Douglas McGregor, Revisited: Managing the Human Side of the Enterprise [Kindle Edition]

Part 1 Why McGregor Matters

Part 2 Selected Essays of Douglas McGregor

In the first part, the authors provide a brilliant introduction to the essays which then follow. They quote liberally from McGregor's classic work, The Human Side of Enterprise. Perhaps you are already familiar with Robert Owen (1771-1858) whom James O'Toole characterizes as "the Thomas Edison of social invention. He was the first to devise or advocate numerous practices in industrial relations, education, and social policy that are still considered progressive today, more than 130 years after his death." More than a century later, McGregor addresses many of the same issues which Owen did. For example:

1. Creating a workplace in which people are treated as human beings

2. Offering incentives and rewards which enable people to motivate themselves to produce work of consistently high quality

3. Viewing the work force as an investment, not as a cost

4. Supporting and nourishing the personal as well as professional development of that work force

5. Formulating means by which to measure worker performance accurately...and fairly

Here is a brief excerpt from The Human Side of Enterprise:

"The outstanding fact about relationships in the modern industrial organization is that they involve a high degree of interdependence. Not only are subordinates dependent upon those above them in the organization for satisfying their needs and achieving their goals, but managers at every level are dependent upon all those below them for achieving their own and organizational goals."

These observations by McGregor explain why it is no coincidence that, year after year, the companies rated "the best to work for" are the same companies which dominate their respective industries, the same companies which have the greatest market value.

In his various works, McGregor devotes substantial attention to two different theories which "are not managerial strategies. They are underlying beliefs about the nature of man that influence managers to adopt one strategy rather than another." The core assumptions of Theory X are that (1) managers alone must organize and control the work to be done, (2) workers must totally subordinate their needs to those of the organization, (3) without strict supervision, workers would be indifferent (perhaps resistant) to the organization's needs because (4) the average worker is indolent, lacks ambition, prefers to be supervised, is self-centered, and dislikes change.

The core assumptions of Theory Y are that (1) "People are not by nature passive or resistant to organizational needs.", (2) "The motivation, the potential for development, the capacity for assuming responsibility, the readiness to direct behavior toward organizational goals are all present in people. Management does not put them there.", (3) "It is the responsibility of management to make it possible to recognize and develop these human characteristics for themselves.", and (4) "The essential task of management is to arrange organization conditions and operation so that people can achieve their own goals best [italics] by directing their own [italics] efforts toward organizational objectives."

Thanks to Heil, Bennis, and Stephens, we now have in a single volume both a brilliant analysis of McGregor's ideas as well as an analysis of the implications of those ideas, and, a selection of McGregor's essays in which those ideas are introduced and developed. Who will gain the greatest value from this book? Those who now know little (if anything) about one of the most influential business thinkers. I agree with Drucker that, "With each passing year, McGregor's message becomes ever more relevant, more timely, and more important." I presume to suggest that that will continue to be true so long as there are organizations in which human beings have work to do.

Everyone was excited about the potential of his assumptions about people in the workplace: Employees want to do a good job; they will make extra effort to learn and accomplish more; they have the potential to much more; and it makes great sense to get everyone involved as much as possible. At the time, it seemed like the first breath of fresh air in the stale world of corporate bureaucracies. Although I haven't thought much about McGregor in over 20 years, I realize that I was profoundly influenced by his thinking.

Reading this fine book gave me a valuable new perspective on McGregor -- that a central weakness of many companies and managers is that the comapny's leadership is not consciously aware of what it assumes about its employees. While almost every company espouses humanistic and empowerment ideas and ideals, many continue to operate in the same old command and control way. Most of the focus is on creating carrots and sticks to manipulate behavior.

Why don't people get it? McGregor had figured out that managers don't think much about their assumptions about employees. McGregor made the important point that everyone needs to determine what those assumptions are (Can people be trusted? If yes, use Theory Y. If no, use Theory X). What happens now is that many people hold Theory X beliefs that employees cannot be trusted and but try to use Theory Y methods (that they can), and the mixed messages keep everyone confused. 'I want you to take full charge of this project, but check with me before doing anything.' Sound familiar?

In particular, managers don't really understand Maslow's hierarchy of needs. As simple needs are fulfilled, psychic needs become more important such as working on something that will make a difference. Chapters 6 and 7 are especially good on how intrinsic personal motivation is created.

This book is excellent in that it contains a retrospective perspective on McGregor as well as some of McGregor's own key essays. I especially enjoyed Warren Bennis's essay on the weaknesses in McGregor's argument: How do managers get their needs served if they are always servant leaders (see Joe Jaworski's excellent book, Synchronicity to get an answer to that) and what is the role of the environment on the needs of the worker in the workplace? Clearly, the Internet is one example of a new force that irresitibly is creating Theory Y contexts for accomplishment, independent of what managers do.

The main weakness of this book is that it does not point out that the limit to Theory Y was that McGregory did not give enough detail to make it possible to know exactly what to do. See Bill Jenson's book, Simplicity, for the significance of this mistake by McGregor.

Whether you believe that employees cannot be trusted or that they are your first line of offense and defense empowered on their own, you will benefit from reading and thinking about the questions and topics in this book. It can be an important step forward toward helping you build an irresistible growth enterprise.