University of Technology Sydney

> Managing People and

Organisations, Essay 1
Option 5: Should managers seek to manage the views and values of their
employees?

JOHANAN (YOCHI) OTTENSOOSER
10873305
Word Count: 2194

W7, Semester 1, 2009


This essay will argue that managers should seek to manage the views and values of
their employees in light of moral, social and economic analysis. Furthermore, the
formation of a corporate culture, whilst flawed, is superior to other management
techniques, and, has become a self-propagating practice.
Johanan (Yochi) Ottensooser
Student: 10873305
Page 2 of 13

Introduction:
A central issue in management theory is how to overcome the Principle-Agent Problem. The
problem is a description of a conflict of interests; that the principle (principle stakeholders,
shareholders, etc.) earns profits on the performance of the organisation whereby the agents
(employees) usually earn unconditional wages. They are parallel but conflicting wants; the
principle seeks the greatest return for the least pay whereby the agent seeks to do the least
work for the greatest pay. It is managements role to mediate between these goals. There
have been two dominant solutions to this problem: the first being dominative and the second
based on the synchronisation of employee views and values of the organisation.
This essay develops the argument in three sections.
Section 1 outlines the critical frames through which management theories will
be analysed (Maslow A. H., 1943) (Milgram, 1974) (Black, 1990).
Section 2 assesses dominative management theories (Morgan, 2006).
Section 3 assesses value-based management (Akroyd, 1990) (Rosen, 1988).
This essay will show that Managers should seek to manage the views and values of
their employees, since this method allows for effective fulfilment of monetary (long-term
profits) and non-monetary (ethical) corporate and individual goals.

Johanan (Yochi) Ottensooser
Student: 10873305
Page 3 of 13

Section 1: The Effectiveness of Management Methods through Frames
It is vital to compare value based management methods in efficacy against the alternatives to
ascertain its worth to management, and, hence, whether or not it should be used. This essay
will discuss the ways in which different management practices motivate employees (Maslow
A. H., 1943, pp. 1, 2), (Milgram, 1974, p. 135) their contribution towards long-term profits
(Akroyd, 1990, pp. 3, 4) and their ethical standards (Black, 1990, pp. 122, 123).
Maslow wrote that all human motivation must be understood to be a channel through
which needs may be satisfied. He expresses needs hierarchically (see Figure 1),
hypothesising that higher wants require the satisfaction of all baser needs (Maslow A. H.,
1943, p. 1). Milgram states that motivation is a product of upbringing and different levels of
the Agentic state (a state of almost complete obedience derived from submission to an
authority) (Milgram, 1974, pp. 135-152) (see Figure 2.).

Figure 1: Maslow's Hierarchy of Needs and Wants (derived from (Maslow A. H., 1943,
pp. 1, 2) and (Maslow A. H., 1967, p. 1))

Profitability is a central defining quality of most organisations, especially businesses.
Different managerial systems are effective in different situations, with efficiency based
Transcendental needs
creativity
identity
morality
Self
Actualisation
self esteem
achievement
respect (of and by others)
Esteem
freindship
family
sexual intimacy
Love/Belonging
security of body
security of employment
security of morality
Safety
food and water
sleep
homeostasis
Physiological Necessities
Johanan (Yochi) Ottensooser
Student: 10873305
Page 4 of 13

Efficiency, Effectiveness and Economy management working well in manufacturing and
with value based Evaluation, Empathy and Ethics working better in the service sector,
(Black, 1990, pp. 123, 124). This essay will regard the profitability of each managerial
system in light of its most common application.

It is crucial to take into account the morality of the application of managerial techniques:
what they ask of the employer, work conditions and ability for the employee to dissent in the
case of a threat to base needs (safety and physiological needs as per Figure 1), or in case of a
difference of opinion. In amalgamating these factors, an analysis of the morality of the
workplace is possible.

An analysis of motivation, profit and morality allows for an evaluation of different
management practices.


Johanan (Yochi) Ottensooser
Student: 10873305
Page 5 of 13

Section 2: Domination
The simplest response to the problem of agency is the dominative method. When work is
scarce, the economic profit (net wages less next best alternative foregone (John Jackson,
2007, pp. 542, 543)) for the individual increases. This is only effective in a employer market.
If the organisations economic wage is normal, then they lose this leverage over the
employee. This idea is historically epitomised by the industrial revolution and the factory (see
appendix 1). The extract below highlights codified employee restrictions.
Any persons found Smoking on the premises will be instantly dismissed. Any
person found away from their usual place of work, ...or Talking with any one out of
their own Alley, will be fined 2d for each offence
(Water-Foot Mill, 1851)

Domination, according to Morgan, is a pervasive side effect of Taylorist bureaucratic
management systems and code-based authoritarian management systems.
Concerning Maslows hierarchy, domination motivates on a base level. The sense of
purposelessness derived from separate value bases and strips dominated employees of the
ability to fulfil higher needs through the workplace, diminishing this management systems
effectiveness in inspiring loyalty, and, therefore, productivity.
Milgram explains the mode of the dominated worker perfectly (see Figure 2). The
employee becomes Agentic through Cultural Antecedent (being required to obey parents,
being a member of organisations), and Binding Factors (the apparent and unchallenged
authority of the employer). Furthermore, this Pavlovian deference to authority teaches
[employees] to respond to impersonal Authorities (Milgram, 1974, p. 137) such as the
management. Milgram continues to show that this state results in almost flawless obedience
(Milgram, 1974, p. 119).
.
However, given the correct conditions an employer market, a relatively unskilled workforce
and little government regulation this system is able to stimulate increases in productivity.
The typical examples of this are the sweatshop and the production line. According to The
Global Players, a globalisation think-tank from Flinders University, this type of
management is beneficial for the employer, who benefits from cheap labour (The Global
Players, 2008, p. 5).
Johanan (Yochi) Ottensooser
Student: 10873305
Page 6 of 13


Whilst this practice has been persistent, the consensus is that this is a relatively ineffective
form of management, since it leads to the stratification of society, alienation and horrible
working conditions (Watson, 2005, pp. 551, 554). Furthermore, because of the absolute
authority of the agents (management), the worker is not able to dissent, at least without
moral support from peers (Milgram, 1974, pp. 116, 117).

An analysis of this management technique shows Domination as being fundamentally flawed.
Employee inspiration is superficial and coercion based. This results the exacerbation of the
problem of agency (The Global Players, 2008, p. 4), decreasing profits and practicing
unethically. This essay has shown that, by failing to meet the corporate goals of profits, and
the social goal of ethics, this management theory is ineffective.



Antecedent
Conditions
Immediate
Antecedent
Conditions
Binding
Factors
The
Agentic
State
Figure 2: The Agentic State (Milgram,
1974, p. 136)

Johanan (Yochi) Ottensooser
Student: 10873305
Page 7 of 13

Section 3: Value-Based Management
One of the first industrialists to realise the flaws in dominative management was
Henry Ford, who attempted to solve the problem of agency by paying Ford employees a third
more than the industrial average in between 1914-1922 (Lewchuck, 1993, p. 841: Table 3).
This pay inspired productivity dually; the profit motive positively compels the worker to
appease the employer and the resultant creation of an elite fraternity of employees provided
an optimum environment for a corporate culture.
Ford created a corporate culture that increased productivity: Ford developed a
fraternalist labor strategy, a mens club, whos objective was to ... maximise labour
productivity (Lewchuck, 1993, p. 824). Ford appealed to the worker in a positive through
ritual, symbolism, mottoes and social imperative; all of which are tools described as means of
manipulating employee views and values (Buchanan, 2004, p. List). By stating the possibility
for growth, as well as the risk of emasculation, [if you work hard] you will be [able] to ...
say: I AM A MAN (Auto Worker News, 1927, p. 4), the employee is required to fulfil work
requirements.

The humanist method of managing values is flexible, assigning independence and
responsibilities to different work groups (Akroyd, 1990, p. 4). The culture method, as
discussed through Fords attempts at social propaganda and the instillation of a corporate
culture, is rather proscriptive. Both seek to inspire productivity by appealing to the
employees psyche, not rationality, to solve the Agency Problem.
This motivation proves to be deeper than the motivation of a dominated employee
because of the nature of the Masloan wants to which this method appeals. The
synchronisation of views and values allows for the fulfilment of all needs, including esteem,
belonging and self-actualisation needs. This increases the employees connection with the
workplace: self-definition and social connection (Rosen, 1988, pp. 477, 478) becomes
intrinsically dependant on the organisation.
The notion of volunteerism is central to value-based management. This invites the
employee to respond to work criteria with more than necessary vigour, extra productivity not
required but volunteered. Milgram describes the power of volunteerism when coupled with a
created Agentic state.
Johanan (Yochi) Ottensooser
Student: 10873305
Page 8 of 13

[In this case] the principle sanctions for disobedience come from within the person...
[they are] not dependent upon coercion, but ... [on] the individual sense of
commitment to his role. In this sense, there is an internalised basis for his obedience,
not merely an external one
(Milgram, 1974, p. 141)

Value-based management is extremely effective at motivating the employee. Profitability,
however, is the central aim of businesses. Value based management seeks to replace external
motivation with an internalised obedience (Milgram, 1974, p. 141). This cuts costs in the
requirement for supervision and competitive wages. Not only does this reduce costs; it
improves output through competition and self-management (Akroyd, 1990, pp. 3, 4, 11, 12).

Both methods of imbuing values on the employees, however, have different shortcomings, as
well as different moral issues to deal with. The humanist approach, that is, allowing for the
spontaneous formation ... of occupational cultures (Akroyd, 1990, p. 4), suffers from a lack
of distinct moral guidelines. Akroyd and Crowdy discuss the case of the English
Slaughterman: they are productive because of self-management (Akroyd, 1990, pp. 11, 12).
This freedom, however, comes with gross brutality and disobeyed health regulations
(Akroyd, 1990, pp. 6, 7, 8), which can in turn lead to contingent liabilities.
The proscriptive nature of corporate culture reduces the potential for ethical breaches.
Most culture-based organisations have induction programs with proscriptions against
immorality: sexual harassment and anti-bullying training. Corporate culture faces two
distinct setbacks: dramaturgical behaviour (Knights, 1982) and looking up and looking
around (Jackall, 1988). Dramaturgical behaviour is performing with the knowledge of the
performance, paying a kind of lip service to the officialised corporate culture whilst not
believing in it because of a fear of showing contempt for the beliefs of the organisation. A
South Park episode Something Wall-Mart This Way Comes portrays this notion: the
management says out loud I love working at Wall-Mart, at which point he writes on a
placard kill me now (Parker, 2004). This is an exaggeration, but, in organisations, the
dramaturgicisation of corporate culture leads to reduced motivation, thus rendering the
corporate culture ineffective. Furthermore, deviation towards the safe and established
hinders an employees decision to dissent and make individual independent decisions.
Johanan (Yochi) Ottensooser
Student: 10873305
Page 9 of 13

Excessive consequences of risks and the precedence of short-term goals over long-term goals
lead to this: by looking up and looking around the manager is able to pass on the risk and
the blame (Knights, 1982).

The delegation of authority, motivation and supervision is a central facet of value-centric
management. This allows for high levels of motivation as well as increased output,
especially in the service industry (Black, 1990, pp. 123, 124), and positive, non-coercion
based employee-employer relations. Moral issues are a product of ineffective management
within this theoretical frame. The moral issue of free will is, furthermore, central to this
debate: with the management of views and values, does an employee lose individual identity?
The Jewish, traditional answer to this question is articulated by Maimonides stated that
during work, an employee must say abridged prayers. This has been expanded by later
Rabbis to mean that during the time of work, he must embody the values of the organisation
unless they contradict natural law (Maimonides, 1170-1180).
Knights and Roberts deny the existence of argument altogether:
By virtue of being self-conscious creatures, individuals always retain some control
over their action, and coercion [or, in this case, managements manipulation of
employee views and values] can therefore never ... [leads to the] complete control
over another
(Knights, 1982, p. 50)
Value based management, if executed effectively, solves the problem of Agency, at
once allowing for profitability, good work conditions and morality. This essay, therefore, has
shown that being more effective than coercive/dominative management theory value
based management should be used by managers.


Johanan (Yochi) Ottensooser
Student: 10873305
Page 10 of 13

Conclusion
This essay has shown the limitations and proficiencies of dominative and value-based
management systems. Dominative value based management motivates superficially, and is
only effective in specific situations. Value-based management motivates intrinsically, tying
self-definition with the organisation, not to mention the power of volunteerism suggested by
Milgram. Both are profitable, but, again, value management pulls ahead, with limitless
possible productivity increases. Whilst value management can be morally questionable, these
moral grey areas, through effective management, can be minimised, unlike the social costs of
domination: class struggles, horrible work conditions, etc. As such, this essay has shown that
value-based management is highly effective, solving the principle-agent problem, thus,
managers should use it.

There is an implicit danger in recommending management systems: that this practice will
assume the role of best-practice. The problem is the reduction of the morally charged job
of managing other human beings to a process of memorising and applying techniques
(Roberts, 1984). This has been the case, with the increasing popularity of management
bibles diluting proper management theory. Furthermore, due to its popularity, value-based
management has become self-propagating, as, since its inception, the nascent immorality of
other management theories has caused them to lose face. Thus, whilst it might be the most
effective, it must still undergo continual critical analysis to ensure its validity.
Johanan (Yochi) Ottensooser
Student: 10873305
Page 11 of 13

Appendix 1
Rules to be observed by the hands employed in this mill (Water-Foot Mill,
1851)

1. All the Overlookers shall be on the premises first and last.
2. Any Person coming too late shall be fined as follows : - for 5 minutes 2d, 10 minutes 4d. and
15 minutes 6d, &c.
...
9. Any person leaving their Work and found Talking with any of the other workpeople shall be
fined 2d for each offence.
10. For every Oath or insolent language, 3d for the first offence, and if repeated they shall be
dismissed.
...
13. The Masters would recommend that all their workpeople Wash themselves every morning,
but they shall Wash themselves at least twice every week, Monday Morning and Thursday
morning; and any found not washed will be fined 3d for each offence.
14. The Grinders, Drawers, Slubbers and Rovers shall sweep at least eight times in the day as
follows, in the Morning at 7 , 9, 11 and 12; and in the Afternoon at 1, 2, 3, 4, and
5 oclock; and to notice the Board hung up, when the black side is turned that is the time to
sweep, and only quarter of an hour will be allowed for sweeping. The Spinners shall sweep as
follows, in the Morning at 7 , 10 and 12; in the Afternoon at 3 and 5 oclock. Any
neglecting to sweep at the time will be fined 2d for each offence.
15. Any persons found Smoking on the premises will be instantly dismissed.
16. Any person found away from their usual place of work, except for necessary purposes, or
Talking with any one out of their own Alley, will be fined 2d for each offence.
17. Any person bringing dirty Bobbins will be fined 1d for each Bobbin.
18. Any person wilfully damaging this Notice will be dismissed.
The Overlookers are strictly enjoined to attend to these Rules, and they will be
responsible to the M. Workpeople observing them.
Johanan (Yochi) Ottensooser
Student: 10873305
Page 12 of 13

Appendix 2
Fraternalism in the Auto Industry: Would you be a MAN? (Auto Worker News,
1927)
One of the most priceless possessions still retained by modern man is what is called
manhood.... [Sic.] Would you be a MAN free, proud, independent, POWERFUL? Then get
together with your fellow worker, ORGANIZE YOURSELF, and you will be in a position to
proudly look into the eyes of foremen, straw bosses, and all the world and say: I AM A
MAN





Johanan (Yochi) Ottensooser
Student: 10873305
Page 13 of 13

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