4.3 Behavioral Management Theory
Behavioral management theory places the person rather than the process at the heart of business
operations. It examines the business as a social system as well as a formal organization.
Therefore, productivity depends on proper motivation, group dynamics, personal psychology,
and efficient processes.
Behavioral management theory humanizes business. Feelings have a practical impact on
operations. Team spirit, public recognition, and personal pride encourage employees to perform
better. Individual relationships also play a role. Employees are more likely to go the extra mile
for a boss they respect and who respects them.
Shortcomings of behavioral management theory include:
i. The difficulty of balancing personal relationships with professional conduct
ii. An inclination toward socially motivated hiring practices that can be unjust
iii. The danger of assuming that all individuals respond the same way to the same situations
and for the same reasons.
Common behavioral management theories include the following:
4.3.1 Human Relations Theory
The fundamental texts on human relations theory evolved from an experiment following classical
theory. Elton Mayo worked as part of a team evaluating the impact on the productivity of various
workplace conditions at the Hawthorne Works, a large factory complex. Early results were self-
contradicting; changes in opposite directions both improved productivity.
Mayo realized that the researchers’ attention to the workers was the common factor. It instilled
pride and fulfilled particular social needs of the workers. This led to the development of the
“Hawthorne effect,” a principle of research that suggests researcher attention affects the subjects
in a study and impacts the results.
, In business management, the Hawthorne studies led to articulating the role that human relations
play in business operations. Mayo and later theorists developed several related conclusions,
including:
i. Group dynamics affect job performance.
ii. Communication between employees and employers must go in both directions.
iii. Production standards depend more on workplace culture than on official objectives.
iv. In addition to compensation, perceived value affects performance.
v. Workers prefer to participate in the decision-making process.
vi. Integration between departments or groups positively impacts an organization.
In the modern workplace, sanctioned social activities and open, defined communication channels
owe a debt to human relations theory.
4.3.2 Theory X and Theory Y
Douglas McGregor primarily investigated the way managers motivate their employees. The same
tactics don’t work across the board, and individuals require different types of oversight or
encouragement. In 1960, McGregor developed Theory X and Theory Y in response, laid out in
“The Human Side of Enterprise.”
This management theory divides workers into two camps that require two leadership styles.
Theory X workers lack drive. Managers need to provide large amounts of structure and direction
to get them to accomplish the necessary work. These workers demand an authoritarian style of
management.
Theory Y workers are self-motivated individuals who enjoy their work and find it fulfilling. They
benefit from a more participative environment that fosters growth and development.
McGregor’s theory of differentiated management practices remains relevant, but neither workers
nor managers tend to exist at the extreme ends of what should be a more nuanced spectrum. The
approach also neglects the reciprocal effect managers and workers can have on one another. A
natural self-starter can have their ambition micromanaged out of them.
Behavioral management theory places the person rather than the process at the heart of business
operations. It examines the business as a social system as well as a formal organization.
Therefore, productivity depends on proper motivation, group dynamics, personal psychology,
and efficient processes.
Behavioral management theory humanizes business. Feelings have a practical impact on
operations. Team spirit, public recognition, and personal pride encourage employees to perform
better. Individual relationships also play a role. Employees are more likely to go the extra mile
for a boss they respect and who respects them.
Shortcomings of behavioral management theory include:
i. The difficulty of balancing personal relationships with professional conduct
ii. An inclination toward socially motivated hiring practices that can be unjust
iii. The danger of assuming that all individuals respond the same way to the same situations
and for the same reasons.
Common behavioral management theories include the following:
4.3.1 Human Relations Theory
The fundamental texts on human relations theory evolved from an experiment following classical
theory. Elton Mayo worked as part of a team evaluating the impact on the productivity of various
workplace conditions at the Hawthorne Works, a large factory complex. Early results were self-
contradicting; changes in opposite directions both improved productivity.
Mayo realized that the researchers’ attention to the workers was the common factor. It instilled
pride and fulfilled particular social needs of the workers. This led to the development of the
“Hawthorne effect,” a principle of research that suggests researcher attention affects the subjects
in a study and impacts the results.
, In business management, the Hawthorne studies led to articulating the role that human relations
play in business operations. Mayo and later theorists developed several related conclusions,
including:
i. Group dynamics affect job performance.
ii. Communication between employees and employers must go in both directions.
iii. Production standards depend more on workplace culture than on official objectives.
iv. In addition to compensation, perceived value affects performance.
v. Workers prefer to participate in the decision-making process.
vi. Integration between departments or groups positively impacts an organization.
In the modern workplace, sanctioned social activities and open, defined communication channels
owe a debt to human relations theory.
4.3.2 Theory X and Theory Y
Douglas McGregor primarily investigated the way managers motivate their employees. The same
tactics don’t work across the board, and individuals require different types of oversight or
encouragement. In 1960, McGregor developed Theory X and Theory Y in response, laid out in
“The Human Side of Enterprise.”
This management theory divides workers into two camps that require two leadership styles.
Theory X workers lack drive. Managers need to provide large amounts of structure and direction
to get them to accomplish the necessary work. These workers demand an authoritarian style of
management.
Theory Y workers are self-motivated individuals who enjoy their work and find it fulfilling. They
benefit from a more participative environment that fosters growth and development.
McGregor’s theory of differentiated management practices remains relevant, but neither workers
nor managers tend to exist at the extreme ends of what should be a more nuanced spectrum. The
approach also neglects the reciprocal effect managers and workers can have on one another. A
natural self-starter can have their ambition micromanaged out of them.
