Book Review Essay: Douglas Mcgregor: The Human Side of Enterprise in Peril

The Human Side of Enterprise by Douglas McGregor; Douglas Mcgregor, Revisited: Managing
the Human Side of the Enterprise by Gary Heil; Warren Bennis; Deborah C. Stephens
Review by: David Jacobs
The Academy of Management Review, Vol. 29, No. 2 (Apr., 2004), pp. 293-296
Published by: Academy of Management
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 ?
Academy of Management Review
2004, Vol. 29, No. 2, 293-311.

BOOK Walter R. Nord

REVIEWS Book Review Editor

Book Review Essay: Douglas McGregor? downsizing, pension insecurity, and aggressive
The Human Side of Enterprise in Peril investors seeking immediate return, it is useful
to reconsider McGregor's call to honor the unful
The Human Side o? Enterprise, by Douglas filled
potential of employees. The recent publi
New York: McGraw-Hill 1960. of Douglas
cation McGregor, Revisited: Manag
McGregor.
ing the Human Side o? the Enterprise, by Gary
Douglas McGregor, Revisited: Managing Heil, Warren Bennis, and Deborah C. Stephens,
the Human Side of the Enterprise, by Gary makes it especially timely to look back at
Heil, Warren Bennis, and Deborah C. Ste McGregor's work.
Theories X and Y are still promi
phens. New York: Wiley, 2000. McGregor's
nently featured in textbooks on management
and organizational theory. However, contempo
By David Jacobs, Hood College, Frederick, Maryland.1
rary management scholars have largely re
The study of the history of ideas is a useful jected McGregor's arguments, preferring contin
corrective for the cataloging of theories that gency theories emerging from empirical studies.
characterizes much and textbooks Even leading disciples of McGregor seem to fol
scholarship
in management. low the fashion and downplay the critical moral
Management theory has not de
in a linear fashion in which each new core of his thinking. Partly as a result, manage
veloped
its antecedents. the his ment fail to perceive
scholars the need for pro
theory outdoes Rather,
toric context of scholarly work has influenced its found reforms in organizations.
Researchers are af HSE is best known for its juxtaposition of The
development. inevitably
fected by the swirl of events and by their per ory X and Theory Y management philosophies.
sonal values, which are themselves
shaped by Theory X is the still persistent view that workers
the context of are ordinarily passive and resistant to the legit
prior experience. Understanding
ideas, historical and imate expectations of management and the or
including biographical
factors, does not diminish their value. Indeed, ganization. Alternatively, Theory Y, McGregor's
ideas demonstrate their value in the context of favored view, assumes that workers seek fulfill
ment from work and will prosper in an environ
experience.
ment inviting their creative involvement.
Throughout the book, McGregor subjects cus
THE HUMAN SIDE OF ENTERPRISE to careful scru
tomary management practices
Famed MIT scholar and father of Theory Y tiny. He uncovers the arbitrary core of perfor
The mance appraisal and merit pay and scores
management, Douglas McGregor published
Human Side of Enterprise (HSE) some forty years managerial manipulation of the illusion of par
ago. If newer were necessarily better, HSE ticipation.
would now merit a footnote. In HSE McGregor disputes the motivational
only However,
was an astute value of traditional forms of merit pay in which
McGregor judge of the organiza
tions of his era, and his moral on employees receive small variations in compen
perspective
human relations remains valuable even in al sation based on subjective assessments of per
tered circumstances. In fact, in this era of formance. Instead, he favors group rewards
based on objective measures of unit perfor
mance and substantial awards for the few out
11 particularly thank George Strauss for his comments on standing performers. With the decline of unions
early drafts of this essay. and the corresponding increase in managerial

293

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 294 Academy of Management Review April

discretion, merit pay of the sort that McGregor necessity of active leadership. When he retired,
challenged is common practice. he commented:
HSE is still a pleasure to read. It is clearly
It took the direct experience of being a line exec
written, and it reveals a nondogmatic but inquir utive and meeting the problems in
personally
ing mind at work. Contemporary management volved to teach me what no amount of observa
tion of other could have I believed,
students might miss the bright colors and mul people taught.
for example, that a leader could operate success
tiple fonts of today's texts, but they would ben
efit from exposure to this classic. fully as a kind of adviser to his organization. I
I could avoid a "boss" ...
thought being
McGregor's thinking reminds one that there ... I to duck the of
hoped unpleasant necessity
was a period in which many management think making difficult decisions ...

ers accepted exam ... I to realize that a leader can

the legitimacy of unions. For finally began
a Russell not avoid the exercise of authority any more than
ple, Mary Van Kleeck, Sage Founda
he can avoid responsibility for what happens to
tion researcher on human resource issues, grew his organization (McGregor, cited in Bennis &
increasingly committed to trade unionism and Schein, 1966: 66-70).
economic planning in the 1920s and 1930s. She
an "interpretation" of scientific man This new moderation did not, however, mean a
embraced
that prioritized workers and working repudiation of unionism or embrace of authori
agement
over tarian
conditions company profits (Oldenziel, management.

2000).
Neil Chamberlain (1948) explored the union
TAKING ISSUEWITH MCGREGOR
challenge to management control and found
managers anticipating a kind of codetermina Edgar Schein (1975) underscored and rejected
tion. McGregor strove to build a new model of the distinctive moral thrust in McGregor's work
the new union reality, as he sought to amend Theory Y and render it
management recognizing
and his concept of the integration of interests in more compatible with contingency theory. While
the enterprise envisioned a fundamental he affirmed Theory Y as a more realistic view of
human nature
than Theory X, Schein took issue
change in direction. Theory Y is compatible with
collective much more so than the with McGregor's moral claim that it is a respon
bargaining,
unitarist-oriented human relations doctrines sibility of management to make it possible for
that predated it and most models people to recognize and develop their capacity
contingency
that followed it. for participation in decision making. Schein
A history of ideas perspective on McGregor called McGregor's larger vision "utopian" and
these discontinuities (as well as re embraced Theory Y as a practical guide for
highlights
veals McGregor's debt to Abraham Maslow). managers only in the higher levels of organiza
years as president of Antioch Col tions. One wonders whether McGregor would
McGregor's
illustrate his to endorse Schein's narrower vision.
lege willingness experiment
with participatory systems. Antioch pioneered
the integrated work/study curriculum under the
CONTINGENCY THEORY
leadership of Arthur Morgan, better known for
his stewardship of the Tennessee Valley Author The in management
transition scholarship
con from Theory to contingency
Y theory reflects a
ity. As Antioch president, McGregor helped
struct a model of college and community gover turn toward empirical research, but also a dim
nance in which students played a decisive role. inution of moral emphasis. McGregor based his
Antioch's nature and freewheel arguments in part on impressionistic observa
experimental
ing politics led to an investigation by the House tion and practiced hypothesis testing only in a
Un-American Activities Committee, and McGre casual manner. His observations were clearly
gor was obliged to defend its traditions of dis shaped by the cardinal value he assigned to the
sent and social reform (Scott Sanders, personal improved treatment of workers.
communication). Contingency theorists seek analytical rigor in

McGregor later modified the extremely demo a narrowly instrumental context: what manage
rial techniques enhance the standard measures
cratic views of his Antioch period. Factionalism
among students and faculty, among other of organizational effectiveness, de-emphasizing
things, exhausted him and convinced him of the larger goals. Enhancing the personal growth of

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 2004 Book Reviews 295

employees is not ordinarily an explicit objective REVISITEDAND REVISED

(see Hellriegel, lackson, & Slocum, 2002).
Douglas McGregor, Revisited underscores the
Robert Vecchio unintentionally admits the
continued relevanceof McGregor's work to con
moral vacuum in many contingency theories:
temporary debates in management scholarship.
do not simply pick one It is noteworthy in its optimistic account of the
Contingency researchers
alternative over the other, but try to identify a set contemporary application of Theory Y. Heil,
of conditions in which one style of supervision Bennis, and Stephens argue that McGregor's hu
could be expected to yield superior results com manistic vision of organizations is closer to re
to the other ... For if you are
pared style example, a pro
in charge of a band of fascists, subordinates
alization today than ever before. Bennis,
your
that you rule with fessor at the University of Southern California,
might well expect and desire
an iron fist (2003: 12). was a student at Antioch while McGregor was
president. Coauthors Heil and Stephens co
Not all contingency theorists have embraced founded the Center for Creative Leadership in
this extreme position. Some have taken a third California.
position, finding Theory X-style autocratic man Heil, Bennis, and Stephens make this claim:
agement conducive to performance in some
contexts, while warning of likely negative social The rise of the networked economy, the growing
power of front-line workers, the shift in power
consequences (George Strauss, personal mass
from producer to individual consumer, and
communication). This third position stresses the increased to offer
capacity of the workplace
"tradeoffs."
meaningful enterprise; all these conditions lend
However, as Hackman (1985) argues, the man hope to a world of work that we could call
agement scholar typically does not contemplate "McGregorian" (p. viii).

the more radical workplace reforms that might

elide tradeoffs and workers' lives and The authors fail to emphasize the dark side of
improve
effectiveness. Influenced the modern employment: stagnant wages, dimin
organizational by
audience, scholars leave off the ished benefits, job insecurity, and aggressive
managerial
table initiatives that call into "(1) union avoidance by many employers (Wheeler,
question
the authority structure of the organization, (2) the 2002).
core used ... The authors are aware on some level that
technology by the organization
[and] (3) fundamental values and McGregor's principles may be honored in the
managerial
about how human resources are breach. While McGregor saw Scanlon
joint
assumptions
used in the organization and about the personal union management/profit-sharing plans as the
and financial rights of employees" (1985: 144). fulfillment of Theory Y, Heil, Bennis, and Ste
Hackman notes that management scholars are phens note that managers have often balked at
inclined to limit their attention to pro involving workers to the degree contemplated in
ordinarily
grams readily acceptable to managers. the Scanlon plans (p. 17). Undeterred, they
That McGregor was not inclined to observe quickly endorse the diluted tonic of open book
these constraints attests to the insights that the management as an acceptable substitute.
moral imagination brings. McGregor's prefer Breathlessly, eschewing distinctions, they
ence for participatory approaches was rooted in state, "Participative management, knowledge
his moral and concern
outlook for the underdog, workers, open-book management, values-based

unlike the many

whose advocacy of participa management, workgroups, and the democratic
tory management was strategic and selective. workplace were visions McGregor had for the
McGregor's moral outlook should not be con world of business" (p. 36).
sidered as an expendable element of his think The optimistic gloss provided by Heil and col
ing, Schein to the contrary. It reflects McGregor's leagues seems particularly out of place when
awareness of the consequences of management managers seek greater authority without ac
choice rather than a troubling
for workers, sub countability. It is often the "tough and mean"
jectivity. Wicks and Freeman, following John CEO in the mold of Albert Dunlap who is cele
Dewey, argue persuasively for the symbiosis of brated in the business pages (Pfeffer, 1998: 148
normative and empirical research (Wicks & 154). The status quo is not as "McGregorian" as
Freeman, 1998). the writers claim.

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 296 Academy of Management Review April

The authors of Douglas Vecchio, R. P. 2003. Organizational behavior: Core

McGregor, Revisited, concepts.
Mason, OH: South-Western Publishing.
are to be commended for focusing attention on
The book includes Wheeler, H. 2002. The future of the American labor move
Douglas McGregor. excerpts
ment. New York: Cambridge University Press.
from McGregor's work, which will surely interest
the reader. and Ste Wicks, A., & Freeman, R. E. 1998. Organization studies and
Unfortunately, Heil, Bennis,
the new pragmatism: Positivism, anti-positivism, and
phens do McGregor a disservice in their Pan
the search for ethics. Organization Science, 9: 123-140.
glossian optimism.
Certainly, in his post-Antioch work McGregor
was not a radical reformer. He was a reformer
and experimenter nonetheless. The Human Side
Book Review Essay: Effective Gover
o? Enterprise finds him somewhat less optimistic
nance in Managing Change?Common
than before but still struggling to humanize or
His can be seen in Perspective from Two Lenses
ganizations. enduring legacy
the work of his successors at the MIT Sloan
Positive Organizational Scholarship: Foun
School of Management, where scholars like
Thomas Wanda
dations o? a New Discipline, edited by Kim
Kochan, Orlikowsky, Joel
Cutcher-Gershenfeld, and others endeavor to S. Cameron, Jane E. Dutton, and Robert E.
sustain studies Quinn. San Francisco: Berrett-Koehler, 2003.
labor-friendly organizational
(see Kochan, Orlikowsky, and Cutcher
in this mold Redeiining the Corporation: Stakeholder
Gershenfeld, 2002). Another scholar
is Jeffrey Pfeffer, whose book The Human Management and Organizational Wealth,
Equa
tion (1998) reflects a concern for workers' rights by James E. Post, Lee E. Preston, and Sybille
as well as organizational effectiveness. Unfortu Sachs. Stanford, CA: Stanford University
nately, humanizing organizations is a project Press, 2002.
honored in the breach by the many who fail to
see the lives behind the dependent variable. By Cam Caldwell, University of Houston-Victoria,
Victoria, Texas.

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