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Jack, let's start with a basic question. You've been in this job 17 years, and yet you're still bursting with energy. How come? What makes you so energized?

Jack Welch: There are a thousand things, I think. I have the greatest job in the world. We go from broadcasting, engines, plastics, the power system—anything you want, .we've got a game going. So from an intellectual standpoint, you're learning every day. We get a great kick out of the fact that we have made this company think outside itself. We want people who get up every morning with a passion about finding a better way: finding from their associate in the office, finding from another company. We're constantly on the search. We brag about learning from Motorola, HP, Allied. Wal-Mart—we learned quick market intelligence from them. Toyota—asset management.

So we've designed a culture that gets people to look outside the company, and we've designed a reward system that's aligned with that. As Herb has said, the rewards of these jobs have to be in the soul and in the wallet. I get a sheet every week of stock optionees who've cashed options. This year we will see $1.6 billion in employee gains in stock options; $1.2 billion of that will be below any senior-management level. Some 40 percent of our optionees make $70,000 or less. If they got a thousand shares each of the past five years, they would today have a gain of $800,000. In five years they've gotten about 12 times their annual salary. That's a kick.

and Herb Show

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CHAPTER 2 THEORIES OF MANAGING PEOPLE

Sam Walton used to say that it takes a week to two weeks for employees to start treating customers the same way the employer is treating the employee. Everybody who's ever flown Southwest Airlines notices a big difference in the way you get treated at Southwest. What are you doing to these people to make them treat us so well?

Herb Kelleher: It's clearly the charisma of the chief executive officer.

But, seriously, your employees act as if they're empowered to make decisions and break rules. How do you encourage fun in a business where you've got people's lives in your hands every day?

Kelleher: There's something we call professional terminalism. People who emphasize too strongly the fact that they're professionals usually are not very good at what they do. What really adds up to professionalism is being very good at what you do in a very modest way. That's the way our people are: They're results oriented. Whether it's the best safety record in the world, the best customer service record in the world, the youngest jet fleet, or lower fares, our people are really focused.

GE also has an informality, which belies the image that most people would have of a huge, massive, financially driven global company. How does that work?

Welch: Informality gives you speed. It takes the crap out of the business equation, the pon­tificating. I can remember 20 years ago in this company when you went to a meeting, the lights went down, you read a script, you gave your pitch, and you got the hell out of the room. That was the game. Today you're in there having an open dialogue with self-confident people, real exchanges about real things.

Giving people self-confidence is by far the most important thing that I can do. Because then they will act. I tell people, if this place is stifling you, shake it, shake it, break it. Check the sys­tem, because it wants to be a bureaucracy. And if it doesn't work, get the hell out. If GE can't give you what you want, go get it somewhere else.

Jack, there's a story that at some point you quit, saying the GE bureaucracy had broken your spirit and you were leaving.

Welch: Right. It was after one year. But my boss's boss came up the night before the going-away party and convinced me that things would change. So I stayed. It was really about the absolute roteness of it all. I was in a group of seven in development engineering, and we all got our raise the same day, and we all got the same amount of money. And I thought I was a hell of a lot better than the other six. I didn't think it was a good deal.

Did your boss's boss make good?

Welch: Yes. He gave me a project where I was the only employee. I was able to call myself king, emperor, any title you wanted. And I hired one technician. And from that, we built a plas­tics business.

Well, that's self-confidence. You looked around, you decided you're worth more than every­body else, and quit. Let's turn to another subject. Herb, the figures I have are that 100,000 people applied for a job last year, and you hired 3,000. What's your advice to someone who wants a job at Southwest?

Kelleher: My first advice would be not to go for my job. Beyond that, I would say that if you're an altruistic, outgoing person who likes to serve others and enjoys working with a team, we want you. If you're the kind of person who enjoys a more secure, more regimented, more inflexible, more rule-governed type of environment, that doesn't mean that you're a bad person, but we're probably incompatible. We shouldn't even get engaged, much less get married.

Is it true that you should be prepared to tell a joke in the job interview?

Kelleher: No, that's not true. But it is true that we will say to someone, tell us how humor helped you get around one of the more difficult situations in your life.

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PART 1 UNDERSTANDING YOURSELF AND OTHER PEOPLE AT WORK

People think it's kind of crazy, Jack, but we had a pilot-applicant class one day and we said, we don't interview you in suits; put on some Southwest Airlines shorts. Now, you may think that that seems kind of quirky and aberrational—irrational, even. But the ones who were delighted to do it because they thought it was a lark—those were the ones we hired.

You both run huge companies. How do you renew a big organization, renew your own spirit, and, most important, renew the sense of purpose of your employees?

Kelleher: The way that we accomplish that is that we constantly tell our employees—and Jack and I were discussing this earlier—think small and act small, and we'll get bigger. Think big, be complacent, be cocky, and we'll get smaller. One way we avoid complacency—and this may just be because I don't have a long attention span—is that we reject the idea of long-range planning. We say, do strategic planning, define what you are, and then get back together soon to define whether you need to change that. And have the alacrity of a puma. Because this plan about what we're going to do 10 years from now will almost certainly be invalidated in the next six months.

Welch: You need to believe that you are a learning institution and to constantly challenge everything you have. I was at Crotonville [the Connecticut site of GE's Leadership Development Center] on Monday night. I said, how many people can raise their hand and say they predicted the Asian crisis? Not one hand went up, including mine. I said, what does that tell you? All of this crap you planned for is meaningless, basically. What's important is that you're agile, in your thinking and in your action. We were getting steel casings for turbines in Mexico, which was making them for 40 percent less than they make them for here. Within 45 days our team had moved those casings out of Mexico to Korea, which was 40 percent below Mexico. That took just 45 days. You've also got to use the strength of a big company, and reduce its weaknesses. For example, a big company doesn't communicate as well as a small company. There's no chance. A big company moves more slowly. We think we're the fastest elephant at the dance, but we are an elephant.

So what does the big company do well? It can go to bat more often. I've made more mis­takes in the 18 years I've been doing this job than probably any human being in America has made. Most of them, Fortune doesn't find out about, the Wall Street Journal doesn't find out about. (Of course, when I screw up Kidder Peabody, I get on the front page of everything.) But if I make small mistakes, no one sees them. We've made $10 billion to $15 billion of acquisitions every year for the past five years. Most don't even make the papers. A billion here, a billion there, two billion here. That's what a big company's balance sheet allows it to do: keep playing.

Jack, you're doing a total-quality thing 10 or 15 years after the rest of corporate America did it. Why are you doing it, and why now?

Welch: There was only one guy in the whole country who hated quality more than me. I always believed quality would come from just operating well and fast, and all these slogans were nonsense.

The guy who hated quality more was Larry Bossidy. He hated quality totally. Then he left GE and went to AlliedSignal. In order to resurrect AlliedSignal, Larry went out, saw Motorola, and did some stuff on Six Sigma. And he called me one day and he said, "Jack, this ain't b.s.— this is real stuff, this is really great stuff."

We poll 10,000 employees every year. In 1995 they came back and said, we desperately need a quality issue. So Six Sigma was something we adopted then. The results are fantastic. We're going to get $1.2 billion of gain this year. For years our operating margin was never over 10. It's been improving, and it's going to be 16.7 this year. Our working-capital turns were four for 35 years. It will be nine this year.

CHAPTER 2 THEORIES OF AAANAGING PEOPLE

Herb, you're a company founder. Many people think there can't be a Southwest without Herb Kelleher. How do you follow your act?

Kelleher: The way I look at it is the United States was strong enough to live through Mil­lard Fillmore and Warren G. Harding. And if we should make a mistake and get a successor who didn't subscribe to Southwest's value system, there will probably be an insurrection. So I think the culture is stronger than any individual who might try to fly in the face of it or defy it.

Finally, what keeps you guys awake at night?

Kelleher: What keeps me awake are the intangibles. It's the intangibles that are the hardest thing for a competitor to imitate. You can get airplanes, you can get ticket counter space, you can get tugs, you can get baggage conveyors. But the spirit of Southwest is the most difficult thing to emulate. So my biggest concern is that somehow, through maladroitness, through inattention, through misunderstanding, we lose the esprit de corps, the culture, the spirit. If we ever do lose that, we will have lost our most valuable competitive asset.

Welch: What do I worry about? I was in Hong Kong about a month ago when our stock crashed through 70 to 69 from a high of 96 [the stock was at 88 at the time of this interview]. People don't realize that 10 percent of our company is owned by our employees, including pro­duction workers, who own $2 billion worth. It is an incredible feeling of responsibility to take their savings and their life and have something go wrong with it.

Source: "The Jack and Herb Show," Fortune 139(1) (January 11, 1999): 163-66.

ul^CLASS PREPARATION

A.Read "The Jack and Herb Show."

B.Fill out and score the Leadership Styles Questionnaire on the following page.

C.Answer the following questions.

1. How would you describe the ideal manager?

2. How did you arrive at this ideal— taking into consideration previous experiences, values, role models, education, training, reading, and so on?

3. What values underlie your picture of the ideal manager?

4. How would you score Jack Welch and Herb Kelleher on the questionnaire on the follow­ing page?

765 PART 1 UNDERSTANDING YOURSELF AND OTHER PEOPLE AT WORK

5. After reading the chapter, which theory(ies) of management seem(s) to be most prevalent in your workplace?

6. What struck you as the most significant idea in the chapter, one which might be useful in your current or former workplace?

Leadership Styles Questionnaire

This instrument is designed to help you better understand the assumptions you make about people and human nature. There are 10 pairs of statements. Assign a weight from 0 to 10 to each statement to show the relative strength of your belief in the statements in each pair. The points assigned for each pair must total 10 in each case. Be as honest with yourself as you can and resist the natural tendency to respond as you would like to think things are. This instrument is not a test. There are no right or wrong answers. It is designed to be a stimulus for personal reflection and discussion.

1. It's only human nature for people to do as little work as they can get away with. _ (A)

When people avoid work, it's usually because their work has been deprived

of its meaning. _ (B)

10

2. If employees have access to any information they want, they tend to have

better attitudes and behave more responsibly. _ (C)

If employees have access to more information than they need to do their

immediate tasks, they will usually misuse it. _._ (D)

10

3. One problem in asking for the ideas of employees is that their perspective is

too limited for their suggestions to be of much practical value. _ (E)

Asking employees for their ideas broadens their perspective and results

in the development of useful suggestions. _ (F)

10

4. If people don't use much imagination and ingenuity on the job, it's probably

because relatively few people have much of either. _ (G)

Most people are imaginative and creative but may not show it because of

limitations imposed by supervision and the job. _._ (H)

10

5. People tend to raise their standards if they are accountable for their own

behavior and for correcting their own mistakes. _ (I)

People tend to lower their standards if they are not punished for their

misbehavior and mistakes.__ (J)

10

6. It's better to give people both good and bad news because most employees

want the whole story, no matter how painful. _ (K)

It's better to withhold unfavorable news about business because most

employees really want to hear only the good news. _ (L)

CHAPTER 2 THEORIES OF MANAGING PEOPLE

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9.

10.

Because a supervisor is entitled to more respect than those below him or her in the organization, it weakens the supervisor's prestige to admit that a subordinate was right and he or she was wrong. Because people at all levels are entitled to equal respect, a supervisor's prestige is increased when he or she supports this principle by admitting that a subordinate was right and he or she was wrong.

If you give people enough money, they are less likely to be concerned with such intangibles as responsibility and recognition.

If you give people interesting and challenging work, they are less likely to complain about such things as pay and supplemental benefits.

If people are allowed to set their own goals and standards of performance, they tend to set them higher than the boss would.

If people are allowed to set their own goals and standards of performance, they tend to set them lower than the boss would.

The more knowledge and freedom people have regarding their jobs, the more controls are needed to keep them in line.

The more knowledge and freedom people have regarding their jobs, the fewer controls are needed to ensure satisfactory job performance.

10

10

10

(M) (N)

(O) (P)

(Q) (R)

(S) (T)

10

Source: Adapted from M. Scott Myers, Every Employee a Manager (New York: McGraw-Hill Book Company, 1970).

Scoring Instructions

Record the nurr then total each

ber you assigned to each of the column.

following letters

in the space provided, and

Theory X

Theory Y

A

B

D

C

E

F

G

H

J 1

L

K

M

N

O

P

R

Q

S

T

(Total)

(Total)

Theory X Score

Theory Y Score

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PART 1 UNDERSTANDING YOURSELF AND OTHER PEOPLE AT WORK

Theory X Assumptions (Traditional)

Theory Y Assumptions (Emerging)

1. People are naturally lazy; they prefer to do nothing.

2. People work mostly for money and status rewards.

3. The main force keeping people productive in their work is fear of being demoted or fired.

4. People remain children grown larger; they are naturally dependent on leaders.

5. People expect and depend on direction from above; they do not want to think for themselves.

6. People need to be told, shown, and trained in proper methods of work.

7. People need supervisors who will watch them closely enough to be able to praise good work and reprimand errors.

8. People have little concern beyond their immediate, material interests.

9. People need specific instruction on what to do and how to do it; larger policy issues are none of their business.

10. People appreciate being treated with courtesy.

11. People are naturally compartmentalized; work

demands are entirely different from leisure activities.

12. People naturally resist change; they prefer to stay in the old ruts.

13. Jobs are primary and must be done; people are selected, trained, and fitted to predefined jobs.

14. People are formed by heredity, childhood, and youth; as adults they remain static; old dogs don't learn new tricks.

15. People need to be "inspired" (pep talk) or pushed or driven.

1. People are naturally active; they set goals and enjoy striving.

2. People seek many satisfactions in work: pride in achievement, the work itself, sense of contribution, pleasure in association, stimulation of new challenges, etc.

3. The main force keeping people productive in their work is desire to achieve their personal and social goals.

4. People normally mature beyond childhood; they aspire to independence, self-fulfillment, and responsibility.

5. People close to the situation see and feel what is needed and are capable of self-direction.

6. People who understand and care about what they are doing can devise and improve their own methods of doing work.

7. People need a sense that they are respected as capable of assuming responsibility and self-correction.

8. People seek to give meaning to their lives by identifying with nations, communities, churches, unions, companies, and causes.

9. People need ever-increasing understanding; they need to grasp the meaning of the activities in which they are engaged.

10. People crave genuine respect from their fellow human beings.

11. People are naturally integrated; when work and play are too sharply separated, both deteriorate.

12. People naturally tire of monotonous routine and enjoy new experiences; to some degree, everyone is creative.

13 People are primary and seek self-realization; jobs must be designed, modified, and fitted to people.

14. People constantly grow; it is never too late to learn; they enjoy learning and increasing their understanding and capability.

15. People need to be released, encouraged, and assisted.

Source: Douglas McGregor, The Human Side of Enterprise (New York: McGraw-Hill Book Company, I960).

THE KNOWLEDGE BASE

Just like Jack Welch and Herb Kelleher, two of the most effective CEOs in recent times, we all have our theories and mental maps about what makes successful managers and organizations. "Theory often gets a bum rap among managers because it's associated with the word "theoreti­cal," which connotes "impractical."1 Kurt Lewin, one of the earliest scholars to study organiza­

CHAPTER 2 THEORIES OF MANAGING PEOPLE

tional behavior, once said there is nothing so practical as a good theory. " A theory is a statement predicting which actions will lead to what results and why. Every action that managers take, and every plan they formulate, is based on some theory in the back of their minds that makes them expect the actions they contemplate will lead to the results they envision."2 Everyone uses theo­ries, but, unfortunately, not everyone uses theories that are valid and backed up by research. Good theories help us interpret the present and figure out what is going on and why. They allow us to make predictions about the consequences of managerial actions.3 In this way, good theories take some of the uncertainty out of decision making and lead to better results.

Over the years, numerous theories have contributed to our general understanding of man­agement. Some of the major schools of management thought are summarized in the following paragraphs to set the stage for the study of organizational behavior. Each reflected the theorist's model of excellent organizations and managers within their sociohistorical context.

Scientific Management Frederick Taylor's scientific management,4 the "one best way" of doing a job, which emerged in the late 1800s, emphasized the efficient division of labor into small, specialized, standardized jobs that were carefully matched with the capacities of workers. For the first time, Taylorism made it possible for engineers to research the most efficient way to do jobs. Taylor's goal was to develop workers to the best of their abilities and to convey the mes­sage that it was cooperation between capital and labor that resulted in success. By increasing profits, rather than arguing over their distribution, both labor and owners would prosper.

Taylor's name is often mistakenly associated with time-and-motion studies run amok and an inhumane emphasis on output. In fact, Taylor was concerned about both the proper design of the job and the worker. In Taylor's eyes, the ideal manager (perhaps with the aid of an engineer) scientifically determined the goals that needed to be accomplished, divided the work up in the most efficient way, trained workers to do the job, and rewarded them by wage incentives such as piecework. However, since foremen were cast as the "brains" who did planning rather than actual operations, workers came to be seen as little more than "a pair of hands." While that sounds pejorative, it was a perspective more easily understood when placed within the context of a country just beginning to industrialize. The labor force quite naturally consisted primarily of people from rural backgrounds without prior factory experience. In that era, workers were viewed as one more resource, much like machines.

Administrative Theory The next phase in management history was termed administrative the­ory. At that time, beginning about the late 1920s, managers were grappling with the problems of organizing larger and larger organizations and defining the emerging role of the professional manager. Administrative theory came up with answers to both issues. Fayol defined the functions of a manager as planning, controlling, organizing, and commanding and advocated the study of management as a discipline.5 Weber contributed greatly to our understanding of the "ideal" bureaucracy and the different types of authority that were appropriate for it.6 In those days, bureaucracy did not have the negative connotations it does today. Indeed, bureaucracy was then viewed as a solution to the nepotism, favoritism, and unprofessional behavior found in organiza­tions of the day. Proponents of administrative theory believed that if managers designed the orga­nization correctly and followed the proven principles of management (e.g., having a limited number of people report to each supervisor, having only one boss for each worker, and engaging in merit-based selection of employees), the organization would succeed.

Human Relations School The formula for organizational success was expanded by the famous Hawthorne studies7 that took place in the late 1920s and 1930s. The Hawthorne studies con­tributed the idea that worker output was affected by numerous, heretofore ignored, variables: how workers were treated; how they felt about their work, coworkers, and boss; and what hap­pened to them outside of work. When the researchers increased the lighting in the wire factory, productivity went up; but it also went up when the researchers dimmed the lighting till it approx­imated "moonlight"! The attention the workers received in the experiment from the researchers, rather than the varied work conditions being testing, caused them to work harder. This phenom­enon has come to be known as the Hawthorne Effect.

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PART 1UNDERSTANDING YOURSELF AND OTHER PEOPLE AT WORK

The human relations school grew out of this research and acknowledged that workers had to be considered as more than "hands"; workers also had "hearts" (i.e., feelings and attitudes that affected productivity). And the norms or implicit rules of the work groups to which they belonged also affected productivity. Therefore, the effective manager was expected to pay attention to peo­ple's social needs and elicit their ideas about work issues. The human relations school of thought gained popularity at a time when the credibility of businesspeOple was low due to the stock mar­ket crash and when feelings of exploitation fueled the union movement. Decreased immigration had made labor scarce, and, as a result, the needs of workers began to receive attention.

Theory X and Theory Y Another example of mental maps that people have concerning man­agement is McGregor's Theory X and Theory Y concept.8 McGregor described two ends of a continuum of assumptions about people and human nature. These assumptions appear on page 34. The Leadership Style Questionnaire that you filled out as part of the class preparation is designed to help you assess the extent of your own Theory X versus Theory Y assumptions about people. Whether we incline more to the carrot (Theory Y) or the stick (Theory X) approach to motivation may be rooted in these assumptions. Understanding them is of crucial importance because of the potential that exists for self-fulfilling prophecies. For instance, if you believe people are lazy and incapable of thinking for themselves (Theory X assumptions), you will most likely manage them in a way that is consistent with these assumptions (e.g., watch over their shoulders all the time and call all the shots). This behavior can cause your subordi­nates to feel that they really have no responsibility in their job, which could lead them to work hard only when you are watching them closely. A self-fulfilling prophecy is thus set in motion, and your view of human nature is confirmed.

In some cultures, we find a stronger tendency toward a Theory X or Theory Y orientation. As we saw in Setting the Global Stage, one of the dimensions anthropologists use to differentiate cultures is their view of human nature. Is human nature good, evil, or neutral—in other words, trustworthy or untrustworthy? Cultures that tend to perceive humankind as innately untrustwor­thy tend toward a Theory X orientation (e.g., Latin American countries). Cultures that tend to perceive humankind as trustworthy are more likely to be characterized by a Theory Y orientation (e.g., Scandinavian countries). These generalizations do not mean that all managers in these cul­tures are similar but that we will find more aspects of either Theory X or Theory Y in their orga­nizations and managerial style. There are other dimensions along which management theories of other cultures differ. Therefore, it's important to understand indigenous management theories when working overseas. European and U.S. theories are written about most frequently due in large part to the research emphasis of their universities, but this does not mean that other impor­tant theories are not alive and well around the world.

Decision-Making School March and Simon,9 writing in the late 1950s, were proponents of the decision-making school. They added yet another layer of complexity to our understanding of organizations with their description of organizations as social systems in which individual deci­sions are the basis of human behavior. One of their contributions was mentioned in the previous chapter: employees make the decision to join an organization, but once hired, they also have another decision to make—whether or not to participate and work as hard as they can. The out­come of this decision depends on the employee's rational analysis of the situation and the rewards involved. Now managers also had to take into account workers' "minds." The effective manager set the premises for employee decisions and relied on their rationality to make choices that would be best for both themselves and the organization. For example, if a CEO of a company in which marketing was seen as the springboard into top management decided that more empha­sis needed to be placed on operations, he or she would promote more rapidly from operations positions. Employees would then realize that operations was the area receiving top-level atten­tion, and ambitious workers would elect to work in that area. Understanding and manipulating the decision premises are unobtrusive methods of organizational control.

However, March and Simon also made the sobering observation that our decisions are lim­ited by the number of variables our brains can handle, the time available, our reasoning powers,

CHAPTER 2 THEORIES OF MANAGING PEOPLE

and so on; they called this bounded rationality. It means that we often "satisfice" (choose a solu­tion that is merely good enough) rather than maximize or optimize (search and consider all the available information) when we make decisions. Furthermore, they noted that routine work drives out nonroutine work, which explains why it seems so much harder to launch important new projects than it is to maintain routine tasks. For theorists of this school, managerial effec­tiveness consisted of a thorough understanding of decision making.

Contingency Approach By the middle of the 20th century, managers and scholars had identified many variables that were thought to be related to success, such as job specialization, managerial principles, worker attitudes and human relations, and rational decisions made by workers. In the 1960s, many scholars converged on the idea that there was no "one best way" to manage. Instead, they tried to identify which variables would be successful for particular situations.

This is still one of the dominant perspectives in the field of organizational behavior and is referred to as the contingency approach;10 the gist of this approach is that effectiveness varies according to the particular situation. Good managers (and employees) analyze the situation and choose the most appropriate action. We know now that individuals, groups, cultural groups, occupational subgroups, industries, types of technology, managerial styles, organizations, and external environments can all vary enormously. As long as organizations fit their environment and as long as their various building blocks—their strategy, structure, systems, staff, style, skills, and superordinate overarching goals—fit together in a complementary fashion, very different types of organizations will still be effective. The particular building blocks in the previous sen­tence are known as the 7-S model,11which is discussed in greater detail in Chapter 21.

Procter & Gamble (P&G)12 is an example of a company that has good "fit." The company regularly appears on Fortune magazine's lists of Most Admired Global Companies, Most Admired American Companies, 100 Best Companies to Work For, the Global Fortune 100, and the American Fortune 100.13 Its management values about staffing are to (1) hire good people of high character, (2) treat them as individuals and develop their individual talents, and (3) provide a work environment that rewards individual achievement. The company is well known for its training programs and promotion from within. General managers are evaluated and rewarded for their success in terms of volume, profit, and people. P&G has developed systems (some­times cumbersome) and skills (marketing, marketing research, and R&D) that reinforce its strategic goals. It has been very responsive to changing market conditions and demographics. Marketing strategies are customized for different ethnic groups, and it has made a major effort to integrate employees from diverse ethnic and cultural backgrounds. For example, the company has a reverse mentoring program that pairs junior female employees with a senior manager to help the mostly male higher-ups understand the issues women face.14 P&G has also experimented with various structures to help it compete more effectively both domestically and globally. Its success is due, in large part, to its ability to keep the 7Ss in alignment and maintain the fit with its environment.

Open Systems Theory According to open systems theory, which became popular due to the rapidly changing environment of the mid-1960s, an effective manager understood the interde­pendence among different parts of systems and recognized that organizations are embedded within the larger environment. Open systems theory maintains that organizations and all the sub­divisions within them take in resources and transform them into a service or product that is pur­chased or utilized by a larger system.15Dealing with external entities is a crucial role for many managers. In this view, organizational effectiveness is governed by three major factors: the indi­viduals who make up the organization, the organization itself, and the environment in which the organization exists. Effective management of the interfaces between these factors—between the individual and the organization and between the organization and its environment—is central to organizational success. The relationship between the individual and the organization is often mediated or linked by a work group.

Looking back on these theories of organization, one is reminded of the parable of the blind men who each touched a different part of the elephant and assumed that they understood the

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PART 1UNDERSTANDING YOURSELF AND OTHER PEOPLE AT WORK

entire animal. How is it that previous theorists only touched on one part of organizing? One answer lies in the bounded rationality of their social context: most popular theories reflect ideas whose time has come, along with the personal predispositions and biases of the theorists them­selves. Another answer is the increasing popularity of the concept of "paradox" regarding the process of organizing. Previous theories emphasized only one side of the equation (change ver­sus stability, production versus social needs, Theory X versus Theory Y, etc.) rather than the bal­ancing act that managers actually perform between them.

Competing Values Framework According to Robert Quinn,16 four of the previously explained theories help us understand the paradoxical nature of management. "Master managers" know how to balance the competing values of the rational goal model (similar to Taylor's scientific management with extra emphasis on profit) with those of the human relations model, and the competing values of the internal process model (comparable to administrative theory) with the open systems model. Exhibit 2-1 summarizes the differences among these models. Both organi­zational success and managerial effectiveness are linked to the ability to balance what at first blush appear to be the competing values of models that face one another diagonally in Exhibit 2-2, the rational goal model with the human relations model and the internal process model with the open systems model. Many of us (including theorists) have mental maps that cause us to see these models as mutually exclusive. Yet productivity and profit cannot be achieved without atten­tion to the human resources responsible for productivity, and growth cannot be sustained if it is not also tempered by a certain degree of stability.

According to Quinn, none of these models is the one best way to organize or manage; in fact, too much emphasis on any one model will lead to failure. Too much of a good thing pushes the organization from what he calls the positive zone into the negative zone as shown in Exhibit 2-2. Overemphasis on productivity and lack of attention and sensitivity to human resources result in employee burnout and blind dogma—the oppressive sweatshop. In contrast, overemphasis on human resources and lack of attention to productivity result in extreme permissiveness, irrelevance, and inappropriate participation—the irresponsible country club. The other two poles are overemphasis on the external environment and change—the tumultuous anarchy—and excessive control and stability, which result in the frozen bureaucracy.17

Rational Goal

Internal Process

Human Relations

Open Systems

Criteria of

Productivity, profit

Stability, continuity

Commitment, cohesion,

Adaptability, external

effectiveness

morale

support

Means-ends theory

Clear direction leads to

Routinization leads

Involvement results

Continual adaptation

productive outcomes

to stability

in commitment

and innovation lead to acquiring and maintaining external resources

Emphasis

Goal clarification,

Defining

Participation, conflict

Political adaptation,

rational analysis, and

responsibility,

resolution, and

creative problem

action taking

measurement,

consensus building

solving, innovation,

documentation

change management

Climate

Rational economic: "the bottom line"

Hierarchical

Team oriented

Innovative, flexible

Role of manager

Director and producer

Monitor and

Mentor and

Innovator and broker

coordinator

facilitator

EXHIBIT 2-1Characteristics of the Four Management Models in the Competing Values Framework

Adapted from R. E. Quinn, S. R. Faerman, M. P. Thompson, and M. R. McGrath, Becoming a Master Manager: A Competency Framework (New York: John Wiley & Sons, 1996), 10-11. Reprinted with permission of the publisher.

CHAPTER 2 THEORIES OF MANAGING PEOPLE

The Irresponsible Country Club



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