BOOK REVIEW the human side of enterprise

prepared byarushi

ABOUT THE BOOK



Heralded as one of the most important pieces of management literature ever written, a touchstone for scholars and a handbook for practitioners, "The Human Side of Enterprise "continues to receive the highest accolades nearly half a century after its initial publication. Influencing such major management gurus such as Peter Drucker and Warren Bennis, McGregor's revolutionary Theory Y-which contends that individuals are self-motivated and self-directed-and Theory X-in which employees must be commanded and controlled

The book offers ten principles for putting his beliefs into practice from which managers at all levels can learn. These principles are augmented with stories and examples from companies who have come to personify McGregor's thinking, including British Petroleum, Egghead.com, CompUSA, Sun, Lucent, and Hanover Insurance. Features perspectives of McGregor's protgs and numerous examples from companies that have flourished under McGregor's approach, including Disney, Silicon Graphics, and Perrier

ABOUT THE AUTHOR



 

Douglas McGregor was a great boss. Wise, witty and insightful, he had extraordinary respect for his employees and believed that if they had the opportunity, they would be enthusiastic, responsible and ethical in the workplace. He believed this so strongly that he wrote this book in 1960 and forever changed management, McGregor was only 58 when he died in 1964, but his contributions to management theory and practice ensure his enduring legacy. In his introduction to this edition of McGregors classic, commentator Joel Cutcher-Gershenfeld points out that in 2004 and 2005 nearly 50 years after it was published business journalists and theorists still referred to McGregors work repeatedly in print.

WHAT ARE YOUR ASSUMPTIONS {IMPLICIT AND EXPLICIT} ABOUT THE MOST EFFECTIVE WAY TO MANAGE PEOPLE??

THEORETICAL ASSUMPTIONS OF MANAGEMENT

  

Management and scientific knowledge Methods of influence and control THEORY X-traditional view of direction and control THEORY Y-integration of individual and organizational goals

THEORY Y IN PRACTISE
       

Management by integration and self control A critique of performance appraisal Administering salaries and promotions The scanlon plan Participation in perspective The managerial climate Staff line relationships Improving staff line collaboration

WHY MANAGEMENT HAS NOT BEEN ABLE TO UTILIZE SOCIAL SCIENCES??



More reliance of managers on their own experiences as compared to theory Insistence on the fact that MANAGEMENT IS AN ART!! Managements misconceptions regarding nature of control.

The effectiveness of organisations could be at least doubled if managers could discover how to tap into the unrealised potential present in their workforces.

EFFECTIVE PREDICTION AND CONTROL

we can improve our ability to control by adapting to human nature rather than human nature conforming to our wishes!

WHY TRADITIONAL PRINCIPLES FALL SHORT OF BEING LIKE THE LAW OF PHYSICS??


Derived from the study of models based on military/catholic church that differ from modern industrial organisations Suffer from ETHNOCENTRISM I.e ignore social,political and economic milieu in shaping organizations Underlying assumptions about human behaviour are only partially true!

AUTHORITY IS NOT THE ONLY MEANS OF CONTROL!!

 PHYSICAL

COERCION

 PERSUASION

 HELP

A half a century ago industrial management had, in the threat of unemployment, a form of punishment which made the use of authority relatively effective. The situation today is vastly different.

When the use of authority does not work dont use less or more. Use another means of influence.

SCHEMATIC REPRESENTATION OF AUTHORITY AND DEPENDENCE

100%

Appropriateness of authority

0% Complete dependence Partial dependence interdependence

AN EXAMPLE OF INTERDEPENDENCE IN AN ORGANISATION

A new manager appears in the textile workers union of america.The manager walked into the weave room directly to the agent and said-I AM THE NEW MANAGER .WHEN I MANGE A MILL,I RUN IT!DO U UNDERSTAND??.the agent nodded and then waved his hand.The workers shut down every loom in the room immediately.The agent turned to the manager and said-GO AHEAD,RUN IT!!

THE PHSYCOLOGICAL ENVIRONMENT OF INDUSTRIAL MANAGEMENT IS LIKE WATER FOR FISHSO MUCH SO PART OF THE ORGANICATION THAT WE ARE UNAWARE OF IT!!

(DIRECTION AND CONTROL THROUGH EXCERSICE OF AUTHORITY)

Theory X - With Theory X assumptions, management's role is to coerce and control employees.
 

  

People have an inherent dislike for work and will avoid it whenever possible. People must be coerced, controlled, directed, or threatened with punishment in order to get them to achieve the organizational objectives. People prefer to be directed, do not want responsibility, and have little or no ambition. People seek security above all else. Example-when I am a boss rather than a leader I am using theory x approach

THE CARROT AND STICK THEORY OF MOTIVATION



Those who took a soft approach tended to use rewards and coaxing in place of coercion or the carrot. Those who used a hard approach tended to use punishment - the stick. These assumptions were rarely stated formally, but most organizations had policies and procedures based on this view

(CREATION OF CONDITIONS SUCH THAT EMPLOYEES CAN ACHIEVE THEIR GOALS BEST BY DIRECTING THEIR EFFORTS TO ORGANISATIONAL SUCCESS)

Theory Y - With Theory Y assumptions, management's role is to develop the potential in employees and help them to release that potential towards common goals.
    

 

Work is as natural as play and rest. People will exercise self-direction if they are committed to the objectives (they are NOT lazy). Commitment to objectives is a function of the rewards associated with their achievement. People learn to accept and seek responsibility. Creativity, ingenuity, and imagination are widely distributed among the population. People are capable of using these abilities to solve an organizational problem. People have potential. When I am a leader rather than a boss then I am using the theory y approach

THEORY X VS THEORY Y
INHERENT DISLIKE OF WORK AVOID RESPONSIBILITY WHEN POSSIBLE PREFER TO BE DIRECTED WILL WORK HARD TO ACHIEVE GOALS ARE WILLING TO ASSUME RESPONSIBILITY ARE CAPABLE OF DIRECTING THEMSELVES CAN MAKE THEIR OWN DECISIONS

CANNOT BE TRUSTED TO MAKE DECISIONS

THEORY X VS THEORY Y
NEITHER SELF MOTIVATED NOR ACHIEVEMENT ORIENTED NOT DEPENDABLE NO CONCERN WITH ORGANISATIONAL SUCCES ARE UNABLE TO CHANGE HAVE A NEED TO ACHIEVE

ARE TRUSTWORTHY AND DEPENDABLE CONCERNED WITH ORGANISATIONAL SUCCESS ARE EAGER TO LEARN AND GROW

CONCLUSION
  

McCregors theory is more far-reaching than a classification of managers. It explains the failure of many management systems and introduces the concept of a new ways of managing. Because there is only so much money that can be offered as motivation and only so much control that can be applied, Theory-X management is limited. However, the possibilities for creating opportunities for people to obtain personal satisfaction, knowledge, achievement, challenge, prestige, and other rewards through work are unlimited. However, McGregor also realized that new ways of managing could not be implemented through old organizational systems.

THEORY Y IN PRACTISE
Participation perspective Management by integration and self control Managerial climate Scanlon plan Performance appraisal Administering salaries and promotion Staff line collaboration

THEORY Y

Staff line relationships

Evolved by late JOSEPH SCANLON,the scanlon plan is a collaborative strategy which has achieved solid results in both economic and human terms It a philosophy of management that rests on the theoretical assumptions of theory y The plan has two central features which in their operation bring about profound changes in organizational RELATIONSHIPS,ATTITUDES AND PRACTICES.

JOSEPH SCANLON-neither of these features alone would be likely to bring about a major change ,linked together however they represent a POWERFUL SYSTEM OF ORGANIZATIONAL CONTROL

CENTRAL FEATURES OF THE SCANLON PLAN

ECONOMIC REWARD COST REDUCTION SHARING HUMAN REWARD

EFFECTIVE PARTICIPATION

COST REDUCTION SHARING



It is a means of sharing economic gains from improvement in organizational performance Utilizes ratio between total manpower costs of the organization and total sales/value added by the manufacturer This method is directly related to success of members in improving over all economic success of the organization

EFFECTIVE PARTICIPATION


A formal method providing an opportunity for every member of the organization to contribute his brain and ingenuity as well physical effort to the improvement of organizational effectiveness Rich opportunities are provided to members to satisfy higher level needs through efforts directed towards the objectives of the enterprise

EFFECTIVE PARTICIPATION(cont.)
  

Distinctly rewards HUMAN CONTRIBUTION The fact of interdependence is accepted Reliance is placed on the know how,ingenuity,innovativeness,human resource of the organization Social and ego satisfaction needs are fulfilled

SCANLON PLAN-EFFECT ON RELATIONS

   

Relations b/w functional groups have changed in scanlon companies All groups have stake in common objectives There is genuine integration/commitment toward organizational objectives All arguments/discussions are centered towards improving organisational performance

Popular because of the large amount of employee involvement in their design, Scanlon Plans are in place at 260 Fortune 1000 companies, as well as many smaller firms. Examples of a few companies using scanlon plan todayscanlonn leadership network,marsh inc.,sara lee knit products,illnois manufacturing association

PERFORMANCE APPRAISAL

Provides systematic control of behaviour of subordinates

Provides systematic control of behaviour of superiors

POSITION DESCRIPTION
Provides an orderly picture of the organisation People become aware of what they are supposed to do Following of a formal chain of command Delimit authority in an organisation

 

Mc gregor proposedPosition descriptions are not a particularly realistic device for telling people what to do Not only do conditions change but so do skills and relative abilities change as well as perception of priorities change Companies would utilize less of their human resource than they now do if managers were to adjust to their position descriptions rather the other way round

 

At two different points in a time ,perhaps a year apart a given position might change from being like figure1 to figure2

Figure 1

Figure 2

GENERAL NOTION

PURPOSES OF APPRAISAL
MOTIVATIONAL

ADMISTRATIVE

INFORMATIVE

WHY APPRAISALS ARE NOT A PERFECT TOOL FOR ADMINISTERING SALARIES,TRANSFERS, PROMOTIONS AND TERMINATIONS??

   

BIAS AND PREJUDICE VARIATIONS IN JUDGES VARIATIONS IN METHODS USED MORE A FUNCTION OF SUPERIORS PHSYCOLOGICAL MAKEUP RATHER THAN SUBORDINATES PERFORMANCE INDIVIDUALS PERFORMANCE IS IN FACT A FUNCTION OF HOW HE IS MANAGED

INFORMATIVE PURPOSE

COMMON DILEMMA FOR SUPERIORS-HOW TO CONVEY??

DO SUBORDINATES REALLY WANT TO BE CHANGED??

MC GREGOR

Few managers are competent to use phsycotherapy Situation of appraisal interview with the superior as judge is the poorest possible thing Managers using it for a counselling purpose is not a good idea!! Subordinates notion-IF I DONT CHANGE,I SHALL BE PUNISHED!!

MOTIVATIONAL PURPOSE

A CHIEF ENGINEER IN A LARGE MANUFACTURING ORGANIZATION WHICH HAS A TYPICAL APPRAISAL PROGRAM DISTRIBUTES COPIES OF APPRAISAL FORM TO HIS SUBORDINATES EVERY SIX MONTHS SAYING-WHY DONT U FILL THIS URSELF FROM HOW U HAVE PERFORMED DURING THESE MONTHS?IL FILL OUT ON U INDEPENDENTLY.IF WE AGREE ,WE WONT NEED TO WORRY ABOUT AN APPRAISAL INTERVIEW .IF WE DISAGREE,WE CAN GET OUT AND THRASH THE DIFFERENCES!!

VIEWS OF PARTICIPATION


IT IS A FORMULA WHICH CAN BE APPLIED BY ANY MANAGER REGARDLESS OF HIS SKILL ,NO PREPERATION IS REQUIRED FOR ITS USE SOME SEE IT AS A FORM OF MANAGERIAL ABDICATION.IT IS A DANGEROUS IDEA THAT WILL UNDERMINE MANAGEMENT PREROGATIVES

VIEWS OF PARTICIPATION(cont)


A MANIPULATIVE DEVICE FOR GETTING PEOPLE TO DO WHAT THEY WANT TO DO DELUDING PARTICIPANTS TO THINK THEY HAVE A VOICE IN DECISION MAKING FOURTH GROUP MAKES SUCCESFUL USE OF PARTICIPATION,BUT DONT THINK IT AS A PANACEA OR A MAGICAL FORMULA

PARTICIPATION IS A SPECIAL CASE OF DELEGATION IN WHICH A SUBORDINATE GAINS GREATER CONTROL,GREATER FREEDOM OF CHOICE,WITH RESPECT TO HIS OWN RESPONSIBILITY!!!

CASE LET US SUPPOSE A MANAGER HAS MADE A DECISION WHICH WILL AFFECT HIS SUBORDINATES.THE CIRCUMSTANCES ARE SUCH THAT HE FEELS HE CANNOT PERMIT THEM TO SHARE IN MAKING THIS DECISIO ,BUT HE IS CONCERNED TO HAVE THEM ACCEPT IT WITH THE BEST GRACE POSSIBLE.WHAT DO U THINK THE MANAGER SHOULD DO??

POSSIBLE PROPOSITIONSHold a discussion to inform the decision and the reasons for taking it Hold a discussion for the best way to implement the decision Discuss a pending decision withhis subordinates and consider modifying his proposed decision Superior present to his subordinate a problem facing him with a request to help him find the best solution Superior says-I will accept any solution u say(if subordinates have a greater stake)

   

PARTICIPATION
     

Provides a greater sense of independence Provides satisfaction through recognition from peers/superiors Subordinates greater influence over matters within the sphere of superiors responsibility Awareness of superiors dependency downward Is consistent with theory y Demonstrates to subordinates how to achieve personal goals through organizational goals

A central characteristic of this relationship is the INTERDEPENDENCE OF THE PARTIES.each party effects the others ability to achieve his goals or satisfy his needs

CONFIDENCE UPWARD..
CONFIDENCE OF SUBORDINATE RESTS ON THE INTEGRITY OF THE SUPERIOR GIMMICKS DESTROY CONFIDENCE SUBORDINATE HAS INSUFFICIENT CONFIDENCE ON SUPERIOR IF HE CEASES TO HAVE INFLUENCE ON DECISIONS AFFECTINF HIM

CONFIDENCE DOWNWARD
Manager A holds people in a relatively low self self esteem.he sees himself as a member of a small elite endowed with unusual capacities,and the bulk of human race as rather limited.he believes that most people are inherently lazy,prefer to be taken care of,desire strong leadership.he sees them as prepared to take advantage of the employment relationship unless they are closely controlled.iN short he holds to THEORY X. OBVIOUSLY HIS THEORETICAL ASSUMPTIONS RELATED TO EMPLOYEES SHALL BE REFLECTED IN HIS DECISIONS

CASE 2
Manager b has a relatively high opinion of the intellegence and capacity of the average human being he sees most human beings having real capacity for growth and development,for the acceptance of responsibilty,for creative accomplishment.He regards his subordinates as genuine assets in helping them fulfill his responsibilities,and he is concerned with conditions which enable him to realise these assets.in short he holds to THEORY Y THE CLIMATE OF THE RELATIONSHIP CREATED BY SUCH A MANGER WILL BE VASTLY DIFFERENT

MANAGER B WILL.
 

PRACTICE EFFECTIVE DELEGATION PROVIDE HIS SUBORDINATES WITH OPPORTUNITY TO DEVELOP THEIR OWN CAPABILITIES UNDER HIS LEADERSHIP HE WILL UTILIZE THEM AS RESOURCES IN HELPING HIM SOLVE DEPARTMENTAL PROBLEMS HIS USE OF PARTICIPATION SHALL DEMONSTRATE HIS CONFIDENCE IN THEM

WHO DETERMINES THE CLIMATE??

CAN A SUBORDINATE HAVE CONFIDENCE IN A GENUINELY INCOMPETENT,DISHONEST,NEUROTICALL Y HOSTILE SUBORDINATE?? SOME PERSONALITIES ARE SIMPLY INCOMPATIBLE FOR REASONS BEYOND CONTROL OF THE ORGANISATION

CONCLUSION


The climate of superior subordinate relationship is not determined by policy or procedure or personal style of the superior but subtle and unconcious manifestations of underlying conceptions of management and the people in general Thats why same policies and procedures yield different results in different organizations

CONVENTIONAL ORGANISATIONAL THEORY DEALS WITH STAFF LINE RELATIONSHIP IN TERMS OF-

PRINCIPLE OF AUTHORITY

AUTHORITY MUST EQUAL RESPONSIBILTY

MC GREGOR
SUCH PRINCIPALS MAY BE GIVEN FORMAL RECOGNITION IN ORGANIZATION CHARTS AND POSITION DESCRIPTIONS BUT ONE WOULD NEVER DEDUCE THEM FROM SRUDIES OF REALITIES OF ORGANIZATIONAL LIFE!!!

NICE SITUATION OR TRAVESTY???

DEPENDS ON THE NATURE OF YOUR THEORETICAL ASSUMPTIONS!!

POWER OF STAFF


The final irony of the whole situation is that now it is the staff and not the line which is beginning to represent the real power in the modern industrial enterprise Staff groups are the ones who help make it possible for management to solve the intricate problems of todays world I.e,financial,technical,scientific and economical Their knowledge and training are extremely essential for the success of the modern industrial enterprise

MC GREGORWE HAVE AN ODD REVERSAL OF COVENTIONAL ORGANISATIONAL THEORY.THE LINE-CENTRAL AND FUNDAMENTAL AUTHORITY IS INCREAINGLY DEPENDENT ON SPECIALISED STAFF GROUPS!!!

Conclusion.
We owe a lot to McGregor and this groundbreaking text. Although much of what he wrote sounds like old news today, it was considered outlandish by many in his day. McGregor and his supporters were derided as soft on employees. Leadership in his era considered coercion and control the only effective ways to make workers fully productive. The bottom line: Theory Y is a management strategy, not a set of tactics, and is based on the quality of the relationship between leaders and staff. McGregor acknowledged that this relationship is a very complex one, fraught with variables. But by stressing the creation of open, needs-based relationships between leaders and workers, McGregor laid the foundations of much of what we practice in leadership today.

THANK YOU