Douglas McGregor

Classical organization theory suffers from "ethnocentrism": It ignores the significance of the political, social, and economic milieu in shaping organizations and influencing managerial practice.

The effectiveness of authority as a means of control depends first of all upon the ability to enforce it through the use of punishment. In the two organizations which have been the models for classical organization theory, the situation with respect to enforcement is clear. In the military, authority is enforceable through the court-martial, with the death penalty as the extreme form of punishment. In the Church, excommunication represents the psychological equivalent of the death penalty.

Human behavior is predictable, but, as in physical science, accurate prediction hinges on the correctness of underlying theoretical assumptions. There is, in fact, no prediction without theory; all 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 we are thus “being ‘practical,” or that “management is an art,” our progress with respect to the human side of enterprise will indeed be slow. Only as we examine and test our theoretical assumptions can we hope to make them more adequate, to remove inconsistencies, and thus to improve our ability to predict.

Man will exercise self-direction and self-control in the service of objectives to which he is committed.

Knowledge accumulated during recent decades challenges and contradicts assumptions which are still axiomatic in conventional organizational theory. Unfortunately, those classical principles of organization — derived from inappropriate models, unrelated to the political, social, economic, and technological milieu, and based on erroneous assumptions about behavior — continue to influence our thinking about the management of the human resources of industry. Management's attempts to solve the problems arising from the inadequacy of these assumptions have often involved the search for new formulas, new techniques, new procedures. These generally yield disappointing results because they are adjustments to symptoms rather than causes. The real need is for new theory, changed assumptions, more understanding of the nature of human behavior in organizational settings.

The approach that dominates organizational theory, teaching, and practice for most of the twentieth century looked at organizations from the top-down, starting with a view of the CEO as the "leader" who shapes the organization's strategy, structure, culture, and performance potential. The nature of work and the role of the workforce enter the analysis much later, after considerations of technology and organization design have been considered. However, if the key source of value in the twenty-first-century organization is to be derived from the workforce itself, an inversion of the dominant approach will be needed. The new perspective will start not at the top of the organization, but at but at the front lines, with people and the work itself — which is where value is created. Such an inversion will lead to a transformation in the management and organization of work workers, and knowledge. This transformation was signalled by McGregor, but we must go further.

We live today in a world which only faintly resembles that of a half century ago. The standard of living, the level of education, and the political complexion of the United States today profoundly affect both the possibilities and limitations of organizational behavior. In addition, technological changes are bringing about changes in all types of organization. In the military, for example, it is becoming increasingly difficult to manage a weapons team in the field as a typical infantry unit was managed a couple of decades ago. Such a team requires a high degree of autonomy. Instead of following explicit orders from superiors, it must be able to adjust its behavior to fit local circumstances within the context of relatively broad objectives. (It is interesting to note the attempts that are made — by "programming" for example — to retain central control over the operations of such units. Established theories of control are not abandoned easily, even in the face of clear evidence of their inappropriateness.) Underlying the principles of classical organization theory are a number of assumptions about human behavior which are at best only partially true.

The key question for top management is what are your assumptions (implicit as well as explicit) about the most effective way to manage people?

It is one of the favorite pastimes of headquarters groups to decide from within their professional ivory tower what help the field organization needs and to design and develop programs for meeting these "needs." Then it becomes necessary to get field management to accept the help provided, and a different role is taken by the staff: that of persuading middle and lower management to utilize the programs.

It is probable that one day we shall begin to draw organization charts as a series of linked groups rather than as a hierarchical structure of individual "reporting" relationships.

Behind every managerial decision or action are assumptions about human nature and human behavior.

The ingenuity of the average worker is sufficient to outwit any system of controls devised by management.

The essential task of management is to arrange organizational conditions and methods of operations so that people can achieve their own goals best by directing their own efforts toward organizational objectives.

Formal theories of organization have been taught in management courses for many years, and there is an extensive literature on the subject. The textbook principles of organization — hierarchical structure, authority, unity of command, task specialization, division of staff and line, span of control, equality of responsibility and authority, etc. — comprise a logically persuasive set of assumptions which have had a profound influence upon managerial behavior.

Above all, it is necessary to recognize that knowledge cannot be pumped into human beings the way grease is forced into a machine. The individual may learn; he is not taught.