-Louis Peaucelle est docteur en sociologie, docteur en informatique et professeur de de sciences de gestion honoraire à l’Uni- versité de La Réunion. Depuis quelques années, il s’est spécialisé sur la recherche historique en gestion, et a notamment dirigé le n° 34, décembre 2003, d’Entre- prises et Histoire sur Henri Fayol. Article récent : « Un « éléphant blanc » en pleine Révolution Française : les grandes tables de logarithmes de Prony comme substitut au cadastre ! », Gérer et comprendre, n° 107, mars 2012, p. 74-86.

Blanche Segrestin est professeure de sciences de gestion à MINES ParisTech-PSL Research University et travaille sur la

théorie de l’entreprise, les capacités d’innovation collectives et les modes de gouvernance. Elle est notamment respon- sable de la Chaire Théorie de l’entreprise : Modèles de gouvernance et création collective. Elle a récemment codirigé L’entreprise point aveugle du savoir, Auxerre, Sciences humaines, 2014.

Benoît Weil est professeur de sciences de gestion à MINES ParisTech-PSL Research University et directeur adjoint du Centre de Gestion Scientifique. Il codirige la Chaire Théorie et Méthodes de la Conception Innovante. Il a récemment codirigé Les nouveaux régimes de la conception. Langages, théories, métiers, Paris, Hermann, 2014.

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© Éditions ESKA, 2016

RÉSUMÉS

EntrEprisEs Et HistoirE, 2016, n° 83, pages 153 à 156 153

— Lee D. PARKER

LE FAYOL DE LA MONDIALISATION : MANAGEMENT CONTEMPORAIN ET TRACES COMPTABLES

henri Fayol est traditionnellement connu comme un industriel français de premier plan de son époque et l’un des pères de la théorie du management dans la tradition des écoles de management classiques. Cependant l’influence de ses idées s’est diffusée bien au-delà de son périmètre initial et de l’école de pensée à laquelle il est caricaturalement rattaché. Cet article se penche sur son profil professionnel complexe, ses dispositions interdisciplinaires ainsi que sur ses contributions uniques en leur genre et pérennes à la théorie contemporaine du management et aux pratiques comptables. Ces dernières sont revues au regard de la diversité des perspective théoriques que ses idées pressentaient incontestablement.

Son orientation et ses contributions font figure d’exception et, depuis, peuvent être retracées dans les diverses dimensions contemporaines de la comptabilité, du contrôle de gestion, de la planification budgétaire et de la gestion financière. La pérennité et l’omniprésence interna- tionales de ses théories sont reflétées aussi bien par l’environnement industriel et marchand de son époque que par l’environnement mondialisé dans lequel la gestion et la comptabilité interviennent aujourd’hui.

THE GLOBAL FAYOL: CONTEMPORARY MANAGEMENT AND ACCOUNTING TRACES

Henri Fayol has traditionally been reputed as a leading French industrialist of his day who pioneered the development of early management theory in the classical management school tradition. However the influence of his ideas has spread far beyond his shores and the school of thought with which he has been stereotyped. this study reflects upon his complex professional profile, his interdisciplinary disposition and his unique and lasting contributions to contemporary management theory and accounting practices. these are reviewed with respect to the diversity of theoretical perspectives for which his ideas were arguably prescient. His unique orien- tation and contributions are also traced to their emergence in various contemporary aspects of accounting, management control, budgeting and financial management. the international durability and pervasiveness of his theories are reflected in parallels between the industrial and market environment of his day and the global environment within which management and accounting is conducted today.

— François DUFFAUT

PIERRE CHEVENARD OU LA RECHERCHE AU CŒUR DE L’ENTREPRISE MODERNE

Cet article expose d’abord l’intervention progressive de la démarche scientifique dans l’industrie sidérurgique et le développement d’une culture de l’innovation dans l’usine d’imphy. C’est en effet dans le cadre de sa vision stratégique pour cette usine qu’henri Fayol lance Pierre Chevenard dans une carrière de chercheur. L’article décrit alors les apports méthodologiques de Chevenard et en particulier sa métallurgie de précision, véritable méthode pour innover. La conclusion insiste sur la pertinence de la symbiose entre recherche et stratégie de l’entreprise, tout évoquant quelques points sur lesquels la leçon que nous a laissée Chevenard mérite d’être complétée.

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Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.