The Human Side of Enterprise

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Cfhe

D^uman

Side

of Enterprise

DOUGLAS McGregor School of Industrial Management Massachusetts Institute of Technology

McGRAW-HILL BOOK COMPANY, New York

Toronto

London

INC. 1960

THE HUMAN SIDE OF ENTERPRISE Copyright

©

1960 by the McGraw-Hill Book Company. Inc. Printed in

the United States of America. All rights reserved. This book, or parts thereof,

may

not be reproduced in any form without permission of

the publishers. Library of Congress Catalog

2223242526

VBVB

45092

Card Number 60-10608

7543210

TO MY WIFE

PREFACE

Some MITs

years ago during a meeting of the Advisory Committee of

School of Industrial Management, Alfred Sloan raised some

questions related to the issue of whether successful managers are

bom

or made.

I

—

was aware

he was

as

—

that his questions

were

not easily answered. The discussion, however, served to sharpen certain mterests I

tion of the

had had

for

many cormnon but

some time

in a systematic

examina-

inconsistent assumptions about

what

makes a manager. In 1954 the Alfred P. Sloan Foundation

Bavelas and

me

to explore

some

made a grant to Alex more fully. Bavelas'

of these ideas

some laboratory experiments, while mine centered had a common focus on a more adequate theory of management.

interests lay in

on research

in industry, but they

After Bavelas went to the Bell Laboratories in 1956, the laboratory

work waned.

I

am

not an experimentalist. Another colleague,

Theodore M. Alfred, and operation of

I

continued a comparative study of the

management development programs

in a

number

of

PREFACE

Vi

large companies.

The

subjects were a group of former Sloan Fel-

lows, but our studies ranged widely within their companies as

we

sought to learn more about the way in which theories and practices within different organizations influence the

These studies are not yet complete, but of

them and

is

making of managers. this

to a large extent the fruit of

and the opportunity

book has grown out

Mr. Sloan's questions

them afforded by the Alfred

to pursue

P. Sloan

Foundation. It

seems clear to

they are made,

is

me

that the

making of managers,

in so far as

only to a rather small degree the result of man-

agement's formal efforts in management development.

much

It is to

a

greater degree the result of management's conception of the

nature of

its

task and of

all

the policies

and practices which are

constructed to implement this conception.

managed determines

The way

to a very large extent

a business

is

what people are per-

We go off on the wrong track when we seek to study management development in terms of the formal machmery of programs carrying this label. ceived to have "potential" and

Without in the

least

how

they develop.

minimizing the importance of the work that

has been done to improve the selection of people with managerial potential, I

have come

portant problems

lie

to the conviction that

elsewhere.

Even

if

some

we

of our

enabling us to do a perfect job of selecting young capacity to

would be

become top

negligible

we have not

most un-

possessed methods

men

with the

executives, the practical gain for industry

under today's conditions. The reason

is

that

learned enough about the utilization of talent, about

human we are a long way from realizing the potential represented by the human resources we now recruit into industry. We have much to accomplish with respect to utilithe creation of an organizational climate conducive to

growth.

The blunt

fact

is

that

zation before further improvements in selection will

become impor-

tant.

This volume

human

is

an attempt to substantiate the thesis that the

side of enterprise

is

"all of a piece"

—

that the theoretical

PREFACE assumptions management holds about controlling sources determine the whole

termine also the quaUty of

VU

human

its

re-

They degenerations of manage-

character of the enterprise. successive

its

ment.

Of course

the process

and the hope of ment is: "What

circular,

is

future progress.

and herein

lies

The key question

the possibility

for top

manage-

are your assumptions (impUcit as well as expUcit)

about the most effective way to manage people?"

From

the answer

question flow the answers to the questions Mr. Sloan raised

to this in

our discussion about the making of managers, as well as answers

to

many

as

it

other questions which perplex and confound

seeks to achieve

more

successfully the

enterprise. It will be clear to the reader that I

present assumptions about the most effective are far

It is

management

economic objectives of beheve many of our

way

to

manage people

from adequate. completely impossible for

me

to

acknowledge individually

the help I have received in evolving the ideas presented here. professional colleagues, past

Many

and present, and many close friends

management have encouraged, criticized, and inspired me twenty years. I cannot hold them responsible for what is in volume, but they taught

me most

of

what

I

now beheve

I

in

for this

know

about management, about social science, and about the relevance of the latter to the former. I

have

which

tried to protect the

illustrative materials

anonymity of the companies from

have been drawn.

May

I,

however,

acknowledge with deep gratitude the time given to Mr. Alfred and

me

by some

managers

thirty

in their

former Sloan Fellows and more than a hundred

companies

to

answer our questions, the frankness

with which they were answered, and the interest these

men

took in

our studies.

To

Patricia

Macpherson,

my

secretary, I

owe much. Were

for her cheerful patience with innumerable rewritings this

book would never have been completed.

and

it

not

editings,

Viii

PREFACE

Finally, to the Alfred P. Sloan Foundation,

personally, this

book

my

and

to

sincere thanks, not only for the funds

possible but for the freedom to pursue

telligible interests

where they

my

Mr. Sloan

which made

not always in-

led.

Douglas McGregor

CONTENTS

Preface Part One.

The

Theoretical Assumptions of

Management

Management and

15

3.

Scientific Knowledge Methods of Influence and Control Theory X: The Traditional View of Direction and

Control

33

4.

Theory Y: The Integration of Individual and Organi

1.

2.

.

zational Goals

Part Two. Theory

Y

45

59

in Practice

5.

Management by

6.

A Critique

Integration and Self-control

of Performance Appraisal

7.

Administering Salaries and Promotions

8.

The Scanlon Plan

9.

10.

....

61

77

90 110

Participation in Perspective

124

The Managerial Climate

132

11. Staff-Line Relationships 12.

3

Improving

.

.

Staff -Line Collaboration

145

157

CONTENTS Part Three.

The Development of Managerial Talent

....

177

13.

An

14.

Management Development Programs

190

15.

Acquiring Managerial

207

16.

The Managerial Team

Conclusion

Analysis of Leadership

Skills in the

Classroom

179

227

244

PART ONE: THE THEORETICAL

ASSUMPTIONS OF MANAGEMENT

1 Management and

Every professional

is

Knowledge

Scientific

concerned with the use of knowledge in

the achievement of objectives: the engineer as he designs equip-

ment, the medical practitioner as he diagnoses and prescribes for the

ills

of his patients, the lawyer or the architect as he serves

his clients.

The

professional draws

upon the knowledge

of sci-

ence and of his colleagues, and upon knowledge gained through personal experience. first

The degree

to

which he reHes upon the

two of these rather than the third

is

one of the ways in

which the professional may be distinguished from the layman. It is

beginning to be possible for the industrial manager to be

a professional in this respect.

He

can draw upon a reasonable and

growing body of knowledge in the social sciences as an aid to achieving his managerial objectives.

He

need not rely exclusively

on personal experience and observation. Progress in any profession dict

One

and

control,

and

is

associated with the ability to pre-

this is true also of industrial

of the major tasks of

effort in the service of the

management

is

management.

to organize

economic objectives of the 3

human

enterprise.

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

4

Every managerial decision has behavioral consequences. Sucmanagement depends not alone, but significantly upon

—

cessful

—

human

the ability to predict and control

Our good

along these lines today

ability

some

in

behavior. spotty. It

is

is

remarkably

respects. Consider such everyday acts as

making

an appointment, signing a purchase agreement, placing a longdistance

asking a subordinate to prepare a report, making a

call,

hotel reservation, mailing a letter. In literally thousands of

we

what others

predict with a high degree of accuracy

and we control

ways

will do,

their behavior in the sense that our actions lead

to the desired consequences.

At

the

same

time,

it

is

true that other attempts at prediction

and control are quite inadequate. problems of our time

reflect

quency, crime, the high conflict, the cold

The

Many

traflBc

of the important social

inadequacy:

this

juvenile

delin-

fataUty rate, management-labor

war.

results so far achieved in the

management

of business

and

industry reflect considerable ability to predict and control hu-

man ful

The

behavior.

company

fact that a

is

economically success-

means, among other things, that management has been able

to attract people into the organization

and

to organize

and

direct

their efforts

toward the production and

at a profit.

Nevertheless, few managers are satisfied with their

sale of

goods or services

members of new developments

abUity to predict and control the behavior of the their organizations.

in this field

The

interest expressed in

an indication of management's recognition of the

is

opportunity for improvement.

The frequent

success of the out-

right charlatan in peddling managerial patent medicines also reflects

the consciousness of inadequacy.

Many managers would

agree that the effectiveness of their organizations would be at least

doubled

if

they could discover

potential present in their I share with cial sciences

human

how

to tap the unrealized

resources.

some of my colleagues

the conviction that the so-

could contribute more effectively than they have to

MANAGEMENT AND

KNOWLEDGE

SCIENTIFIC

5

human side of enterprise. why improvement has been

managerial progress with respect to the

There

are, of course,

Some have

slow.

are

in their

still

to

many

reasons

do with the

social sciences themselves: they

adolescence in comparison with the physical

ences; their findings are piecemeal

many

cision;

critical

are

issues

and

One need

relative matters,

however.

today with that

thirty years

scattered; they lack pre-

These are

in controversy.

still

sci-

only contrast the situation

ago to recognize that much has been

accomplished. The social sciences are a rich resource today for management even though they have not reached full maturity. I

am

not particularly impressed with arguments that social

do not publish

entists

their findings in

language

layman. Neither do physicists! Also, while

some

social scientists

jump

incautiously

is

it

from

sci-

intelligible to the

lamentable that

relatively precari-

ous theory to practical applications, and others refuse to concern themselves at

all

with applications, there

or

on "middlemen"

in the

form of

and the Sunday supplements

them judge the

The time

is

to interpret theory

scientific

not far off

when

enough versed

and research or

adequacy of claims or proposals.

—hke

any

a necessity to be

weU

the competent

—

other professional practitioner

will find

it

manager

in the scientific disciplines relevant to this

be able to read the

literature

and judge the adequacy of

work

to

scientific

and claims.

findings

This

are forced

social scientist consultants

or on literature intermediate between scientific journals

staff,

to help

nothing unique about

Today most managers

social science in these respects.

to rely

is

is

not to say that

we

social scientists

can ignore our re-

sponsibilities. It is to say that the position of the

the social sciences will one day be

no

manager

vis-a-vis

different than that of the

engineer vis-a-vis the physical sciences or the doctor vis-a-vis

chemistry or biology. The professional need not be a but he must be sophisticated enough to scientific

knowledge.

scientist,

make competent

use of

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

6

Every Managerial Act Rests on Theory There are some other reasons why management has been slow to

tively

utilize social science

The

especially important.

rally considers himself his

first is

own

knowledge.

Two

rela-

of these are

manager quite natu-

that every

social scientist.

His personal ex-

perience with people from childhood on has been so rich that he feels httle real

The

behavior. to

need

to turn elsewhere for

social scientist's

knowledge often appears

be theoretical and unrelated to the

must tical

deal,

and

whereas

his

own

knowledge of human

realities

to

him

with which he

experience-based knowledge

is

prac-

useful.

This frequent, invidious comparison of the practical and the theoretical with respect to the

management

has been a severe handicap to progress in

of

premature and misguided attempts to translate into action;

it

dle worthless

human

this field. It

resources

has led to

scientific findings

has permitted the quack and the charlatan to ped-

gimmicks and programs.

Every managerial act

and hypotheses

—

that

is

rests

to say,

on assumptions, generalizations, on theory. Our assumptions are

frequently implicit, sometimes quite unconscious, often conflicting; nevertheless, they determine our predictions that a,

we do

if

b wUl occur. Theory and practice are inseparable.

Next time you attend a management a policy problem

is

staff

meeting at which

under discussion or some action

is

being

considered, try a variant on the pastime of doodling. Jot

down

the assumptions (beUefs, opinions, convictions, gener-

alizations) about

human behavior made

during the discussion

by the participants. Some of these wUl be explicitly stated ("A manager must himself be technically competent in a given will

field in

order to manage professionals within

be imphcit, but

fairly easily inferred

it.").

Most

("We should

re-

MANAGEMENT AND quire the ofl&ce force to factory."). It will not

SCIENTIFIC

punch time clocks

make

problem under discussion

too a

is

KNOWLEDGE as they

do

7

in the

much difference whether the human problem, a financial

or a technical one. Tune your ear to listen for assumptions

about

human

behavior, whether they relate to an individual,

a particular group, or people in general. riety of

It is

your

list

more or

less

adequate theoretical as-

not possible to reach a managerial decision or

is

it

length and va-

will surprise you.

possible to have

sumptions;

The

take a managerial action uninfluenced by assumptions, whether

adequate or not. The insistence on being practical really means,

my theoretical The common practice

assumptions without argument or

"Let's accept test."

of proceeding without explicit ex-

amination of theoretical assumptions leads, at times, to remarkable inconsistencies in managerial behavior.

A

manager, for example,

subordinates.

When

states that

he delegates to

"People need to learn to take responsibihty," closer to the situation can ever,

his

asked, he expresses assumptions such as,

make

or,

"Those

the best decisions."

How-

he has arranged to obtain a constant flow of detailed

information about the behavior of his subordinates, and he uses this information to police their behavior and to "second-

guess" their decisions.

need to know what his behavior,

which are really

He

am held responsible, so I He sees no inconsistency in

says, "I

going on."

nor does he recognize some other assumptions

implicit:

make

is

as

"People can't be trusted,"

good decisions

With one hand, and

in line with other

he takes actions which have the

delegation.

Not only does he

cies involved,

but

if

"They

can't

in accord with certain assumptions,

he delegates; with the other, and tions,

or,

as I can."

fail

assump-

effect of nullifying his

to recognize the inconsisten-

faced with them he

is

likely to

deny them.

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

8

Another common way of denying the importance of theory to managerial behavior

is

to insist that

management

is

an

This

art.

also precludes critical examination of the theoretical assumptions

underlying managerial actions by placing reUance on intuitions

and

which are by definition not subject

feelings,

issue

is

not whether management

poses are different. Science

knowledge; management,

is

a science.

any profession,

scientific

To

insist that

those objectives.

The

knowledge

utilize

no more than a

of what

is

concerned with

is

issue

is

management

is

whether man-

achievement of

in the

an

art

is

frequently

denial of the relevance of systematic, tested knowl-

edge to practice. So long as the manager lidity of his

pur-

Its

concerned with the advancement of

is

like

the achievement of practical objectives.

agement can

The

to question.

It is not.

personal assumptions, he

available in science.

in the social sciences

is

is

And much

fails to

question the va-

unlikely to avail himself is

there.

The knowledge

not sparse, but frequently

it

contradicts

The

personal experience and threatens some cherished illusions. easy

way out

is

rejection, since

and inadequacies

in scientific

one can always find imperfecdons

knowledge.

Control Is Selective Adaptation

An

equally important reason for management's failure to

effective use of current social science

misconception concerning the nature of control in the

human

field

of

behavior. In engineering, control consists in adjustment to

nature do our bidding.

We

not, for example, dig channels in the expectation that water

wiU

natural law. It does not

do

make

knowledge has to do with a

flow uphill;

we do

mean making

not use kerosene to put out a

fire.

In designing

an internal combustion engine we recognize and adjust

to the fact

expand when heated; we do not attempt to make them behave otherwise. With respect to physical phenomena, control involves the selection of means which are appropriate to the nature that gases

of the

phenomena with which we

are concerned.

MANAGEMENT AND In the

SCIENTIFIC

KNOWLEDGE

9

human field the situation is the same, but we often dig make water flow uphill. Many of our attempts to con-

channels to trol

behavior, far from representing selective adaptations, are in

direct violation of

people behave as

we can no more

human nature. They consist in trying we wish without concern for natural

to

make

law.

Yet

expect to achieve desired results through inap-

propriate action in this field than in engineering.

Individual incentive plans provide a good example of an

attempt to control behavior which

count of "natural law"

—

fails to

in this case,

take sufficient ac-

human

behavior in the

industrial setting.

The and with fair

practical logic of incentives

that they will this logic,

work harder

we measure

is

that people

to get

more

of

want money, it.

In accord

jobs, establish standards for "a

day's work," and determine a scale of incentive pay

which provides a bonus for productivity above the standard. Incentive plans do not, however, take account of several

other well-demonstrated characteristics of behavior in the organizational setting: (1) that most people also want the ap-

proval of their fellow workers and that, will forego increased

pay

if

necessary, they

to obtain this approval; (2)

that

no managerial assurances can persuade workers that incentive rates will

remain inviolate regardless of

how much

they pro-

duce; (3) that the ingenuity of the average worker cient to outwit

is

suffi-

any system of controls devised by manage-

ment.

A

"good" individual incentive plan may bring about a

moderate increase it

may

also

haviors

(perhaps 15 per cent), but

deliberate restriction of output, hidden jigs

and

fix-

hidden production, fudged records, grievances over

tures,

rates

—

in productivity

bring a considerable variety of protective be-

and standards,

titudes

etc.

In addition,

it

generally creates at-

which are the opposite of those desired

—antagonism

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

10

toward those who administer the plan, cynicism with respect to

management's

integrity

and

fairness, indifference to the

importance of collaboration with other parts of the organization (except for collusive efforts to defeat the incentive

system). All of these results are costly, and so are the managerial

countermeasures which must be established to combat them (staff

effort,

elaborate control procedures, closer supervi-

sion, concessions with respect to rates,

down-time provisions,

setup arrangements, etc.). If the total costs of administering the incentive culated,

it

—both

program

direct

would often turn out

and

indirect

that they

—were

cal-

add up to more

than the total gains from increased productivity. Certainly the typical incentive plan

method of control

if

is

of limited effectiveness as a

the purpose

is

to motivate

human

beings

to direct their efforts toward organizational objectives.

Another

fallacy

human sire, we tend

is

often revealed in managerial attempts to con-

behavior.

trol

When we

to seek the cause

fail

to achieve the results

everywhere but where

it

we

de-

usually

our choice of inappropriate methods of control. The engineer does not blame water for flowing downhill rather than up,

lies:

in

nor gases for expanding rather than contracting when heated.

However, when people respond to managerial decisions sired ways, the normal response is to blame them. It is pidity, or their uncooperativeness, or their laziness

on

which

The

is

what happened, not management's means for control.

as the explanation of

to select appropriate

in

director of operations research in a large

unde-

their stu-

seized failure

company

is

concerned because fewer than half of the solutions to operating problems developed

adopted by the

by

his research

line organization.

He

is

team have been

currently trying to

persuade higher management to issue orders to the

line re-

MANAGEMENT AND

KNOWLEDGE

SCIENTIFIC

11

garding the implementation of certain of his findings. "If they can't recognize what's

have his is

to

assumption of the

his further

ment

for the organization, they

methods of

is

wiU

Not only

his conclusion.

is

but so also

line's stupidity incorrect,

assumption that commands from higher manage-

will solve the

"out there."

is

good

be told what to do,"

It

problem. Yet, for him, the whole problem

own

does not occur to him to question his

control.

and control are as central

Effective prediction

to the task of

management as they are to the task of engineering or of medicine. If we would improve our ability to organize and direct human effort is

toward economic ends, we must not only recognize that

so,

we must

also recognize

and correct some

common

this

fallacies

with respect to these matters.

Human

behavior

is

predictable, but, as in physical science, ac-

curate prediction hinges on the correctness of underlying theoretical all

assumptions. There

is,

in fact,

no prediction without theory;

managerial decisions and actions rest on assumptions about

behavior. If

we adopt

the posture of the ostrich with respect to

our assumptions under the mistaken idea that practical," or that

spect to the

"management

human

is

an

art,"

we

are thus "being

our progress with re-

side of enterprise will indeed

be slow. Only as

we examine and test our theoretical assumptions can we hope make them more adequate, to remove inconsistencies, and thus improve our

We

can improve our

ability to control

than in attempting to make

human

if we human

only

recognize that

nature rather

nature conform to our wishes.

our attempts to control are unsuccessful, the cause generally

lies in

our choice of inappropriate means.

We

will

be unlikely

improve our managerial competence by blaming people for to

to

ability to predict.

control consists in selective adaptation to

If

to

behave according to our predictions.

to

failing

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

12

Comrol and

Professional Ethics

human behavior

Discussions of the idea of controlling tifiable

the

apprehensions about possible manipulation and exploita-

These concerns are not new, but they

tion.

manager becomes more professional

knowledge

We

raise jus-

to achieve the objectives of the

must pause, therefore,

be intensified as

will

in his use of social science

economic

enterprise.

to consider another characteristic of the

professional: his conscious concern with ethical values. Scientific

knowledge

is

indifferent with respect to

sense (and only in this sense) science

is

be used to help mankind or

uses. In this

independent of values.

knowledge can be used for good or

Scientific

its

evil

to destroy him, as

purposes;

we have

can

it

seen so

dramatically in recent times with respect to certain applications of nuclear physics. It sional the

more ues.

is

obvious, therefore, that the

manager becomes

professional he

He must

in his use of scientific

must become

more

profes-

knowledge, the

in his sensitivity to ethical val-

be concerned both with broad social values and with

those involved in his attempts to control the

members

of his

own

organi2ation.

Management's freedom

to

manage has been

progressively cur-

our society during the past century. Legislation with re-

tailed in

spect to child labor, the

women, workmen's commany other matters reflects management. One approach to

employment

of

pensation, collective bargaining, and society's

concern with the ethics of

these problems

is

to see

all restrictions

on management

as unrea-

sonable and to fight blindly against them. This was fairly typical of industrial

proach

is

to

management a generation or two ago. The other apbecome more sensitive to human values and to exert

self-control through a positive, conscious, ethical code. It latter

is

approach which characterizes the concept of the "social

this

re-

management about which we hear so much today. Even though some managers are increasingly aware of these problems and are making sincere attempts to keep their behavior sponsibility" of

MANAGEMENT AND

in line with high ethical principles,

the ethics of

management

we have

way

a

13

go before

to

are comparable to those, for example,

many

of medicine. There are

KNOWLEDGE

SCIENTIFIC

instances in which essentially un-

defended with rationaliza-

ethical practices are either ignored or tions.

usual today for big corporations to encourage, and

It is

sometimes to require, their executives to have annual physical examinations. Not

make the management to

ual's career.

many

years ago

it

was common practice

data from these examinations available to top to use in

making decisions

affecting the individ-

Today, most large companies have a firm policy

that these personal data about the individual are shared

the doctor only with the patient himself. It

whether he

vidual

executive

known

to his superiors.

make

will

up

is

by

to the indi-

information

this

Most managements today

are scrupu-

lous in observing this policy.

Contrast this practice with that used in psychological ing

and

in the clinical diagnosis of the personahties of

tives for

test-

execu-

purposes of placement. The reference here

is

not

to initial selection but to administrative practices affecting

the career of the individual after he has

member of the organization. The data obtained from such

tests

become an accepted

and

clinical interviews

are private information which the individual gives about himself unwittingly.

not

know what

He

has, in effect,

significance will

no choice,

To

by the

test

trative

purposes seems quite clearly to be as

or the LDterviewer.

since

be placed upon

he does

his responses

use such data for adminis-

much an

inva-

sion of individual rights as to use medical data in this way.

Yet,

many companies have

opposite policies with respect to

these two kinds of information. It is

natural to expect

nomic objectives of the

management

to

be committed to the eco-

industrial organization.

However, the

his-

14

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

tory of social legislation has indicated that society will grant

agement freedom tent that

human

in

its

values are preserved and protected. Professions

like medicine, education,

and law

in general maintain high ethical

standards with respect to the influences they exert on ings. In directing the tion,

man-

pursuit of these objectives only to the ex-

management

human

human

be-

resources of the industrial organiza-

in a similar position. Here, as elsewhere in our

is

freedom

society, the price of

is

responsibility.

REFERENCES F., "Thinking Ahead: The Potentials of Management Harvard Business Review, vol. 37, no. 1 (January-Feb-

Drucker, Peter Science,"

ruary), 1959.

Gouldner, Alvin W., "Theoretical Requirements of the Applied Social Sciences," American Sociological Review, vol. 22, 1957, pp. 91102.

Selekman, Benjamin M., "Sin Bravely: The Danger of Perfectionism," Harvard Business Review, vol. 37, no. 1 (January-February), 1959.

Wilensky, Harold L., praisal of

Relations.

"Human

Relations in the Workplace:

Some Recent Research," Research

New

York: Harper

&

in Industrial

An ApHuman

Brothers, 1957, pp. 25-50.

2 Methods of

Formal

Influence

theories of organization

and Control

have been taught in management

many years, and there is an extensive Hterature on the hierarchical subject. The textbook principles of organization structure, authority, unity of command, task specialization, divicourses for

sion of staff

—

and

authority, etc. tions

line,

span of control, equality of responsibility and

—comprise

a logically persuasive set of assump-

which have had a profound influence upon managerial behav-

ior over several generations. Despite the fact that they rest pri-

marily on armchair speculation rather than on empirical research, the literature gives the impression that these classical principles are

beyond challenge. (The manual for a supervisory in

training

program

one large company suggests that the instructor point out by

analogy and example that the principles of organization are "like the laws of physics.")

Formal textbook sumptions in

many

principles

have blended into personal

as-

ways. In some instances the formal theory has

been consistent with these assumptions; sometimes there have been sharp inconsistencies. Since

it

is

15

rare for deep-rooted emotional

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

16

academic

convictions to be abandoned in favor of conflicting

some managers

theory, at least in the field of the social sciences,

simply reject the formal principles (and the "long-haired" profes-

who propound them) and

sors

retain their

own

assumptions. In

other instances there are varying degrees of accommodation be-

tween academic theory and personal conviction. Out of ess of rejection

some

this

proc-

and accommodation have come many innovations,

of which have been successful. It

is

not

difficult, in fact, to

find examples which contradict almost every one of the textbook

principles of organization.

The arguments with

respect to these

exceptions are naturally vehement, but regardless of their merit, it is

becoming clear that the

traditional prmciples fall considerably

short of being like the laws of physics.

Among many

reasons, three

are especially significant: 1.

The conventional the

models

study of

Church) which

were derived primarily from

principles

(the

differ in

military

and the Catholic

important respects from

industrial organizations. It

is

modem

a plausible idea that there

should be universal principles of organization, and that they could be derived from the study of such old and successful institutions. ciples

common

However,

to all

if

there are universal prin-

forms of organization,

it is

now

ap-

parent that they are not the ones derived by classical theorists

from the Church and the

ample, unity of

command

military.

of an organization must only have one boss) sential ple.

on the

As an exmember

(the principle that each

batdefield, but

may be

es-

not a universal princi-

it is

Whatever the organization chart may show, the typ-

ical middle-level

manager

in the

zation finds that his behavior

is

modem

industrial organi-

controlled not by one but

by several "superiors." In some companies, project groups are formed to carry out

complex

tasks,

and the members

of these groups report both to the project supervisor and

METHODS OF INFLUENCE AND CONTROL Moreover, there

to their functional superiors.

is

17

one organ-

where subordinates always have had two bosses:

ization

the family! 2.

Classical

organization

theory

from "ethnocen-

suffers

trisra": It ignores the significance of the political, social,

and economic milieu

in shaping organizations

We

encing managerial practice.

which only

faintly

The standard

live

and

influ-

today in a world

resembles that of a half century ago.

of living, the level of education, and the

complexion of the United States today profoundly

political

both the possibihties and limitations of organiza-

affect

tional behavior. In addition,

bringing about changes in the military, for example,

technological changes are types of organization. In

all

it is

becoming increasingly

dif-

manage a weapons team in the field as a typical unit was managed a couple of decades ago. Such

ficult to

infantry

a team requires a high degree of autonomy. Instead of

following explicit orders from superiors, to adjust

behavior to

its

context of relatively broad objectives. (It

note the attempts that are

made

is

interesting to

—by "programming"

for

—

to retain central control over the operations of

units.

Estabhshed theories of control are not aban-

example such

must be able

it

local circumstances within the

fit

doned

easily,

even in the face of clear evidence of thek

inappropriateness. 3.

Underlying the principles of classical organization theory are a

number

of assumptions about

human behavior which

are at best only partially true. In this respect organizational theory

nomic theory

is

in

much

the

same

state

today as was eco-

at the turn of the century.

Knowledge

ac-

cumulated during recent decades challenges and contradicts

assumptions which are

organization theory.

It will

still

axiomatic in conventional

be necessary

of these assumptions in detail.

to

examine some

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

18

—

Unfortunately, those classical principles of organization

de-

rived from inappropriate models, unrelated to the political, social,

economic, and technological milieu, and based on erroneous as-

sumptions about behavior

—continue

about the management of the

human

to

influence our thinking

resources of industry.

Man-

agement's attempts to solve the problems arising from the inade-

quacy of these assumptions have often involved the search for formulas, new techniques, new procedures. These generally

new

yield disappointing results because they are adjustments to

toms rather than causes. The

need

real

for

is

new

symp-

theory, changed

assumptions, more understanding of the nature of

human behav

ior in organizational settings.

Methods of Influence If

there

is

a single assumption which pervades conventional or-

ganizational theory

means

it is

that authority

of managerial control. This

the central, indispensable

is

the basic principle of organi-

is

zation in the textbook theory of management. of the organization

is

The very

structure

a hierarchy of authoritative relationships.

The terms up and down within the structure refer to a scale of authority. Most of the other principles of organization, such as unity of command, staff and line, span of control, are directly derived from this one.

The

first

thing to be noted about authority

is

that

it is

but one

of several forms of social influence or control. Direct physical co-

ercion

was

is

the

most powerful and the most primitive of

almost universal a few centuries ago, and

sometimes, although

its

use

is

limited

culture today. Physical coercion

is

by

we

control of small children.

We are

these. It

resort to

social prohibitions in

it

our

a legitimate means of social

control over certain forms of criminal behavior; sionally in severe labor disputes;

still

and

it

is

it

occurs occa-

common

in parental

devoting a substantial portion of

METHODS OF INFLUENCE AND CONTROL

19

most frightening

use: in

our national budget today to prevent

its

war.

Persuasion, in

many

its

In the sales

cial control.

forms, represents another means of so-

field,

cion are clearly inappropriate,

where authority and physical coer-

we

place major reliance on this type

of influence. Within management, consultation

and discussion pro-

vide at least a partial substitution of persuasion for authority. In certain kinds of relationships, but not in others, there

is

the ex-

pectation that authority or even physical coercion will be resorted to

if

persuasion

relations tions,

and

is

ineffective.

This situation

in the international field.

is

common

in labor

Within industrial organiza-

managers frequently speak euphemistically of "selling" an

idea or a course of action to

aware that

persuasion

if

thority as the

one cannot

is

means of

someone when both

control. In a genuine sales relationship

back on authority

fall

parties are fully

not successful resort will be had to au-

if

persuasion

fails.

This makes

quite a difference! Finally, there

is

the

form of influence involved

"help." While the nature of this influence

derstood,

it is

professionals

different

—

is

in professional

relatively poorly

un-

from ordinary methods of persuasion. Most

lawyers, doctors, architects, engineers

—simply

on "the authority of knowledge." Their relationships with

rely

clients

represent an extreme form of authoritarianism in which "help"

is

conceived in completely unilateral terms. They are often indifferent to the fact that the client can ignore their advice, or even

terminate the relationship, at

True professional ticated

and

sensitive individual in

consist in playing sional's larly

will.

by the exceptionally sophisany professional field, does not

help, as typified

God

knowledge and

with the skill at

client,

but in placing the profes-

the client's disposal. It

important form of social influence which

understood. detail in

We

will

have occasion to examine

Chapters 5 and 12.

is

a particu-

is

not at aU well

its

nature in some

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

20

All these methods of social control are relative; none lute.

The appropriateness

of a given form of control

is

is

abso-

a function

of several other variables. Effective control consists in "selective

adaptations" to these variables.

The engineer does not

dig chan-

nels to

make water

mands

to a customer; the superintendent does not give orders to

flow uphill; the salesman does not give

the president; a nation at

war does not

com-

offer professional help to

the enemy; the parent does not give advice to his year-old child.

The

success of any form of social influence or control depends

upon

ultimately

altering the ability of others to achieve their goals

or satisfy their needs. this ability (for

The modification may be an enhancement of

example, through the offer of a product, the pro-

vision of professional advice, or the promise of a reward)

curtailment of

it

or a

(for example, through a disciplinary action, a

jail

sentence, the termination of employment, or the threat of a pun-

ishment). Such modifications in the abiUty of the individual to

may be

minor (as

is

the

case with product advertising in mass media) or major (as

is

the

achieve goals or satisfy needs

relatively

case with the superior in an organizational relationship

who may

long-term career expectations of his subordinates in im-

affect the

portant ways). However, in either case, the influence can occur

only

when

the other.

may be is

is some degree of dependence of The dependence may be quite small

there

unilateral or mutual, but

no opportunity

how

affect

my

if

there

is

my

it

no dependence there

to control. Unless I perceive that

ability to satisfy

on

the one party

or very great,

you can some-

needs, you cannot influence

my

behavior.

Thus

the nature

and degree of dependence

is

determinmg what methods of control wUl be

a critical factor in effective.

Selective

adaptation to these aspects of organizational relationships

matter of great importance. Let us consider in a tail

what

this

means.

little

is

a

more de-

METHODS OF INFLUENCE AND CONTROL

21

The Limitations of Authority In general, both the literature on organization and

management

practice accept authority as an absolute rather than a relative concept. Little recognition is given to control as a process of selective

adaptation to such varying conditions as the nature and degree of

dependence

The consequences are Some of our most troublesome probhuman resources of industry in the United

in organizational relationships.

of considerable significance.

lems

managing the

in

States today are directly traceable to the assumption that authority is

ior

an absolute and

which flow from

The first

of

to inappropriate attempts to control

this

means of control depends

effectiveness of authority as a all

upon

behav-

assumption.

the ability to enforce

it

through the use of punish-

ment. In the two organizations which have been the models for classical organization theory, the situation with respect to enforce-

ment

clear. In the military, authority

is

is

enforceable through the

court-martial, with the death penalty as the extreme

form of pun-

ishment. In the Church, excommunication represents the psychological equivalent of the death penalty.

A

half century or

threat of

more

ago, industrial

management had,

in the

unemployment, a form of punishment which made

the use of authority relatively effective. Discharge as the ultimate

punishment was even further reinforced by yellow-dog contracts

and employer

The

blacklists.

The

situation today

social legislation of the 1930s,

is

vastly different.

unemployment compensation,

the limitations on arbitrary discharge brought about by a generation of

widespread collective bargaining, and the far greater mo-

bihty of our citizens aU serve to less severe

enforcing authority cation from the

What

make

form of punishment than it is

certainly not

Church or

it

discharge a considerably

once was. As a means of

comparable to excommuni-

to the military court-martial.

this indicates is that the

employment

relationship involves

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

22

substantially less

dependence than

ternative relationships, alternative

it

did a half century ago. Al-

ways of

satisfying needs

and

achieving goals are suflBciently available that a particular employ-

ment

relationship can be terminated with a relatively smaller loss.

Moreover, the dependence tiated limitations

further reduced

by the various nego-

on management's freedom

to exercise the au-

is

thority to discharge.

This ships

is

phenomenon

of decreased dependence in social relation-

not confined entirely to industry. Consider, for example,

what has happened

in the last fifty years in the

United States to

the position of the wife in the marital relationship, or of the older

adolescent child in the fanuly.

We

have tended to recognize more

readily in these relationships the effect of lessened dependence

upon the appropriateness of authority as a means of social control. The significance of the parallel change in the employment relationship within management or between the worker and man-

— — agement

^has

been

less well

understood.

The second limitation upon the effectiveness of authority as a means of control is the avaHabihty of countermeasures. These can range, depending upon conditions, from a minimal but relatively ineffective compliance to open rebellion. The elaborate legaUsm of certain collective bargaining relationships provides

one

illustration

of the use of countermeasures to render authority less effective.

subtle forms of sabotage of organizational objectives are

more symptoms

which suggest that management leans on a weak crutch

if it

Likewise, restriction of output, featherbedding, and other

too

much on

relies

authority today. Moreover, these countermeasures

are not limited to workers or to unionized plants. Although given different labels, restriction of output

and featherbedding can often

be observed within management! They are not unknown even at the vice-presidential level.

Less obvious, but equally effective in defeating managerial purposes, are such things as indifference to organizational objectives,

low standards of performance, ingenious forms of protective be-

METHODS OF INFLUENCE AND CONTROL havior,

and

refusal to accept responsibility.

phenomena

tice to rely less

cept in the

and

less

fact

is

that these

in daily prac-

on the exercise of personal authority ex-

crisis situation

more evident

The

most managers tend

are so familiar that

23

when

other methods

This becomes

fail.

The use of management is

the higher one goes in the organization.

commands and relatively rare.

orders within the higher levels of

This was not true

fifty

or even twenty-five years

ago.

The outstanding trial

organization

fact

is

about relationships in the

modem

indus-

that they involve a high degree of interdt-

pendence. Not only are subordinates dependent upon those above

them

in the organization for satisfying their needs

their goals, but

those below

managers

them

at every level are

for achieving both their

and achieving

dependent upon

own and

all

organizational

goals.

An

agent of the Textile Workers Union of America likes

when a new manager appeared in the mill where he was working. The manager came into the weave room the day he arrived. He walked directly over to the agent and said, "Are you Belloc?" The agent acknowledged that he was. The manager said, "I am the new manager here. When I manage a mill, I run it. Do you understand?" The agent nodded, and then waved his hand. The workers, intently watching this encounter, shut down every loom in the room immediately. The agent turned to the manto tell the story of the occasion

ager and said, "All right, go ahead and run

This

is

it."

a dramatic illustration of the fact that every manager

dependent upon those below him in the organizaThe dependence may be more pronounced it is certainly more explicit when those below are organized in a militant union. at every level is tion.

—

It is

—

nevertheless a fact whether or not workers are formally or-

ganized,

and within the management framework

trouble with focusing explicitly

as

well.

on the concept of authority

is

The that

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

24 it

dependence downwards. Some people are

blinds us to this

strongly motivated toward the managerial role because they perceive

it

as an escape

ity, their

from dependence. Their

on author-

reliance

attempted escape, tends in fact to be self-defeating.

Interdependence in organizations involves more than dependence upward and downward; Interdependence

is

it

also involves lateral dependence.

characteristic of staff-line relationships. It

equally characteristic of relationships between

many

ments (particularly where the output of one department

and

input of another),

is

it

characteristic

is

line departis

the

of the relationship

among any group of subordinates who report to a common boss. The competition which is so common within such a group for power and position and recognition pendence inherent in the

is

a reflection of the interde-

situation.

Conventional organization theory gives

pendence upward, but interdependence. This

The Church

models. is

all

is

fails

full

recognition to de-

to recognize the significance of

a result again of the theorist's choice of

rests on dependence which The ultimate source of all authority and God, and all members of the organization are, there-

as

an organization

essentially one-way.

power

is

dependent upward. In the military

fore,

war which is

it

—

built

are the conditions for

—under

the conditions of

which the military organization

individuals are required to sacrifice their personal goals

and needs

and

to the necessities of the national crisis,

to accept

dependence upward. As we have noted above, both these organizations have a

Industry,

of

all

There

means of

reinforcing this dependence.

on the other hand,

is

of us. Its ultimate purpose is

the economic organ of society, is

no superhuman source of

to serve the

common

authority; there

is

good.

no sound

basis for expecting the individual to sacrifice his personal goals or

needs for the organization (except possibly under tions), if it

no

and there

does

exist.

is

no successful way

crisis

condi-

to enforce this expectation

In a free enterprise society such as ours there

final sanction that

is

can be applied to enforce managerial author-

METHODS OF INFLUENCE AND CONTROL ity.

In

fact,

because the dependence

applied in both directions.

is

25

mutual, sanctions can be

Management can attempt

to enforce

its

authority through disciplinary action, but the individual can resign;

he can join a powerful union; he can resort to a variety of

tactics

which influence the

their

needs and to

They

are dependent

fulfill

ability of those

above him to

satisfy

their responsibilities to the organization.

upon him,

just as

he

is

dependent upon them.

fundamental, therefore, to any theory of organization that

It is

the nature of the dependency relationships be understood and al-

lowed

for.

In the social, economic, and political milieu of the

United States today the management of industry able to rely

on authority

is

becoming un-

as the sole, or even the primary,

method

of accomplishing organizational objectives through people. Its de-

pendence downward

is

too great to permit this unilateral

means

of

control.

The curve in Figure 1 is a rough schematic representation of way in which the appropriateness of authority probably varies

the

as a function of dependence.

ship

is

relatively

When

the dependence in the relation-

complete (as in a slave economy or between a

parent and a small chUd), authority can be used almost exclusively

1007c Dependence of subordinates in U.S. Industry today

Approprioteness Authority

Complete

Partial

dependence

dependence

Figure

Interdependence (equal dependence both ways) 1

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

26

without fear of negative consequences. At the other extreme,

dependence

means

is

approximately equal,

authority

is

when

useless

as

a

of control (consider the relationship between friends, for

example). In United States industry today, employees are in a relationship of partial dependence. Authority, as a tainly not useless, but for

means

many purposes

it is

of influence, less

is

cer-

appropriate than

persuasion or professional help. Exclusive reliance upon authority

encourages countermeasures, minimal performance, even open re-

The dependence

bellion.

family

—

is

—

as in the case of the adolescent in the

simply not great enough to guarantee compliance.

The Psychology of Dependence One

of the reasons

why

these limitations

on the effectiveness of would expect is that

authority are not so well recognized as one

dependence involves deep-seated emotional reactions. To be dependent to

is

in

be secure.

some ways satisfying. It is nice to be taken care of, In other ways it is frustrating. To be dependent is

to be limited in freedom, to

be subject to influences which are

frequently perceived as arbitrary and unjust.

Likewise, independence stand on one's life.

On

own

feet,

is

make

satisfying. It

one's

own

is

nice to be able to

decisions, lead one's

the other hand, independence can be threatening.

can be too far out on a limb; the

risks

own One

can be frightening.

These emotional concomitants of dependence and independence stem from a

series of universal

born into a relationship of fants

human

relatively

experiences.

Each of us

is

As inwe were

complete dependence.

and small children we would not survive unless

taken care of completely. The process of growing up involves a gradual shift out of to take

this state

more and more

The end in society is

of dependence as

we become

able

responsibility for ourselves.

product, however,

is

not independence.

No

completely independent, /w/^rdependence

is

individual

a central

METHODS OF INFLUENCE AND CONTROL characteristic of the

modern, complex

27

society. In every aspect of

we depend upon each other in achieving our goals. We do not grow our own food, make our own clothes, provide our own translife

portation or shelter, educate ourselves.

a society

we can have more

individually.

on

We

of everything

have learned that as

we want by

However, the price of speciahzation

is

specializing

dependence

others.

Growing up and learning ent relationships

is

to live in this

not without

trary emotional needs

and

its

complex of interdepend-

emotional

conflicts.

Our con-

anxieties are profoundly influential.

No

how we resolve them as we grow up, we remain sensitive when we are placed in a situation which resembles, even remotely, the dependence of infancy. To be a subordinate in an organizamatter

tion

is

to be placed in a dependent relationship

which has enough

of the elements of the earlier one to be sensitive and, under certain conditions, explosive.

The

desirable end of the growth process

a balance

—

to tolerate certain

unduly frustrated, and respects without

undue

at the

is

an

ability to strike

forms of dependence without being

same time

anxiety.

Some

to stand alone in

even a moderate amount of dependence with comfort. rebellious; is

some

of us never learn to tolerate

We

remain

any hint of the exercise of personal authority over us

threatening. Others of us tend to be

on our own. some degree

We

unhappy

if

we

are too

much

on those above and to be sure of of protection and security. The variations in these like to lean

patterns are, of course, infinite.

Whatever they

are,

few of us

achieve that degree of emotional maturity which makes us able to accept

dependence with complete

objectivity.

Dependent

rela-

tionships are sensitive ones.

Role Relationships The common-sense assumption ship

is

essentially a single,

is

that the managerial relation-

uniform one.

We

tend to think that the

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

28 boss

is

a boss

is

a boss

is

a boss. This

not the case at

is

all.

The

circumstances change from hour to hour and from day to day as the

manager undertakes

and the methods of

different activities,

influence which are appropriate shift accordingly.

In describing

all

forms of social relationships,

we

tend to

at-

more obvious characteristics and single and unchanging roles. Thus we

tach labels which define then:

which assign to the parties

speak of the parent, the husband, the friend, the manager. In each of these, however, the individual occupies a variety of different roles over time.

The

may

parent, for example,

at times

be a play-

mate, at other times a teacher, at other times an arbitrator, at other times a protector.

The

parent's behavior

and the forms of

influence he utilizes shift appreciably as the conditions

demand

different roles.

The same

thing

is

true of the manager.

At times he may be

in

the role of the leader of a group of subordinates; at other times

he

may be

a

member

of a group of his peers. Sometimes he

the role of teacher; at other times he

may be

disciplinarian, a helper, a consultant, or simply

he

is

is

in

a decision maker, a

an observer.

When how

helping a subordinate to analyze a problem and decide

to deal with

win be quite

it,

the methods he uses to influence the subordinate

different than

when he

is

dealing with a disciplinary

problem. The very nature of the relation stances change. Moreover, the

shifts

manager adopts

as the circum-

different roles as

he deals with the manager of another department, or with

his

im-

mediate superior, or with a superior several levels higher in the organization.

The managerial

role

is

not a single, invariant one, but a complex

of different roles. Ordinarily

we

adjust to the changing circum-

stances without conscious thought, but an observer wLU detect

major changes

in behavior

and

attitude,

and

in the resulting be-

havior of the other party to the relationship. Conventional theories of organization

do not recognize the

in the managerial relationship.

significance of role flexibility

METHODS OF INFLUENCE AND CONTROL in influencing behavior

most appropriate manager's

would be

of flexibility in managerial roles which

The degree

own

limited not only

is

and

theoretical assumptions

attitudes but

expectations of his subordinates. They, too, tend to

mon-sense assumption that a boss

is

29

a boss

is

by the

by the

make the comThe formal

a boss.

position which the superior occupies in the organizational hier-

archy and the emphasis upon authority as the managerial method of influence

make

it difiicult

for subordinates to perceive

spond to a boss as a colleague or as a consultant. Only ager

if

and

the

re-

man-

genuinely sensitive to the differing role requirements, and

is

in addition explicit

about the role he

learn to respond appropriately.

ably confused

when

a boss

authoritarian role in

making

is

adopting, can subordinates

latter are

sometimes consider-

has consistently occupied a single

dealings with

all his

"participative" without

The

who

is

them suddenly becomes

explicit his

own

conscious attempt

to shift his role.

Despite these

difficulties, it is clear that

the superior-subordinate relationship

mand

considerable role

flexibility. If

pothesis that appropriate control

we cannot Of

ignore

its

is

shift in

ways which de-

accept the theoretical hy-

a function of the conditions,

impUcations.

course, there are times

propriate one. It

is

do

we

the circumstances of

when

the role of boss

the only ap-

is

sometimes necessary to issue a direct order,

to take a formal disciplinary action, to terminate a subordinate's

employment. There are other instances, however, where we tend unnecessarily to think of the boss role as inevitable.

A

superior

acting explicitly as an "arbitrator" in resolving an issue between

subordinates, or in deciding eral

proposed alternatives

among

sev-

which can carry quite

dif-

upon one course

is

in a role

ferent overtones for subordinates than

if

of action

the superior

is

inflexible

in his role of boss.

The in

necessity for role flexibility sometimes places the

an impossible

situation.

cupy incompatible

This happens

when he

is

manager

forced to oc-

roles in a relationship with another individual

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

30

or a group. Performance appraisal programs, for example, often require the superior to occupy simultaneously the role of judge and the role of counselor to a subordinate.

ments are frequently required service

and advice, and

Members

of staff depart-

be

specialists offering professional

in addition,

policemen administering man-

to

agerial controls.

Obviously, circumstances which force incompatible roles on the

and confusion

individual create tension

consequent costs for the organization

The

in the relationship.

may be

We

substantial.

wiU

have occasion to examine these problems of role incompatibility further in Chapter 6,

and again

in

Chapter 12 when we consider

staff-line relationships.

From For

Physical Coercion to Selective Adaptation all

of these reasons,

would appear

it

that authority

is

an

in-

appropriate method of control on which to place exclusive reliance in

United States industry today

if

management's purpose

is

to in-

fluence behavior toward the achievement of organizational objectives. It

Under

is

obvious that

collaboration

it is

at best

cannot be dispensed with altogether.

it

certain circumstances

it

may be

essential,

but for promoting

a weak crutch.

Over the long sweep of history there have been two major sitions

with respect to the central means of controlling

havior in organizational settmgs.

The

first

was the

transition

sheer physical force to reliance on formal authority. turies.

Even today we tend

to slip

other attempts to influence faU.

dent that

we have

At

It

be-

from

took cen-

back into rehance on force when

The

transition

is

clearly further

along in the United States and Western Europe than parts of the world.

tran-

human

in

it is

the level of international relations,

some

it is

evi-

only a precarious foothold on the transitional

ladder from primitive force to "higher" forms of influence.

The second tury,

and

it

transition has

has

its

been under way for

roots deep in the past.

But

it is

at least a cen-

far

from com-

METHODS OF INFLUENCE AND CONTROL

31

plete today. In domestic politics authoritarianism is suspect; in

child rearing

we have made some

ance on authority

problems than less force

rely

A

than

it

once did; husbands in our culture can no longer to control the behavior of their wives.

difficulty is that

trending toward.

tion halfway

are not at

is

clear

all

after

some

there an answer in the simple

is

we

that

if

compromise

we can

will

we

Authority

is

sion.

that of

is

appro-

and under certain conditions.

perfectly appropriate as a

havior under certain circumstances.

wrong or bad about

—

escape from our present dilemma.

There are many alternatives to authority, not one. Each priate for certain purposes

posi-

free ourselves

are limited to a single dimension

—

less authority

what we are

trial-and-error

not an appropriate antithesis to authori-

between the extremes. Only

from the notion

more or

we

becoming evident

It is

learning that abdication tarianism, nor

reli-

more

generally recognized today to create

is

solves; in religious organizations authority carries

it

on authority major

wild swings, but exclusive

means of influencmg be-

There

giving an order or

is

nothing inherently

making a

unilateral deci-

There are many circumstances, however, when the exercise

Under such circumstances, the solution does not lie in exerting more authority or less authority; it lies in using other means of influence. of authority

achieve the desired results.

fails to

If authority is the

only tool in the manager's

to achieve his purposes very well, but

it

kit,

he cannot hope

does not follow that he

this tool. There are times when he wiU need when other tools will not be appropriate for his purposes. The power to influence others is not a function of the amount

ought to throw away it,

of authority one can exert. It priate selection of the

means

is,

rather, a function of the appro-

of influence

which the particular

cir-

cumstances require. Conventional organization theory teaches us that

power and authority are coextensive. Consequently, relinquishis seen as losing the power to control. This is a com-

ing authority

pletely misleading conception.

We

have today

at least the basic

knowledge to enable us to

dis-

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

32

among

criminate

several forms of influence

of the conditions within which each

—

limited though

it

is

—

^has

is

and

to recognize

some

appropriate. That knowledge

important implications for industral

management.

REFERENCES and Organization.

Argyris, Chris, Personality

New

York: Harper

&

Brothers, 1957.

Bakke, E. Wight, Bonds of Organization. New York: Harper & Brothers, 1950, Yale Labor and Management Series. Barnard, Chester I., The Functions of the Executive. Cambridge, Mass.: Harvard University Press, 1938. Boulding, Kenneth E., The Organizational Revolution.

Harper

&

New

York:

Brothers, 195^.

Drucker, Peter

F.,

The

New

Society.

New

York: Harper

&

Brothers,

1950.

Drucker, Peter

F.,

The Practice of Management.

New

York: Harper

&

Brothers, 1954.

Hahe, Mason Wiley

&

(ed.).

Modern Organization Theory. New York: John

Sons, Inc., 1959.

Harbison, Frederick, and Charles A. Myers, dustrial World.

New

Management

in the In-

York: McGraw-Hill Book Company,

Inc.,

1959.

Jacobson, E.,

W. W.

Role Concept

Jr., and S. Lieberman, "The Use of the Study of Complex Organizations," Journal

Charters,

in the

of Social Issues, vol. 7, no. Metcalf,

Henry C, and

L.

3,

1951.

Urwick

(eds.),

The Collected Papers of Mary Parker

&

Dynamic Administration:

Follett.

New

York: Harper

Brothers, 1942.

Simon, Herbert A., Administrative Behavior, 2d ed.. New York: The Macmillan Company, 1959. Simon, Herbert A., "Authority," Research in Industrial Human Relations.

New

York: Harper

&

Brothers, 1957.

3 Theory X: The Traditional View of Direction

and Control

Behind every managerial decision or action are assumptions about

human

nature and

ably pervasive.

ganization and in 1.

human

They

behavior.

are implicit in

much

The average human being has an inherent and will avoid it if he can.

literature of or-

dislike of

The punishment

of

work

Adam

and

Knowledge was to be banEden into a world where they had to work for a living. that management places on productivity, on the con-

for eating the fruit of the Tree of

ished from

The

few of these are remark-

current managerial policy and practice:

This assumption has deep roots.

Eve

A

most of the

stress

cept of "a fair day's work," on the evils of featherbedding and restriction of output,

on rewards for performance

logic in terms of the objectives of enterprise

ing belief that

—

—while

reflects

it

has a

an underly-

management must counteract an inherent human 33

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

34

tendency to avoid work. The evidence for the correctness of

this

assumption would seem to most managers to be incontrovertible.

Because of

2.

this

human

characteristic of dislike of work,

most people must be coerced, controlled, ened with punishment effort

The wards

them

work

is

so strong that even the promise of re-

not generally enough to overcome

the rewards

adequate

to put forth

toward the achievement of organizational objectives.

dislike of is

to get

directed, threat-

it.

People

will accept

and demand continually higher ones, but these alone

wlU not produce the necessary

effort.

Only the threat of punish-

ment wUl do the trick. The current wave of criticism of "human relations," the derogatory comments about "permissiveness" and "democracy" in industhe trends in

try,

the postwar

some companies toward

wave of

decentralization

—

recentralization after

these are assertions of

all

work under ex1957-1958 ended a

the underlying assumption that people will only ternal coercion

and

control.

The

recession of

decade of experimentation with the "soft" managerial approach,

and

this

assumption (which never really was abandoned)

is

being

openly espoused once more. 3.

The average human being to

prefers to be directed, wishes

avoid responsibility, has relatively

security

above

little

ambition, wants

all.

This assumption of the "mediocrity of the masses" pressed so bluntly. In fact, a good deal of the ideal of the worth of the average

and

social values

great

and

demand such

many managers wUl

it is

easy to see

it

rarely ex-

human

being.

Our

given to pohtical

public expressions. Nevertheless, a

give private support to this assumption,

reflected in

has become a nasty word, but gerial philosophy.

is

lip service is

pohcy and

it is

practice.

Paternahsm

by no means a defunct mana-

THEORY I

X:

THE TRADITIONAL VIEW

have suggested elsewhere the name Theory

X

35

for this set of

assumptions. In later chapters of this book I will attempt to show that is

X

Iheory

is

not a straw

in fact a theory

in a

man

for purposes of demohtion, but

which materially influences managerial strategy

wide sector of American industry today. Moreover, the prin-

ciples of organization

which comprise the bulk of the Uterature of

management could only have been derived from assumptions such human nature would

as those of Theory X. Other beliefs about

have led inevitably to quite different organizational principles.

Theory industry.

X

human

provides an explanation of some

behavior in

These assumptions would not have persisted

if

there

were not a considerable body of evidence to support them. Nevertheless, there are

many

readily observable

phenomena

and elsewhere which are not consistent with

this

in industry

view of human

nature.

Such a provides

state of affairs is

many examples

not

uncommon. The

history of science

of theoretical explanations which persist

over long periods despite the fact that they are only partially adequate. Newton's laws of motion are a case in point.

untn the development of the theory of

relativity

It

was not

during the present

century that important inconsistencies and inadequacies in

New-

tonian theory could be understood and corrected.

The growth

of knowledge in the social sciences during the past

quarter century has tions

about

human

tional setting in

made

it

possible to reformulate

nature and

human

some assump-

behavior in the organiza-

which resolve certain of the inconsistencies inherent

Theory X. While

this

reformulation

is,

of course, tentative,

provides an improved basis for prediction and control of

it

human

behavior in industry.

Some Assumptions about Motivation At

the core of any theory of the

sources are assumptions about

human

management

of

human

re-

motivation. This has been

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

36

many

a confusing subject because there have been so

among

points of view even

conflicting

social scientists. In recent years,

how-

ever, there has been a convergence of research findings and a growing acceptance of a few rather basic ideas about motivation.

These ideas appear to have considerable power. They help

Theory

plain the inadequacies of

which

following generalizations about motivation are

oversimplified. If

all

which are particularly

significant for

some

they do ignore

Man

complexities of

human

facts,

but

behavior which are

unimportant for our purposes. a wanting animal

is

another appears in

—

as soon as

—

^works,

if

Human

you please

—

one of

Man

At

is satis-

unending.

is

It

continuously puts forth effort

to satisfy his needs.

needs are organized in a series of levels

of importance.

needs

his

place. This process

its

continues from birth to death.

when

management would be ob-

do not misrepresent the

scured. These generahzations

fied,

somewhat

of the qualifications which would be required

adequate treatment were introduced, the gross essentials

truly

relatively

an en-

theory of management.

tirely different

by a

to ex-

as well as the limited sense in

correct. In addition, they provide the basis for

it is

The

X

—

a hierarchy

the lowest level, but preeminent in importance

they are thwarted, are the physiological needs.

bread alone, when there

is

Man

fives

by

no bread. Unless the circumstances are

unusual, his needs for love, for status, for recognition are inoperative

when

stomach has been empty for a while. But when he

his

and adequately, hunger ceases

eats regularly

The

need.

sated

has emptiness. of

man

A

man

The same

for rest, exercise, shelter, protection

need

is

to the

X

and

is,

from the elements.

not a motivator of behavior! This

of profound significance. It

Theory

is

a fact which

is

management

of people. I shall return to

make

it

is

a fact

unrecognized in

therefore, ignored in the conventional

ment, an example wUl

full bottle

true of the other physiological needs

is

—

satisfied

be an important

to

has hunger only in the sense that a

later.

the point. Consider your

approach

For the mo-

own need

for

THEORY air.

X:

THE TRADITIONAL VIEW

Except as you are deprived of

tivate him.

—

dominate man's behavior

Some people

where he

this,

is

he

dependent

in a

is

fears arbitrary deprivation,

The need

confident of

mistakenly refer to these as

man

needs for security. However, unless

he

mo-

to

These are the safety needs, for protection against dan-

ger, threat, deprivation.

security.

has no appreciable mo-

the physiological needs are reasonably satisfied, needs

at the next higher level begin to

tionship

it

upon your behavior.

tivating effect

When

it,

37

for the "fairest possible break."

more than

is

feels threatened or

rela-

he does not demand

When he

dependent, his greatest need

is

is

But when

willing to take risks.

for protec-

tion, for security.

The

fact needs

ployee

is

may assume tions,

little

emphasis that since every industrial em-

in at least a partially

dependent relationship, safety needs

considerable importance. Arbitrary

management

ac-

behavior which arouses uncertainty with respect to contin-

ued employment or which

reflects favoritism

predictable administration of poUcy

—

of the safety needs in the

tivators

or discrimination, un-

these can be powerful

employment

mo-

relationship at

every level from worker to vice president. In addition, the safety

needs of managers are often aroused by their dependence down-

ward or

laterally.

This

ment prerogatives and

When fearful

is

a major reason for emphasis

man's physiological needs are

about

on manage-

clear assignments of authority. satisfied

his physical welfare, his social

tant motivators of his behavior.

and he

is

no longer

needs become impor-

These are such needs as those for

belonging, for association, for acceptance by one's fellows, for givU3g and receiving friendship and love.

Management knows today is

of the existence of these needs, but

it

often assumed quite wrongly that they represent a threat to the

organization.

Many

studies

have demonstrated that the

tightly

work group may, under proper conditions, be far more effective than an equal number of separate individuals in achievmg organizational goals. Yet management, fearmg group

knit, cohesive

— THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

38

own

hostility to its

to control

and

objectives, often goes to considerable lengths

direct

human efforts in ways that are human beings. When man's

natural "groupiness" of

and perhaps in

—

his safety needs, too

ways which tend

inimical to the social needs

are thus thwarted, he behaves

He becomes

to defeat organizational objectives.

resistant, antagonistic, uncooperative.

But

this

behavior

a con-

is

sequence, not a cause.

—

Above the social needs in the sense that they do not usually become motivators until lower needs are reasonably satisfied are the needs of greatest significance to management and to man himself. They are the egoistic needs, and they are of two kinds: 1.

Those

—

that relate to one's self-esteem: needs for self-re-

spect and self-confidence, for autonomy, for achievement, for competence, for knowledge 2.

Those

that relate to one's reputation: needs for status, for

recognition, for appreciation, for the deserved respect of

one's fellows

Unlike the lower needs, these are rarely

satisfied;

man

seeks

more satisfaction of these needs once they have become important to him. However, they do not usually appear in any significant way until physiological, safety, and social needs

indefinitely for

are reasonably satisfied. Exceptions to this generalization are to

be observed, particularly under circumstances where, to severe deprivation of physiological needs,

in addition

human

dignity

is

trampled upon. Political revolutions often grow out of thwarted social

The

and ego,

as well as physiological, needs.

typical industrial organization offers only limited oppor-

tunities for the satisfaction of egoistic

levels in the hierarchy.

needs to people

The conventional methods

work, particularly in mass production industries, give these aspects of

human

management" were

at

lower

of organizing little

heed to

motivation. If the practices of "scientific

deliberately calculated to thwart these needs

THEORY

X:

—

which, of course, they are not

THE TRADITIONAL VIEW

39

they could hardly accomplish this

purpose better than they do. Finally

—

needs for

own

a capstone, as

self-fulfillment.

it

were, on the hierarchy

—

there are the

These are the needs for realizing one's

continued self-development, for being crea-

potentialities, for

tive in the broadest sense of that term.

The

conditions of

modern

industrial life give only limited op-

human needs

portunity for these relatively dormant sion.

The

to find expres-

deprivation most people experience with respect to other

lower-level needs diverts their energies into the struggle to satisfy

those needs, and the needs for self-fulfillment remain below the level of consciousness.

Now,

We

briefly, a

few general comments about motivation:

recognize readUy enough that a

man

from a severe

suffering

The deprivation of physiological needs consequences. behavioral The same is true, although less well has recognized, of the deprivation of higher-level needs. The man dietary deficiency

whose needs thwarted

is

sick.

for safety, association, independence, or status are

is sick, just

as surely as

is

he who has

sickness will have behavioral consequences. if

we

forms of behavior are symptoms of

and

his

"human

illness

—

nature." These

of deprivation of his

egoistic needs.

The man whose

lower-level needs are satisfied

to satisfy those needs.

(Remember my asks,

And

be mistaken

attribute his resultant passivity, or his hostility, or his refusal

to accept responsibility to his inherent

social

We

rickets.

will

"Why

For

point about your need for air.)

aren't people

is

not motivated

practical purposes they exist

more productive?

no

longer.

Management

We

often

pay good wages,

provide good working conditions, have excellent fringe benefits

and steady employment. Yet people do not seem put forth more than

minimum

effort." It is

to

be willing to

unnecessary to look

far for the reasons.

Consideration of the rewards typically provided the worker for satisfying his needs through his

employment leads

to the interest-

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

40

ing conclusion that most of these rewards can be used for satisfy-

mg

needs only when he leaves the job. Wages, for example,

his

cannot be spent at work. The only contribution they can make to his satisfaction

ing from

wage

on the job

in terms of status differences result-

is

one of the rea-

differentials. (This, incidentally, is

sons

why

rates

can be the subject of so much heated dispute. The issue

small and apparently unimportant differences in wage is

not the pennies involved, but the fact that the status differences

which they

one of the few ways

reflect are

need satisfaction in the job situation

sult in

Most

fringe benefits

—overtime

in

which wages can

re-

itself.)

pay, shift differentials, vacations,

health and medical benefits, annuities, and the proceeds from stock

purchase plans or profit-sharing plans

when

only

among

wages, are effort. It is

work

is

—

needed satisfaction

yield

the individual leaves the job.

Yet

these, along with

management for many wage earners

the major rewards provided by

not surprising, therefore, that for

perceived as a form of punishment which

is

the price to

be paid for various kinds of satisfaction away from the job. the extent that this

them

to

is

their perception,

undergo more of

Under

this

today's conditions

we would

punishment than

is

necessary.

management has provided

relatively

well for the satisfaction of physiological and safety needs.

standard of living in our country

major deprivation of

is

To

hardly expect

The

high; people do not suffer

their physiological

needs except during peri-

ods of severe unemployment. Even then, the social legislation developed since the

But the ical

fact that

and the

work

cushions the shock.

management has provided

and safety needs has

social

and

thirties

for these physiolog-

shifted the motivational

emphasis to the

egoistic needs. Unless there are opportunities at

to satisfy these higher-level needs, people will

be deprived;

Under such conmanagement continues to focus its attention on physioneeds, the mere provision of rewards is bound to be in-

their behavior will reflect this deprivation.

ditions,

logical

if

effective,

and reHance on the threat of punishment

will

be

inevi-

THEORY Thus one

table.

X:

THE TRADITIONAL VIEW

of the assumptions of Theory

validated, but only because

we have mistaken

X

will

41

appear to be

effects for causes.

make

insistent demands for more money under these becomes more important than ever to buy the magoods and services which can provide limited satisfaction of

People

will

conditions. It terial

money has only limited value in satneeds, it can become the focus of interest

the thwarted needs. Although isfying

many

if it is

the only

The

higher-level

means

available.

"carrot and stick" theory of motivation which goes along

with Theory

The means

X works reasonably

well under certain circumstances.

for satisfying man's physiological

safety needs can be provided or withheld

ployment

itself is

and

ditions,

By

he

is

these

means the individual can be con-

struggling for subsistence.

bread alone when there

But the "carrot and

man

limits)

such a means, and so are wages, working con-

benefits.

trolled so long as live for

and (within

by management. Em-

is little

Man

stick" theory does not

work

has reached an adequate subsistence level and

primarily by higher needs.

tends to

bread. at all is

once

motivated

Management cannot provide a man

with self-respect, or with the respect of his fellows, or with the satisfaction of needs for self-fulfillment.

such that he

is

for himself, or

We

can create conditions

encouraged and enabled to seek such satisfactions

we can

thwart him by failing to create those con-

ditions.

But sense;

this creation it

of conditions

is

not "control" in the usual

does not seem to be a particularly good device for direct-

And so management finds itself in an odd position. The high standard of living created by our modem technological know-how provides quite adequately for the satisfaction of physiological and safety needs. The only significant exception is where management practices have not created confidence in a "fair ing behavior.

break"

— and

thus where safety needs are thwarted. But by

ing possible the satisfaction of lower-level needs,

deprived

itself

of the ability to use the control

makmanagement has devices on which

— THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

42

the conventional assumptions of

X

Theory

has taught

it

to rely:

rewards, promises, incentives, or threats and other coercive devices.

The philosophy because the tively

management by

of

regardless of whether

it is

hard or

soft

human needs on which

approach

this

and control are of hmited value

inadequate to motivate

is

unimportant motivators of behavior

rection

and control

direction

—

relies are rela-

our society today. Di-

in

in motivating people

whose

important needs are social and egoistic.

work

the needs

them, behave exactly as

we might

People, deprived of opportunities to satisfy at

which are now important predict

—with

sibility,

to

indolence, passivity, unwillingness to accept respon-

resistance to change, willingness to

foUow

unreasonable demands for economic benefits.

we may be caught Theory strategy; it

X

it

purports

ing,

it

in a

web

of our

own

It

the

weaving.

explains the consequences of a particular managerial

human

neither explains nor describes to.

Because

its

nature although

assumptions are so unnecessarily limit-

prevents our seeing the possibihties inherent in other

gerial strategies.

What sometimes appear

decentralization,

management by

sion, "democratic" leadership

—

to be

new

objectives, consultative supervi-

is

side of enterprise.

The

—

is

—

tactics

na-

it is

to the hu-

that these

new

ap-

programs, procedures,

within an unchanged strategy based

In child rearing, trol

"new approaches"

real diflBculty

proaches are no more than different gadgets

human

constantly becoming disillusioned with widely

touted and expertly merchandized

man

new

implement them are

derived from the same inadequate assumptions about

Management

mana-

strategies

are usually but old wine in

bottles because the procedures developed to

ture.

demagogue,

would seem that

on Theory X.

recognized that parental strategies of con-

must be progressively modified to adapt

to the

changed capa-

and characteristics of the human individual as he develops from infancy to adulthood. To some extent industrial managebilities

ment recognizes

that the

human

adult possesses capabilities for

THEORY

THE TRADITIONAL VIEW

X:

continued learning and growth. Witness the in the fields of training

many

current activities

and management development. In

conceptions of managing

human

resources, however,

appears to have concluded that the average

43

human

its

basic

management

being

is

perma-

nently arrested in his development in early adolescence. Theory is

built

on

common human

the least

"hand" of the

past.

As

X

denominator: the factory

Chris Argyris has shown dramatically in

and Organization, conventional managerial strategies for the organization, direction, and control of the human resources of enterprise are admirably suited to the capacities and his Personality

characteristics of the child rather than the adult.

In one limited area

—

that of research administration

—

there has

been some recent recognition of the need for selective adaptation in managerial strategy. This, however, has been perceived as a unique problem, and nized.

its

As pointed out

broader impUcations have not been recog-

and the previous chapter, changes

in this

the population at large

—

in educational level, attitudes

motivation, degree of dependence tunity

in

and values,

—have created both

the oppor-

and the need for other forms of selective adaptation. HowTheory X continue to influence

ever, so long as the assumptions of

managerial strategy,

we

will fail to discover, let alone utilize, the

potentialities of the average

human

being.

REFERENCES Allen, Louis A., Hill

Book

Mu nagement and

Bendix, Reinhard,

Wiley

&

Organization.

New

York: McGraw-

Coffipany, Inc., 1958.

Work and Authority

in Industry.

New

York: John

Sons, Inc., 1956.

Brown, Alvin, Organization of Industry. Englewood

Cliffs, N.J.:

Pren-

tice-Hall, Inc., 1947.

New

York:

Pit-

Gouldner, Alvin W., Patterns of Industrial Bureaucracy. Glencoe, Free Press, 1954.

111.:

Fayol, Henri, General and Industrial Administration. man Publishing Corporation, 1949.

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

44

Koontz, Harold, and Cyril O'Donnell, Principles of Management.

New

York: McGraw-Hill Book Company, Inc., 1955. Maslow, A. H., Motivation and Personality. New York: Harper

&

Brothers, 1954.

Urwick, Lyndall, The Elements of Administration.

&

New

York: Harper

Brothers, 1944.

Walker, Charles R., Toward the Automatic Factory. New Haven, Conn.: Yale University Press, 1957. Whyte, William F., Money and Motivation. New York: Harper & Brothers, 1955. Zaleznik, A., C. R. Christensen, and F. tion,

Productivity,

and

J.

Satisfaction

The Motiva-

Roethlisberger,

of Workers:

Study. Boston: Division of Research,

A

Prediction

The Graduate School of

Business Administration, Harvard University, 1958.

4 Theory

Y:

Individual

The

Integration of

and Organizational Goals

To some, the preceding analysis we not made major modifications

will

appear unduly harsh. Have

in the

management

not recognized the importance of people and

made

human Have we

of the

resources of industry during the past quarter century?

vitally signifi-

cant changes in managerial strategy as a consequence?

Do

the

developments since the twenties in persormel administration and labor relations add

There

is

up

to nothing?

no question

that important progress has

been made in

the past two or three decades. During this period the

human

side

become a major preoccupation of management. A tremendous number of poHcies, programs, and practices which were virtually unknown thirty years ago have become common^be he worker, profesplace. The lot of the industrial employee of enterprise has

—

sional, or executive

—has improved

to a degree

which could hardly

have been imagined by his counterpart of the nineteen twenties.

Management has adopted

generally a far 45

more humanitarian

set

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

46

of values;

it

has successfully striven to give more equitable and

more generous treatment

to

its

employees.

has significantly re-

It

duced economic hardships, eliminated the more extreme forms of industrial warfare, provided a generally safe

ing environment, but its

it

lias

done

all

and pleasant work-

these things without changing

fundamental theory of management. There are exceptions here

and

there,

and they are important; nevertheless, the assumptions remain predominant throughout our economy.

X

of Theory

Management was

subjected to severe pressures during the Great

The wave of pubhc antagonism, the open warfare accompanying the unionization of the mass producDepression of the

thirties.

tion industries, the general reaction against authoritarianism, the legislation of the

New

However, the changes

Deal produced a wide "pendulum swing." in

pohcy and practice which took place dur-

and the next decade were primarily adjustments

ing that

increased

power of organized labor and

to the

to the pressures of public

opinion.

Some

movement was away from "hard" and toward "soft" management, but it was short-Uved, and for good reasons. It has become clear that many of the initial strategic interpretations accompanying the "human relations approach" were as naive of the

which characterized the early stages of progressive edu-

as those cation.

We

have

now

discovered that there

simple removal of control

—

that abdication

ternative to authoritarianism. direct correlation

We

We

is is

no answer

in the

not a workable

have learned that there

is

al-

no

between employee satisfaction and productivity.

recognize today that "industrial democracy" cannot consist in

permitting everyone to decide ever3'thing, that industrial health

does not flow automatically from the elimination of dissatisfaction, disagreement, or even open conflict. Peace organizational health; sociaUy responsible

is not synonymous with management is not co-

extensive with permissive management.

Now power,

that it

management has regained

its

earlier prestige

and

has become obvious that the trend toward "soft" man-

.

THEORY

Y:

the INTEGRATION OF GOALS

agement was a temporary and

47

relatively superficial reaction rather

than a general modification of fundamental assumptions or basic strategy.

Moreover, while the progress we have made in the past

quarter century ishing returns.

substantial,

is

The

it

has reached the point of dimin-

tactical possibilities within

conventional man-

have been pretty completely exploited, and significant new developments will be unhkely without major modifiagerial strategies

cations in theory.

The Assumptions of Theory

Y

There have been few dramatic break-throughs

in social science

theory like those which have occurred in the physical sciences

during the past half century. Nevertheless, the accumulation of

knowledge about human behavior in many specialized

made

fields

has

number of generalizations which new theory with respect to the management of human resources. Some of these assumptions were outlined in the discussion of motivation m Chapter 3. Some others, possible the formulation of a

provide a modest beginning for

which 1

will hereafter

be referred to as Theory Y, are as follows:

The expenditure

not inherently dislike conditions,

and mental effort in work is The average human being does work. Depending upon controllable

of physical

as natural as play or

rest.

work may be a source

of satisfaction (and will

be voluntarily performed) or a source of punishment (and will 2.

be avoided

if

possible).

External control and the threat of punishment are not the only means for bringing about effort toward organizational objectives,

Man

will exercise self-direction

trol in the service of objectives to 3.

Commitment

to objectives

is

e.g.,

and is

self-con-

committed.

a function of the rewards as-

sociated with their achievement.

such rewards,

which he

The most

significant of

the satisfaction of ego and self-actu-

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

48

alization needs,

can be direct products of

effort directed

toward organizational objectives.

The average human being

4.

learns,

under proper conditions,

not only to accept but to seek responsibility. Avoidance of responsibility, lack of ambition, and emphasis on secu-

consequences of experience, not inherent

rity are generally

human The

5.

characteristics.

capacity to exercise a relatively high degree of imagi-

nation, ingenuity,

and

zational problems

is

creativity in the solution of organi-

widely, not narrowly, distributed in

the population.

Under the conditions of modern

6.

industrial

lectual potentialities of the average

human

life,

the intel-

being are only

partially utilized.

These assumptions involve sharply managerial strategy rather than static:

They

and development; they

for

indicate the possibility of

human growth

stress the necessity for selective adaptation

rather than for a single absolute

framed

different implications

than do those of Theory X. They are dynamic

in terms of the least

form of

common

control.

They

are not

denominator of the factory

hand, but in terms of a resource which has substantial potentialities.

Above the limits

all,

the assumptions of Theory

on human collaboration

are not limits of

how

discoveruig resources.

human

Y

point up the fact that

in the organizational setting

nature but of management's ingenuity in

to realize the potential represented

Theory

X

offers

management an easy

for ineffective organizational performance: It

of the

human

resources with which

is

by

its

human

rationalization

due to the nature

we must work. Theory Y, on

the other hand, places the problems squarely in the lap of

agement.

K

employees

sponsibiUty, intransigent, uncreative, uncooperative. plies that the causes lie in

and control.

man-

are lazy, indifferent, unwilling to take re-

Theory

Y

im-

management's methods of organization

THEORY The assumptions

the INTEGRATION OF GOALS

Y:

of Theory

theless, they are far

more

Y

49

are not finally validated. Never-

consistent with existing knowledge in

Theory X. They

the social sciences than are the assumptions of

undoubtedly be refined, elaborated, modified as further re-

will

search accumulates, but they are imlikely to be completely contradicted.

On ever,

may

the surface, these assumptions

difl&cult to accept. is

not seem particularly

Carrying their implications into practice, how-

not easy. They challenge a number of deeply ingrained

managerial habits of thought and action.

The

Principle of Integration

The

central principle of organization

X is that of direction and control

—what has been

of conditions such that the

own

through the exercise of authority

The central

called "the scalar principle."

which derives from Theory

their

which derives from Theory

goals best

of the enterprise.

Y

is

members

by directing

of the organization can achieve

their efforts

toward the success

These two principles have profoundly

imphcations with respect to the task of managing but the scalar principle

so firmly built

is

principle

that of integration: the creation

human

different

resources,

mto managerial

attitudes

that the implications of the principle of integration are not easy to perceive.

Someone once ical

—

so

^is

it.

said that fish discover water last.

—

environment" of industrial management

much

a part of organizational

that

we

water for are

fish

unaware of

Certain characteristics of our society, and of organizational

within

it,

policies

—

it

life

we cangreat many

are so completely established, so pervasive, that

not conceive of then- being otherwise.

be

life

The "psycholog-

^like

As

a result, a

and practices and decisions and relationships could only

seems

Among

—what they

are.

these pervasive characteristics of organizational

the United States today

is

life

in

a managerial attitude (stemming from

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

50

Theory X) toward membership is

in the industrial organization. It

assumed almost without question that organizational require-

ments take precedence over the needs of individual members. Basically, the

employment agreement

which are

that in return for the rewards

offered, the individual will accept external direction

The very

control.

is

idea of integration and self-control

is

and

foreign to

our way of thinking about the employment relationship. The tendency, therefore,

is

either to reject

consciously until

The concept

it fits

A

if

is

it

manager

its

be more effective in achieving

members.

in a large, geographically decentralized

notified that

he

is

position at headquarters. It

being promoted to a poUcy level is

a big promotion with a large

salary increase. His role in the organization

more powerful one, and he

will

will

be a much

be associated with the major

executives of the firm.

The headquarters group who selected him for this position have carefully considered a number of possible candidates. This man stands out among them in a way which makes him the natural choice. His performance has been under observation for

some

time,

and there

is little

question that he pos-

sesses the necessary qualifications, not only for this opening

but for an even higher position. There

is

genuine satisfaction

that such an outstanding candidate is available.

The man

is

he expresses in the

appalled.

it,

is

company."

to

He

He

He and

his

doesn't want the job. His goal, as

be the "best damned

district

manager

enjoys his direct associations with oper-

and he doesn't want a policy level wife enjoy the kind of life they have created

ating people in the field, job.

or

un-

its

adjustments are made, in significant ways,

and goals of

district

socialistic,

nature) or to twist

existing conceptions.

tion that the organization will

company

out of hand (as

of integration and self-control carries the implica-

economic objectives to the needs

it

human

anarchistic, or inconsistent with

THEORY in a small city,

and the

ditions

He

the INTEGRATION OF GOALS

Y:

and they

both the living con-

dislike actively

social obligations of the headquarters city.

expresses his feelings as strongly as he can, but his ob-

The

jections are brushed aside.

that his refusal to accept the able.

51

organization's needs are such

promotion would be unthink-

His superiors say to themselves that of course when he

has settled in to the

And

right thing.

Two

new

job,

he

will recognize that

was the

it

makes the move.

so he

years later he

an even higher position

in

is

company's headquarters organization, and there

in the

talk that

is

he wUl probably be the executive vice-president before long. Privately he expresses considerable unhappiness faction.

He

(and

in the situation

he

left

and

would "give anything"

his wife)

dissatis-

to be

back

two years ago.

Within the context of the pervasive assumptions of Theory X,

promotions and transfers in large numbers are made by unilateral

The requirements

decision.

of the organization are given priority

automatically and almost without question. If the individual's personal goals are considered at of salary

and position

tually refuse such a

all, it is

will satisfy

move without

health or a severe family

crisis,

assumed

that the rewards

him. Should an individual aca compelling reason, such as

he would be considered to have

jeopardized his future because of this "selfish" attitude.

It is

rare

indeed for management to give the individual the opportunity to

be a genuine and active partner in such a decision, even though it

may

affect his

tions following to suffer

if it

unilateral

most important personal

from Theory

The is

goals.

Yet the implica-

are that the organization

ignores these personal needs and goals. In

decisions with respect to promotion,

failing to utilize its

human

is

hkely

making

management

is

resources in the most effective way.

principle of integration

and the

Y

demands

that both the organization's

individual's needs be recognized.

a sincere joint effort to find

it,

Of

course,

when

there

an integrative solution which

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

52

meets the needs of the individual and the organization

quent outcome. But not always

Theory

Y

begms

appear

to

—and

this is the

unrealistic. It collides

pervasive attitudes associated with

is

a fre-

point at which

management by

head on with direction

and

control.

The assumptions

of Theory

Y

imply that unless integration

achieved the organization will suffer. The

is

objectives of the organi-

zation are not achieved best by the unilateral administration of

promotions, because

this

form of management by direction and

commitment which would make availthose affected. The lesser motivation,

control will not create the able the full resources of

the lesser resulting degree of self-direction and self-control are costs which,

more than good of

One

when added up

offset the gains

many

instances over time, will

obtained by unilateral decisions "for the

the organization."

other example wUl perhaps clarify further the sharply dif-

ferent implications of It

for

Theory

X

and Theory Y.

could be argued that management

is

already giving a

great deal of attention to the principle of integration through its efforts

in the field of

of dollars and

much

economic education. Many millions

ingenuity have been expended in attempts

to persuade employees that their welfare

is

intimately con-

nected with the success of the free enterprise system and of their

own

own

companies. The idea that they can achieve their

goals best by directing their effort toward the objectives

of the organization has been explored and developed and

communicated

management

in every possible way. Is this not evidence that

is

already committed to the principle of inte-

gration?

The answer

is

a definite no. These managerial efforts, with

rare exceptions, reflect clearly the influence of the assumptions of

Theory X. The central message

the industrial employee to

is

an exhortation to

work hard and follow orders

m

THEORY

Y:

the INTEGRATION OF GOALS

order to protect his job and his standard of

has been achieved, ning industry, and

it

is

required.

much more to

Much

living.

by our established way of run-

says,

would adapt themselves

53

could be achieved

management's

if

employees

definition of

what

Behind these exhortations hes the expectation

that of course the requirements of the organization

economic success must have

and

its

priority over the needs of the

individual.

Naturally, integration of the enterprise so

we

means working together

all

may

management's impHcit assumption

is

adjusting to the requirements of the

means organization as management

that working together

perceives them. In terms of existing views, that individuals, seeking their

of the enterprise.

On

for the success

share in the resulting rewards. But

own

the contrary, this

it

seems inconceivable

would further the ends

goals,

would lead

to anarchy,

chaos, irreconcilable conflicts of self-interest, lack of responsibility, inability to

make

decisions,

and

failure to carry out those that

were

made. All these consequences, and other worse ones, would be inevitable unless conditions could be created such that the

members

of the organization perceived that they could achieve their goals best

by

prise. If the

tion

To

is

directing their efforts

assumptions of Theory

own

toward the success of the enter-

Y

are valid, the practical ques-

whether, and to what extent, such conditions can be created.

that question the balance of this

The Application of Theory

volume

is

addressed.

Y

In the physical sciences there are

many

theoretical

phenomena

which cannot be achieved in practice. Absolute zero and a perfect

vacuum

are examples. Others, such as nuclear power, jet aurcraft,

and human space

flight,

ble long before they

are recognized theoretically to be possi-

become

feasible.

This fact does not

make

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

54

theory less useful.

If it

were not for our theoretical convictions, we

would not even be attempting space today. In

flight into

fact,

to develop the

were

it

means

for

human

not for the development of

we

physical science theory during the past century and a half,

would

be depending upon the horse and buggy and the

stUl

ing vessel for transportation. Virtually

all significant

sail-

technological

developments wait on the formulation of relevant theory. Similarly, in the try,

management

the assumptions and theories

human about human

of the

resources of indus-

nature at any given

time hmit innovation. Possibihties are not recognized, innovating are not undertaken, until theoretical conceptions

efforts

groundwork for them. Assumptions

like those of

X

Theory

a

lay

permit

us to conceive of certain possible ways of organizing and directing

human

but not others. Assumptions like those of Theory

effort,

possibilities for

As in the case of the some of these possibilities

practices.

theory,

Y

new managerial policies and development of new physical science

open up a range of

are not immediately feasible,

and others may forever remain unattainable. They may be too cosdy, or

may be

it

that

we simply cannot

discover

how

to create

the necessary "hardware."

There tialities

is

substantial evidence for the statement that the poten-

of the average

human

being are far above those which

we

typically realize in industry today. If our assumptions are like those

of Theory X,

or

money

we wUl not even

and there

potentialities

will

to discovering

recognize the existence of these

be no reason to devote time,

how

to realize them. If, however,

cept assumptions like those of Theory Y, to discover

to innovate,

human

effort,

we

ac-

will

be challenged

of organizing

and directing

even though we recognize that the perfect organiza-

tion, like the perfect

We

new ways

we

effort,

vacuum,

is

practically out of reach.

need not be overwhelmed by the dimensions of the man-

agerial task implied

by Theory Y. To be

sure, a large

mass pro-

duction operation in which the workers have been organized by a militant

and

hostile

union faces management with problems which

THEORY

Y:

the INTEGRATION OF GOALS

55

appear at present to be insurmountable with respect to the application of the principle of integration. It sufficient

knowledge

will

may be

decades before

have accumulated to make such an ap-

Theory Y will have to be tested ways and under more favorable circum-

plication feasible. Applications of initially in

stances.

more

limited

However, a number of applications of Theory

Y

in

man-

aging managers and professional people are possible today. Within the managerial hierarchy, refined, techniques

use.

As knowledge

the assumptions

can be tested and

can be invented and skUl acquired in

their

accumulates, some of the problems of appli-

cation at the worker level in large organizations

may appear

less

baffing than they do at present. Perfect integration of organizational requirements and individual goals

and needs

this principle,

is,

we

of course, not a realistic objective. In adopting

seek that degree of integration in which the in-

dividual can achieve his goals best

by

directing his efforts toward

the success of the organization. "Best"

win be more

attractive than the

difference, irresponsibility, It

means

that

he

many

means

that this alternative

others available to him: in-

minimal compliance,

will continuously

hostility, sabotage.

be encouraged to develop and

utilize voluntarily his capacities, his

knowledge, his skiU, his in-

genuity in ways which contribute to the success of the enterprise.^ 1

A

recent, highly significant study of the sources of job satisfaction

dissatisfaction

among managerial and

professional people

suggests

and that

these opportunities for "self-actualization" are the essential requirements of

both job satisfaction and high performance. The researchers find that "the wants of employees divide into two groups. One group revolves around the

need to develop in one's occupation as a source of personal growth. The second group operates as an essential base to the first and is associated with fair treatment in compensation, supervision, working conditions, and administrative practices. The fulfillment of the needs of the second group does not motivate the individual to high levels of job satisfaction and . to on the job. All we can expect from satisfying [this second group of needs] is the prevention of dissatisfaction and poor job per.

.

extra performance

formance." Frederick Herzberg, Bernard Mausner, and Barbara Bloch Snyderman, The Motivation to Work. New York: John Wiley & Sons, Inc., 1959, pp. 114-115. (Italics mine.)

THE THEORETICAL ASSUMPTIONS OF MANAGEMENT

56

Acceptance of Theory

Y

does not imply abdication, or "soft"

management, or "permissiveness." As was indicated above, such

means

notions stem from the acceptance of authority as the single of managerial control, and from attempts to minimize

consequences. Theory direction

and

Y

assumes that people

and

commitment

self-control will

ternal controls

committed

is

small, only a shght degree of self-direction likely,

and a substantial amount of external

wUl be

it is

large,

many

relatively superfluous,

conventional ex-

and

to

some

extent

Managerial poUcies and practices materially

self-defeating.

affect

degree of commitment.

Authority

is

to objectives. tion, for

an inappropriate means for obtaining commitment

—

Other forms of influence

example

—

help in achieving integra-

are required for this purpose. Theory

to the possibility of lessening the emphasis

control to the degree that

can be achieved. ity of

human

Its

commitment

theless,

it is

pomts

to organizational objectives

beings for self-control, and the consequent possibihty

on other means of

clear that authority is an appropriate

under certain circumstances

ment

Y

on external forms of

underlying assumptions emphasize the capac-

of greater managerial reUance

Y

to those objectives.

be

influence will be necessary. If

this

negative

self-control in the achievement of organizational ob-

jectives to the degree that they are If that

its

will exercise self-

—

particularly

to objectives cannot be achieved.

influence.

means

Never-

for control

where genuine commit-

The assumptions

of

Theory

do not deny the appropriateness of authority, but they do deny it is appropriate for all purposes and under all circumstances.

that

Many

statements have been

acquired today the cal problems

know-how

which may

to

arise,

made

to the effect that

we have

cope with virtually any technologi-

and that the major

industrial ad-

vances of the next half century wUl occur on the human enterprise.

side of

Such advances, however, are improbable so long as direct and control its human

management continues to organize and resources on the basis of assumptions

—

tacit

—

or expUcit

like those

THEORY

Y:

the INTEGRATION OF GOALS

57

of Theory X. Genuine innovation, in contrast to a refurbishing and

patching of present managerial strategies, requires

ance of

less limiting

resources

we

Y

is

the accept-

human

seek to control, and second the readiness to adapt

selectively to the implications contained in those

Theory

first

assumptions about the nature of the

new

assumptions.

an invitation to innovation.

REFERENCES Brown,

J.

A. C, The Social Psychology of Industry. Baltimore: Pen-

guin Books, Inc., 1954. J., New Frontiers for Professional Managers. New York: McGraw-Hill Book Company, Inc., 1956. Dubin, Robert, The World of Work: Industrial Society and Human

Cordiner, Ralph

Englewood

Relations.

Cliffs, N.J.:

Prentice-Hall, Inc., 1958.

Friedmann, Georges, Industrial Society: The Emergence of the Human Problems of Automation. Glencoe, III.: Free Press, 1955. Herzberg, Freaerick, Bernard Mausner, and Barbara Bloch Snyderman, The Motivation to Work. New York: John Wiley & Sons, Inc., 1959.

Krech, David, and Richard Social Psychology. Inc.,

Theory and Problems of York: McGraw-Hill Book Company,

S. Crutchfield,

New

1948.

Harold J., Managerial Psychology. Chicago: University of Chicago Press, 1958. McMurry, Robert N., "The Case for Benevolent Autocracy," Harvard Business Review, vol. 36, no. 1 (January-February), 1958. Leavitt,

Rice, A. K., Productivity

and Social Organizations: The Ahmedabad

Experiment. London: Tavistock Publications, Ltd., 1958. Stagner, Ross, The Psychology of Industrial Conflict. New York:

John Wiley

&

Sons, Inc., 1956.

PART TWO: THEORY Y IN PRACTICE

5 Management by and

Self-control

Let us

now

Integration

consider in some detail a specific illustration of the

operation of a managerial strategy based on Theory Y. cept of

"management by

The con-

objectives" has received considerable at-

tention in recent years, in part

due to the writings of Peter Drucker.

However, management by objectives has often been interpreted in a

way which leads to no more than a new set of tactics within a management by direction and control. The strategy to be illustrated in the following pages is an appU-

strategy of

cation of Theory Y. create a situation in

Its

purpose

is

to

encourage integration, to

which a subordinate can achieve

his

own

best

by

It is

a deliberate attempt to link improvement in managerial

directing his efforts

goals

toward the objectives of the enterprise.

com-

petence with the satisfaction of higher-level ego and self-actualization needs. It

is

thus a special and not at

conventional conception of

all

management by 61

a typical case of

objectives.

th-B

.

THEORY Y

62

IN PRACTICE

This Strategy includes four steps or phases:

The The

1

2.

clariScation of the broad requirements of the job

establishment of specific "targets" for a limited time

period 3.

The management process during

4.

Appraisal of the results

Harry Evans

Vice President,

is

the target period

Staff Services, for

a manufac-

company with twenty plants throughout the Middle West and the South. The company is aggressively managed and finan-

turing

cially successful;

growing

it is

fairly rapidly

through acquisition of

smaller companies and the development of

new markets

for

its

products.

Evans was brought President,

who

felt

into the

company

three years ago by the

that the staff functions of the organization

needed strengthening. One of the President's concerns was the personnel department, which had been something of a stepchild since

it

was established

agement needed a

He

in the early forties.

and guidance

lot of help

felt that

the

in order to

man-

fulfill its

responsibilities in this field.

Tom for a

Harrison has been Director of Personnel Administration

little

number

sionally as ise as

less

than a year. Evans selected him from

of candidates. Although he

some

is

of his colleagues, he appeared to have

an administrator.

bitious, personable, a

He

is

in his

among a

not as well trained profes-

young

good prom-

forties, intelligent,

am-

hard worker with ten years of practical ex-

perience in personnel administration.

After Harrison had been on the job a few months, Evans had

formed the following impressions about him: 1. He is overly anxious to make a good impression on top

management, and

this interferes

too carefully to see which sails

accordingly.

He

way

with his performance. the

wind

is

He

watches

blowing and trims his

accepts even the most trivial assignments

from any of the top management group, which makes a good im-

:

MANAGEMENT BY INTEGRATION AND SELF-CONTROL pression but does

little

63

to strengthen the personnel function.

He

has done nothing to change the rather naive top management expectation that personnel administration can be delegated to a staff

department ("You take care of the personnel problems and we'll run the business."). 2.

Harrison

is

a poor manager, somewhat to Evans's surprise,

since he appeared to function well with responsibilities.

He

more

limited supervisory

uses his subordinates as errand boys rather

is much too ready to impose upon them own practical and common-sense views of what should be done,

than as resources, and he his

brushing aside their specialized professional knowledge.

He

is

anx-

ious to reorganize the department, giving key responsibilities to

men

like himself

who have

practical experience but limited pro-

fessional training.

These things added up, in Evans's eyes, to an inadequate conception of the nature of the personnel job and the proper role of the department within the company.

He

recognized the value of

management's acceptance of Harrison's practical orientation, but the real needs of the company would not be met unmanagement acquired a quite different point of view with respect to the function. He was not at all inclined to replace Harrison, since he believed he had the capacity to perform effectively, but he recognized that Harrison was not going to grow into the job

he

felt that

less

without help. His strategy involved the four steps listed below. Step

Determining the Major Requirements of the Job. Evans

1.

suggested to Harrison that he would like

him

to give

some

inten-

sive thought to the nature of his job in the light of his experience

so

far.

He

sibihties,

asked him to

list

what he

he wished, but not limiting himself to cuss with you at it

felt to

be

his

major respon-

using the formal position description in his possession

some

it.

He

if

said, "I'd like to dis-

length your view of your job after being

on

for the past eight months."

The

list

of requirements which Harrison subsequently brought

in for discussion with

Evans was

as follows

THEORY Y IN PRACTICE

64 1.

Organization of the Department

2.

Services to top a.

management

Awareness of company problems and provision of programs and policies for solving them

3. Productivity of the

Department and

administration of personnel programs

a. EfiBcient

services b.

Definite assignments of projects to staff with completion dates

c.

and follow-up

Periodic appraisals of the performance of department

members, with appropriate action 4. Field relations a.

Providing the

field units

with advice, adequate pro-

grams, information b. Periodic visits to assure the

adequacy of

field

personnel

units

Harrison and Evans had several lengthy discussions of of responsibilities. Evans began by saying,

"Tom,

I

this list

asked you to

bring to this meeting a written statement of the major require-

ments of your job as you see them. Perhaps you expected define your job for you, to I

were to do

so,

it

you what

tell

would not be your

job.

I

want you

Of

me

to

to do. If

course, I don't ex-

pect that I will necessarily see eye to eye with you on everything

you have written down.

common

We

purpose:

I

do take

it

for granted that

we have

a

both want yours to be the best damned

personnel department anywhere.

"The is

that

I say list

difficulty

if I

we

are Ukely to have in discussing your ideas

disagree with you, you'll feel you have to accept what

because I'm your boss.

that

we

I

want

to help

are both completely satisfied with, but I can't help

you simply defer

to

my

ideas or

if

I don't

of dominating you. So try to think of

me

we can

if

express them for fear as a colleague

experience and knowledge are at your disposal

I'm certain

you end up with a

resolve any differences that

—not

as

whose

your boss.

may come

up."

MANAGEMENT BY INTEGRATION AND SELF-CONTROL In the course of the discussion

Evans did bring up

65

his concerns,

but he put major emphasis on encouraging Harrison to examine his

own

ideas critically.

of the

ties

company

Evans talked quite frankly about the

situation as

reali-

he saw them, and he discussed

his conception of the proper role for a personnel department. tried to

He

persuade Harrison that his conception of the personnel

own

function was too limited, and that his

of their training and experience, could help

subordinates, because

him

more

arrive at a

adequate conception. Harrison held a couple of meetings with his

own department

staff to discuss this

whole question, and

after

each of them he had further conversations with Evans.

The

critically significant factor in these discussions

was not

content, but the redefinition of roles which took place.

ceeded, by his manner

more than by

their

Evans suc-

his specific words, in con-

veying to Harrison the essential point that he did not want to

occupy the conventional role of boss, but rather, to the extent possible, the role of a consultant

knowledge and experience that they

who was

putting

all

fullest

of his

at Harrison's disposal in the conviction

had a genuine common

interest in Harrison's

doing an

outstanding job.

As he began

to sense this,

perception of his

own

and

to believe

it,

Harrison's whole

role changed. Instead of seeking to find out,

would be natural under conventional circumstances, how Evans wanted him to define his job, what Evans wanted him to do, what as

Evans would approve or disapprove, Harrison began to think for freedom about his

himself. Moreover, with this greater sense of

own

role

ceive his to use

The

(and with Evans's open encouragement) he began to per-

own

them

result, unreafistic as

matic change

The

it

may seem

at first glance,

in Harrison's perception of himself

was a dra-

and of

his job.

true nature of the change that took place during these discus-

sions with final

subordinates not as "hands," but as resources, and

thus.

Evans and with

his subordinates

statement of his responsibilities as he

was revealed

now

in his

perceived them:

THEORY Y

66

IN PRACTICE

1.

Organization of the Department

2.

Continuous assessment of both short- and long-run com-

pany needs through: a.

Exploration in the

b.

General awareness of management's problems

c.

Exploration of the views of members of the Depart-

d.

ment Knowledge

of external trends

Professional help to

3.

field

all levels

a.

Problem solving

b.

Strategy planning

c.

Research studies

d. Effective

management

personnel programs and policies

Efficient administration of services

e.

members

4.

Development of

5.

Personal development

This

of

first

staff

step in Evans's managerial strategy with Harrison

thus consistent with his that Harrison

commitment

must take the major

velopment, but he believes he can help. tion as an active process

opinion and argument.

may

He

Theory Y.

to

responsibility for his

He

is

beheves

own

de-

conceives of integra-

which inevitably involves differences of

He

recognizes the likelihood that Harrison

accede too readily to his views without real conviction, and

he does not want

this to

happen. Consequently he attempts to

establish a relationship in

which Harrison can perceive him as a

genuine source of help rather than as a boss in the conventional sense.

He knows

take time, but tant. Since

will If

is

the long-term results which he considers impor-

he does not expect that Harrison

overnight, he

which

that the establishment of this relationship will

it is

is

Harrison

is

grow

into his job

prepared to accept a definition of Harrison's job

considerably short of perfection.

be improved

will

six

He

is

confident that

months hence when they discuss

it

it

again.

going to learn and grow in competence, and

if

MANAGEMENT BY INTEGRATION AND SELF-CONTROL he

is

going to find opportunities to satisfy his higher-level needs

in the process,

it is

his job. This

unlikely

is

he

essential that

position description or

the job

if

find a genuine challenge in

him by a formal who simply tells him what

defined for

is

by a superior

he wants done. Thus, the principle of integration right at the start. It

work

67

is

not necessary in applying

of the organization planning

However, a position description it is

is

is

important

to ignore the

necessity for a logical

any organization

division of responsibihties within

jacket unless

The

staff.

it

to

likely

is

obvious.

become a

strait

recognized to be a broad set of guidelines within

which the individual hterally makes

his

ovm

job.

The conception

of an organization plan as a series of predetermined "slots" into

which individuals are

selectively placed denies the

whole idea of

integration.

The process involved

at this

step

is

similar,

limited in scope, to the one so aptly described

covering "what business

ment looking

we

although more

by Drucker

are in." In the case of top

as dis-

manage-

at the organization as a whole, this frequently

highly instructive experience.

a limited setting such as

doing something

like

The same

this,

Evans

is

is

a

thing can be true even in

especially

if

the superior can, by

doing, encourage the subordinate

to think creatively about his job.

Step 2. Setting Targets. their discussion of the

When Evans and

Harrison finished

major requirements of Harrison's job, Evans

suggested that Harrison think about some specific objectives or targets

which he might

set for himself

and

his

department during

the following six months. Evans suggested that he think both about

improving the over-all performance of his unit and about his personal goals.

what

steps

you

to

want

own

asked him further to consider in broad terms

he proposed to take to achieve these

said, "I don't like

He

to

tell

you how

to

targets.

do your job, but

I

Evans

would

do some careful thinking about how you are going to

proceed. Perhaps I can be helpful

when we

discuss your ideas."

Finally, Evans asked Harrison to consider what information he

THEORY Y IN PRACTICE

68

would

and how he might obtain

require,

the end of the period targets.

He

how

well he

it,

in order to

had succeeded

in

know

at

reaching his

when

suggested that they get together to talk further

Harrison had completed his thinking and plannmg along these lines.

This

is

the planning phase, but again the process

the subordinate

is

one

encouraged to take responsibility for

is

performance. The conventional process

in

which

his

own

one in which objectives

is

are conceived by higher levels and imposed on lower levels of the

The

organization.

rationale

available the broader

extent this

is

true,

is

that only the higher levels have

knowledge necessary

but there

is

for planning.

To some

an important difference between

the kind of planning in which a central group determines in de-

what each division or department

tail

the central group communicates sirable over-all objectives it

will do,

and

what are beheved

and asks each unit

to

that in to

which

be the de-

determme what

can contribute.

Even when general ally

objectives are predetermined, they can usu-

be limited to certain aspects of performance such as produc-

tion goals, costs,

and

profit margin.

There are other aspects which

are subject to local determination, as

is,

of course, the planning

with respect to personal objectives.

The important

from Theory

theoretical consideration, derived

and commitment to objectives. Genuine commitment is seldom achieved when objectives are externally imposed. Passive acceptance is the most that can be expected; indifference or resistance are the more likely consequences. Some Y,

is

that the acceptance of responsibility (for self-direction

self-control)

is

correlated with

degree of mutual involvement in the determination of objectives is

a necessary aspect of managerial planning based

This

is

embodied

on Theory Y.

in Evans's suggestions to Harrison.

In the discussion of targets, the superior again attempts a helping role rather than an authoritative one. His primary interest

is

MANAGEMENT BY INTEGRATION AND SELF-CONTROL in

helping the subordinate plan his

own

69

job in such a fashion that

both personal and organizational goals will be achieved. While the superior has a veto ercise

it

only

To be

if it

power by

sure, subordinates will

particularly the

virtue of his position, he will ex-

becomes absolutely necessary.

first

sometimes

set unrealistic goals,

time they approach a task like

ence has indicated that the usual problem

this.

Experi-

that the goals are set

is

too high, not too low. While the superior can, through judicious advice, help the subordinate adjust unrealistic goals, there

may

often be greater long-run advantages in permitting the subordi-

him where

nate to learn by experience than in simply telling

planning

The

list

Evans was 1.

of targets which Harrison brought for discussion with this:

Determination of major company needs, long and short range, by: a.

management management

Field visits and discussions with local

b. Intensive discussions with top c.

Exploration of the views of the personnel department

A

plan, with assignments of responsibility,

staff

schedule will be worked out for

this. I

expect

and a time

we can com-

plete the study within six months, but a report

quent plans

will

and subse-

probably not be completed by September.

determination with department

2. Joint

staff of

current proj-

ects

This 3.

his

unrealistic or inadequate.

is

will involve

planning such as you and

Development of departmental Items

1

learning

staff

and 2 can be a vehicle for

how

particularly

to

work

on how

better with

I are doing.

members this. I

my

need help in

subordinates, and

to eliminate the friction

between the

old-timers and the college-trained youngsters.

THEORY Y

70

IN PRACTICE

Self-development

4.

a.

do some reading

I'd like to

to

improve

—

ing about personnel administration

my own

think-

maybe

take a

or

university course. I'd like your advice. b.

much

haven't gained as

I

guess

I

need. I hear rumblings that

I

happy with me about

this,

a manager as

skill as

some of my

but I'm not sure what

is

are not

staff

do something

as a boss. I'd like to

way

the best

to

proceed.

Development of a good plan of organization

5.

for the de-

partment In working through some of the above projects,

some good ideas about how we ought

I'll

get

up

as a department.

Since the working relationship between the two quite

weU

think

I

to be set

men had been

established during their earher discussions, there

comfortable give and take at as a crucial

Evans saw the

this stage.

one which could become the

conception of the department's

role.

He

basis for

an

target

entirely

felt also that it

new

could be

extremely educational for Harrison provided he tackled sensitivity

was a

first

it

with

and an open mind. Accordingly he spent several hours

helping Harrison to think through his strategy for determining the needs of the tion.

company with

respect to personnel administra-

Harrison began to see that

which he could work toward

Evans had

all

this

project

was a means by

the other targets

on

his

list.

after Harrison's earlier experiences in

little difficulty

persuading him to involve his subordinates in developing plans for the project.

He

him

and evaluate

He

to discuss

—and

felt

said

suggested that Harrison continue to meet with

—

son to begin improving his

They agreed

this

process for a couple of months.

that this might be the best

own managerial

that Harrison

for Harri-

would explore possible university

programs during the next few months to see might meet his needs a

method

skills.

little later.

if

some one

of these

Meanwhile, they worked out a

— MANAGEMENT BY INTEGRATION AND SELF-CONTROL reading

list

71

and a plan for an occasional session when Harrison

could discuss his reading. In view of the nature of the personnel function, and the particular

problems facing Harrison, the targets did not lend them-

selves to quantitative sible

measurement such

as might have

been pos-

a production operation. Nevertheless, Harrison, under

in

Evans's tutelage, worked out a fairly detailed plan with specific steps to be accomplished est

was

tliat

by the end of

accomplishments

at the

Evans brought

your plans, and

I

have

if

He

want

said, "I don't

up on you from week

to week.

confidence that you will

full

reach your targets.

free to seek help

my

own

into the discussion the question of their relation-

position of checking

lieve

months. Evans's inter-

end of the period.

ship during the ensuing period.

effort to

six

Harrison would have a basis for evaluating his

On

you want

the other hand, I it.

be in a

to

These are

make

want you

There are ways

in

experience can be useful to you. Suppose

every to feel

which

we

I be-

leave

it

on your initiative as often as you wish not for you to report how you are doing, but to discuss any problems which you would like my help on, or any major revisions in your plans." Thus Evans helped Harrison still further to perceive that we'll get together

the role that he wanted to occupy as a superior, clarify his

Step

3.

own

and thus

also to

responsibihties as a subordinate.

The Ensuing Period. Since

this is a

managerial strategy

rather than a personnel technique, the period between the estab-

lishment of targets and the evaluation of accomphshment as important as the

first

period will depend upon the

is

just

What happens during this unique circumstances. The aim is to

two

steps.

further the growth of the subordinate: his increased competence, his full acceptance of responsibihty

(self-direction

trol), his ability to achieve integration

quirements and his

own

and

self-con-

between organizational

re-

personal goals.

In this particular situation Evans's primary interests were two: (1) the emergence throughout the

company

of a

more adequate

THEORY Y IN PRACTICE

72

conception of the personnel function, and (2) the development of a competent department which would provide leadership and pro-

aU

fessional help to

He

function.

management with

levels of

felt that,

as a result of steps

respect to this

and 2 of

1

his strategy,

Harrison too was committed to these objectives. Moreover, he was

persuaded that Harrison's project for assessing company needs

—

in the field of personnel administration

highly promising

means

to these ends.

must be careful on two counts. too

fast.

The company

First

situation

was

as

now

conceived

He warned

—was a

himself that he

he must not expect too much in

no sense

critical

and there

was no need for a crash program. Harrison's project was certain to

be a valuable learning experience for him and his

staff.

Second, Evans recognized that

was

if

the best learning

to occur,

he must curb his natural tendency to step in and guide the project. Harrison would

make

mistakes; at his present level of sophistica-

he would quite possibly

tion task.

fail to

appreciate the fuU scope of the

more would be gained if he those occasions when Harrison sought his

Nevertheless, Evans decided

limited his influence to help.

This

been

is

what he

justified.

did.

He and

His confidence in Harrison proved to have

more

his staff tackled the project with

in-

genuity and sensitivity than Evans would have imagined possible

and began rather quickly

to

understand the true dimensions of the

problem. Harrison came in one day to

tell

him

cided to extend their explorations to include versity centers in order to take

some

top-flight

that they

visits to

had de-

several uni-

advantage of the point of view of

academic people. Also, they planned to

test

some

of their emerging ideas against the experience of several other

companies. After

this discussion,

and the evidence

it

provided concerning

the expansion of Harrison's intellectual horizons

and the use he

was making of the resources represented by his subordinates, Evans stopped worrying. He would bail them out if they got into trouble, but he anticipated no such necessity.

MANAGEMENT BY INTEGRATION AND SELF-CONTROL At

Step 4. Self-appraisal.

the end of August, Harrison reminded

Evans (not vice versa!) that the want a report?" was

73

six

his question.

months was up. "When do you Evans responded that a report

was not what he wanted, but Harrison's own evaluation of what he had accomplished with respect to the targets he had set six months earlier.

Said Evans, "This can give you a basis for planning for

the next six months."

A

week

Harrison brought the following notes to a dis-

later

cussion with Evans. Appraisal, September 1 1.

Determination of major company needs: a.

The

field

work

b.

My

staff

and

involve a in this

completed.

is

working on a proposal that

I are

new conception

company.

We

wiU have a

with you within thirty days, and a

full

day to

let

will

of personnel administration draft for discussion

we want you

to take

us present our findings and proposals

to you. c.

The

results of

our work make

it

clear that

we have an

educational job to do with top management, and I want

my

to include a plan along these lines in

next set of

targets.

2. Joint determination with staff of current projects. I

now

conducting a set of target-setting meetings with

department

staff as

a whole in which

we

plans for the next year. All major projects

—

group

nmg

will

individual or

be followed by individual plan-

sessions.

Development of department a.

are laying our

—

are being discussed out in detail there. These de-

partment meetings

3.

am my

The major changed

my

I'm learning

project

staff

members

we have been

ideas about several of

how

to

carrying out has

my

work with them, and

subordinates. it's

clear they

THEORY Y IN PRACTICE

74

are growing.

Our

show you what b. I've

appreciated

it

will

target-setting

ap-

mean.

how much your

my

proach has helped ing to use

month

presentation to you next

I

development, and I'm attempt-

with each of

my

subordinates. Also, I think

the departmental planning mentioned under 2 above

is

a developmental tool. I've been talking with some

B

people in the

I'm excited about

Company who do this and in our own company.

its possibilities

Self-development

4.

AH

can say

I

is

I've learned

than in the previous

more

in the past six

months

five years.

Departmental organization

5.

I haven't

done a thing about

portant right now.

We

seem

it.

It

doesn't

seem very im-

to be able to plan our

as a department pretty well without developing a setup. Perhaps we'll

need to come back to

this

work

new

during the

next six months, but there are more important things to

be done 6.

first.

General comment I

would

six

rate myself considerably lower than I

months ago

sibilities

of

my

in terms of

The tail.

his

man

up

to

would have

well I'm filling the respon-

job. It's going to take

years to measure of the

how

me

what you have a

in this spot, but I think I

a couple of

right to expect

can do

it.

discussion of this self-appraisal went into considerable de-

Evans

own

felt that

strengths

Harrison had acquired quite a

little

insight into

and weaknesses, and they were able

to discuss

objectively where he needed to give thought to improving his

com-

petence further. Harrison, for example, opened up the whole his "yes-man" attitude in dealing with top management and pointed out that his exploratory interviews with some of these men had resulted in increased self-confidence. He said, "I

problem of

MANAGEMENT BY INTEGRATION AND SELF-CONTROL think

maybe

future. self,

I

can learn to stand up for

You have

and that

I

me

helped

my

to realize that I can think for

can defend myself

in

75

ideas better in the

my-

an argument."

They agreed to postpone Harrison's discussion of plans for the next six months until after the one-day session at which Evans would meet with the whole department. "Then," said Harrison, "I to talk over with you a new statement of my responsibilities

want

which I'm working on."

Managerial Strategy versus Personnel Techniques The most important tegration

and

management by ina strategy a way of man-

point with respect to

self-control

is

that

it is

—

The tactics are worked out cumstances. Forms and procedures are of aging people.

stress this point

since

because

it

has been

some of my colleagues and

target setting, to

I

my

in the Ught of the cirrelatively httle value. I

frequent experience, ever

began to talk publicly about

have people send or bring

the heading "self-appraisal")

me

forms (often with

with the request that I

tell

them

means of installing a new program. management a program of target setting, and providing standardized forms and procedures, is the surest way to prevent the development of management by integration and self-control. The manager who finds the underlying assumptions of Theory Y whether

"this is all

right" as a

"Selling"

congenial will invent his

own

tactics

provided he has a conception

The manager whose underlying assumpTheory X cannot manage by integration and

of the strategy involved. tions are those of self-control If

a

staff

no matter what techniques or forms are provided him. department

is

interested in the potential values of tar-

get setting, the approach will be to devise

agement to examine of

its

its

means of

getting

man-

assumptions, to consider the consequences

present strategy and to compare

it

with others.

The

tools for

building this managerial philosophy are attitudes and beliefs about

people and about the managerial role, not manuals and forms.

THEORY Y

76

IN PRACTICE

Often such a development of management by integration and self-control begins with

egy and discovers his

his

own

strat-

value. Soon, his subordinates are following

its

example, and before long others around him are asking ques-

tions tial

an individual who develops

and considering

steps are taken

own

their

tion, the

growth of the idea

can

anywhere.

start

staff will

this is

As

may be more

interest begins to

rapid, but the process

be shown by others, the

often face the problem of persuading

not a

new gimmick and

formal machinery which for a

applications of the idea. If the ini-

by a manager toward the top of the organiza-

is

of fending off

management that demands for the

so often seen as the only requirement

new personnel program.

Managers who have undertaken self-control report that the strategy

not be

clarified,

to is

manage by

and

integration

time-consuming. Roles can-

mutual agreement concerning the responsibihties

of a subordinate's job cannot be reached in a few minutes, nor can

appropriate targets be established without a good deal of discussion. It is far quicker to

and

to inform

him

hand a subordinate a

of his objectives for the

however, the strategy

perceived as a

is

requires less policing of subordinates

by growth

in managerial

way

position description

coming period. of

and which

If,

managing which is

accompanied

competence, the expenditure of time

will

be accepted as natural. This approach does not tack a existing managerial load. It existing responsibihties

a

—

is critical

new

set of duties

rather, a different

on top of the

way

of fulfilUng

of "running the job." I have yet to

manager who has made

who

is,

meet

effective use of this managerial strategy

of the time required. Several have said, "If this isn't

the primary job of the manager,

what

is?"

6 A

It

Critique of Performance Appraisal

will

be instructive to contrast the strategy of management by

integration

and

self-control with a

more

familiar one utilizing per-

formance appraisals. Performance appraisal

often perceived

is

simply as a technique of personnel administration, but where

used for administrative purposes strategy, the implicit logic of

to direct their efforts

ment must

tell

it

which

it is

becomes part of a managerial is

that in order to get people

toward organizational objectives, manage-

them what

to do, judge

how

well they have done,

and reward or punish them accordingly. This strategy varies in detail

from company

to

company, but

in general

it

includes the

following steps: 1.

A

formal position description, usually prepared by

stajff

groups, which spells out the responsibilities of the job,

determines the limits of authority, and thus provides each individual with a clear picture of

what he

is

supposed to

do. 2.

Day-by-day direction and control by the superior within the limits of the formal position description.

77

The

superior

THEORY Y

78

IN PRACTICE

assigns tasks, supervises their performance and, of course, is

expected to give recognition for good performance and

criticize

poor performance, correct mistakes, and resolve

difficulties in the

3.

A

day-to-day operation,

periodic, formal

summary

of the subordinate's per-

formance by the superior, using some kind of a standardized rating form. Typically, the rating will include judg-

ments concerning the quantity and quality of the subordinate's

work; his attitudes toward his work and toward the

company

(loyalty, cooperativeness, etc.); such personaUty

characteristics as his abihty to get along with others, his

judgment, and his reactions under

stress;

and

over-all

judgments of his "potential" and of his readiness for promotion. 4.

A

which the superior communicates

session in

his judg-

ments to the subordinate, discusses the reason for them,

and advises the subordinate on ways

in

which he needs to

improve. 5.

The subsequent use

of the formal appraisal

the administration of salaries, promotions,

development programs,

by others

in

management

etc.

Variations of these procedures are utilized to improve the objectivity of the superior's

judgment among discrimination.

judgments, to increase comparability of

different superiors,

and to improve the fineness of utilize multiple judgments

For example, some plans

obtained independently from several superiors or developed in a

group

setting;

some

utilize the

series of quite specific

"forced choice" method in which a

judgments are translated into general scores

know the weigh tmg of individual items and know how he has evaluated the subordinate

(the superior does not

presumably does not

until the results are calculated).

grams for training superiors techniques.

Many companies

in rating procedures

and

conduct proin counseling

A CRITIQUE OF PERFORMANCE APPRAISAL

79

Appraisal programs are designed not only to provide more systematic control of the behavior of subordinates, but also to control the behavior of superiors. For example,

an appraisal program

will force the superior to face

of poor performance and deal with them, that

communicate

it is

it

believed that

up

to problems

will force

him

to

to his subordinates his judgments of their perform-

ances, etc.

A considerable spect to the in practice.

way

amount of experience has accumulated with rewhich this general strategy tends to work out

in

How well

does

it

achieve

its

purposes? Let us see.

The Position Description First,

formal position descriptions provide management with an

orderly picture of the organization that people

and the comfortable conviction

know what they are supposed to do. They establish command and they delimit authority so that

formal chains of

people will not interfere with each other. Position descriptions are a basis for an equitable salary classification scheme, provided

it is

recognized that at best they yield only a rough picture of reality.

However, they are not a

particularly realistic device for telling

people what to do. Within the managerial hierarchy that

any job

is

it is

doubtful

performed the same by two successive incumbents,

same incumbent over any long period of time. Not only do conditions change, but so do skills and relative abiUties, and perceptions of priorities. Companies would utilize less of their or by the

human

resources than they

now do

their position descriptions rather

Management

at

if

managers were to adjust to

than the other

way around.

middle and lower levels makes

little

actual use

of position descriptions. Typically, they are glanced over

when

they are received in order to determine whether they coincide with

common-sense preconceptions, and then they are filed away and Many research studies show up substantial differences

forgotten.

in the perceptions of subordinates

and superiors concerning the

re-

— THEORY Y IN PRACTICE

80

quirements and priorities of the positions of the former. Position descriotions do not often produce the clarity of understanding they

are designed to provide.

Organizations which really attempt to use position descriptions for control purposes (government agencies, for example) stimulate

a substantial of which tions

is

amount

of managerial behavior the primary purpose

to defeat the system.

by managers

to enable

hire a particular person

who

The

them

juggling of position descrip-

do what they want

to

does not

fit

a classification,

—

salary adjustment, legitimize a promotion

non

is

a

to

do

make

a

common phenome-

such organizations. The neat systems are often rendered in-

in

effective

by these countermeasures.

Organization planning groups sometimes attempt to eliminate these difficulties by a participative approach in which individual

incumbents of jobs are encouraged to help the their this

own knowledge

staff

by contributing

to the writing of the job description.

While

process undoubtedly reduces the resistance to the whole idea,

it is

doubtful whether

it

results in greater use of the position de-

scriptions themselves for direction

and control of behavior.

The dimensions of a managerial position can be precisely defined only for a particular

incumbent

stances at a given point in time. fect the

1.

in a particular set of circum-

Among

the variables which af-

"shape" of the position are the following:

The way

in

which superiors, subordinates, and colleagues

are performing their jobs. The position of a sales vice president, for example, will be vastly different

if

the presi-

dent of the organization has had his major exprience in sales

than

it

wUl

if

the president's experience has been

in research or in manufacturing. 2.

The

individual's qualifications.

These include

his experi-

ence and competence which change over time and thus lead

him to perceive the requirements of and to perform differently.

ferently

his position dif-

A CRITIQUE OF PERFORMANCE APPRAISAL 3.

The

4.

The

individual's personal interests.

81

These are related

to,

but not identical with, his qualifications, individual's assumptions about his role as a

His position to 5.

will

which he delegates

The

manager.

be different depending upon the degree responsibility, for example.

constantly changing requirements of the external situ-

ation.

Economic

conditions, pecuharities of the market,

political circumstances, competitive conditions,

and a host

of other variables require changes in performance which affect the nature of the job.

At two

different points in time, perhaps a year apart, a given

position might change

from being

like

Figure

1 to

being like Fig-

ure 2.

Figure

Figure 2

1

Meanwhile, the formal position description look like the rectangle in the figures. Even to keep position descriptions

up

to date

is

likely to

when

and to

continue to

there are attempts

relate

them

closely

to the incumbents' views of their responsibilities, the variations in

the real dimensions of the jobs are rarely captured.

Apart from providing guides for salary administration and some help in hiring and placement, the chief values of position descriptions are

(1) to satisfy the needs of organization planners for

order and systematization, and (2) to provide reassurance to top

THEORY Y IN PRACTICE

82

management what

to do.

him

that everyone has a piece of paper which tells

The danger

is

make

that both these groups will

the

mistake of assuming that the descriptions represent reahty.

Appraisal: The Administrative Purpose

now how One of

Let us consider achieves

its

purposes.

well

appraisal process

the

these purposes

the results of appraisal are used for salary administration,

demotion, and termination. There are

transfer,

tion,

itself

administrative:

is

promo-

difficulties

here, too.

In the dijfferent

first

problem of variation

place, the

in the standards of

judges has never been completely solved, nor have

succeeded in eliminating the

effects of bias

praisal used (whether

and the amount of

upon

judges will be

the particular

method of ap-

"How

its

use, but they

The answer given by an has

superior's psychological

we

mak-

involves multiple judgments, for example)

training given in

stantial nevertheless.

the question:

it

in

among

ing appraisal judgments. These variations greater or smaller depending

and prejudice

A

done?"

make-up

is

as

much

remain sub-

appraisal

form

to

a function of the

as of the subordinate's perform-

ance. If

we

to use

then take these somewhat questionable data and attempt

them

to

make

fine discriminations

between people for pur-

poses of salary administration and promotion, pretty picture, but one which has fairly

little

we can

create a

relation to reality.

Using

simple procedures, and some safeguards against extreme bias

and prejudice,

it is

probably

fair to

between the outstandingly good, the

say that

we can

satisfactory,

discriminate

and the unsatis-

When, however, we attempt to use the results make discriminations much finer than this, we are quite probably deluding ourselves. The fact is that many salary administration and promotion plans use appraisal results to make

factory performers.

of appraisal to

A CRITIQUE OF PERFORMANCE APPRAISAL

83

discriminations considerably smaller than the margin of error of

the original judgments.

The problem poses

is

of judging performance for administrative pur-

further complicated

formance

is,

by the

any individual's per-

fact that

to a considerable extent, a function of

how he

is

man-

For example, the individual who operates best when he

aged.

given quite a bit of freedom

may

find himself

provides close and detailed supervision.

is

under a superior who

Under

these conditions,

even the most objective measures of his performance

will

provide

a better basis for judging his boss than him! Finally,

it is

judgments

relatively easy to find evidence that the

which managers make of

their subordinates'

performances

differ

depending upon whether they are used for administrative purposes.

One company used formal

appraisals for several years

simply as a basis for consultation between the superior and his subordinates. file,

The

appraisal forms were kept in a central

but with the understanding that they would not be used

for any administrative purpose.

As

a result of certain changes in top management, a con-

cern developed that there was too

much "deadwood"

company. The

in the

were

in-

structed to go through the appraisal forms in the central

file

managerial organization of

this

in order to locate individuals

showed no

particular

who

staff

had, over a period of time,

improvement

in performance,

managers of these individuals were instructed

to

and the

do some-

thing to change this behavior or terminate the relationship. It

was further announced

that the periodic appraisals

would

henceforth be used for administrative purposes.

The next set of appraisals showed a drastic revision upward. Most of the "deadwood" had disappeared from the distribution,

although not from the organization. Thus, top

THEORY Y IN PRACTICE

84

management's attempt

through

control

to

appraisals

the

brought about a change, but not quite the one that had been intended. It

would seem

be a

something

praisals are salaries,

to

fair generalization that

less

performance ap-

than a perfect tool for administering

What about

promotions, transfers, and terminations.

their

value in achieving their informative purpose? Are they an ade-

quate means for letting the subordinate

Appraisal:

stands?

The Informative Purpose

characteristic of

It is

know where he

human

beings that they find

to

it difficult

hear and accept criticism. Judgments which are positive can per-

haps be communicated

municate This a

critical

common

dilemma.

to be asked to

but

it is

rather difficult to

with the appraisal interview

difficulty

criticism in the

effectively,

com-

judgments without generating defensiveness.

If

well illustrated

by

communicate

his

the superior attempts to

form of abstractions and

be more

is

The

specffic, to give illustrations.

nate feels that the generalizations for correcting his behavior.

If,

he

generalities,

is

likely

subordi-

do not give him a sufficient basis

on the other hand, the superior

attempts to communicate in terms of concrete illustrations, he likely to find himself

to

show

that there

illustration

on the defensive

is

as the subordinate attempts

were extenuating circumstances surrounding any

which he brings up.

In attempting to communicate criticisms to a subordinate the superior usually finds that the effectiveness of the communication inversely related to the subordinate's need to hear serious the criticism, the less likely If the

superior

is

insistent

is

The more

the subordinate to accept

enough, he

may be

negative judgments to a subordinate, but often finds that he has done serious

it.

damage

tween them. Since the appraisal interview

is

is

it.

able to convey his

when

this

happens he

to the relationship be-

an important occasion

A CRITIQUE OF PERFORMANCE APPRAISAL during which the attempt

complete evaluation,

it

is

made

85

to give the subordinate a rather

carries substantial overtones for him. It

accentuates his dependence and thus readily arouses latent anxie-

and

ties

hostilities. Critical

when

than

they are

made

judgments in

this setting

mean

more

far

with respect to specific incidents in the

day-to-day relationship. Criticism of the latter type does not threaten the person himself as

do the more general evaluative

judgments communicated in connection with a formal appraisal,

and thus they are easier to hear and respond to. It is an open question whether subordinates

want

know where

to

they stand. It

great majority will insist that they is

true that

is

do want

when

asked, the

know. However,

it

possible to interpret this expressed desire in several ways. It

may mean,

am

for example, "I don't

know whether my

boss feels I

doing an adequate job because he says so Uttle about

formance in our day-to-day relationship.

and

I

This

would

certainly like to

know whether he

my

per-

am

doing well,

feels the

same way."

I feel I

not necessarily the desire for a cold-blooded, objective

is

evaluation. It

reassurance.

may be an

If,

expression of anxiety and of a need for

in fact, the individual

ation involves only fill

to

in general really

minor

the need. If the individual

intensify the anxiety

is

doing well, and the evalu-

criticisms, the appraisal interview is

and make

it

may

not doing well, the interview wiU

extremely

difi&cult for

him

to re-

act realistically.

other individual, mean, "I

know where he stands may, for anknow that I am doing a relatively poor

job in some respects, but

hope the boss

The expressed

like to

"I

be sure

know

am

I

recognition for

how good

I

desire to

I

this is the case." Still

is

not aware of

doing an outstanding job, and it

from the boss.

He

it.

I

would

another meaning might be,

doesn't

I

would

seem

to

like

more

be aware of

am."

These and many other

attitudes are the natural

consequence of

the situation in which the responsibility for evaluation rests, not

on the individual himself, but on the boss.

If

our managerial

strat-

THEORY Y

86

egy emphasizes

IN PRACTICE

dependence,

this childlike

this

on teacher's grade, we should not be surprised

schoolboy reliance if

the reactions to

an objective appraisal are sometimes immature.

There

another aspect of the appraisal interview as a com-

is still

munications device. Since most appraisals involve the superior's evaluation of attitudes and personality jective

performance, there

in addition to ob-

traits,

an invitation inherent in the situation

is

to invade the personaUty of the subordinate. Recognizing the deli-

cacy of

this situation,

many managements encourage

the superior

to use the interview for "counseling" purposes. It

can be stated categorically that few managers are competent

to practice psychotherapy.

interview, in

Moreover, the situation of the appraisal

which the superior

is

in the role of a judge,

The

poorest possible one for counseling. tionship

is

one in which the counselor

neither criticizes nor praises,

is

the

effective counseling relais

a neutral party

and whose concern

is

who

solely for the

To attempt to counsel in a much a travesty as to attempt

health and well-being of the chent.

formal appraisal interview

is

as

The manager,

bribery of a victim during a holdup.

judgments about a subordinate,

is

and clearly in the minds of

his behavior in certain ways,

both

the recognition that the superior

him

he does not change. Surely

if

fective counseling,

The

role of judge

Appraisal:

even

if

and the

making

implying that he needs to

change is

in

is

in a position to punish

this is

not a situation for ef-

the superior

is

skilled in psychotherapy.

role of counselor are incompatible.

The Motivational Purpose

Finally, consider the motivational purpose of appraisal.

common-sense assumption falling

down

Clearly

it

will

will

is

that telling an individual

The

where he

is

provide effective motivation to get him to change.

not do so unless he accepts the negative judgment

and agrees with

it.

We

have already seen that

this is

not too likely

A CRITIQUE OF PERFORMANCE APPRAISAL a possibility. Contrast the situation in which a subordinate

own performance

uating his set

relative to specific targets

a few months ago with the situation in which he

his superior evaluate his

is

87 eval-

is

which he

listening to

performance against the superior's stand-

ards and objectives. In the latter case, the stage

is

set for rationali-

zation, defensiveness, inability to understand, reactions that the

superior

is

being unfair or arbitrary. These are not conditions con-

ducive to effective motivation.

The semiannual or annual

appraisal

is

not a particularly

effi-

cient stimulus to learning for another reason: It provides "feed-

back" about behavior at a time remote from the behavior People do learn and change as a result of feedback. In the only

way

itself.

fact, it is

they learn. However, the most effective feedback

occurs immediately after the behavior.

The subordinate can

learn a

great deal from a mistake, or a particular failure in performance,

provided

it

analyzed while

is

hand. Three or four months ing from that experience

is

all

the evidence

is

immediately at

later, the likelihood of effective learn-

small. It

wUl be

smaller

stUl

if

the su-

perior's generalized criticism relates to several incidents spread

over a period of months. Finally,

is

it

common

experience that managers tend to resist

and avoid the task of making formal of conducting appraisal interviews

volved.

Somehow,

the task

is

appraisals,

when

critical

an onerous one.

and particularly

judgments are

Many managers

ognize the difficulties described above, and their resistance to a realistic skepticism about the

reasons,

it

is

is

in-

rec-

due

whole procedure. Whatever the

unlikely that the superior will perform a disliked

mannner which wUl motivate and encourage the subordibecome more effective. Once more, it seems that a means

task in a

nate to

of control

—

in this instance control of the superior

procedure of the formal appraisal It

and interview

is

—through

the

inappropriate.

human nature. many managers, guided by

does not represent selective adaptation to It

should be pointed out that

as-

THEORY Y IN PRACTICE

88

sumptions like those of Theory Y, have invented adaptations of conventional appraisal procedures which avoid some of the

diffi-

culties discussed above.

As one

simple and relatively effective example, a chief en-

gineer in a large manufacturing organization which has a typical appraisal

program

to his subordinates every six

"Why

don't you

fill

this

months with

comment:

during these few months.

one out on you independendy.

I'll fill

this

out on yourself from your knowl-

how you have performed

edge of

K we

we

agree,

need to worry about much of an appraisal interview. disagree,

we can

Of course Theory

X

this

get together

as

it is

The

and thrash out our

won't If

we

differences."

"gimmick" in the hands of an exponent of

could be a devastating weapon!

the hght of his philosophy of effective

form

distributes copies of the appraisal

As used by

management, however,

this

it is

man

in

a rather

countermeasure to the impact of the appraisal machinery

administered in his company. theoretical assumptions of

Theory

X lead quite naturally to

a strategy of telling people what to do, judging their performance,

and rewarding or punishing them, and to procedures such a tribute to the adaptability of

work

at all.

The main

egy underlying them

human

appears to be something of

human

beings that these procedures

point, however,

is

as those

It

involved in performance appraisal.

is

that the managerial strat-

not particularly appropriate for controlling

behavior in the setting of industry today. Certainly, the

strategy of

management by

integration

appropriate for intelligent adults and to growth, learning,

is

and

more

self-control is

likely to

more

be conducive

and improved performance.

REFERENCES Drucker, Peter F., "Integration of People and Planning, Harvard Business Review, vol. 33, no. 6 (November-December), 1955.

A CRITIQUE OF PERFORMANCE APPRAISAL

89

Foundation for Research on Human Behavior, Performance Appraisal and Review. Ann Arbor, Mich.: 1958. Kelly, Philip R., "Reappraisal of Appraisals," Harvard Business Review, vol. 36, no. 3 (May-June), 1958. Mahler, Walter R., and Guyot Frazier, "Appraisal of Executive Performance: The 'Achilles Heel' of Management Development," Personnel, vol. 31, no. 5, 1955.

Norman R. F., The Appraisal Interview. New York: John Wiley & Sons, Inc., 1958. Rowland, Virgil K., "From the Thoughtful Businessman," Harvard Business Review, vol. 35, no. 5 (September-October), 1957. Whisler, Thomas L., "Performance Appraisal and the Organization Maier,

Man," The Journal of

Business, vol. 31, no.

1

(January), 1958.

7 Administering Salaries

and Promotions

not be surprising

It will

if

the reader

is

saying at this point: "Yes,

but what about the practical problems connected with administer-

and promotions?

ing salaries

It is all

to encourage

managers

ments about

their subordinates.

very nice to be informal and

to avoid the difficult task of

How

making judg-

are the necessary decisions

made concerning problems, transfers, terminations? who gets a salary increase, or an executive bonus, and how much? Does self-appraisal mean self-determina-

going to be

How

are

tion of

we

to decide

income and self-placement?"

These are legitunate questions. In order least partial answers,

tional

tion

approach

to

it

will

be necessary

wage and

to see that they to

salary administration

and placement. 90

have

at

examine the conven-

and

to

promo-

ADMINISTERING SALARIES AND PROMOTIONS

Wage and

Salary Administration

Within the framework of Theory X, the withhold economic rewards

ment

the prime

is

exercises authority in industry.

major motivator of human behavior

Money

is

a

91

means

for satisfying

ability to

provide or

means by which manage-

Money

perceived as the

is

in the organizational setting.

many

needs. This fact enables

management to use it to obtain acceptance of direction and control. The employment contract is perceived as an agreement to accept direction in return for economic rewards.

As we have

seen, the existence of a situation of full

ment, the relatively high standard of bility of the

Money

employees today. but the individual it

employ-

considerable

mo-

population, and the presence of various forms of social

legislation all tend to lessen

obtaining

living, the

is

less

somewhat the degree of dependence of

is

essential for satisfying

many

needs,

dependent upon a single employer for

than he once was.

The more important question, however, is how much money is necessary to make the employment contract effective? This, of course, is a relative matter in several respects. The necessary amount is first of all relative to the competition of the labor market and to general economic conditions including the cost of ing, the tax structure, etc.

Second,

it is

relative to the

liv-

importance

of the job in question within the hierarchy of jobs in the organization. Third,

it

is

relative to the contribution of the individual

because the "productivity" of individuals on the same job varies. Establishing the

Wage and

Salary Structure.

erations determine the nature of managerial

Two

major consid-

pohcy and practice

with respect to wage and salary administration.

The

first is

the

amount of money provided market, economic conditions,

consideration of equity: whether the is

perceived to be fair relative to the

the importance of the job,

and the

individual's contribution. If

it is

not, either the individual will not take the job, or, having taken

THEORY Y IN PRACTICE

92 he

it,

will

not perform in a satisfactory manner (he will restrict

output, be indifferent or antagonistic to organizational ob-

his

jectives,

engage in countermeasures which interfere with manage-

ment's attempts to direct and control his behavior).

The second

consideration

sense, including

all

ential increments of

In general

In this

it is

money

assumed

field of

is

that of incentive

types of economic rewards)

(in the

broad

the use of differ-

to yield differential increments of effort.

more money

that

wage and

will result in

more

salary administration there

emphasis on measurement because atic

:

it is

determination of economic rewards

based on arbitrary decisions,

is

effort.

a strong

recognized that a systemis

more

equitable than one

personal considerations, pressure

("the squeaky wheel"), and individual opinion. Arguments, tion,

and countermeasures are reduced

to the extent that

fric-

economic

rewards can be determined by impersonal and objective methods.

Measurement

therefore, the

is,

key to equity

in administering eco-

nomic rewards. Management's success

measurement

varies,

m

achieving equity through the use of

depending upon the nature of the problems

involved. In the determination of general levels of wages aries relative to

economic conditions, we encounter some

and

sal-

difl&cult

problems which are reduced, but not solved, by systematic approaches. Market surveys, cost-of-living indices, and policies such as that of providing

economic benefits "equal

to or better than"

the average, certainly increase the degree of acceptance. ever,

How-

questions of the company's "ability to pay" and of the

employee's "fair share of the

fruits of enterprise"

do not lend them-

by formula. Collective and individual barframework of measurement, become the ultimate

selves to determination

gaining, within a

determinants.

Within the organization, determination of salaries for particular jobs is generally

and salary to

classification plans

which

differential

wages and

accomplished today by wage rest

on systematic attempts

measure job importance. Management has been reasonably

sue-

ADMINISTERING SALARIES AND PROMOTIONS There

cessful in this area.

seem

and the

93

however, some inequities which

be impossible to ehminate with present

to

For example, the

ods.

are,

classification

meth-

between top worker job rates

differential

rates for the lowest levels of supervisory jobs

is

a con-

stant source of trouble. Certain kinds of jobs, such as that of the

research scientist or the top-level executive are difficult to eval-

Market conditions sometimes create insurmountable inequi(the current inflation of the market price for technically trained

uate. ties

college graduates puts a severe strain

By and

large,

however,

on

the salary structure).

has proved possible to achieve a rea-

it

sonable equity by means of job evaluation and salary classification plans. It has

precise

The itself

become

measurement

clear that attempts to achieve ever

specialists are so

enamored of

that the plans tend to

of their adequacy

the intricacies of

become

unintelligible,

generated. Equity hinges

is

more

in this field are not particularly rewarding.

relatively simple classification plans

measurement and suspicion

on acceptance, and

appear to be more readily ac-

cepted than some of the more elaborately "scientific" ones.

Rewarding Individual Differences difficult

we

in Productivity.

problems in wage and salary administration

The most arise when

turn to the measurement of individual contributions within the

framework of general wage cation. Variations in

are substantial, and

levels

and of wage and salary

classifi-

performance among individuals on any job

management

continually seeks ways of relat-

ing economic rewards to these variations. of course, the motivational one, but

it is

The major concern

problems of equity.

if

The wage incentive field yields some instructive insights we are willing to perceive them. An incredible amount of

and ingenuity have been directed toward the problem of measuring worker output in order to relate economic rewards to it. Nevertheless, individual incentive plans have

effort

never provided the motivation which might be expected on logical groimds.

is,

inextricably tangled with

Problems of equity plague management con-

THEORY Y IN PRACTICE

94

and the costs involved in trying

tinually,

are so high that

many managements have abandoned

tive plans in favor of

measured day work.

It

but

it is

incen-

has been im-

possible so far to prove conclusively which approach ter,

them

to alleviate

individual incentive plans are

bet-

is

clear that the gains for the organization

from

modest even under the best con-

ditions.

For

salaried employees (including managers), merit rating plans

take the place of incentive plans as a method of providing differ-

economic rewards for individual contributions. Measure-

ential

ment here becomes an even more difficult matter. Except in the limited number of instances where direct measures of profit and loss is

can be

utilized, the criterion for the individual's contribution

uncertain.

The most

carefully designed systematic attempts at measure-

ment of individual contribution (and these are few and

far be-

tween!) are usually based on over-aU subjective ratings or rankings of performance. acteristics of is

These are then correlated with

specific char-

performance which can be judged, and a rating form

developed, utilizing the items which correlate best with the

over-all rankings.

The

correlations are rarely high

enough

to ac-

count for more than half the variance in performance, even when

many

items are combined. Moreover, even

if

the correlations are

high, they are correlations with a criterion of performance is

itself

Few cision.

merit rating plans even attempt this degree of scientific pre-

Normally, the rating form

simply assumed without any all

which

subjective (the original ranking).

test

contribution to the enterprise.

ual's superior,

combined

in

is

a series of variables which are

whatever to correlate with over-

They

are rated

by the individ-

weighted (or not) according to arbitrary rules, and

some fashion to give a general "measure" of performno more than a cursory examination of most

ance. It requures

such plans to raise serious questions about their validity.

ADMINISTERING SALARIES AND PROMOTIONS

As one

illustration,

consider a rating form which includes

a factor of "loyalty." While disloyalty

is

it is

probably true that active

negatively correlated with contribution to the

enterprise, does

it

follow that

a positive contribution? Is loyal individual tices

95

maximum

loyalty represents

not possible that the blindly

it

would never even perceive

policies or prac-

or decisions which were poor and sorely needed cor-

Does management value most

rection?

who own

the individual

puts loyalty to the organization above loyalty to his highest principles?

SimUar naive assumptions are revealed when, for example, "quality" and "control of costs" are rated as independent factors with

no recognition

that in

some sense they are

re-

ciprocal.

The problems with merit

rating plans are

compounded by an-

other consideration, namely, the widespread policy of strict secrecy

with respect to individual managerial salaries. Equity

acceptance of the fairness of decisions

—cannot

fidence in a system of measurement. It rests also

of

how

fairly the

system

uation in which the plan tions concerning the

is

administered. But here

itself is

—

rest alone

that

is,

on con-

on perceptions

we have

a

sit-

usually subject to serious ques-

adequacy of measurement, and there

additional requirement of secrecy concerning the results of

an

is its

ad-

ministration.

A

final

complication results from the fact that merit plans are

make not gross but fine differentiations between individuals. One may receive a 3 per cent increase, another 6 per cent, another 10 per cent. As previously suggested, it is likely that the

used to

probable error of measurement of most merit rating plans eral times the

is

sev-

magnitude of the differentiations that are made

their administration.

Perhaps

it

is

just as well that

management

attempts to maintain secrecy with respect to the results of ministration of such plans!

in

its

ad-

THEORY Y IN PRACTICE

96

In the light of considerations such as these, questions: Given

an adequate base salary

likely that small increments of salary

us ask some

let

structure,

is it

in fact

provide genuine motivation

for increased effort? In view of our earlier consideration of tivation, is

it

likely that

mo-

such kinds of limited economic rewards

have a fraction of the incentive value that opportunities for increased satisfaction of social, ego, and self-actualization needs

would have? Within the present income tax

structure,

what

is

the real significance, motivationally speaking, of a 5 or even a

10 per cent salary increase to an individual making $15,000 or

$20,000 a year?

Is

it

possible that the assumptions of

Theory

have led to reUance on the least appropriate among several native methods of influence?

To be

sure,

management can provide

or withhold salary increments authoritatively, while create conditions (or

fail

X

alter-

it

can only

to) for individuals to achieve satisfac-

tion of their higher-level needs.

However, would

it

not seem that

emphasis on the principle of integration in contrast to authoritative control of relatively minor increments of economic reward, might

merit exploration?

Conclusions.

The

conclusions which seem to

me

reasonable with

respect to salary administration are these:

1.

The problems

of equity with respect to economic rewards

can be reasonably solved by systematic market survey, attention to the cost of Uving, policies such as paying salaries

"equal to or better than" average, well-conceived

position classification plans, and the processes of collective

and individual bargaining. In

this fashion the indi-

vidual can be assured of a general level of economic re-

2.

ward which he wiU accept as fair. The problems of motivation will be

solved in part by the

provision of equitable rewards in the form of base salaries

and

in part

by providing opportunities

for achieving

satisfaction of higher-level needs through efforts directed

ADMINISTERING SALARIES AND PROMOTIONS toward organizational objectives (the principle of

97 inte-

gration).

Four categories of increments of economic reward above base salaries are a.

Those

realistic:

that can be directly tied to objective criteria of

accomplishment such as

and

profit

loss.

These wUl

necessarily be limited to a few people in the total pop-

ulation

if

they are administered

on an

individual basis.

Moreover, they wUl, potentially, be large enough to

have genuine motivational value. b.

Those that are administered

as "time-service" incre-

ments, received automatically at intervals so long as

performance

is

be small, and

not unsatisfactory. Such increments will

will

have as

their chief value the

main-

tenance of equity (on the assumption that time on a job brings some increase in competence and in contribution). c.

Merit increases to the small proportion of individuals in a given salary classification clearly outstanding.

entiations of

These

whose performance

is

will require only gross differ-

performance in which the probable error

of measurement will be small, and they will also in-

volve large enough salary increments to have genuine motivational value. d.

Group rewards

for departmental, or divisional, or

com-

pany-wide achievement of objectively measurable eco-

nomic

results.

in terms of

These would be shared within the group

an equal percentage of base

salary.

Scanlon Plan, to be considered in Chapter this

(The

8, utilizes

method of motivating performance.)

Conventional programs for providing large numbers of people with differential and relatively small merit salary increases, in the light of our present ability to

measure

managerial contributions to the enterprise, are not very

THEORY Y

98

realistic.

IN PRACTICE

The absence

of objective criteria of performance

and the problems involved

in

measurement are such that

equity cannot be achieved through such methods. over, there

much

is

More-

reason to doubt that such rewards have

motivational value relative to other opportunities

which can be provided through apphcations of the

princi-

ple of integration.^

Thus

the question about salary administration raised at the be-

ginnmg of

this

superior to

make

to administer

chapter

is

answered:

the judgments

It

we have

is

customarily relied upon

economic rewards (except possibly with respect to outstanding). For some,

a few individuals whose performance

is

these conclusions will appear defeatist.

They

in the

unnecessary for the

are,

if

one stays with-

framework of Theory X. From the point of view of Theory

Y, they suggest simply that we have been relying on inappropriate

methods of control. Conventional merit plans of salary ad-

ministration do not represent selective adaptation to the condi-

we face. The challenge is to find other ways to motivate peoManagement by integration and self-control offers one such

tions ple.

method.

There

is

no impUcation

are unimportant. 1

The

The

in this conclusion that

implication

is

economic rewards

that an equitable salary struc-

previously mentioned study of Herzberg, Mausner, and Snyderman,

The writers point out that when producing dissatisfaction, it was associated with "the unfairness of the wage system within the company, and this almost always referred to increases in salaries rather than the absolute levels. It was the system of salary administration that was being described, a system supports the conclusion in this paragraph. salary

was a factor

in

which wage increases were obtained grudgingly, or given too late, or which the differentials between newly hired employees and those with years of experience on the job were too small." On the other hand, salary increases were a source of satisfaction primarily as they accompanied job achievements. They conclude: "It would seem that as an affector of job attitudes salary has more potency as a job dissatisfier than as a job satisfier." Herzberg, Mausner, and Snyderman, The Motivation to Work, pp. in

in

82-83.

ADMINISTERING SALARIES AND PROMOTIONS ture furnishes the

99

major economic rewards, but that our attempts

to get greater "productivity" through the use of small increments

of economic reward within such a structure have not been particularly effective.

The Administration of Promotions and Placement Unfortunately,

it

does not seem possible to solve the problems

involved in promotion by eliminating the necessity for subjective

judgments by superiors of their subordinates. Moreover, in addition to considerations of equity

and motivation, there are con-

siderations of qualifications involved. ing,

what

abilities

and

skills

What

experience and train-

are required to perform a given job,

and how can we determine which individual among several candidates possesses these to the greatest degree? It is

tempting to assume that these problems would be solved

we could develop adequate methods

for measuring (1) jobs

if

and

(2) individual qualifications (in contrast to individual contributions to the enterprise).

Much

time and effort has been and

being devoted to the pursuit of this objective. ists

Many

is

staff special-

have the dream of a system which would involve a

set of

punched cards carrying the detailed requhements of every job and another

set carrying the qualifications of

every

member

of

openmgs would then require only a mematching. However, as in the case of measur-

the organization. Filhng

chanical process of

ing merit, there are formidable obstacles.

We

noted in the previous chapter that jobs

managerial jobs

—do not

—and

consist of fixed receptacles

particularly

whose

detailed

dimensions can be measured. They are embedded in complex organizational and external relationships which change substantially

over time. In addition,

one pattern of

it

is

simply not true that one and only

qualifications of the

incumbent

will yield the best

performance of a given job. Variations in personal qualifications will result in the

job being performed differently, but several such

THEORY Y IN PRACTICE

100

patterns could lead to equivalent results as far as the achievement of organizational objectives

is

concerned.

Conventional organization theorists usually lay great stress on

and then

defining the job

an individual

fitting

to

They

it.

are con-

cerned to prevent the "square peg in the round hole." Such an

may have

idea

the merit of logical simpUcity, but the fact that

this rule is so rarely

problem

is

followed in practice should warn us that the

considerably

principle of integration that the individual

more complex than

Moreover, the

this.

sharply contradictory to the conception

is

must be adapted and molded

to the requirements

of the organization.

Further, while progress

is

being made,

we

are

still

a long

way

even from knowing what the qualifications for managerial success in

most jobs may

be, let alone

from being able

Finally, since personality characteristics

to

measure them.

and factors of emotional

adjustment are thought to be as important as factors of experience, training, ethical is

skill,

and

intellectual capacity,

problem which was

briefly

we must

mentioned in Chapter

face the 1.

There

a real question concerning the ethics of using private and per-

sonal data (in contrast to "public" data on performance, educational achievement, etc.) in administering

promotions and place-

ment. Certainly the

dream

and personal

istics

possibilities.

of a mechanical matching of job character-

qualifications has

For the foreseeable

no more than very lunited

future, managerial

judgments of

a subjective kind are going to play a large part in administering

promotions and placements.

A

Role for Measurement. Research groups

in several

companies

have developed methods of measurement for selection and for pro-

motion with respect to a hmited number of positions which have given is

only It

management

substantial help.

necessar}' for each position,

when

there

does not lend

is

A

rather elaborate procedure

and hence the method

is

useful

continuing need for numbers of candidates.

itself

to the situation where replacements

on a

ADMINISTERING SALARIES AND PROMOTIONS given job are infrequent, or where the

101

number of incumbents

is

means

of

small.

The

research iavolves the determination by statistical

a large number of "items" (aspects of experience, attitude,

ability,

personahty) which discriminate between present incumbents of the position all

who

by management on the

are ranked

basis of over-

value to the company. These items are combined in a test (with

weights determined by their discriminative value) which

is

then

used to help screen applicants.

There

is

evidence that

this

procedure can improve selection and

promotion practices materially provided: 1.

Management becomes

actively involved in the research

leading to the development of the tests (and thus acquires

a real understanding both of the values and the limitations of the instruments). 2.

The

tests are

used as an aid to selection and not as the

sole basis for judgment, (It to this principle, but

the tendency

son

is

is

easy to obtain

hard to maintain

on the

to rely

why management

it

lip service

in practice

because

This

one rea-

test scores.

is

participation in the research

is

im-

portant, ) 3.

The conception

of "good" and "poor" performance re-

mains unchanged. (Since the whole approach hinges on

management's original ranking of incumbents, the discriminate only in terms of that criterion.

ments of the job change, or different idea of

the tests

become

what

if

management acquires a

constitutes

useless

tests

If the require-

"good" performance,

and the research must be

re-

peated.)

Even

this rather elaborate research

method does not eliminate

managerial judgment in the administration of promotion and placement. Nevertheless, the use of standardized

tests

and procedures

(without such custom-tailored methods) as the primary basis for

—

)

THEORY Y IN PRACTICE

102

complex managerial jobs

selection in filling

Many

day.

commercial firms

dence for the validity of such methods (This

not

is

The

is

dubious, to say the

toevi-

least.

one more reason for concern with the ethics of man-

is

agerial practices in this field.

responsibility in

The manager

human

Most

being.

"scientific" determination,

off the responsibiUty

Whether or not

it

the

affect

of us are a litde hesitant

about "playing God." When, however, one can

on a

some

likely to feel

is

making subjective judgments which

career of a fellow

rest

uncommon

offer services of this kind.

is

let

the decision

too easy to slough

all

.

tests are utilized, there are

safeguards in the

form of procedures which can help to improve the validity of managerial judgments and which will help to protect the individual against the consequences of prejudice, poor judgment, and the like.

Carefully designed methods for utilizing group judgments rep-

resent the best of these.

The Role

of the Individual. Perhaps the biggest change required

in current practices with respect to promotion and placement if

we

—

has to do with Today he tends to

desire to utilize the principle of integration

the relation of the "candidate" to the process.

be a pawn on the organizational chessboard. Plans are frequently

made

with respect to his career which

may have profound

effects

upon his most important goals and needs. Yet he is likely to have no voice in these plans and to remain in complete ignorance of them

until after the decision has

been reached. Moreover, the or-

ganization's needs are given priority almost without consideration

of his needs. If his goals and needs are considered at

Ukely to be in the paternalistic sense of deciding "what

all, is

it

for him."

An

assistant chief engineer,

aged

thirty-eight, in a large

organization, has for several years desired ence.

He

some

is

good

line experi-

has expressed a strong interest in a job where he

could have a reasonable autonomy and be judged by "the

ADMINISTERING SALARIES AND PROMOTIONS p.

and

1.

He

statement."

103

has shown considerable administra-

tive abiUty in the various engineering jobs

he has held.

He

is

regarded by those above him as outstanding, and a Ukely prospect some day for vice president of engineering.

In a discussion with a manager two levels above him

has had both interest and influence on

asked

if

I

he had ever been considered for a hne job. The

answer was emphatic: "Oh, no! His forte

The

who

man's career,

this

engineering."

is

principle of integration requires active

and responsible par-

Howmay seem in the if we would create his own goals best

ticipation of the individual in decisions affecting his career.

ever radical this

may

be,

however impractical

light of traditional practice,

it is

it

a requirement

conditions such that the individual can achieve

by

directing his efforts

No amount

toward organizational objectives.

of scientific evidence concerning his qualifications, no safeguards

sound and unprejudiced judgments, no rationalizations

to ensure

about the disappointment of unsuccessful candidates can excluding the individual from a process which

is

justify

so important to

him.

A

beginning can be

made

in target-setting sessions.

feasible to discuss the individual's career interests,

needed experiences and

would be

Here

it

is

to consider

kinds of opportunities which

training,

relevant, questions of timing. Here, too, personal con-

siderations

which might

job or to stay on

it

affect his desire to

move from

his present

can be discussed.

One company has had

a practice for several years of asking

each member of management, periodically: "Is your hat in the ring?" If his answer

openings which

may

is

yes,

occur. If

he it

is

is

considered for relevant

no, he

is

excluded from

such considerations without prejudice. Of course, the question will be asked again in a year or two, differently then.

The

decision, however,

and he may

is his.

feel

THEORY Y

104

Data about the and even

IN PRACTICE individual's interests, his relevant experience,

his capacities as

measured by

knowledge and agreement, be included file

in the central personnel

for possible reference as openings occur.

sonality tests fidential

basis

and

clinical evaluations,

can, with his full

tests

The

results of per-

provided they are kept con-

between the psychologist and the individual, can be a

on which he plans

his career

and decides whether

to

be a

candidate for particular openings.

A

few companies have developed procedures which make

possible for individuals to submit their

names

it

as candidates for

particular openings. This enables the individual to take a responsible role

with respect to his

own

problems involved, of course, but

career development. There are it

is

possible to find a middle

ground between administrative practices which as a

pawn and

treat the individual

those sometimes found at the worker level which

involve direct "bidding" for jobs.

In the context of management by integration and self-control,

both the superior and the subordinate can furnish data for the adof promotions.

ministration

If

sharply from those developed by

the

superior's

judgments

differ

the subordinate's self-appraisals,

there will be the need for discussion and resolution of the differences.

There

is

reason to expect, however, that such differences

can usually be reconciled during the course of a series of targetsetting

and

self-appraisal discussions.

was President of Antioch College, we worked out a review procedure under which any promotional decision made by me which was felt by the faculty member to be unfair could be taken to a faculty board for a hearing and a

WhUe

I

final decision. Since I

this

meant

that

my

was not a member of the review board,

decision could be overruled.

In the course of about four years during which

was

this

system

in operation, only two cases went to the review board. I

ADMINISTERING SALARIES AND PROMOTIONS

105

these, overruled on the other. My mechanism provided a valuable check

was upheld on one of was

feeling

that this

against the fallibility of administrative judgments;

may

odd

as

it

me served to with my faculty.

seem, the decision which went against

strengthen rather than

weaken my

position

Certainly the very presence of this procedure, even though it

was

rarely used, lessened the feehngs of

relationships

and made

easier for

it

me

dependence

in the

to deal with difl&cult

situations.

Conclusions.

Some

general conclusions with respect to the ad-

ministration of promotions

Theory 1.

Y

are:

The matching rial levels

a.

and placement within the context of

of individuals to jobs

—cannot be a mechanical

—

at least at

manage-

process because:

Job requirements are dynamic rather than static; they change as a function of many variables in the situation.

b. Individuals

with different patterns of qualifications,

although they

may perform

a given job differently, can

achieve organizational objectives equally well. c.

We

do not have adequate knowledge of the characterassociated with managerial success, nor very premethods for measuring those that are considered

istics

cise

important. 2.

Hence, a considerable element of subjective judgment remains regardless of the use that is made of measurement

—

—

in decisions concerning the

placement of individuals.

Careful, systematic research can provide tools that will aid

judgment, but such tools cannot replace judgment. Exclusive reliance

on the

results of tests

is

completely un-

warranted at the present stage of development of such tools.

THEORY Y IN PRACTICE

106 3.

The

principle of integration

demands an

active rather than

a passive role for the individual in the administration of

promotions and placement. At the very he can provide concerning

his interests, goals,

cations can be utili2ed to permit

him

to

data which

least,

and

qualifi-

become an

active

candidate for promotional opportunities under most

cumstances. His goals and needs

and not simply by others

—can

—

as perceived

cir-

by him

influence decisions affect-

ing his career. 4.

Judgments of the superior about

oped within a strategy self-control, are likely

his subordinates, devel-

of management by integration and to be based upon data and experi-

ence which will improve their quaUty. In the admim'stration of promotions, therefore, tion in

The

which

it

is

face a situa-

decisions need not be completely unilateral, but they

be made. In the absence of truly objective there

we

unrealistic to relinquish the use of authority.

is

criteria of

must

performance,

a substantial degree of dependence of the individual

upon

those above him. Given this dependence, the exercise of author-

an appropriate means of control provided we are aware of the negative consequences if equity is not preserved. Under some

ity is

conditions

it

may be

will serve as a

feasible to establish review procedures

whicL

check against arbitrary decisions and thus increase

the likelihood of achieving equity.

The answer

to the questions raised at the beginning of this

ter is that unilateral direction

and control with respect

chap-

to the ad-

ministration of salaries and promotions can be reduced but not

eliminated

( 1 )

by the use of measurement where

it is

appropriate,

(2) by eliminating differentiations between individuals error of

measurement

differentiations

is

is

small,

large

when

the

and the motivational value of the

and (3) by giving individuals greater

opportunities to play an active part in decisions affecting their careers.

ADMINISTERING SALARIES AND PROMOTIONS

107

Addendum I

can

no easy solution

offer

to the ethical

problems involved in

the use of test data and clinical personality diagnoses for adminis-

The issues comments may be in order.

are exceedingly complex, but a

trative purposes.

First,

me

seems to

it

that a distinction can

few

be made between

data concerning intellectual aptitudes and capacities on the

test

one hand, and those concerning personality characteristics on the other. Certainly

but the

critical

measurement of the

point

latter is

still

to invade the personality.

Management's legitimate concern

performance. Obviously performance

and adjustment, but the question

agement has a

right to

when

causes

its

The

is

go behind the performance

with

is

by personality

affected

is

characteristics

of

quite primitive,

whether management has any moral right

is

whether man-

to the diagnosis

those causes are personal and private.

difficulty, of

course,

is

that the restriction

imposed by

this

protection of the individual severely limits the data which can be

used for prediction of success or failure on the job. The real reason for

management

about the personality

interest in information

the possibility of improving such predictions.

an individual's

is

are interested in

inferiority feelings, or anxieties, or neurotic tend-

encies because of

what they lead us to expect about

ance in given situations.

would enable us and

We

It

perform-

can even be argued that such knowledge

to protect

to protect others

his

him from

failure

and unhappiness,

from harmful consequences of

his personal

adjustment.

Yet the use of such knowledge

in these

ways seems

manipulative in the worst sense of the word. organization to step into the private

make

decisions for

that, except

not

make

This

domam

him which only he has

It is

to

me

to

of the person and

the right to make. (Note

under the most extreme conditions, a surgeon does

the final decision to operate, even to save a patient's

is felt

be

permitting the

to

be the inviolate right of the person.)

life.

THEORY Y IN PRACTICE

108

For the individual

clinical psychologist to

on a

share his diagnosis with the

confidential basis, advising

consequences for him and others

sible

if

him concerning

the pos-

he attempts certain types

of responsibilities, raises no problems. If

were

it

left to

the indi-

vidual in consultation with the psychologist to decide what use to

make

of personality

measurements and diagnoses, we would have

a situation comparable to that which obtains between managers

and medical departments

come

many

in

to accept the idea that

it is

large companies today.

the individual's

not that of his superiors, to decide

how

own

We

have

responsibility,

health considerations

should affect his career decisions, except in cases like those of the airplane pilot and the locomotive engineer where the public safety is

directly involved.

me

The

parallel with

"mental health" seems to

a fairly good one.

—

Tests of capacity

how

to

intelligence tests, for

It is

knowledge. The

more

test is

and private

solved. It

Many

is

same

A

difficulties.

measure of

intelli-

personal and private than a diagnosis of emotional

is less

adjustment.

habits

—seem some-

be different in nature, and the implications with respect to

their use don't present the

gence

example

like a

measurement of height or of job

composed not of questions about personal but of impersonal problems to be

attitudes,

a measurement based on performance.

personality characteristics and aspects of adjustment are

subject to modification through individual effort, certam types of

education, and psychotherapy.

on the

basis of measures

It

seems unjust to predict behavior

and diagnoses of such

and

characteristics,

therefore to deny the individual the opportunity to change. If limit ourselves to the statement that a given

aspect of his performance the possibility that he can

In the end,

I

possibilities for

is

unsatisfactory,

we

form of behavior or

we

leave

do something about

open

to

him

it.

can only confess to a degree of disquiet over the manipulation and exploitation of

my

feUow human

beings inherent in the administrative use of personality tests and clinical diagnoses of

adjustment for purposes of placement.

I

view

ADMINISTERING SALARIES AND PROMOTIONS

109

with even greater concern the probability that the predictive value of such instruments wiU be increased substantially during the next

decade or two. The issues involved wUl then be

whole

intensified.

This

promotion, and placement presents a sub-

field of selection,

stantial challenge to the ethical values of professional

We cannot afford to dismiss the issues by

management.

defending unilaterally the

needs of the organization, or to look the other way in the hope that they will

go away.

growing public concern

If

we do

will lead

either,

we run

one day to

the risk that a

legislative restrictions

further curtailing management's freedom of action. tantly, ical

we put

materialistic

More impor-

economic considerations ahead of eth-

ones and thus place ourselves as managers in a position few of

us would care to defend.

REFERENCES American Management Association, Handbook of Wage and Salary

New York: 1950. David W., Wage and Salary Administration. Englewood

Administration. Belcher,

Cliffs, N.J.:

Prentice-HaU, Inc., 1955.

Employee Relations Department, Esso Standard

Oil

Company, Made

Measure. New York: 1953. Foundation for Research on Human Behavior, Assessing Managerial Potential. Ann Arbor, Mich.: 1958. to

Jacques, Elliot,

Measurement of

Publications, Ltd.,

Responsibility.

London: Tavistock

1956.

National Industrial Conference Board, Inc., Employee Salary Plans in Operation, Studies in Personnel Policy, no. 100, 1949.

Whyte, William H.,

Jr.,

The Organization Man.

Schuster, Inc., 1956.

New

York: Simon

&

8 The Scanlon

Plan

Management by integration and self-control can take many forms. One of the most unusual of these is the Scanlon Plan. Out of his deep

interest in

union-management cooperation, the

late

Joseph

Scanlon evolved a collaborative strategy which has achieved sohd results, in

both economic and

human

on

carried

at

MIT

number of inwork is being ably

terms, in a

dustrial companies. Scanlon died in 1956. His

today by his close friend and successor, Fred-

erick Lesieur.

The Scanlon Plan is not a formula, a program, or a set of proa philosophy of managecedures. It is a way of industrial life ment which rests on theoretical assumptions entirely consistent with Theory Y. The Scanlon Plan differs from target setting in that

—

—

it

is

appUed

to the

whole organization rather than

to

superior-

subordinate paks or to small groups. However, the underlying strategic considerations are very similar.

The plan embodies two

central features which in their operation

bring about profound changes in organizational relationships, tudes,

and

practices. Scanlon's discovery that these

110

atti-

two features

THE SCANLON PLAN would encourage the development of a

human

assumptions about organized

111

different set of managerial

effort represents

a social in-

vention of considerable significance. Neither of these features alone

would be

likely to bring

however,

they represent

about a major change; linked together, a powerful

system

organizational

of

"control."

Cost-reduction Sharing

The

first

feature

is

a means of sharing the economic gains from

improvements in organizational performance. ing in the conventional sense at

reduction sharing.

wage and

£ill,

not profit shar-

It is

but a unique kind of cost-

not a substitute for a normal, competitive

It is

salary structure, but

is

built

on top of

it.

This method for sharing cost-reduction savings utUizes a ratio

between the

total

manpower

costs of the organization

and a meas-

ure of output such as total sales or value added by manufacture.

The

latter

index in the ratio can only be derived after considerable

study and analysis of the particular company, and

unique to the

uct mix, inventory,

it is

relatively

Allowances are made, of course, for prod-

situation.

work

in process, etc. In

most companies a

can be developed which turns out to have been for considerable periods of tune.

ratio

relatively stable

Sharp fluctuations can usually be

traced to major technological or economic changes.

This ratio

is

not seen as an exact,

infallible,

permanent measure.

Careful study of the company's financial records, a good deal of

common

sense,

termination.

and a

It is

stances warrant,

lot of

mutual discussion enter into

its

de-

subject to change from time to time, as circum-

and the history of Scanlon companies indicates

that these changes are

made without

diflficulty

when

the need

arises.

Improvement of

the ratio represents an over-all

for the organization.

Some

economic gain

portion of the resultant savmgs (some-

times 50 per cent, often 75 per cent, occasionally 100 per cent)

THEORY Y

112

IN PRACTICE

are paid to participants in the Plan

on a monthly

basis as a per-

members of management group

centage of their base wages or salaries. Normally, aU the organization except possibly the very top

economic reward for improvement. Such a

participate in this

ward, properly developed, gains genuine acceptance

(it is

re-

per-

ceived to be equitable) and, in addition, provides genuine motivation. It is

a means for promoting collaboration within an interde-

pendent system. Competition

and maximized with respect

An that

is

minimized within the organization

to other firms in the industry.

important characteristic of

it is

this

method of measurement

directly related to the success of the

members

in improv-

ing the over-all economic success of the organization.

nary profit-sharing plan lacks

is

The

this direct relationship. Profits

ordi-

may

reflect circumstances and factors almost completely irrelevant to

the efforts of the

members

of the organization. I

knew

of an in-

stance a few years ago, for example, where nearly three-quarters of the profits of the enterprise over a period of several years resulted

this

from the manipulations of the treasurer market.

terial

The

company had

profit-sharing little

in the

raw ma-

bonus paid to the employees of

connection with their contribution to the

success of the enterprise.

Employees under a Scanlon Plan, on the other hand, are able to and innovations, stim-

trace directly the results of various changes

ulated by their efforts, tion

between

result

is

upon the bonus, and thus

to see the connec-

and organizational achievement. The

their behavior

a very real and quite sophisticated understanding of the

economics of the firm, gained through direct experience. Economic education of the work force

never a problem in a Scanlon factory.

is

There are many examples

in

Scanlon companies of

profit-

able orders for products obtained after the employees

persuaded management

which appeared

had

to bid for the business at prices

initially to

be ridiculously low. Given a

full

understanding of the competitive situation and a knowledge

THE SCANLON PLAN of existing costs, the

members of

113

the organization were will-

in a strong competitive position.

management put Commitment to the

nomic

is

ing to exercise their ingenuity to help

and

level

A

objectives of the enterprise

itself

eco-

clearly evident at every

in every function of these companies.

third feature of the

economic reward

is

that

it is

reasonably

well related temporally to the behavior which produced

annual profit-sharing bonus ship to daily behavior.

A

is

An

it.

a reward which has httle relation-

monthly payment carries with

it

a psy-

chologically meaningful cause-and-effect connection because the

behavior and the reward are reasonably close together in time.

Effective Participation If the

Scanlon Plan consisted of nothing but

this

measure of

organizational efiectiveness and the bonus, there would be

reason for singling tures

it

mentioned above, but fundamentally

other example of the

many

Scanlon Plan

is

it

would simply be an-

varieties of incentive

plans found in industry today.

ture: a formal

some

out for special attention because of the fea-

The

and profit-sharing

distinguishing feature of the

the coupling of this incentive with a second fea-

method providing an opportunity

for every

mem-

ber of the organization to contribute his brains and ingenuity as well as his physical effort to the improvement of organizational effectiveness. This

the

is

means by which

the integrative principle in operation. It rich opportunities are provided every

is

mem-

ber of the organization to satisfy his higher-level needs through efforts directed

Even

toward the objectives of the enterprise.

the repetitive worker at the bottom of the hierarchy

is

po-

more than a pair of hands. He is a human resource. His know-how and ingenuity, properly utilized, may make a far greater tentially

difference to the success of the enterprise than in his

any improvement

physical effort, although of course his effort

is

not unimpor-

THEORY Y

114

Moreover, he achieves recognition and other important so-

tant.

cial

and ego

We its

IN PRACTICE

satisfactions

from

this utihzation of his capacities.

hear a great deal of talk about improved productivity and

significance in our total

economic

picture.

Many

of those

who

talk the loudest conceive of productivity solely in terms of the

physical output of production and clerical workers. If such people

would only do more of what they are told would rise and the economy would be better to

be heard on every hand today.

Plan that

off.

This message

is

a true virtue of the Scanlon

scraps completely this narrow and insulting conception

it

of the worth of the ductivity

It is

to do, productivity

human

being in the industrial enterprise. Pro-

seen in terms of the over-all effectiveness of the or-

is

and everything that contributes

ganization,

tinctive potential contribution of the

to

human

it is

valued.

The

dis-

being in contrast to

the machine, at every level of the organization, stems from his capacity to think, to plan, to exercise judgment, to be creative, to direct

and control

his

own

behavior. In contrast to the philosophy

of traditional incentive plans and the conventional practices of industrial engineering, the Scanlon Plan encourages distinctively

human

The mechanics sists in

cuss,

and rewards the

contribution.

of the second feature of the Scanlon Plan con-

a series of committees whose purpose

is

to receive, dis-

and evaluate every means that anyone can think of for im-

proving the

ratio,

and

to put into effect those that are considered

from every group and function in the organization serve os these committees. Departmental committo be workable. Representatives

tees of

into

workers and lower-leve.' supervision are empowered to put ideas

effect

which have

appropriate to their level. Those

suggestions

broader implications are referre