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“Liberated” companies – our point of view


The end of Theory X companies: a mistaken prediction
In their joint 2009 publication “Freedom, Inc”, Isaac Getz and Brian M. Carney ask a key question: “why did McGregor’s prediction in 1950 that all Theory X companies would have disappeared within a decade never come to pass?”.

Let’s briefly remind ourselves of the background to this issue. Douglas Mc Gregor, a professor at the Massachussets Institute of Technology from 1937 to 1964, distinguished two ways of managing a company, i.e. “Theory X” and “Theory Y”. Companies that chose to follow Theory X favoured authority and control, based on the premise that human beings do not like work nor taking responsibilities. On the other hand, companies that adopted Theory Y took the opposite premise that humans enjoy work as much as they enjoy rest and recreation, that they accept responsibilities and are motivated by the possibility of developing in their work. These companies allow their employees freedom to take initiatives instead of telling them how to do their job. In other words, Theory X results in a directive management style, commonly referred to in managerial parlance as “top-down”, whereas Theory Y leads to participative management, widely known as “bottom-up”.

A liberated company can be considered as being the ultimate incarnation of a Theory Y company. Why then, despite all of the advantages extolled in the pages of “Freedom, Inc”, did it not succeed in supplanting the directive model? To try to answer this question we need to leave aside the aforementioned premises. We could talk about what we believe to be the characteristics of human nature for hours on end without ever really moving away from the free association akin to pub-arguments. It is much wiser to listen to what company people, both managers and employees, have to say about “X” or “Y” management practices. And we have worked with hundreds of such people over the past 25 years.

Directive management appeals to company leaders

Let’s start by looking at companies who manage their operations and their projects in “top-down” mode. Two main reasons motivate company leaders to opt for this way of doing things. The first of these is to remain masters of their own choices. Those who are at the head of Theory X companies believe that by inviting their employees to participate in decision-making processes, the final decisions may not be exactly what they were hoping for. The second reason relates to time management. “Employee participation” requires a minimum amount of time, which for managers signifies longer lead times in achieving results, something that they seek to avoid at all costs.

Theory X companies can still look forward to a bright future. In a world in which organizations are more and more complex, with environments that are changing more and more often and with an ever greater pressure to obtain results more quickly exerted by those in charge, top-down management is naturally appealing to decision makers. And yet… directive management never, or almost never, produces the expected results. There are two reasons for this. The first of these is that the possibilities offered by networking games and the amount of autonomous scope allowed to the actors involved in order to get round or distort decisions made are many and varied. Furthermore, the ever greater complexity within companies, which we have just referred to, provides them with an ever greater scope of manoeuvre. As Michel Crozier would probably have said, you cannot manage a company by decree!

The second reason is that staff members know something that the decision-maker is unaware of and which is absolutely essential for taking effective decisions: the reality of life at the grass roots. To avoid making mistakes, wise managers will seek the opinion of their team-members before ratifying a decision. Above all, they will make sure that they ask their team for concrete proposals that will enable them to adapt their decisions to the practical realities of their professional world. If they fail to do this, it is highly likely that their team members will drag their feet when the time comes to apply the decision. Some of them however (it depends on each person’s character) will pull out all the stops to zealously apply the decision! In both cases, the result will inevitably be a jam of some kind.

This point is particularly worthy of attention, given that in recent years, globalization and corporate expansion have increased the distance that separates sources of decision from points of application. The distance between those who make decisions and those who implement them at grass roots level has grown, increasing the risk of producing decisions that are seen as being totally discombobulated by those who have to implement them.

Participative management is struggling to assert itself

Let us now turn to the question of participative management. This model is finding it difficult to establish a firm footing, and not only because company leaders have nailed their colours to the mast of authoritarianism. The cause can also be found in the lack of effectiveness of the “bottom-up” management mode. It is time to face facts: the history of organizations is riddled with stories of participative processes that have ended up leading into blind alleys. Just ask any employee who has participated in such experiments – many will tell you that they came out of it somewhat perplexed. There is little doubt that at the outset they appreciated the scope of expression and action that they were being given. However, after a certain amount of time, when they had not seen any tangible results, they started wondering about the real purpose of what they were involved in… was it not just a simple cosmetic operation? This is borne out by a comment made by a factory operator at the end of a brainstorming session aimed at finding ideas to simplify processes within the context of a workshop reorganization program: “Let’s face it, all of this is just to sweeten the pill before we swallow it.”

It is also worth sounding out employees of companies in which procedures are few and far between and there is a high level of tolerance with regard to individual initiative-taking. A large number of them will tell you things such as: “you can’t imagine what has to happen before a decision can be made here…”, “it’s exhausting; you cannot find two managers who are moving in the same direction”, “it’s stressful, things are never clear”.

Then, on the other side of the coin, you have company leaders who have played the “participative” card and who also express their disappointment after the event. The ideas and proposals fed back from the grass roots for the most part seem to be inapplicable or incoherent with the company’s declared strategy. Not forgetting the amount of time wasted in interminable work groups. “We got stuck in the mud”, “we shot ourselves in the foot” are some of the comments that we heard from such company leaders who, aware of this necessity “to get the grass roots people to participate” in order to make the right decisions, had committed themselves to a “bottom-up” management strategy.

Getz and Carney try to shed some light on this mystery: Why do Theory Y companies fail to gain ground? What ingredient is missing from the recipe? The authors stress the fact that there are certain conditions of “employee liberation” that have not been met. Their publication does not provide an exhaustive list but does make several suggestions as the pages are turned. Three of these suggestions stand out in particular: “clearly set out the vision, the strategy, the mission and the values”, “treat employees as equals”, or, and this final reason is directly related to the personality of the leader of a Theory Y company, “to have been personally exasperated by the excessive number of procedures in a previous experience,.” (the manager in question having made the eradication of all restrictive rules a personal cause within each organization that he had been called upon to lead). There is undoubtedly a certain amount of truth in these explanations. However, Getz and Carney do not devote much space to these issues in their publication.

Neither top-down nor bottom-up, but an interactive, structured approach to relations between decision-makers and the grass roots

From our point of view, the response to today’s managerial challenges is neither top-down or bottom-up. What we recommend is an interactive model – interaction between decision-makers and the grass roots. In this model, each of the parties has a clearly-defined, coherent role within the organization. Managers have a position that provides them with an overview of the situations that have to be dealt with. This enables them to fulfil their role: set the course and make decisions. They are not “subordinate to their teams” as proclaimed by the supporters of liberated companies . However, given their lofty position, they are only able to get a general overview of what is happening out in the field. Their teams on the other hand are in the thick of the action. They see what is happening at close quarters. They are fully aware of all of the traps and pitfalls. They know the importance of details, the things that those who make decisions cannot see. It is therefore important that they offer their contribution to their manager’s decisions so as to ensure that they are applicable and realistic.

In practical terms, a permanent back & forth process between decision-makers and the grass roots will be triggered. The former will make decisions and then “place an order” with the players in the field: what do we need to add or adjust in my decision to make it applicable? The latter will then set to work in order to provide answers to these questions. The ball is then played back into the court of the decision-maker who must provide clearly reasoned feedback: giving the green light to certain proposals, asking that others be reworked and why, etc. In this way, he can ensure that everyone remains on track. Then the players in the field take over the reins once again in order to implement the solutions that have been decided upon. In so doing, they identify new pitfalls and put forward new proposals, etc.

The people who work for a company are not bothered about knowing whether their leader is “directive” or “participative”. They don’t expect him or her to make their life easier by setting out or repealing decisions. That is totally missing the point! What they expect from their leader are two things: firstly, that he or she takes decisions, and secondly, that these decisions are applicable at the level at which they are executed. And the only way of ensuring that the second of these expectations can be met is for the manager to come to them and ask the simple question: “what should be removed or added to my decision to enable you to implement it in an intelligent way?” It is also by doing this, rather than by abstract processes such as “value charters”, that managers will gain the trust of those who work out in the field.

This model also presents another virtue: it reassures both the company leaders (I retain control of my choices) and members of staff (my leaders have their finger on the pulse). It is a model that is accessible and adaptable to all.

Take a pencil…

To move away from the way of working of Theory X companies, the solution is not to aim for the Theory Y model. It will only produce a boomerang effect which brings you directly back to your starting point: Theory X. Companies must establish a management model founded on structured dialogue between those whose role it is to make decisions and those whose role it is to implement them. But let’s end this reflection on a participative(!) note… Take a pencil and, on a blank sheet of paper, draw a shape that illustrates the iterative model that we are advocating. What do you come up with? Could it be a “W” perhaps…?

(1) And even if they were, history shows us that this would by no means guarantee that their teams would be “liberated”. But we are getting away from the subject…

This article was originally published on the French Metis web site


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