Compare And Contrast The Theories Of Understanding Managerial Effectiveness Business Essay

Introduction

In the scenarios of today’s corporate world, managers are essential for the survival and longevity of a firm and organizations. Throughout the ages, there were many theoretician and scholars that have contributed to the body of knowledge to managerial effectiveness.

Among the many theorists, the authors have picked three theorists as to form a contrast and comparison to varying aspect and ideology of managerial thought and design. The theorists we have chosen for the theme of this assignment are Chester Barnard, Douglas McGregor and David McClelland. We will examine the various theories that they have contributed to the understanding of managerial effectiveness.

This paper will compare and contrast the theories of the three above-mentioned theorist as well as to critically evaluate and analyse the concepts of this paper’s main theorist Chester Barnard in regards to his main theories, the era when it was formulated, as well as to discern it’s usefulness in today’s context.

Before we proceed along to the next segment, it is only fitting to state the limitations of this paper. With each theorist contributing such enormous wealth of knowledge and having conceptualized so many theories, we cannot possibly explore all the facets of their contributions within the parameters of four thousand words, but it is the authors expressed hope that we have covered the more prominent of the theories and had done justice to their contribution within the parameters if this paper.

Chester Irving Barnard: A brief biography

Chester Barnard (1886-1961), was born in Malden, Massachusetts, and has diverse managerial skill sets that saw him with multiple roles of as a successful corporate executive, s and public servant throughout his life. (Payayitam et al, & Wolf, 1961) He is considered as the founder of the system organization theory and the first of HR strategist; He was a sociologist of organizations without a portfolio (Wren and Bedeian, 2009).

Chester Irving Barnard, (1886-1961), Barnard was not only a good business manager, but was an excellent pianist and activist. When he studied at Harvard University, he earned extra income by tuning pianos and conducting a small dance band. He was also a successful practitioner. After spell at Harvard, Barnard joined American Telephone and Telegraph (AT&T). He began his work as a statistician. Barnard spent his entire working life with the company. He became a President of New Jersey Bell in 1927. (Wren and Bedeian, 2009).

2.1 Setting of his theory

Barnard’s life and theories were founded around the time of the Great Depression. Where unemployment brought about scarcity of resources, anxiety, economic stagnation, and despair among people. (Hoopes, 2003, p. 161-167; Wolf, 1961, p.172).

Barnard’s theories of moral leadership for senior managers, may have been developed to helped to ease public relations in the American society during such trying times. (Hoopes, 2003, p. 161-167; Wolf, 1961, p.172).

2.2 The Theories of Barnard:

Barnard introduced the views on authority and organization integration. His famous book, “The functions of the executive” was published in 1938, which has been regarded as a classic in the field of modern management science. (Wren and Bedeian, 2009).

Barnard had defined an organization as “a system of consciously coordinated activities or forces of two or more persons”. All systems contained 3 elements; (1) willingness of members to cooperate, (2) a common purpose, (3) members able to communicate with each other. In particular, He analyzed that systems of people comprise 3 elements (Wren and Bedeian, 2009).

2.2.1 Theory of authority

Bernard believed that the source of authority do not reside in persons of authority, but (un)acceptance by subordinates. This brings about a concept of duality in authority between individual actions and operating within an organization’s chain of command (Feldman, 1996). Andrews, (1968) wrote that individual decisions occur under the existence of a “zone of confidence” in which each individual’s orders are accepted without conscious questioning of their authority.

According to Barnard (1971), authority has 2 aspects which are the “subjective” and the “objective”. The subjective refer to personal acceptance of a communication as being authoritative. The objective refers to the character of the original communicator. Barnard held that authority originated at the bottom of an organization and flow upward. And formal authority become real when it is accepted by those who are subject to it (Barnard, 1971).

Aspect or objective of authority can be divided into 2 two levels. The first one is formal authority or the Authority of position. In this concept, a communication might be accepted because it comes from a person of formal authority. Objective authority is informal authority or Authority of leadership which describe a communication might be accepted when a subordinate had respect and have confidence in a superior’s personal ability, irrespective of the superior’s rank or position (Barnard, 1971)

Authority of leadership combined with authority of position can create the zone of indifference (set of communications that an individual would rarely challenge) become exceedingly broad (Wren & Bedeian ,2009) while a zone whereby a subordinate no longer believes in the command of a superior is called the “zone of no confidence” (Nam & Lemak, 2007)

2.2.2 Theory of Incentive

Barnard (1971) had defined this theory into two classes; first class are specific and can be specially offered to an individual, the second class are general and cannot specially offered. In the other words, the first are specific inducement and the second are general inducement.

Specific inducement may be offered by money and other material inducements while general inducement can be association, condition, opportunity and other non-material inducement (Andrews, 1968).

2.2.3 The function of the executive

Barnard focused on maintaining internal equilibrium while confronting external environmental force (Wren & Bedeian ,2009). The functions of executive are to serve as channels of communication so far as communications must pass through central positions. It corresponds with 3 element of system as mention earlier.

The first element of system, which is provision communication; Executives have to define organizational duties, clarify lines of authority and responsibility (Barnard,1971)

Secondly, to promote the securing of essential efforts, executive have to play role in establishing cooperative relationships among members if the organization and eliciting their contributions to achieve organization’s goal. This aspect of management includes the recruiting and selection process, maintaining morale, giving suitable inducement, and maintaining deterrents such as supervision control, inspection and training (Barnard,1971).

Thirdly, to formulate and define purpose or objective; Executive have to delegate objective authority, that is, to make decision about assigning responsibilities and authority, so that individuals would know how they contributed. (Barnard,1971).

Application of Barnard’s Theories.

Due to the dynamic nature of Barnard’s theories, it usefulness in management is very versatile. The authors of this paper has discern that Barnard’s theories permeates to all levels of organization and take into account communication, leadership, authority chain of command, incentives, motivation as well as organizational structure. (Wren & Bedeian ,2009)

Douglas Murray McGregor: Theory X and Theory Y

Douglas Murray McGregor (1906-1964) was amongst the earlier pioneers of the behavioural science approach to management. (Bartol, Tein, Matthews & Sharma, 2008)

Born in Detroit, Michigan studied at Harvard where he gained his MA and his doctorate in psychology where he stayed to teach Psychology for two years from 1935 to 1937. (Managers-Net, NA)

McGregor was most well-known for his theories- Theory X and theory Y this behavioural approach heralded a more humanistic approach that saw workers as social creatures and emphasised that managers may be able to improve productivity of their subordinates by increasing worker’s satisfaction and morale. (Bartol et al, 2008)

McGregor argues that a management style and activities are influenced by the two assumptions and a manager may subscribe to either or of the opposing theories, which McGregor named theories Theory X and Theory Y. These two theories are considered a behavioural viewpoint and behavioural science approach, which focused on the study of human behaviour in and organization in order to create theories that are aimed at improved efficiency in an organization through creating ideal work condition and social conditions thus increasing morale, creativity and resultantly work efficiency. (Bartol et al, 2008)

A Theory X manager as described by McGregor, assumes that all workers are lazy, have little ambitions, dislike work, need to be coerced to work, are likely to put their individual concerns and needs above that of their organization and are largely motivation by security needs. (McGregor, 1960) A Theory X manager’s style is characterized by strict control, manipulation and direction (Mendenhall & Oddou, 1983) and will set up elaborate control protocols in order to manage the workers under him. The Theory X manager will motivate entirely by material incentives. (Bartol et al, 2008)

Theory X is subdivided into Hard “X” and soft “X”. Hard “X”, as described by McGregor, is the “Classical” view of theory X that is identified by managerial traits of close supervision, control and coercion (McGregor, 1960) while Soft “X” is seen as the softer, more human relation orientation of Theory X that is characterized by permissiveness and needs satisfaction. (McGregor, 1960)

The hard “X” style of management led to restriction of productivity, joint distrust, unionism, and potentially “Subtle but effective sabotage of management objectives”(McGregor Cited in Heil, Bennis & Stephen, 2000). Where else soft “X” style of management may lead to a manager’s failure to manage efficiently as McGregor argues that employees will take advantage of a manager that is overly permissive by demanding more while contributing less. (McGregor, 1960)

The Theory Y manager in contrast to Theory X, assumes that all workers do not dislike their work, are self -motivated to work, can display innovative ideals and creativity at work and have their ego, social and self -actualization needs unfiled at work. (McGregor, 1960)

Theory Y may lead to leadership styles that are more participative, this would lead empower of the worker to seek responsibility and be more committed to organizational goal achievement. (Bartol et al, 2008)

Even as McGregor states the two theories that generalize a manager’s view of his subordinates, he asserts that theory X assumptions are not correct. McGregor advocates theory Y as a more effective motivational of the two theory, this is further reinforced by Heil, Bennis and Stephens (2000) who believed that “managers seeking to unleash human potential must first abandon their oversimplified view of the work place and learn to deal with the human side of organization” (Heil, Benis, & Stephens, 2000 pg43)

Comparison: Barnard & McGregor

As we have priory discussed the respective theory underpinning of both Barnard and McGregor, we can see that there are marked similarities and opposing viewpoint to the concept of management principles. In this section of the assignment, the author seeks to analyse, compare, and contrast the two set of principles. For the sole purpose of this segment of this paper, we will be using only McGregor’s Theory Y as a subject of analysis as it has similarities with Barnard’s theories and since McGregor has already explained in his literature that Theory X is a wrong assumption, (McGregor, 1960) the author see a comparison of Theory X with Barnard’s theories moot.

The main discerning difference- taxonomy wise, is Barnard theories belongs to the school of classical viewpoint and of the administrative management approach, while McGregor’s theories are from the angle of behavioural viewpoint. (Bartol, 2008) while both set of theories are from the angle of human capacity and motivation viewpoint. (Bartol, 2008) Both set of theories, Barnard’s and McGregor’s, put emphasis on the importance of manager as critical facilities of organizational efficiency, (Heil et al 2000 & Scott, 1992) Barnard’s theories suggests that the power of the manger is not ultimate and is dependent on his or her subordinate’s acceptance of that formal authority (Barnard, 1971). McGregor assumes that acceptance formal authority is unquestionable (as he has not stated otherwise).

Both Barnard and McGregor’s theories understood that if a manager’s style is too harsh it may lead to resentment from his or her subordinate and instead suggested that consideration to an employee’s non-material incentive, coupled with material gains should be a better motivational force as opposed to coercion and threat. (Barnard, 1971 & Heil et al, 2000)

Both theorist are more humanistic in their approach and is a stark contrast to earlier scientific approach to management that eschewed worker’s emotional, mental and social health. (Barnard, 1971 & Heil et al, 2000) While both theorist argues that management functions are important to the welfare and organizational effectiveness of an organization, Barnard’s approach are mainly focused on communication and bottom to top hieratical relations, McGregor put emphasis on how the manger’s assumption, first and foremost, and how it may be self-fulfilling prophecy to the attitude of the employees. (McGregor, 1960)

Barnard (Barnard, 1971) and McGregor (McGregor, 1960) also stressed the importance that non material incentives, such as decentralization, job enlargement and participative management and Barnard’s Persuasion and tangible incentives can be used in tandem to collective motivate employees to higher level of efficiency. Both theorist in this aspect, have similarities in whereby they challenge the traditional scientific approach that workers are only motivated by material gains and unfulfilled needs. (Barnard, 1971 & McGregor, 1960)

Both theorist, in McGregor’s case directly (and in Barnard case, indirectly) put emphasis that physiological need and security are likely to be already fulfilled and managers should concentrating on fulfilling upper hierarchy (Maslow, 1954) needs such as ego, self-fulfillment and pride of workmanship (Barnard, 1941 & McGregor, 1960)

With both theorist having a strong view of human as quintessentially social creature that sought motivations that are not merely material in nature, both theorist are consider somewhat Avant-garde theorist of their time and offer insights beyond the one dimensional views of scientific management.

David C. McClelland: Three Needs Theory.

David C. McClelland is the author of “The achieving society” (1961) which is discussed about three needs includes: need for achievement (n achievement), need for power and need for affiliation that will affect to economic growth.

The first human motivation is the Need for achievement, which is defined as needs of humans in order to achieve what things are set. According to Wren and Bedeian (2009), need for achievement has a link directly to entrepreneurial activities. David C. McClelland (cited in Webber, 1969, p.165) suggested that it not their goal to measure how their business performs but based on their personal achievement of what they can achieve for the business.

In McClelland theory (1961), “risk taking”, “energetic and/or novel instrumental activity”, “individual responsibility”, “knowledge of results of actions”, “long-range planning and organizational abilities” are mentioned as facets of entrepreneurs who will behave.

Next, need for power is also called as need for authority. According to Arnolds and Boshoff (2003), subjects who have the need for power (abbreviation n Power) motives tend to control or impact over another subject. Veroff (1958, p. 220-225, cited in McClelland, 1961, p.167) pointed out that “disputing a position, arguing something, demanding or forcing, punishing…” are characters of n Power subjects. Peay and Dyer (1989) also mentioned that there are two types of n Power which includes personal power and socialized power. Personal power individuals, has the tendency to set up organizations which are represented for their power, authorities and influences, meanwhile socialized power individuals are characterized by willingness to help other feel powerful, they have a tendency to build organizations which are beneficial to society (Peay & Dyer, 1989)

Finally, McClelland (1961, p.160) defined the need for Affiliation (viz. n Affiliation) as “establishing, maintaining, or restoring a positive affective relationship with others”. N Affiliation has connected to birth rate which is related to population growth and “in turn may be related to economic growth” (McClelland, 1961, p.162). Weissenberg and Gruenfeld (1958, cited in Arnolds and Boshoff, 2003, p.60) asserted that subjects who have n Affiliation seek to be accepted, understood by others in workplace and it will be an intangible method that is able to improve employee performance.

Comparison: Barnard and McClelland.

We can see similarities when comparing Barnard to McClelland as they are both from behavioural view of management and empathized on the behavioural patterns of managers and employees. (Bartol et al, 2008)

While Barnard’s theories permeates through the whole organization structures, McClelland’s theories are focused on individuals as we can see that Barnard includes chain of commands and organizational hierarchy and communication as a whole. While McClelland looks into specific traits and motivations of a person. (Wren & Bedeian, 2009)

We can also discern that both theorist are concerned with the authority of the managers, or rather the acceptance of any form of formalized power as we can see McClelland has linked the need for power as one of the key traits of entrepreneurs and have explained it place in building an organization through its impact in the type of power need’s either socialized or personal. (Arnolds & Boshoff, 2003)

Barnard explains that the concept of power is in place only if subordinates accepts it and his theories of authority of position and leadership authority are similar to the concept of whether the individual fit McClelland’s socialized or personal power, which has the same underpinnings as Barnard’s authority of leadership and authority of position. An individual in an organization may wield more power of influences that the manager if he or she a higher degree of socialized power as opposed to the manager’s formal authority. (Arnolds and Boshoff, 2003)

McClelland’s concept of need for Power, Affiliation and Achievement is also in tandem with Barnard’s theories of incentive; where by a motivation of an individual may be more than merely material in nature. This places McClelland’s theories as reinforcement to Barnard’s theory. (Arnolds and Boshoff 2003)

Barnard application, today’s context: A Conclusion.

The theories of Barnard are still widely used in management activities especially in the field of executive development and human resource management (Novicevic, Heames, Paolillo & Buckley; 2009). As mention earlier, the theories of authority and incentives have been widely spread and applied in today’s business.

One examples of Barnard’s theory in today’s context is the American Telephone and Telegraph (AT&T). AT&T continues to apply to Barnard’s theories in management. For instance, AT&T insists on the strategy of using telephone operator. Theories of authority and incentives have been confirmed that are widely useful in terms of leadership, leadership development, and executive education (Novicevic, Heames, Paolillo, & Buckley; 2009). Barnard’s theories can assist managers to establish a clear relationship between conception of management and the needs of contemporary practice, which has played a great role in the field of human resource management (HRM).

Another application of Barnard’s theories is the concept of whistle blowing, we want to look into the case of Enron and how the subsequent whistle blow brought down the entire corporation and how Barnard’s theories ties in with the individual the blew the whistle- The (then) Vice President of Enron, Sherron Watkins. (Nam & Lemak, 2007)

Sherron Watkins was the whistle blower that called attention and ultimately brought down the energy giant, Enron. Watkin’s , upon appointment as Vice President of Enron, was aware of the discrepancy in the accounts reporting that hid massive debt from public and had written an anonymous letter to the CEO of Enron, Kenneth Lays to inform him of the situation. (Bierman, 2008)

From Barnard’s (1938) theory of the function of the executive, he espoused the idea that the key to resolving organization conflict resides in the executive himself/herself and in today context one of the important aspect a leader must possess to enhance his/her authority is to possess an ability to moderate morality within an organization. (Strother, 1976) and it may that reason that Watkins had decided to blow the whistle.

We can also see that Barnard’s (1971) theory of acceptance of authority that Watkins may have blew the whistle because of the (un)acceptance of authority of the then CEO of Enron, Kenneth Lay, as Barnard theory states that acceptance of authority is based the individual and also on four condition for acceptance of the communicated instructions mainly the believe that the communication is consistent with an organization’s purpose and they believe the communication is compatible with their personal interests. (Nam & Lemak, 2007)

In this Enron case, Watkins had wrote an anonymous letter to Lay, warning of the unethical accounting practices lack of action this is a classic example of Barnard’s “Neutral Zone” where Watkins is still trying to work within the organizational structure, albeit anonymously. Lay’s did not take any action. Watkins’s subsequent action expresses Barnard’s (1971) rules on authority- when Watkins went ahead to blow the whistle she is already in the zone of no confidence. (Nam & Lemak, 2007)

So we can see in the two above mentioned, cases that Barnard’s theories are still used in this modern day and age and still applicable. We as the authors of this paper feel that Barnard have look into all aspect of management with regards to organization structure as well as particular attention to both the organization as a whole and the individuals that comprise the work force of an organization. His theories have two facets to it as it’s focuses on the whole commanding structure ( Theory of authority) as well as the individuals ( theory of incentive)