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Dictate, motivate, or what? That is the question when founding a new enterprise anywhere in the world. New enterprises become part of the culture. It is therefore important how they contribute to that culture. In the US, big business is too authoritarian to produce a net effect of fostering peace among world societies. This page illustrates why that is so and outlines methods proven to be better.

Have you ever seen two organizations locked in endless battle? One is driven by a taskmaster who demands total compliance down to the last detail. The other is led by a coach who mentors all of the common goals and who asks for feedback continuously on how to get there. Which style is winning and why?

These styles represent the extremes of business governance, and the battle of management style was formally joined several decades ago. That contest is now well along and it provides background for this page. I use the term governance to mean the style by which an enterprise manages itself. Governance is not so much about hierarchy and organization charts as it is about behavior of individuals and collectively, of how people manage themselves, their jobs, and their enterprise. Governance is also about how people interact and set examples for others. All these define what we are as an organization. Governance is rarely something written down; it is a culture, and it flavors everything. Governance can arise from a set of commandments; it can also develop ad hoc with or without much design. Unlike governors in stable societies, founders of start-up enterprises have the opportunity to create or greatly influence the governance style of their enterprise. It is far easier to establish appropriate governance up front than it is to change it later on after it has taken root.

Historical Development
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The American political history of the last 200+ years carries a simple yet profound message. The current Administration and Supreme Court notwithstanding, Jeffersonian democracy is now widespread and gaining in much of the third world. Political systems having regard for the individual simply work better than do authoritarian ones. And so it is with organizations and businesses. The U. S. Constitution, with its separation of church and state and tripartite checks and balances, is a leading model—as shaky as it can be at times.

Throughout western history, enterprise was shaped first by tribal chieftains, then by feudal or religious lords who gave way to industrial chieftains (Robber Barons) who were in turn replaced in the late 19th Century by the Big Boss for hire. The Big Boss is typically Authoritarian and exclusionary. His style was and often still is a solo command-and-control style that has come to be known as Theory X.

Fourteen-hour days and child labor drove the wheels of the industrial revolution until the early 19th century. That changed, however briefly, when Robert Owen took over managing a textile factory in the Scottish mill town of New Lanarck. No one knew it at the time but a new day had dawned. Among other innovative changes, Owen instituted shortened working hours, a grievance procedure, pay-continuance during business downturns, and contributory health, disability and retirement plans. He did these things while getting rich in the process. Ordinary stuff today, but remarkable (and highly profitable) in his time. Owen was more than an industrialist; he was a social visionary and much of what he instituted in his business is now embedded in modern British society. His New Lanarck experiment included the entire community. By harnessing waterpower and his philosophy, productivity of the New Lanarck ensemble was hundreds of times what had been standard when he was born. His philosophy was simply "rational approach [to any problems at hand]." There was no punishment, only encouragement and kindness. He was a doer, not a talker. When he later began publishing his ideas, radical for his time, he became an outcast. In pre-Victorian England, Owen's reduction of child labor and other advanced ideas were not just novel—they were threatening. He was attacked from all directions. Although he publicly became a nonperson, he became president of the first Congress at which all the Trade Unions of England united in a single great trade association. He never gave up working to better the plight of the common man.

In the end, Theory X survived alive and well. Nevertheless, Owen's procedures eventually became vertebrae in the backbone of a new management style (Theory Y), as we shall see—more than a century later.

Later in the 19th Century, as the Industrial Revolution began running on steam, productivity multiplied yet again. However the oppressiveness of Theory X allowed intimidation and violence to stand in for leadership. Inevitably, labor unions rose to give employees the voice they needed to improve their lot in industrial America. Even today, some Theory X organizations run into unionization drives because of their poor working environments. I know poor and hazardous working conditions first hand; I once belonged to two different labor unions as I labored in the mines and canneries right after WW II. One of my partners lost his life in a cave in. His family received only his earned wages, and they had to wait months for that.

Theory Y provides a better way—by giving employees a direct voice and the sense of ownership and loyalty that brings. That union membership is now in decline is doubtless due in part to improving dialogue between management and the workforce-what Theory Y is all about.

Hawthorne Studies
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In 1924, Western Electric began experiments to determine what roles lighting conditions might have on productivity. They experimented for three years before concluding that lighting conditions as an independent variable had no clear effects.

In 1927, aware of the lighting results, George Elton Mayo of the Harvard Business School became curious whether fatigue and monotony might affect productivity. With Western Electric's cooperation, Mayo instituted a five-year study into the effects of working conditions on productivity. His studies were done at the Western Electric Hawthorne Works in Chicago. Women employees assembled telephone relays, comprised of 40 separate parts. Mayo directed the experiments that were carried out by Hawthorne personnel.

For this second series of experiments, two women were selected who in turn selected four more who became the experimental group of six. These people were then given a separate area in which to assemble relays. An easy-going "supervisor" was selected to be a "friendly observer." The rest of the Hawthorne plant served as the control group—meeting one condition for scientific validity. Another condition for such validity, lack of extraneous effects, was met by selecting a supervisor who would be a friend, not a disciplinarian.

Effects such as working hours, rest breaks, temperature and humidity were studied systematically as independent variables, one at a time. Owen's results are captured in the following table.

Piece work (8 weeks) Increase
Two 5 minute rest breaks (5 weeks) Increase
Two 10 minute rest breaks Sharp increase
Six 5 minute rest breaks Slight decline
Two rest breaks, with free hot meal Increase
Work day decreased 30 minutesIncrease
Work day decreased 1 hour No change
Back to standard conditions All-time record high

Medical evaluations showed no evidence of cumulative fatigue. An 80% reduction in absenteeism was an unexpected side benefit. Mayo had made a startling discovery. It is not so much the conditions; it is the rules, or rather lack of them. Returning to the starting standard conditions produced an all-time record productivity; this was totally unexpected. Something else besides fatigue and lighting was afoot. These women had developed an increased sense of individual responsibility that came individually from group interactions and pride, not management!

Each woman had been allowed to assemble her relays in any manner she wished—with the more intelligent ones changing the sequence more often to combat boredom. The supervisor essentially stood aside except for necessary functions such as maintaining the experimental conditions and record keeping. By feeling they were part of the process, these women realized their own dignity and self-worth. Their motivations to excel arose from within themselves as part of the group. It could not have come from the Big Boss nor did it come just from the common need to earn a living. The control group next door, suffering under the old management style and conditions, set no records. Mayo created conditions under which people by their own actions could satisfy their need for achievement. There is no doubting the validity of Mayo's findings. Mayo's long term researches fully affirmed the results of Owen.

David McClelland, also of Harvard, later found similar results in his study: Need for achievement is a distinct human motive that can be distinguished from other needs.

Douglas McGregor

Mayo's results largely went ignored by business as World War II came and went. Not until 1960, when Douglas McGregor also of Harvard, published his "Human Side of Enterprise," did professional business managers begin to take serious notice. McGregor developed a formal definition of Theory Y management style that stood in dramatic contrast with Theory X, the predominant practice of his day. McGregor in his "Human Side of Enterprise," ISBN 0-07-045098-6, codified the two styles as follows:

Theory X Precepts
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  • The average human being has an inherent dislike of work and will avoid it if he can.
  • Because of this human characteristic of dislike of work, most people must be coerced, controlled, directed, threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives.
  • The average human being prefers to be directed, wishes to avoid responsibility, has relatively little ambition, wants security above all.

Theory Y Precepts
  • The expenditure of physical and mental effort in work is as natural as play or rest.
  • External control and the threat of punishment are not the only means for bringing about effort toward organizational objectives. Humans, if allowed to, will exercise self-direction and self-control in the service of objectives to which he is committed. [To be sure, not everyone will be equally adept at doing so, but a well balanced society will have jobs for everyone.]
  • Commitment to objectives is a function of the rewards associated with achievement.
  • The average human being learns, under proper conditions, not only to accept but to seek responsibility.
  • The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the solution of organizational problems is widely, not narrowly, distributed in the population.
  • Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partially realized.

McGregor's book arose from an earlier speech at MIT with the same title. Warren Bennis at USC had things to say:

    "…this book, more than any other book on management, changed an entire concept of organizational man and replaced it with a new paradigm that stressed human potentials, emphasizing human growth, and elevated the human role in industrial society."

Frederick Herzberg in 1966, also picked up on what McGregor had to say. Herzberg discussed motivation as having two factors:

  • "hygienic factors" if not addressed lead to dissatisfaction and
  • "motivation factors " that contribute to job satisfaction.

Herzberg demonstrated that achievement, recognition, work itself, and responsibility are the most important motivators, but personal growth and advancement are also important. In contrast, he showed that demotivators were associated with supervision and the working environment. These are awesome messages.

In 1970, a management practitioner, Robert Townsend, of Avis fame, published "Up the Organization" in which he related his many Theory-Y experiences to good effect. This best seller elevated Theory Y to national awareness.

In spite of Mayo's solid evidence—complete with its scientific controls and the later findings in support—Theory Y was slow to find acceptance in the work place because such ideas:

  • were counter to prevailing thought and feeling;
  • undermined the most basic tenets of command and control;
  • gave some power to the masses;
  • were not the intended result;
  • involved change which was too scary to consider;
  • were certainly not the boss's ideas, and
  • happen to be somewhat contrary to the other side of human nature, the Authoritarian Personality that often drives people seeking power over others. Such people cannot see beyond motivating by punishment.

For all the above reasons Theory-X bosses and their leaders resisted change to a Theory Y mode. Nevertheless, McGregor's interpretations inexorably begin to take hold. Management styles recognizing personal respect, involvement, and team play enhanced all dimensions of the human experience, including the bottom line. Theory Y was reborn and by the end of the century it was generally recognized as the best method available—even as it was still too rarely practiced.

Dignity and self-worth are built into our national Constitution and these elements encourage immigrants to high levels of productivity upon arrival in this country. Look what they achieved over the last two centuries. All these immigrants were given was individual opportunity and the respect ensured by our Constitution. It remains so today. For example, immigrants from the world over arrive steadily to enjoy the fruits of freedom, democracy, and free enterprise. Their motivations include individual need for achievement, recognition, self-worth, and getting ahead economically.

Industrial histories in the 20th century show the gradual but increasing adoption of Jefferson's ideals. By the latter 20th century, the world market economies that flourished were those with innovative management systems that were participative and inclusionary (where people largely made their own work decisions). Personnel Offices, controlled by regulations, became Human Resource Departments, focusing on the value of employees as human beings.

The postwar Japanese experience (in contrast to Detroit) in decentralized decision-making provides a dramatic case in point. And so does the belated response of Detroit. The Japanese riposte to that was to become more like us, less monolithic in their culture. Already there is some influx of foreign workers into Japan and more will be needed to maintain their economy, even though the foreigners remain second class citizens. Inevitably immigration brings social change. Japan's evolution to still higher ground has just begun even as further progress remains mired in cultural traditions.

Exclusionary Management Systems

Because of his/her power to intimidate or fire, a Theory X boss with an idea that is off-track, even slightly, is rarely stood up to. His/her power (or perception thereof) instills fear throughout the organization. Employees do not question the boss's rationalizations that displace blame upon others. They dare not openly question the boss when he takes, or is given, credit for events that he had nothing to do with—or even fought against. In these matters the following features tend to be barriers to higher enterprise performance.

In a Theory X enterprise, employees may:

  • be handicapped by their own inexperience in dealing with a "tough boss";
  • be simply naïve (not know there is, or can be, a better way);
  • feel helpless in the emotional turmoil created by fear of the Big Boss;
  • have been drilled into a military-like discipline in his/her formative years;
  • fear being ridiculed in public-a natural enough response;
  • have a deep-seated sense of duty to, and fear, of authority;
  • have a mindset of blind obedience [see Adorno, Milgam, Zimbardo, Altemeyer on this site];
  • feel social pressure not to rock the boat (very common);
  • not challenge the obviously absurd because they lack confidence in themselves or in their own perceptions;
  • not take the time needed to think the issues through;
  • have hang-ups (defenses) of their own that blind them to reality;
  • simply fear conflict;
  • realistically fear losing their jobs;
  • be simply kept in the dark about issues important to them (also very common); or
  • too readily accept the status quo because prior experience demands no less.

These illustrate the struggle between exclusionary power at the top (telling you) and inclusionary dialogue with the ranks (asking you). In too many cases, Theory X has roots in an insecure boss who fears s/he will be seen as a weak person, and who may be authoritarian because s/he cannot deal with any question about his/her own ideas or abilities. Such a manager compensates by being an overly aggressive commandant and counters his/her inner fear of being a weak person. Theory X is also fostered by prior military training where a strict command and control is enforced.

The Big Boss - Exclusionary Micro Manager
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Theory X managers view people much less optimistically than do their Theory Y counterparts. Consider a situation where a command and control type of person is in power and must deal with a serious problem. As long as the questions from you and others are simple and non-threatening, conversation flows smoothly. But if the conversation moves into a sensitive area, s/he may redirect it or cut it off altogether and move discussion away from resolution—without resolving the problem. People in power do after all have the right to veto and more and insecure bosses too often abuse that power—if instinctively.

It takes courage, in such a Theory X environment, to stand and ask probing or tough questions, especially if the boss views the questioner as a troublemaker, which in the boss' perspective the questioner may well be. In my experience, any potential for an idea being ridiculed or vetoed stifles free expression. Probing questions do not often surface because of outright fear of the Big Boss. And even if the boss tries to probe, he rarely gets any response except that of "yes, boss," which is nowhere.

The Big Boss, in these situations, may:

  • be blinded by his/her own perceptions or projections;
  • not listen even as s/he demands to be heard;
  • be sensitive to the fact that s/he did not think of it;
  • fear the answer;
  • fear the person with the answer;
  • feel threatened;
  • reject the method out of hand because the method was not his/her idea.

Most people are left unheard if not totally silent in the face of these communication barriers.

In action, the Big Boss may often have a narrow view of what his/her job is or even who s/he is. One Big Boss I worked with was adamant that he was a people-oriented person and "loved" everyone. His actions spoke otherwise. The group of people he managed was often in turmoil. Conflicts arose that were never resolved. Not until he gave a private party with people from higher levels in the company, neighbors, and friends attending, did I begin to realize the depth of his manipulation and self-delusion. He spent the evening ignoring the "common folk" while ingratiating himself with his higher ups and a pretty lady. Some guests found it impossible to even say good night, so engrossed was he with the "powerful" and "beautiful".

Inclusionary Management Systems
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The best Theory Y leaders, coaches by nature, try to create environments free of fear. These leaders believe that people are naturally motivated, and that by providing an environment that enhances natural motivations, the best in creativity and performance is achieved. The Theory Y goal is to promote cooperation and teamwork by open communication among people, departments, and between levels in the enterprise. In this situation, the creative person is free to lead the rest of us out of the darkness—the leadership mantle shifts from one to another as needed for their particular wisdom.

By recognizing the value of individuals in the workplace, Theory Y respects individual importance. In fact, when self-motivated, each individual can achieve beyond all expectations. You have a Theory Y leader when you hear him/her respectfully ask, "What do you think?" with feeling, sincerity, and empathy. You have a Theory Y leader when no issue important to the group is off limits or cannot be fully discussed. You have a Theory Y leader when s/he can, when necessary, alter the structure of the ship or cut back the work force while creating positive experiences in the process. Theory Y managers are not little bosses, but they often command more real power than the Big Boss ever can. Inclusionary systems motivate and execute on the floor or executive mansion, while the middle level departments may be staffed to take advantage of authoritarian rigor in departments such as engineering, accounting, analytical lab and law. Research can often accommodate both when they require both imagination the find the concepts and rigorous follow-through.

Further clues about governance can be found in nature itself. I see interdependence everywhere, among individuals, groups, species, and bio-systems. On the grand scale, we all depend upon the sun which was born of the universe we are part of. We arrive on this planet as helpless beings and, if we live out our natural lives, we often end up the same way. In between, city folk, for one example, depend on farmers for food and farmers rely on city folk to improve farming equipment and technology. This is cooperation; it is not command and control.

There is hierarchy apparent-on the grand scale.
Elements of each theory are in the nature of things.
Striking a proper balance is the key to a great start-up and its potential for positive growth.

Nature can be a tough place—if you are prey, or if you have to compete with your brethren for food. Theory X might eulogize the hunter or warrior, but after all is said and done, what can a hunter or warrior accomplish in society? Devour human prey? Conquer other people? This "law of nature" happens every day in typical corporate America—but it is not consistent with Jeffersonian Democracy nor does it win the hearts and souls of those involved. At best it maintains an animalistic stasis. There may be a lesson here for the world at large—where terrorism, driven by authoritarian sociopaths hijacl not only corporations, but governments, banks, and religions as well—has become common place.

Management Styles for New Ventures
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Organizations are dynamic and "fit for battle" when they make continuous learning and distributed decision-making their daily business and part of their strategies. Instead of fighting each other, your employees put their hearts into making the organization what it can be, focusing on and taking pride in:

  • being part of a great organization,
  • living in harmony with nature and all of humanity,
  • removing workplace negatives and barriers to high morale,
  • manufacturing quality products at lowest possible cost,
  • improving the retrieval, processing, and using of information,
  • providing customer services,
  • bridging all management levels with dialogue, and
  • competing by continuous learning and advancing the state of the art.

Organizations are dynamic and fit for battle when they make continuous learning and distributed decision-making the basis of their culture.

Leaders who serve their stakeholders well do so by increasing and relying upon human capital to effect enterprise growth from within.

The clearly defined issue is how to balance authority between a central figure and those who actually get all the work done. Structure and central authority are clearly needed to avoid chaos, enable systems, and for legal reasons. Just as clearly, in a team of people with various skills, it does not often pay to challenge the experts as the team struggles for understanding and integration of thinking. If you are in a burning building, you had better follow the person who knows the way out.

A proper application of Theory Y recognizes these needs for structure. The crucial difference is that Theory Y leaders win their leadership positions through the respect they earn while Theory X managers are appointed simply to exert command and control. Too often the only perceivable qualification of a Theory X leader is that s/he is aggressive or a control freak by nature. I have known several.

Each management style has its vulnerabilities. Some Theory Y managers are reluctant to discharge employees for cause, circumstance, or budget. Theory X managers are too eager to discharge and are often wasteful of human capital—their people spend too much time fighting each other and not enough time competing in the market place, even when their best thinking and experience are demanded by the situation. Each management style, for different reasons, can neglect the need for organizational change even after the need is obvious to all. Avoiding the extremes is the name of the game.

We all differ in our abilities to do this or that job while having a fundamental human need for achievement, personal regard, and professional respect. Respect cannot be commanded; we earn it by how we apply our skills, how we interact with others, and for what we are (character). It is up to the group to decide how successful we are. It is both that simple and that complex.

Command-and-control has long been a military tradition. But guess what? Even there it is changing, at least in the US military. Military after-action reports weigh the opinions of everyone. A private is expected to fault a general if the latter erred. The Gulf War was the first field-test of the new mentality. The later experiences in the Balkans, Afghanistan, and Iraq similarly showcased this new effectiveness of soldier involvement with his/her superiors.

Certainly Theory X has a place in the military, but it can have serious consequences. General Patton said: "War is a very simple thing, and the determining characteristics are self-confidence, speed, and audacity." However Bradley and Eisenhower both questioned Patton's style of incurring excessive casualties. Five decades later, their questions found some answers applied in the Gulf, Bosnian, Afghanistan and Iraqi wars.

Jack Welch, of GE fame, has been quoted in a similar vein: "[Leadership requires] speed, simplicity, and self-confidence." Welch has his critics, as General Patton did. He is not called "Neutron Jack" without reason. He is certainly a strong and dramatic leader, redefining the term in the contemporary press. Certainly he made a number of very effective strategic and organizational decisions at GE and deserves high recognition for all that.

Could Welch (who engineered such a dramatic make-over of GE as its CEO) have done even better with inclusionary leadership throughout GE? I think so. We cannot know for sure, since there is no scientific comparison on the scale of GE—like Mayo arranged. But Mayo's results have stood the test of time.

And there were other variables at work at GE—at least three that we know about. Welch was among the first to ride the Black-Belt-quality wave. When Black-Belt statistical and control procedures are applied throughout all elements of a large company, their effects on efficiency can be dramatic-and independent of management style. Secondly, Welch developed highly refined and efficient information systems and procedures. These too have positive effects on productivity under either management style. Finally, much of the growth Welch is credited with came from acquisitions of other companies. Acquisitions are not growth in capital so much as they are in the corralling of it. None of these procedures is the sole province of Theory X leadership. Nevertheless, take these combined effects out of GE's growth and how does Welch look? And why do so few of the folks at GE feel self-actualized and safe in their jobs? Looked at in these ways, his accomplishments seem more human. Still he steered the ship that did some great things.

When Welch finally recognized that an inclusionary style works better, he adopted it for his inner team because it works, not because it is his natural style. From my personal observations and reports I read, Welch's later inclusionary style never penetrated much below his direct reports. All but one went their separate ways with Welch's retirement! When we think of Jack Welch, we can admire his brain, his dedication, and what he achieved. How he got where he wanted to go gives us pause. Nevertheless, like Henry Ford, he is worthy of objective study.

What is certain is that when people feel safe, creativity and unity of purpose arise spontaneously. Theory Y is successful in part because it removes realistic reasons for fear-the largest being the rational fear of the Big Boss. When people are safe, they can lay down their defenses, be creative, and achieve results. Theory Y managers are moderates; theory X people are the little dictators.

To further contrast the extremes between these management styles:

Exclusionary Boss Inclusionary Coach and Leader
Covers up mistakes; finds a scapegoat Mistakes are to be learned from
Can be paid irrational bonus / salary Earns his/her way by creating value
Shoots from hip autocratically Seeks counsel, tries to act wisely
Runs a sweat shop Leads from acclimation and by example
Demands loyalty Earns loyalty
Demands commitmentAllows natural commitment to develop
Views talented people as rivalsGives talented people responsibility
Micro-manages Distributes decision making
Appoints his Successor Enables successor to earn his job
Is the governance Relies on governance

In applying this table, it is good practice to use a scale, say from 1 to 10, left to right. We don't have enough data for this table to provide statistics. Suffice to say, most people score in the middle ground. On averaging the ten traits, virtually no one scores at or near 1 and the same is true of 10. It is also clear that each trait has its own average and standard deviation that can be used to calculate significance. In the U.S. at least, one must be careful what questions are asked. Question regarding gender ID, ethnicity, religious preference, and the like may be illegal unless you can prove a certain feature is demanded in the job.

If your goal is to create capital, then you should seriously consider structuring your organization to do so. In one example, authoritarians do well in careers such as finance, operations, sale, strategy, and legal where organization and uniformity are important. So hire accordingly. For other positions such as top management, marketing, research, development and marketing, people oriented individuals do much better than does the big boss. The typical enterprise is organized along strict command-and-control reporting lines.

In contrast, an inclusionary structure could look quite different. It could have entities such capital formation (staff functions-human and real capital), performance (staff functions-continuous improvement quality, professionalism), administration (line functions-operations, finance, marketing, human resources, public relations, legal) reporting to each coach who work together. Here the line-operating core would be supported by and responsive to the surrounding staff functions looking out for things that need continuing emphasis, all in dialogue.

These structures are not mutually exclusive. How much of which structure you choose depends on the situation of course. Each can create capital. Only one does so by purposely enriching the individual experience and growth. This company grows by growing human capital by encouraging the very best thinking and performance from all its constituents.

Equally true, many people, for whatever reason, are more comfortable with tightly controlled environments; bankers and manufacturing types seem to be in this category and often for good reason. The most common reason is that most people are authoritarian by nature, an artifact of evolution fostered by like mindedness, not by enhancing individual potentials. But these people can still fit nicely in Theory Y organizations, where their special talent in focusing is quite useful, even vital.

Some Anecdotes

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I have worked for several Theory X managers and observed many more. One I observed could not comprehend why people feared him, though he knew well that they did. He saw himself as a Theory Y manager when he was Theory X at heart. But Theory Y, being reality-based, fails when "used" by phony people in authority. The reason is simple. The truly "X" style boss wearing a "Y" leader mask is transparent, no matter how loudly s/he may proclaim otherwise. His/her real self leaks through because s/he is basically putting on an act. One important reason why Theory Y management works so well so often is that people know they will have something to say about decisions affecting them and are therefore more apt to support them.

One theory "X" boss I knew had an "open door" policy (to go with his generally closed mind), which he broadcast loudly and repeatedly, yet virtually never did his employees visit. Only his two cronies came by. This man installed one of his cronies as his would-be successor only to discharge her after she alienated suppliers, customers, and co-workers alike, after much too long a trial.

This Theory X manager was eventually replaced as well by a natural Theory Y type, from the outside. In contrast, the new manager, being a natural Theory Y personality, never felt he had to say a word about an open door. Within days, streams of "co-workers" were dropping in, giving him the real low-down on how they felt, and about what was going on in the workplace, in the market, and with suppliers. It took the organization some time to recover, but the recovery began immediately and the needed force reduction went smoothly. When Theory X managers are phony (hyper-defensive) command-and-control types, they miss the vistas and may even leave grave damage in their wake as this one did. Not all are that bad. In fact, recent research shows that in many cases, theory X organizations do rather well, in spite of their high turnover. This observation says a lot about the average American worker, s/he works in a professional manner, regardless of who is in charge.

I know two Theory Y managers in otherwise Theory X companies. Each is doing well but is miserable. They stay only because they feel obligated to protect their people from irrational pressures and prods while implementing the good stuff the organization really has to offer. In each case, their departments routinely exceed goals set by the owners. These people play politics only when they have no other recourse. But when they do have to, they are usually effective. Being a solid citizen in the Y model can give you strength.

It seems obvious then that talent and skill are only part of the equation. In my experience, a governance that honors human dignity will be the better for it. Hiring people already having that quality will go far toward establishing such a corporate ethos and ambiance. My personal governance choice comes down to being fair and real with empathy for others. It works. My numerous achievements were all enabled by my many friends, colleagues, and co-workers at all levels.

A retreat for high-level industry leaders to discuss the business future was convened to define what to look for in recruiting people. Qualities they came to were:

  • how to think
  • how to relate
  • how to use appropriate productive technology

Add character, initiative, energy, and commitment to these qualities, and you have the makings of an entrepreneur. New ventures can afford nothing less.

How to hire the right folks for the right job and to support your intended governance becomes clearer the more we know about the human personality.

The astute reader of the above will see the Authoritarian Personality walking through enterprise as if they own it. In large measure they actually do—all the way to the boardroom. There are some logical reasons why. Professions such as accounting, engineering, computer systems, manufacturing, require intellectual focus. Authoritarians have this feature in surplus. Add to this mix, Milgram's finding that most of us are authoritarian to some degree, and we have a natural fit between our personalities and what is required in the most important sectors of enterprise.

This is the very reason Mayo's breakthrough in understanding Robert Owens great success never rose to dominance—indeed it is the opposite. The efficacy of Theory Y management has been proven many times over. I have personally seen it work and work well in two companies: The Alta Group in Fombell PA, and E-Chem in Taiwan.

This page may be a little oblique to terrorism, but to combat hard times, it is helpful to know how to optimize productivity in enterprise. We may just need all we can get. The up side is that most authoritarians do yeoman duty in enterprise; it is the relatively-extreme top dogs that are the problem—when they are robber barons, sociopaths, dictators, or plutocrats whose only goal is to widen the gaps between themselves and the rest of us.

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