Global Trends Opinions

Do we need to consider a »Theory Z« for millennials?

21 June 2019 / 9:00

In 1960, Douglas McGregor published his famous book “The Human Side of Enterprise”, which had a significant impact on the way we see organisations, management and human engagement in enterprises. In this book, Douglas McGregor identified an approach of creating environments within which employees are motivated via authoritative direction and control or integration and self-control, which he called theory X and theory Y. Both theories with their underlying assumptions materialize in the way organisations are built, projects are managed and people are led.

Theory X rests on three core assumptions:

  • The average human being has an inherent dislike of work and will avoid it if he can…
  • Because of this human characteristic of dislike of work, most people must be coerced, controlled, directed, threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives…
  • The average human being prefers to be directed, wishes to avoid responsibilities, has relatively little ambition and wants security above all.

Theory Y rests on the following assumptions:

  • The expenditure of physical and mental effort in work is as natural as play or rest…
  • External control and the threat of punishment are not the only means for bringing about effort toward organizational objectives. Man will exercise self-direction and self-control in the service of objectives to which he is committed…
  • Commitment to objectives is a function of the rewards associated with their achievement…
  • The average human being learns, under proper 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…
  • Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partly utilized.

Based on the latter, McGregor observes that the limits on human collaboration in the organizational setting are not limits of human nature but of management´s ingenuity in discovering how to realize the potential represented by its human resources. Furthermore he notes that the organization is likely to suffer if it ignores the personal needs and goals of the workforce and calls for integration, which demands that both, the organization´s and the individual´s needs be recognized.

Nearly sixty years later the situation has changed significantly. On the one hand side, his observations were revolutionary for that time, on the other hand the millennials, or “Generation Z” are joining (soon) the workplace, which will impose another change to organizations and its leadership. So it may be time to advance these theories with their underlying assumptions and to formulate the Theory Z. In 1969, psychologist Abraham Maslow proposed his own model of workplace motivation, which he called Theory Z. Unlike Theories X and Y, his Theory Z recognizes a transcendent dimension to work and worker motivation, an ideal managerial style would help cultivate worker´s creativity, insight, meaning and moral excellence. William Ouchi developed another Theory Z, which builds in Japanese Management Styles. However, both did not consider the new developments and needs of millennials.

Drafting a modern Theory Z, it could build on the following assumptions:

  • Individuals strive for a meaningful life, in which work is only performed temporarily, serving less the livelihood than the purpose of personal development…
  • Commitment of individuals to something (e.g. a project) depends on whether the work resonates with them, they feel called to perform the work, or can achieve a “flow experience”, get the opportunity to collaborate with others and receive recognition for what has been done (e.g. through feedback and positive reinforcement)…
  • The average human is striving for work autonomy and self-control instead of being led by others. However, someone in the organisation needs to care for orchestration of activities, guiding through a purposeful mission and a set of values…
  • Modern technologies, such as Artificial Intelligence, Information and Communication Tools, are releasing individuals from routine activities and enabling them to focus on evolutionary and purposeful work…
  • Organisations offer a wide range of opportunities for networking, collaboration and development, which individuals may chose for their own purposes, not the other way around.

That sounds strongly like emancipation of the individual. This raises the question of the purpose of organisations. What makes organizations attractive for the young generation to share time, energy and skills with them? Do young people want to commit to projects chartered by organizations and do they formally want to become a part of it? These are questions that will shake up organisations, which are still hierarchically structured and led like Theory X predicts. Projects will still play an essential role as “incubators” in which self-organisation and work autonomy is given space and time. However, project leadership styles and project management will radically change

Source: IPMA

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