CHAPTER 16

Leadership Style as a Motivator

New styles of leadership and their effects on motivation are a constant topic of discussion. Some term the most common style to be in vogue over the last fifty years “permissive leadership,” which, in turn, is related to dozens of leadership concepts and techniques. “Permissive leadership” grew out of our experiences during World War II. With a U.S. military that had expanded over 1000 percent to include more than 13 percent of the population, with 16 million servicemen and women under arms, the military needed large numbers of new leaders fast. Therefore, they screened millions of people as best they could and selected those who tested best and trained them for leadership as rapidly as possible.

New officers were referred to as “ninety-day wonders” because there simply wasn’t enough time to give them more training. Before the war, officer training took a minimum of six months and could require more than four years. But ninety days was all the time the tens of thousands of these new leaders could be spared. In many cases, these quickly trained leaders performed brilliantly. Unfortunately, a significant number did not. Some simply fell back on their legal authority to give orders and, by law, to have these orders enforced.

Simply giving orders is not leadership, and, after the war, the military recognized the need to revamp leadership training. Accordingly, the military encouraged, initiated, and funded a great deal of leadership research at universities around the country. Researchers began by studying leadership traits and went on from there. One of the more successful ideas that emerged led to a more flexible style of leadership whereby the leader delegated more aspects of the job to those led. Delegation was not new. In ancient times, leaders were admonished to tell their followers what to do but not how to do it. Even General Patton, a leader with a dominant style, taught: “Don’t tell people how to do things. Tell them what to do and let them surprise you with their results.”¹ However, the new emphasis encouraged more freedom for subordinate action and thinking and more openness on the part of the leader. One of the most widely read and adopted examples of the new open style was Douglas McGregor’s concept of Theory X and Theory Y.²

Theory X and Theory Y

Douglas McGregor was a professor at the MIT Sloan School of Management. Although he did no research himself, he closely studied the work of others, including three of Drucker’s books: Concept of the Corporation, The New Society, and The Practice of Management .³ McGregor concluded that managers led by one of only two general theories of motivation. Leaders following Theory X (which closely resembled the carrot and-stick approach) assumed that employees primarily work for money or when threatened with punishment and will avoid work if possible. They have little interest in the job or assuming responsibility for the outcome of their work. As a result, such employees must be closely supervised and controlled, using incentives to reward those who perform adequately and punishment for those who do not.

Theory Y leaders’ assumptions and style of leadership were quite different. They assumed that employees were ambitious, self motivated, and eager to accept greater responsibility for work outcome, if only encouraged and allowed to do so. They could lead themselves better if only permitted more authority over what they did and how it was done. Tight control and supervision was not the way to motivate them. In fact, it was counterproductive. Instead, a Theory Y leader let workers exercise self control with as much self-direction and autonomy possible. In effect, the leader’s permissive style empowered followers to do their best.

Drucker’s Views on Theory X

Drucker agreed that Theory X was not the final answer, and, citing Xenophon’s writings about Cyrus the Great’s father, who recommended something like Theory Y, said this was known since antiquity.

However, there was more to it. With the rise of the knowledge worker, the number of jobs in which workers were expected to simply follow orders was continually declining. It’s not so long ago that all employees were exhorted not to think but to do as they were told. A sign posted at the entrance to a large factory read, “Check your brain outside before entering.” This was a clear warning not to think, and to just follow orders. However, the time for this approach was long past even when Drucker stated this fact more than thirty years ago.

Drucker’s “knowledge workers,” equipped with brainpower and a constantly expanding universe of intellectual and experiential resources, were increasingly needed for the organization to be competitive. In addition, knowledge workers knew their worth and the potential contribution of their ideas and expected to be consulted about their work. This in itself became a potential motivator, but also a potential de motivator if knowledge workers and their ideas and inputs were arbitrarily ignored or excluded. Drucker concluded that the carrot and stick approach no longer worked for knowledge workers and, in developed countries, it didn’t work for manual workers either.⁴

Drucker found fault with Theory X even when he admitted that, on occasion, it had worked. In speaking of compensation and benefits as a primary motivator, he said in class, “The problem with the carrot and stick approach is not that it hasn’t worked, but that it has worked too well. This caused increasing demands for more and more until the limit was reached and the corporation was no longer competitive.”

Problems with Theory Y

Yet Drucker did not accept permissive leadership in its entirety. He took strong exception to certain aspects of Theory Y, and what Drucker termed a laissez faire style of leadership. According to Drucker, the biggest problem with Theory Y was not what McGregor had written, but how others had interpreted and applied it. Drucker said that McGregor did not intend Theory Y to mean permissiveness. It did not mean freedom from restraint, and, by itself, it was inadequate because by making the worker responsible and oriented toward achievement, it made impossibly high demands on both worker and leader.⁵

These demands were far from insignificant. Drucker credited Abraham Maslow, developer of the famous “hierarchy of needs,” for pointing out that the demand for responsibility and achievement under Theory Y went beyond what any but the “strong and healthy” could fulfill. Maslow went so far as to call Theory Y “inhumane.” Drucker concluded that a leader could not simply replace Theory X with Theory Y. Rather, the leader must replace the security and certainty provided by Theory X and provide by different means what commands and penalties once accomplished.⁶

Drucker had another major criticism of permissive leadership, which he repeated in many of his writings: “Knowledge workers still need a superior. The organizational structure must clearly identify where final decisions and ultimate responsibility rest.”⁷ In other words, the call for permissiveness did not mean the demise of the organizational leader or relegating the leader to some sort of figure-head status, a cheerleader, or a simple connection to more senior executives. On the contrary, the Theory Y leader’s job was much more difficult than the Theory X leader’s because the responsibilities of leadership under Theory Y were significantly greater than they had been under Theory X.

The Responsibilities of Theory Y Leaders

“One does not manage people,” Drucker insisted. “One must lead them.” True leadership was far more than giving orders, rewarding those who carried them out efficiently and effectively, and punishing those who did not.

What were the added responsibilities under Theory Y? For many types of knowledge work, productivity was, and is, not easy to define and therefore not easy to measure. You can’t do it by calculating the ability to carry out orders. That’s Theory X. Yet measurement is necessary, for example, to know whether your team is moving forward. The goal is no longer obedience—it is achievement. There’s a difference. You don’t simply want workers to put in time, you want them to be highly productive and to achieve the objective. Doing this depends as much on the workers’ ability, intellect, and work as on your own as leader.

Drucker, using the example of a salesperson, explained the difficulty of measuring productivity under Theory Y. Do you measure the salesperson’s productivity by total sales, by profitability, by the ability to bring in new customers, service accounts, introduce new products, by some relationship with territory, or what? Earlier I used sales to demonstrate an output that is easily measured, but, as Drucker’s analysis makes clear, even that is not so simple.

Also, should such things as dependability and reliability be factored in? The sales manager or other higher level manager can and does calculate incentives and set priorities. However, simply measuring productivity quantitatively is not sufficient because of the number of factors. It’s a moving target, and much of the responsibility for implementing general guidelines and deciding what to do must be delegated to the individual on the firing line, the salesperson.⁸ This is true for thousands of types of work performed by knowledge workers. Being a Theory Y manager and worker is hard work!

That’s not all. Theory Y workers need a challenge, and they need to know how everything fits together. They need to know the organization’s mission and to be convinced that it is worthwhile. They need to see the results of their work and to know how they are doing. They want to know the facts. The leader must also recognize that not all followers can be led and motivated in the same way. Each needs to be led differently, and led differently at different times. Only in this way can Theory Y followers and leaders function to make the theory work (and it is not clear that all can) so that the worker shares responsibility and, together with the leader, can achieve the goal.

When Theory X Leadership Is Acceptable

Peter did not address this question directly, but he came close to implying that there are times when elements of Theory X are appropriate, even for a Theory Y leader. Psychologists tell us that individuals are motivated toward pleasure or away from pain. A single individual’s perception may vary in different situations or environments. However, in general a person’s preferred tendency falls into one of these two categories. Some workers will not be as motivated by the responsibility and possibilities inherent in Theory Y, but are motivated by avoiding the punishment or pain associated with failing to achieve what the leader desires. For such workers, benefits or rewards offered under either Theory X or Theory Y may have minimal effect as a motivational tool, but the “stick” may be a necessary tool under both theories, as is the “carrot” in reverse circumstances.

Five Dimensions of Work

Drucker described five dimensions of working: physiological, psychological, social, economic, and power. All are separate and need to be analyzed independently. However, as motivators they operate together in any work situation. Moreover and unfortunately, their demands are very different and frequently pull in different, if not opposite, directions. Yet they not only are present at the same time, they also must be managed simultaneously.

The traditional approach to management, leadership, and motivation is to treat one of these, depending on whose concept you follow, as the dominant dimension.⁹ Therefore, you have advocates recommending motivational systems and models based on economics, social equality and diversity, Japanese management, Total Quality Management (TQM), reengineering, knowledge management (KM), Drucker’s own management by objectives (MBO), Theory Y, shared management, and more. Drucker labeled this the “fallacy of the dominant dimension.”

There is no question but that the research, analysis, and application of these various concepts add to the leader’s understanding and knowledge of leadership and ability to motivate workers to achieve. The problem is that each one claims to be the dominant theory, the one a leader and the organization needs to follow to ensure ultimate and continual success. These and other ideas led to what Fortune magazine called “Management by Fad.”

Building on Drucker’s “fallacy of the dominant dimension” one can see great danger in viewing these ideas as be alls and end alls to leadership and management. Some organizations that adopted TQM went so far as to declare that if any individual failed to go along and adopt the TQM philosophy, the organization’s whole TQM system would not work. Maverick “nonbelievers” had to be educated, persuaded, threatened with punishment, or dismissed from the organization!

While Drucker saw Theory Y as the more correct general approach for motivation, compared to Theory X, he did not view it or any other management philosophy—even MBO, his own management system—as the only one.¹⁰ Many if not most of the techniques embedded in these concepts would work and add value, if done right. However, it was the leader’s application of these elements that was crucial to their success. Although he believed in Theory Y, he said that it was foolish to deny that financial reward was not a motivation. People were just not universally altruistic. Thus it was up to the leader to lead correctly under Theory Y.

How to Make Theory Y Work

Drucker agreed that leaders must recognize that knowledge workers usually don’t produce their best when fear is the motivator. Therefore, if your style has been carrot and-stick, better take the advice of Cyrus the Great’s father and think again. However, Drucker believed in several essentials. Foremost, that Theory Y didn’t mean unrestrained laissez faire leadership. If anything, the leader must be even more involved than the Theory X leader.

Next, leaders must remember that the goal of Theory Y is to get each worker to continually achieve a personal best working synergistically with others, which is accomplished by emphasizing performance, not obedience. It’s fine to adopt various concepts and to apply them through education and motivational policies. That’s smart leadership and can help leaders understand leadership and expand their own ideas.

Leaders should not make a religion out of any one concept. No matter what advocates claim, none is the dominant dimension for leading, and all dimensions—physiological, psychological, social, economic, and power—must be recognized, considered, and managed simultaneously by the leader. Adopting a philosophy emphasizing one dimension means management by fad, and no matter how good the idea, no fad lasts forever. Leadership does.

Drucker on Style and Motivation

Leading people under Theory Y is much more difficult than during the carrot and stick days of Theory X. You are still the leader, with full responsibility for getting the job done. You cannot abrogate this. At times, your role may be “benevolent dictator”; at other times, much leadership work will be assumed by those you lead, a form of shared leadership. Throughout, each worker must be treated differently, and there are times that each must be treated differently from that worker’s norm. Without this, the organization will never achieve the maximum productivity sought. Even with the most participative form of Theory Y, you can delegate authority, but you can never delegate overall responsibility. Overall responsibility for everything an organization or anyone in it accomplishes, or fails to accomplish, belongs to the organization’s leader, just as it did in the time of Xenophon and Cyrus the Great.