In his book Principle-Centered Leadership, Stephen Covey summarizes well the four stages of management thinking. Understanding the history of management is helpful not only for avoiding wrong turns, but also for shedding light on what it means to manage people holistically.
The Scientific Paradigm
First was the scientific management paradigm. It viewed people primarily as economic beings who don’t want responsibility but instead must be motivated through “the great jackass method, the carrot and the stick.” This method managed through authoritarian, command-and-control methods.
Two key figures here are Max Weber and Frederick Taylor. Weber “postulated the view that bureaucracy—order by rule—was the most effective form of human organization.” Taylor, then, “put Weber’s theories to the test” with his famous time and motion studies.
“The thrust of the Weber-Taylor school was to suggest that if a finite body of rules and techniques could be learned and mastered—rules about breakdown of work, about maximum spans of control, about matching authority and responsibility—then the essential problems of managing large groups of people would be more or less solved.” (92)
Another component of the scientific paradigm was that it viewed organizations as primarily rational, as opposed to social. “Rational, in this context, means that clear purposes and objectives for organizations exist, and that these can be determined rather straightforwardly.” On this view, decisions about objectives are almost mechanical and rise straightforwardly from analysis.
On the social view, on the other hand, it is recognized that determining purpose can be messy and is not always “very straightforward or deductive.” Decisions about purposes and objectives are ultimately value choices, although they are informed by analytical considerations. These decisions therefore need to be informed as much by social coalition as by clear-headed thinking.
The Human Relations Paradigm
The second management paradigm was the human relations paradigm which acknowledged that people also had hearts as well as stomachs—they were social beings. It was recognized that people had feelings, and thus the principle of management here became kindness. But the assumption here still left management in charge—except that instead of acting as an authoritarian, the manager was a benevolent authoritarian. Managers in this paradigm could become overly soft and lax in imposing any firm standards and expectations.
Douglas McGregor is a key figure here. He first developed the Theory X and Theory Y model. According to theory X, most people are lazy and seek to avoid responsibility. It is “the assumption of the mediocrity of the masses.” According to theory Y, however, work is as natural as rest and people want to seek out greater responsibility. McGregor argued that the theory a company holds affects how it manages and treats is people. In fact, “the theoretical assumptions management holds about controlling its human resources determine the whole character of the enterprise.”
Organizations that hold to theory X tend to focus on command and control, whereas those who hold to theory Y seek to empower their people. McGregor argued that most organizations of his day held to theory X—and that even if they spoke as if they held to theory Y, their practice in reality accorded with theory X.
McGregor also pointed out, consistent with the fact that most organizations held to theory X, that in most organizations of his day authority was the “central, indispensable means of managerial control.” But authority, McGregor pointed out, is really just one of many forms of social influence and control, and that organizations—consistent with theory Y—should utilize many of these other means. But this was unlikely to happen as long as organizations regarded authority as an absolute concept, as the primary guiding means of control, rather than a relative concept.
McGregor’s insights are right on. However, the school of management that took his principles fell into disrepute because many took things to an equally silly excess on the human relations side as scientific management had gone on the rational side. Some companies, for example, focused simply on making everyone happy and threw out all forms of top-down authority. As Peters summarizes:
Whereas the rational model was a pure top-down play, the social model, as produced by McGregor’s misguided disciples, became pure bottom-up play, an attempt to start revolutions via the training department. McGregor had feared that all along and said, ‘The assumptions of Theory Y do not deny the appropriateness of authority, but they do deny that it is appropriate for all purposes and under all circumstances.
The Human Resource Paradigm
The third phase in management thought is the human resource paradigm, which came to work “not only with fairness and kindness, but also with efficiency.” Now contribution began to matter. People were seen not only as economic and social beings, but also thinking beings.
Covey notes that “with this larger understanding of man’s nature, we begin to make better use of talent, creativity, resourcefulness, ingenuity, and imagination.” There is more delegation, and people are not longer seen merely as machines or physical properties, but people. The aim becomes to “create an environment in which people can contribute their full range of talents to the accomplishment of organizational goals.”
The Principle-Centered Paradigm
Finally, this leads us to the principle-centered leadership paradigm, which acknowledges all of the dimensions of a person. It deals with fairness, kindness, efficiency, and effectiveness. As Covey notes, “we work with the whole person.” People are not just assets, “not just economic, social, and psychological beings. They are also spiritual beings; they want meaning, a sense of doing something that matters.”
Meaning, then, becomes the fundamental management and motivational principle—not in exclusion from the other dimensions of a person, but in conjunction with them and as a necessary component. “People do not want to work for a cause with little meaning, even though it taps their mental capacities to their fullest. There must be purposes that lift them, ennoble them, and bring them to their highest selves.”
The proper way to manage people given this paradigm is not through control but through principles. What are principles? They are “the natural laws and governing social values that have characterized every great society, every responsible civilization, over the centuries. They surface in the form of values, ideas, ideals, norms, and teachings that uplift, ennoble, fulfill, empower, and inspire.”
Principles are what fundamentally tap into the level of meaningfulness and also, by their very nature, are inconsistent with management by control. For with principles, detailed control is not necessary. Instead, the key to managing people by principles is to make the values clear and provide the conditions for people to manage themselves. The role of the manager then becomes one of help and support, and of helping the employee align his role with his strengths. This arrangement becomes possible by setting up win-win performance agreements. These agreements make expectations clear (which is necessary for empowerment) without prescribing the methods in detail, while also outlining key guidelines and resources available. With this clarity in place, an employee can then evaluate himself, which is far more effective anyway.
Principle-centered managers realize that people are more creative and resourceful and filled with more initiative than most of their jobs require right now. People are spending their creativity and energy on their own goals and dreams—and much of this is lost to the organization. But if you can align what you need from the employee for the sake of organizational performance with the goals and initiatives he naturally wants to pursue, then you will tap into this energy that is lost to the organization—and amplify the employees effectiveness in achieving his own goals as well.
On the PCL paradigm, the center of power thus shifts away from the “elite authoritarian group” to every person in the organization. This is because it recognizes that people want to be treated as whole people. They “want to contribute to the accomplishment of worthwhile objectives. They want to be part of a mission and enterprise that transcends their individual tasks. They don’t want to work in a job that has little meaning, even though it may tap their mental capacities. They want purposes and principles that lift them, ennoble them, inspire them, empower them, and encourage them to their best selves.”
The scientific management (stomach) paradigm says, “Pay me well.” The human relations (heart) paradigm says, “Treat me well.” The human resource (mind) paradigm says, “Use me well.” The principle-centered leadership (whole person) paradigm says: “Let’s talk about vision and mission, roles, and goals. I want to make a meaningful contribution.”
The Excellence Paradigm
Finally, Tom Peters and Robert Waterman propose a theory as well in In Search of Excellence. It is not necessarily contrary to principle-centered leadership, and has much in common with it.
The main components of the theory are:
- People’s need for meaning.
- People’s need for a modicum of control
- People’s need for positive reinforcement, to think of themselves as winners in some sense
- The degrees to which actions and behaviors shape attitudes and beliefs rather than vice versa
- The notion of companies as distinctive cultures
- The emergence of the successful company through purposeful, but specifically unpredictable, evolution
Peter’s first four points have been discussed in detail in some of the other documents. A few notes can be made on the last two.
First, the centrality of culture means that “the process of shaping culture [is] the prime management role.”
Second, culture allows for the “lose-tight” dynamic of the excellent companies. Culture shapes behavior and provides meaning (through the “tight” dimensions), but also allows people to stick out (because everything that is noncore is adaptable). “The culture regulates rigorously the few variables that do count, and it provides meaning. But within those qualitative values (and in almost all other dimensions), people are encouraged to stick out, to innovate.”
Third, culture allows you to sidestep the complexity of large organizations. This is because it allows you to manage by a few core values rather than detailed rules. Big institutions are too complex to manage by rules; so the excellent companies have simplified, and instead they use a few transcending values to shape behavior.
Peters argues that “managed evolution is important to keeping a company adaptive.” But adaptation is also too complex to manage by rules. Thus, instead of creating rules to manage adaptation, great managers instead make sure that there are enough tries to satisfy the laws of probability. The result is that there will at least by lots of singles and doubles, and the ability to rapidly learn from the market and continually make improvements that build on one another.
But in order for this to happen, the organizational culture has to have the loose-tight properties that are characteristic of the culture of the excellent companies. Most current theory, however, cannot enable this because it is “neither tight enough nor loose enough.” It isn’t tight enough “to consider the role of rigidly shared values and culture as the prime source of purpose and stability” and thus proposes “rules and goal setting to cover these bases.” On the other hand, it is not loose enough to acknowledge the “relative lack of structure” and the need for a “wholly new management logic” that is needed to ensure continuous adaptation in large enterprises. Instead, it proposes structural rules and planning exercise—both forms of rigidity—to hurdle this need.
What we see in the development of management thought is an ongoing trajectory toward freedom and meaning as the ultimate guiding principles of management. Freedom and meaning, however, do not mean that there is no structure. Rather, organizations must have both loose and tight properties. There must be clear and fundamental core values (tight properties) in place in order to enable freedom to flourish and in order to provide the meaning that is ultimately motivating to people and the direction that enables them to manage themselves rather than operate within the command-and-control framework of earlier generations of management thought.
Extension: Biblical Connections. It would be useful to explore the biblical connections here. A few initial thoughts are:
- Freedom is at the essence of the Christian life that Christ has won for us (Galatians 5:1), and it is therefore good and right that our paradigm of management reflects the central defining value of freedom.
- The image of God also argues for freedom as a fundamental, defining concept in how we manage. If people are in the image of God, we should seek to maximize and empower individual freedom to the greatest extent possible in all areas—including management. It is not right to ignore the value of freedom when it comes to managing people, as though there are any realms where the image of God does not have implications for how we treat people.
- Meaning is also fundamental to the Christian view of man. People are not merely economic beings, they are not merely social beings, they are not merely competent beings. They are also spiritual beings. If management is to be holistic—and it ought to be, because it is about people, and people are holistic—then it has to reflect the spiritual dimension. There is a danger here, of course, that the concept of meaning can be secularized, and understood apart from God. At the same time, there does have to be a kind of meaning that non-believers can and ought to have in their work, and it is right to acknowledge this. It is, I believe, the responsibility of the individual, however, to make sure that these penultimate dimensions of meaning are not treated as ultimate, and to instead find his or her ultimate meaning in God, and a sense of fulfilling a calling given by God. It is the responsibility of the organization not to interfere with this ultimate dimension of meaning, even if it is a secular organization and cannot make this component explicit.
- Really, the concept of meaning here reflects the biblical reality that our work is a calling. It is meaningful because God has given it, and because it is in the path of the specific good works that he has laid before us and which is part of the purpose (meaning) he has for our lives (Ephesians 2:10).
- A slightly unrelated Lencioni thought here: Lencioni argues that “irrelevance” and “anonymity” are two components of a miserable job. At the human level, a Christian may experience a miserable job. But in an ultimate sense, no job needs to be miserable for the Christian because God takes notice (“do your work as unto the Lord”) and because everything the Christian does is relevant and lasting (“always abounding in the work of the Lord, knowing that your labor in the Lord is not in vain”).
 See also chapter 4 (chapter 2 in the 2010 edition) of Management for Productivity for an excellent, clear, and comprehensive overview of the history of management in the 20th century and what we learned from each school of thought, as well as Tom Peters overview in In Search of Excellence, pp. 89-103.
 Stephen Covey, Principle-Centered Leadership, p. 176.
 Tom Peters and Robert Waterman, In Search of Excellence, 92
 Ibid, 92.
 Ibid, 91.
 He summarized Theory X in three tenets (see Douglas McGregor, The Human Side of Enterprise, updated and with commentary by Joel Cutcher-Gershenfeld, p. 43):
- The average human has an inherent dislike of work and will avoid it if he can
- People, therefore, need to be coerced, controlled, directed, and threatened with punishment to get them to put forward adequate effort toward the organization’s ends
- The typical human prefers to be directed, wants to avoid responsibility, has relatively little ambition, and wants security above all.
 McGregor summarized Theory Y in this way (McGregor, pp. 59-60):
- The expenditure of physical and mental effort in work is as natural as in play or rest—the typical human doesn’t inherently dislike work
- External control and threat of punishment are not the only means for bringing about effort toward a company’s ends
- Commitment to objectives is a function of the rewards associated with their achievement—the most important of such rewards is the satisfaction of ego and can be the direct product of effort directed toward an organization’s purposes
- The average human being learns, under the right 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.
 Peters, p. 94.
 Peters, p. 96. Peters and Waterman also note, by the way, that in their study of excellent companies, the best companies hold together both authority and empowerment. They have both a caring side and a tough side. “Like good parents, they cared a lot—and expected a lot” (96).
 Covey, p. 178.
 Ibid, 178.
 Ibid, 178.
 Ibid, 178.
 Ibid, 179.
 Ibid, 179.
 Ibid, 179-180.
 Ibid, 180.
 Peters and Waterman, 105.
 Ibid, 106.
 That’s a key point: When the values are clear and the culture embodies them, you don’t need detailed rules.