On The Human Side of Enterprise

I recently finished reading the classic The Human Side of Enterprise by Douglas McGregor. Below are selected excerpts from the book that I found particularly insightful:

1- “It seems clear to me that the making of managers, in so far as they are made, is only to a rather small degree the result of management’s formal efforts in management development. It is to a much greater degree the result of management’s conception of the nature of its task and of all the policies and practices which are constructed to implement this conception. The way a business is managed determines to a very large extent what people are perceived to have “potential” and how they develop. We go off on the wrong track when we seek to study management development in terms of the formal machinery of programs carrying this label.”

2- “All managerial decisions and actions rest on assumptions about behavior…We can improve our ability to control only if we recognize that control consists in selective adaptation to human nature rather than in attempting to make human nature conform to our wishes.”

3- “The desirable end of the growth process is an ability to strike a balance – to tolerate certain forms of dependence without being unduly frustrated, and at the same time to stand alone in some respects without undue anxiety.”

4- “The power to influence others is not a function of the amount of authority one can exert. It is, rather, a function of the appropriate selection of the means of influence which the particular circumstances require. Conventional organization theory teaches us that power and authority are coextensive. Consequently, relinquishing authority is seen as losing the power to control. This is a completely misleading conception.”

5- “The central principle of organization which derives from Theory X is that of direction and control through the exercise of authority – what has been called “the scalar principle.” The central principle which derives from Theory Y is that of integration: the creation of conditions such that the members of the organization can achieve their own goals best by directing their efforts toward the success of the enterprise.”

6- “Confidence thus rests heavily on the subordinate’s belied in the integrity of the superior, When one is dependent, any suspicion that the superior cannot be fully trusted arouses anxiety.”

7- “To be sure, some people are dishonest. The question, however, is whether it is cheaper to setup procedures for dealing with the bulk to honest people or to build procedure for dealing with the dishonest few. In this field (retailing) at least, the data are clear: the former strategy is economically superior.”

8- “There are at least four major variables now known to be involved in leadership: (1) the characteristics of the leader; (2) the attitudes, needs, and other personal characteristics of the followers; (3) characteristics of the organization, such as its purpose, its structure, the nature of the tasks to be performed; and (4) the social, economic, and political milieu…This is an important research finding. It means that leadership is not a property of the individual, but a complex relationship among these variables.”

9- “Let us consider some of the important environmental conditions which affect the growth of managers…(1) economic and technological characteristics of the industry and the firm, (2) policies and practices of the company, and (3) the behavior of the immediate superior.”

10- “If a climate and soil conditions conducive to growth are created by the way management manages, the cream will rise to the top, in the sense that individual managers throughout the whole organization will be involved in a process of self-development leading to the realization of their full potentialities.”

11- “In view of the complexities and difficulties involved in improving managerial competence through classroom learning, our expectation should be modest. This is not to undervalue the contributions of classroom education, but to suggest that managers sometimes expect formal education to relieve them of responsibility for the growth on the job of their subordinates.”

12- “What distinguishes such groups (really good top management team or series of staff meetings or committee)? … (1) The atmosphere…tends to be informal, comfortable, relaxed…(2) There is a lot of discussion in which everyone participates…(3) The task or the objective of the group is well understood and accepted by the members…(4) The members listen to each other!…(5) There is disagreement…(6) Mist decisions are reached by a kind of consensus in which it is clear that everybody is in general agreement.”

13- “Management is severely hampered today in its attempts to innovate with respect to the human side of enterprise by the inadequacy of conventional organization theory…It is not important that management accept the assumptions of Theory Y. These are one man’s interpretations of current social science knowledge, and they will be modified…It is important that management abandon limiting assumptions like those of Theory X, so that future interventions with respect to the human side of enterprise will be more than minor changes in already obsolescent conceptions of organized human effort.”

14- “The purpose of this volume is not to entice management to choose sides over Theory X and Theory Y. It is rather, to encourage the realization that theory is important, to urge management to examine its assumptions and make them explicit. In doing so, it will open a door to the future.”


Omar Halabieh

The Human Side of Enterprise


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