The Practical Application of the Transformational, Bureaucratic and Human

Relations Theories of Leadership and Management: John Davison Rockefeller

and Pact Inc.

Module Title:

Leadership and Management Theories

Module Code:

BS4S16-V1-15767

Tutor Name:

Yianna Orphanidou

Student Name:

Ibiwari Mordecia Jaja

Student Enrollment Number:

74113118

Date of Submission:

May 31, 2020

Assignment Title:

Summative Essay - Critically evaluate the application of leadership theories to a leader

in an organisational context (e.g. a company of your choice) and management theories

to a contemporary organization.

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 INTRODUCTION

Utilizing a secondary research method, this summative essay will carry out a detailed

analysis of the transformational theory of leadership, critically evaluating and applying it

to the leadership of Chief Executive Officer of the Standard Oil Company, John Davison

Rockefeller. The essay will carry out a case study of the life of John D. Rockefeller as a

transformational leader, presenting information on Rockefeller’s biography and life

experiences, while considering the effect this had on shaping his leadership style as the

CEO of the Standard Oil Company. The second part of this essay will critically evaluate

the human relations and bureaucracy theories of management, critiquing these theories

and applying them to the current practice in a contemporary organization, Pact Inc. Pact

is an international not-for-profit organization.

The not-for-profit sector which is also popularly known as the third sector (with

government knows as the first and businesses known as the second) consists of a set

of voluntary, private and charitable organizations and associations (Anheier, 2005). This

sector has gained increasing prominence over the years, giving birth to organizations

that are solely concerned with making social impact mostly in the areas of welfare

provision, health, community development, education, the environment etc. These

organizations, being nonprofit, rely heavily on voluntary commitment of staff to the

organizational goals, hence the need for proper and effective management and

leadership (Anheier, 2005).

Pact Inc. is an international not-for-profit organization headquartered in the United

States of America and operational in over 40 countries in Africa, Asia, Europe and the

Americas. Pact’s organizational vision is to create a world, where the people they serve

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are heard, capable and vibrant (Pact world, 2019). As a not-for-profit organization, Pact

serves by implementing programs in the practice areas of capacity development,

women empowerment, governance, health, livelihoods, mining, energy and the

environment. Pact is a top implementing partner for the United States Agency for

International Development (USAID). Pact is also financed by other donors such as the

President Emergency, Global Fund and other private funders including the Bill and

Melinda Gates Foundation, The Coca Cola Foundation and corporations (Pact world,

2019).

Pact operates a hierarchical organizational structure. The organization is led by a Chief

Executive Officer (CEO), who together with the board of directors oversee the

operations of the organization. Pact has various country offices that are directly led and

managed by country directors, who report to regional directors based in the

headquarters office. One of such country offices is Pact West Africa, which is the

country office for Nigeria, based in Nigeria. Pact’s policies and standards of operations

cut across all country offices, giving the organization a uniform standard and culture

globally. (Pact, 2017). Pact’s global organizational culture is that of creating a group of

creative and innovative professionals that work together as a family within an

organization that genuinely cares for every employee’s growth and welfare. Overtime,

this has been realized with testimonials from employees around the world (Pact World,

2020).

This essay will further analyze other leadership and management theories that have

been critically evaluated by various scholars ranging from the classical and

contemporary theories. This will be done in order to present a context-based, in-depth

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analysis of leadership and management theories. The last part of the essay will be

focused on providing a critical evaluation of how well the discussed leadership and

management theories fit or do not fit into the reality of what is being practiced in the

contemporary organization presented.

Leadership Theories

The development of leadership as a concept and an area of research interest has been

around for centuries. Historical scholars such as Plato held the belief that one’s class

position was the singular factor for determining a leader (Gregory-Mina, 2009).

Overtime, scholars have presented varying opinions on the definition of leadership,

positing various theories to further explain the concept. Despite the myriad of leadership

definitions that exist, a universal definition of leadership was developed and agreed

upon during the first GLOBE conference in 1994, where 54 researchers from 38

countries reached a consensus on the definition of leadership (Gregory-Mina, 2009).

This definition goes thus:

“Leadership is the ability of an individual to influence, motivate, and enable

others to contribute toward the effectiveness and success of the

organizations of which they are members” (House, Javidan, & Dorfman,

2001 as cited in Gregory-Mina, 2009)

As mentioned above, various scholars have offered different definitions of leadership,

describing what leadership means from their diverse lens. Most definitions of leadership

have conceptualized leadership as the ability to influence people to achieve established

goals. In his book Leadership: Theory and Practice, Northouse defines leadership as “a

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process where an individual influences a group to attain a common goal” (Northouse,

2013). The term has also been defined as a process of influencing others to understand

and agree about what needs to be done and how. It also involves the process of

facilitating individual and collective efforts to achieve common goals (Jie-Hui Xu, 2017).

Similarly, Guzman, Muschard, Gerolamo, Kohl & Rozenfeld in their journal article

Characteristics and Skills of Leadership in the Context of Leadership put forth a

definition of leadership as the ability to lead organizations and groups to transformative

change by providing direction and aligning people with all the strategies required to fulfill

a vision (Guzman, Muschard, Gerolamo, Kohl & Rozenfeld, 2020).

In seeking to conceptualize leadership, different types of leadership theories have been

posited by various scholars through the development of comprehensive theories aimed

at relating leadership to the demands of society (Northouse, 2013). Some have argued

that leadership emanates from the personality of a person, this perspective to

leadership originates from the trait theory of leadership (Northouse, 2013). This theory

suggests that a leader is different from a non-leader because of certain unique inborn

qualities he/she possesses that imbues the ability to lead. Proponents of this theory

often use statements like “He is a born leader” (Northouse, 2013). Following from the

trait’s theory, a behavioral approach to leadership was formed. Here, the actions of a

person and not qualities determine whether he/she is a leader. Another perspective,

which is referred to as the skills theory posit that a leader is someone who has certain

skills and competencies (Khan, Nawaz, Khan, 2016). Other scholars argued that

leadership is situational, which means that leadership can be differ based on particular

situation and contexts (Khan, Nawaz, Khan, 2016).

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Other contemporary theories of leadership have been put forward in a bid to further

conceptualize leadership. The transactional theory of leadership is one based on

reciprocity, where the leader-follower relationship is based on a series of agreement

and exchange (Khan, Nawaz, Khan, 2016). One of the most vastly studied one which is

the focus of this essay is the transformational leadership theory. This theory sees the

leader as transcending personal interests to prioritizing the needs of the needs of the

group. The transformational leader “attempts to induce followers to reorder their needs

by transcending self-interests and strive for higher order needs" (Bass and Bass, 2008).

Just like the word love or democracy, a million definition of leadership exits, capturing

what it means to different people in different contexts. The concept of leadership has

been analyzed using countless theories which cannot all be mentioned here.

Leadership as a concept is still being largely researched, and hence cannot be seen to

be a one-size-fits-all concept or even to have a universal definition (Northouse, 2013).

John D. Rockefeller (A Brief History)

John D Rockefeller was born on the 8 th of July 1839 in New York State, United States of

America. John however grew up in Pennsylvania, with his mother who was a Baptist

fanatic and a Father who was mostly absent and a known criminal and bigamist,

constantly moving his family to different cities in order to avoid the law catching up with

him (Lee, 2002). His father’s behavior became an image that John was determined to

avoid at any cost, having a deep hatred for a showy lifestyle. John’s mother was a

committed Baptist woman who devoted her time to brining up her children in the fear of

God. Following his mother’s leadership, John took church very seriously and was often

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referred to as ‘the deacon’ by most of his friends (Lee, 2002). He later went on to

become a full-time minister for a while before dropping it to learn accounting trade in

order to support his family financially. As the first son of the family, John had to grow up

really quick to act as the breadwinner of the family. At a young age, he was already

selling candy, turkey and any other thing he could find for profit (Lee, 2002). In later

years, John is noted to have said “I was trained from the beginning to work and to save.

I have always regarded it as a religious duty to get all I could honorably and to give all I

could. I was taught that way by the minister when I was a boy” (Lee, 2002). John’s

upbringing, faith and commitment to church was very critical to his principles and

worldview. (Lee, 2002). At the age of 23, John founded the Standard Oil Company in

1863 which became known as the greatest monopoly in America’s oil industry in the 20 th

century. John built the company to a great success that even after its dissolution by the

U.S. government, John became America’s first billionaire (Harvard Business School).

Transactional Leadership

Transactional leadership style is often explained as a prerequisite or in comparison to

for the more vastly studied transformational leadership. However, it will be good to

critically analyze this style of leadership as a unique style with its own characteristics

without resorting to comparing it with transformational leadership just yet.

The concept was transactional leadership was first developed by Max Weber and then

expounded by James McGregor Burns. According to Burns, Transactional leaders

approach followers with the intent to exchange one thing for another, this can be in the

form of the winning the followers commitment to the leaders goals and objectives by

offering the follower additional benefits beyond salary in an organizational setting

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(Stewart, 2006). In explaining this further, Burns argues that in transactional leadership,

the leader and the follower are not bound together with the purpose of achieving

mutually similar goals, instead, since the relationship is based on an exchange, both the

leader and the follower acknowledges the power relations of the other and continue to

pursue their respective purposes (Stewart, 2006)

In their book, Improving Organizational Effectiveness through Transformational

Leadership, Bernard Bass and Bruce Avolio further explain transactional leadership as

the exchange that occurs among leaders, colleagues and followers. Here, the leader

discussed the terms of reference of what is required with the follower, presenting the

conditions and rewards that the followers will receive upon fulfilling the terms of

reference (Bass and Avolio, 1994). They further refer to this type of leader as a

‘transactional operator’ who is only concerned about achieving his/her own personal

agenda without a genuine concern for the welfare of followers (Bass and Avolio, 1994).

Leaders in this category can be productive and successful by expecting and demanding

results. Also, followers will not always feel badly treated as long as there are rewards to

go with their commitment (Bass and Avolio, 1994).

As a leader of the Standard Oil Company, John D. Rockefeller could be considered

transactional, in the sense that he was often result-oriented to the extent that he was

aware of every detail of all activities happening in the Company. He was known to

micro-manage employees by going to the refinery to ensure that the workers aren’t

pausing on their efforts (Ron Chernow, 1998). He questioned every aspect of the work

and hurried employees into finishing tasks in order to improve productivity. In exchange

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for their commitment and hard work, all officers in the Company were granted stock in

the enterprise (Ron Chernow, 1998).

The transactional leadership theory has been criticized for not rewarding personal

initiative and creativity of followers. Some studies also reveal that the transactional

theory of leadership fail to balance out the level of leaders actions and the nature of the

relations with the followers (Khan, Nawaz & Khan, 2016)

Transformational Leadership

The concept of transformational leader is primarily focused on ‘change’. This leadership

theory which was first coined by Downton and was further expounded by leadership

expert James McGregor Burns postulates that transformational leaders are change

agents who motivate their followers to achieve their goals and vision, while empowering

them in the process (Jie-Hui Xu, 2017). This type of leadership is considerate of the

follower’s growth; hence the leader provides the follower with support, mentorship and

coaching, encouraging the follower to use their own abilities (Osula and Eddie, 2014).

The uniqueness of the transformational theory of leadership is seen in its alignment to a

greater good as it entails “the involvement of the followers in processes or activities

related to personal factor towards the organization and a course that will yield certain

superior social dividend”.

Burns (2003) in his book transforming leadership gives a clear definition of what it

means to transform – “it is to cause a metamorphosis in form or structure, a change in

the very condition or nature of a thing, a change into another substance, a radical

change in outward form or inner character, as when a frog is transformed into a prince,

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or a carriage maker into an auto-factory. It is change of this depth and breath that is

fostered by transforming leadership”. With the advent of the oil industry in America, the

industry was ridden with various woes, ranging from fire outbreaks, poor technology and

transportation system and the most daunting issue of waste involved in the refining

process, which was costing the industry a lot of profit. John D. Rockefeller through his

company was determined to do everything in his power to address these issues,

particularly the problem of waste (Lee, 2000). To do this, John found alternative uses

for many of the waste by-products and his company began selling them for profit.

Standard Oil is recorded to have developed over 300 by-products from oil waste, hence

reducing the profit loss in the oil industry of America at the time (Loborec & Weber,

2015)

Bass and Roggio (2006), further expound on the work of Burns by postulating that

leaders that are transformative not only cause a change in their followers but go ahead

to support the growth of followers into future leaders, by empowering them and being

attentive to their needs. These leaders also ensure that the goals of individual followers,

their own goals and the organizational goals are all aligned.

As a result of the positive relationship between that exists between the transformational

leader and the follower, these leaders tend to earn the trust and loyalty of their followers

and often have more committed and satisfied followers. The followers of a

transformational leader are highly motivated and often exceed performance

expectations (Bass and Riggio, 2006). The employees of the Standard Oil Company

were often referred to themselves as the Standard Oil Family, with everyone being

treated right and working towards the fulfilment of the company’s goals and objectives

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 (Loborec & Weber, 2015). Rockefeller gained the commitment and trust of his

employees by often working with them and appreciating their efforts, giving them long

fully-paid leave in order to get their highest performance. Most employees were known

to cut their leave short because of their commitment to the organizational goal and

success (Loborec & Weber, 2015).

Another aspect of transformational leadership which is often emphasized by scholars is

the ability of a leader to create a compelling vision that followers can buy-into and

commit to achieving. This helps innovation, particularly in the face of competitions

(Paracha, Qamar, Mizar, Hassan, Waqas, 2012).

Burns (2003) in expatiating on the visionary aspect of transformative leadership states

that transformative leaders are visionaries that aim to move their followers from being

only interested in their personal needs to being driven toward a higher and a more

universal needs and purpose.

To effectively understand all aspects of transformative leadership, Bass and Roggio

(2006) in their book transformational leadership discuss four components of

transformational leadership which are often referred to as the Four I’s.

These components with their brief definitions can be seen below:

Idealized Influence Inspirational Motivation Individualized Intellectual Stimulation

Leaders have certain
character, morals, ethics and
behavior that allow them to
serve as role models to their
followers. Here, leaders can
be relied upon to do what is
11 on their high
right based
moral and ethical conduct.
Consideration
Here, the leader is able This is the leader’s
to inspire followers and This deals with the leader’s ability to challenge
drive them to action. the ability to connect with each followers to be creative,
leader creates a follower’s needs, goals, innovative and to learn
compelling vision for the strengths and weaknesses to ask the difficult
organization and aligns and is able to build on the questions.
these with the vision and follower's strengths
goals of the followers.
John D. Rockefeller can be said to have displayed clear leadership attributes relating to

two of these components – Idealized Influence. As the founder of the Standard oil

company, John D. Rockefeller was a man with high moral standards owing to his

upbringing by a stout Baptist mother. Throughout his lifetime, he was known to have

upheld the Christian faith strictly, being a non-drinker and not giving in to gambling.

John devoted a huge part of his time and profits from his company to philanthropy and

community service. The pressure of managing both charity and business almost cost

him his life at the early age of fifty (Lee, 2000).

The other component that can be associated with John D. Rockefeller is ‘inspirational

motivation’. The Standard Oil Company began operations with only one refinery in

1863. However, this did not limit John D. Rockefeller’s vision of becoming the biggest

monopoly in the America’s oil industry. In growing his company, Rockefeller has an

inclusive vision that kept both him and his followers accountable to achieving the goals

of Standard Oil Company. In talking about his leadership, he is quoted to have made

the statement – “Good leadership consists of showing average people how to do the

work of superior people” (Mindvalley, 2018)

As Bass and Avolio (1994) rightly pointed out, although transactional leadership have

the tendency to hinder the creativity and growth of the follower, it is often appreciated

for its ability to achieve the goals and objectives of the leader, albeit using an ‘the end

justifies the means’ approach. Transformational leadership on the other hand brings into

consideration the needs of the follower, with the leader being a role model, showing

genuine concern for the growth of the follower in order to achieve transformative change

by pushing a particular vision for all to pursue. As a leader, John D Rockefeller

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combined both of these leadership styles, applying them interchangeably as the

situation demands. This correlates with Bass conclusion, as opposed to what Burns

suggested in his work, that transactional and transformational leadership are

interdependent and not mutually exclusive. Successful leaders tend to utilize both

leadership styles based on the situation and the task to be achieved (Northouse, 2004).

Management Theories

The concept of management can be said to be as old as the human race. However,

despite the long-standing existence of the concept, scholars have and are still

postulating various perspectives as to what the word ‘management’ really means.

Hence, according to Gerald Cole (2004), there is no general definition to the concept of

management but various scholars have succeeded in producing different versions of

what this concept means. One of the first scholars to conceptualize the term

‘management’ was Henri Fayol in 1916.

According to Fayol, “To manage is to forecast, and plan, to organize, to

command, to coordinate, and to control” (Cole, 2004).

Agreeing with this definition, Brech (1957) explains that management is a social process

that involves the activities of coordinating, planning, controlling and motivating (Cole, 2004).

Similarly, Kootz and O’donnell (1984) states that management is an operational process,

noting that there five vital principles of management and these include, planning,

organizing, staffing, directing, leading and controlling (Mahmood, Basharat and Bashir,

2012)

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In giving a varying view of management, Tom Peters (1988) in his definition decides to

explore the concept of management by describing the roles of managers. Peters points out

that managers need to be obsessed with responding to customers, constants think of ways

to innovate, initiate partnership with like-minded organizations, lead in a way that

encourages change and be visionary, and control using simple support systems (Cole,

2004).

In alignment with all these definitions, Gerard Cole in his book Management Theory and

Practice giving an overarching definition of management highlighting all the elements of

management mentioned in the above definitions. He states that:

“Management is a process that enables organizations to set and achieve their

objectives by planning, organizing and controlling their resources, including

gaining the commitment of their employees” (Cole, 2004).

Beyond defining management, different theories of management have been proffered to

further explore the concept more broadly. The first theories of management, often referred

to as the classical theories of management were developed by Henri Fayol and Taylor who

were actually practicing managers at the time the theories were developed (Cole, 2004).

The Classical Management theories which include, the scientific management theory

developed by Freiderick Winslow Taylor, the administrative management theory developed

by Henri Fayol and the bureaucratic management theory developed by Max Weber, were all

developed with the aim of predicting employees behavior at the work place (Mahmood,

Basharat and Bashir, 2012).

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Being the earliest postulated theories of management, the classical theories of

management were criticized for having some shortcomings particularly in the areas of

human relations. This led to the development of what is often referred to as the neoclassical

or human relations theories of management (Bittner, 2006). The primary concern of human

relations theorists were individual behavior and social relationships at the workplace. They

were interested in both employee satisfaction and the efficient use of resources (Cole,

2004). The development of the human relations theory is attributed to Elton Mayo. Other

proponents of the theory include McGregor, Maslow, Bernard among others (Bittner, 2006).

The concept of management is very broad, having various definitions and theories. For the

purpose of this essay, the bureaucratic and human relations theory of management will be

critically analyzed and applied to a contemporary organization.

The Classical Management Approach: Bureaucratic Management Theory

The bureaucratic theory of management was developed by sociologist Max Weber, his work

on bureaucracy has remained the foundation for the study of administrative excellence in

organizations (Rudolph and Rudolph, 2011). The Weber’s theory of bureaucracy as it is

called was formulated in 1947 and the work was titled, ‘The Theory of Social and Economic

Organization’ (Mahmood, Basharat and Bashir, 2012).

The theory is primarily concerned with two vital elements – having an organization with

a structured hierarchy and with a set of clearly defined rules that governs the

organization and its employees. Weber was convinced that the only way to efficiently

manage an organization in order to achieve the highest level of productivity was through

bureaucracy (Peek, 2020). Weber advocated for a rational form of organization, which

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will be bureaucratic. In Weber’s ideal bureaucratic organization, roles are defined within

a hierarchy, job holders are selected on merit and are required to be impartial and

subject to established organizational rules that guide their actions in the work place

(Cole, 2004). Weber argues that with the existence of established rules and practices,

officials of an organization are bound to be legitimate and not arbitrary. With this point

Weber declares that “Bureaucratic organizations are capable of achieving the highest

efficiency, and is in that sense, the most rational known means of carrying out

imperative control over human beings” (Cole, 2004).

Additionally, Weber was of the opinion that formality and impersonality in the workplace

guaranteed the accomplishment of organizational objectives, as this ensured that

organizational goals are not confused with personal interests (Serpa and Ferreira,

2019). Weber advocated for an organizational system where employees roles and tasks

are clearly defined according to their various expertise with a strict culture of division of

labor (Peek, 2020).

Weber’s Bureaucratic Management Theory Contain Certain Key features (Peek, 2020)

that apply to Pact Inc. as a contemporary organization. These can be seen below:

Hierarchical Arrangement of Offices: Weber believed that organizations should be

structured hierarchically, in such a way that allows for the easy flow of information from

top to bottom and vice versa. He advocated that each layer of the hierarchy chain

should be provide direct supervision to the layers below them and be subject to the

supervision of those above them. Pact Inc. organizational structure is strictly

hierarchical in nature with a Chief Executive Officer (CEO) at the peak of the hierarchy.

The CEO is supported by other executive officers who are responsible for leading

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various departments in the organization (Pact world, 2019). This set of executive

officers are referred to as ‘Vice Presidents’ and they report directly to the CEO. For

example, there is the Vice President of Pact Ventures, Vice President of Human

Resources, Vice President of Africa Programs etc. These Vice Presidents supervise the

‘Regional Directors’ who in turn supervise ‘Country Directors’ that are responsible for

managing the operations of Pact in various countries as designated. This chain of

command continues and cuts across managers, deputy managers, senior officers,

officers, assistants, interns and volunteers who are at the bottom of the chain (Pact

world, 2019).

Division of Labor: Here, employees are expected to have clearly defined roles and

responsibilities and be engaged only in tasks where they have expertise, in order to

ensure organizational efficiency. Weber believed that division of labor in this manner will

promote timely completion of tasks. At Pact, every employee has a designated

document which is referred to as a ‘job description’ that specifies their distinct roles and

responsibilities with their job position. This is given to each employee to ensure that

roles are clearly divided without having to overlap. To ensure that employees have the

required expertise to carry out the assignment in their job description, In Pact, the job

description document is used for the recruitment process prior to hiring an employee

(Pact, 2018). Also, there is also the departmentalization of the organization that ensures

clear division of labor. For instance, there is the procurement department, the finance

department, the programs department, the human resource management department,

the IT department, the business development department etc. Employees are

designated to particular departments according to their Job roles and all these

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departments are led by their various managers with clearly defined responsibilities as

their names imply (Pact, 2018).

Merit-based Recruitment of Employees: The recruitment of employees should not be

based on personal connections (nepotism) or interests. All employees should be

selected equally, based on their technical competency and expertise for the job position.

Also, based on this, the employee’s salary should also be based on their job position in

the company and nothing else. Pact has an interesting policy that enforces this feature

of the bureaucratic theory. This policy is called the ‘conflict of interest policy’. (Pact,

2018). According to this policy, employees are required to indicate if they have any

relationship of any kind with proposed candidates for a job and they are also required to

be exempted form the selection process of such candidate. If these rules are not strictly

followed, then it will result in the automatic disqualification of the candidate regardless of

the skills of that candidate (Pact, 2018).

Achievement-Based Promotion: In Weber’s ideal organization, workers should be

promoted based on their experience, achievements and technical competencies and not

based on personal favors or any other factor. In Pact, the promotion process for an

employee is started by the supervisor of such employee, who is required to provide a

‘justification for promotion’ (Pact, 2018). This justification will include a description of the

achievements of the employee in the job position that he/she currently occupies, the

required qualifications/certifications/skills of the employee that makes him/her a suitable

candidate for the higher position being desired. Based on the justification provided, then

the promotion request will be handled fairly by the human resource management

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department with final authorization from either the Country, Regional, Vice President or

CEO (Pact, 2018).

Establishment and Application of Organizational Rules: The rules in a bureaucratic

organization should be clearly defined and enforced, this allows for employees to be in

tune with the standard of operations of the organization and to always know what is

expected of them without confusion. This according to Weber, helps for the smooth

running of the organization. Pact is well run and guided by a myriad of policies and rules

that govern the affairs of the organization and the behavior of employees. For instance,

Pact has the Pact Policy and Procedural Manual that is given and explained to every

employee upon onboarding and orientation (Pact, 2018). This manual contains policies

such as the ‘Sexual Harassment Policy’ which is being heavily enforced in the office.

Pact also has the ‘Pact Code of Conduct and Ethics Manual’ which explains how Pact

handles fraud, money laundering and theft. This policy is also available for all

employees so that they are aware of what is expected of them (Pact, 2017).

The bureaucratic theory of management is one of the longest standing theory of

management, with its principles still being largely utilized by most contemporary

organizations. However, this theory has been largely criticized for ignoring the human factor

(Mahmood, Basharat and Bashir, 2012). While Pact Inc. in its organizational modus

operandi reveal clear practices of the principles of the bureaucratic theory of management,

It combines this with the practice of the fundamentals of the human relations theory of

management, as will be explained below.

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Human Relations Theory of Management: Elton Mayo Hawthorne Experiment

The Human Relations Theory of Management originated from the Hawthorn Studies

executed between 1924 to 1932 by Elton Mayo and Fritz Roethlisberger. The Hawthorn

studies was first carried out to test the effect of the physical environment and conditions

on the productivity and efficiency of workers (Business News Daily, 2020). However, in

carrying out this experiment, Elton and Fritz observed that workers productivity

increased significantly when workers were being observed by others, because during

the study, senior officials visited the workplace to observe the workers during the

experiment. This discovery led them to conclude that workers are more productive and

efficient when they have relations with their colleagues or management. Hence, if

workers feel like they are ‘seen’ by their supervisors, then they will be motivated perform

better (Business News Daily, 2020). With this discovery, Elton Mayo concluded that

“the needs of workers were often based on sentiment (belonging to a group and

thus having a sense of value) and that this could lead to conflicts with managers,

who mainly focused on cost reduction and efficiency” (Mulder, 2017).

In his book Management Theory and Practice, Cole (2004) notes that Elton Mayo’s

Hawthorn Studies which originally started as a study into the effect of physical

conditions on workers, ended as a series of studies on the effect of social factors (group

membership, established relations with superiors etc.) on productivity of workers.

According to Cole (2004), the most significant finding of the Hawthorne experiment

revealed that social relations at the workplace was to be placed on the same pedestal of

importance as monetary incentives and physical working conditions.

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Elton Mayo’s Hawthorn Experimented is credited with the following findings:

1. Workers should be treated as members of a group. Elton posits that individual

workers should not be treated in isolation in the workplace but as members of a

group, as this is how they think and act (Kwok, 2015). In Pact, there are

structures that have been put in place to ensure that workers can see themselves

as members of a group. One of this is the annual staff retreat, where all staff get

to be laid back and interact with both supervisors, and subordinates without all

the work pressure. Pact also encourages group culture by having an established

rule to celebrate every employee’s birthday (Pact 2018).

2. Money is not the sole motivator. Elton found that workers are more satisfied

when they are recognized as a valuable member of a group and appreciated

than when they are only offered monetary of good working conditions (Cole,

2004). As an established rule in Pact, every quarter, an employee of the month is

voted and the winner is publicly recognized and appreciated (Pact 2018). Also,

as part of the human development commitment of the organization, employees

are often sponsored to take trainings and courses, at the end of which they are

recognized with certificates. Additionally, being a non-profit, every staff that

works on a project is given an ‘Award of Appreciation’ for the successful

completion of that project (Pact 2018).

3. Work habits and attitudes of employees are to a large extent determined by

informal groups, which exercise strong social controls over the employee (Kwok,

2015).

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 4. Group bonding and collaboration at the work place must be consciously

developed, as this does not occur by accident (Kwok, 2015). Group bonding at

Pact is ensured through annual staff retreat and birthday celebration of

employees (Pact 2018).

5. The social needs of workers should be catered for by supervisors and managers

so that they can ensure that workers feel motivated enough to work towards

fulfilling the organizational goals and not against it (Kwok, 2015). In Pact, all

supervisors are obligated to conduct weekly ‘one-on-one check-ins’ with each of

their supervisees (Pact 2018). The purpose of this check-in is to discuss the

mental health of the employee, catch up on tasks for the week and discuss other

things like the growth of the employee (Pact 2018).

The Hawthorn experiments no doubt revealed the social/human factor lacking in other

classical theory of management, by proposing a model of the ‘social man’, the

experiment furthered the humanization of work (Cole, 2004). The findings revealed by

the experiment play a major role in the productivity of employees, particularly in

contemporary organizations like Pact Inc. However, Elton’s Mayo’s human relations

theory of management has been criticized as giving managers the power to mentally get

employees to accept less pay while thriving on workers need for social acceptance and

relations (Bruce and Nyland, 2011). Hence, it can be said that in applying the theories of

management, contemporary organizations should strive to balance their organizational

management and practices between the classical and human relations theories of

management, in order to truly satisfy the needs of employees.

22
Conclusion

This report critically analyzed the transformational and transactional theories of

leadership, applying it to the leadership style of John Davison Rockefeller. Flowing from

the analysis carried out above, we see that although, John was more of a transformative

leader, he also displayed transactional leadership qualities in order to successful grow

his company, Standard Oil into America’s greatest monopoly in the oil industry. This

reveals to us the interdependence of the transactional and transformational leadership

theories and how they can both be applied as leadership styles to achieve the best

outcomes.

The human relations and bureaucratic management theories of leadership were also

critically evaluated in this report, applying these theories to a contemporary

organization. In the application of these theories, we see that Pact Inc. as a

contemporary organization displayed a lot of likeness to both theories in its

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management practices. Balancing these two theories of management, have aided Pact

to run a successful and effective organization.

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