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> Managing People and Organisations, Essay 1

Option 5: Should managers seek to manage the views and values of their

employees?

Johanan (Yochi) OTTENSOOSER

10873305Word Count: 2194

W7, Semester 1, 2009

This essay will argue that managers should seek to manage the views and values of their employees in light of moral,

social and economic analysis. Furthermore, the formation of a corporate culture, whilst flawed, is superior to other

management techniques, and, has become a self-propagating practice.

Introduction:

A central issue in management theory is how to overcome the Principle-Agent Problem. The

problem is a description of a conflict of interests; that the principle (principle stakeholders,

shareholders, etc.) earns profits on the performance of the organisation whereby the agents

(employees) usually earn unconditional wages. They are parallel but conflicting wants; the

principle seeks the greatest return for the least pay whereby the agent seeks to do the least

work for the greatest pay. It is management’s role to mediate between these goals. There

have been two dominant solutions to this problem: the first being dominative and the second

based on the synchronisation of employee views and values of the organisation.

This essay develops the argument in three sections.

Section 1 outlines the critical frames through which management theories will

be analysed (Maslow A. H., 1943) (Milgram, 1974) (Black, 1990).

Section 2 assesses dominative management theories (Morgan, 2006).

Section 3 assesses value-based management (Akroyd, 1990) (Rosen, 1988).

This essay will show that Managers should seek to manage the views and values of

their employees, since this method allows for effective fulfilment of monetary (long-term

profits) and non-monetary (ethical) corporate and individual goals.

Johanan (Yochi) OttensooserStudent: 10873305 of 13

Section 1: The Effectiveness of Management Methods through Frames

It is vital to compare value based management methods in efficacy against the alternatives to

ascertain its worth to management, and, hence, whether or not it ‘should’ be used. This essay

will discuss the ways in which different management practices motivate employees (Maslow

A. H., 1943, pp. 1, 2), (Milgram, 1974, p. 135) their contribution towards long-term profits

(Akroyd, 1990, pp. 3, 4) and their ethical standards (Black, 1990, pp. 122, 123).

Maslow wrote that all human motivation “must be understood to be a channel through

which … needs may be … satisfied”. He expresses needs hierarchically (see Figure 1),

hypothesising that higher wants require the satisfaction of all baser needs (Maslow A. H.,

1943, p. 1). Milgram states that motivation is a product of upbringing and different levels of

“the Agentic state” (a state of almost complete obedience derived from submission to an

authority) (Milgram, 1974, pp. 135-152) (see Figure 2.).

Figure 1: Maslow's Hierarchy of Needs and Wants (derived from (Maslow A. H., 1943,

pp. 1, 2) and (Maslow A. H., 1967, p. 1))


Transcendental

needs

creativityidentitymorality

Self Actualisa

tion

self esteem

achievement

respect (of and by

others) Esteem

freindship

family

sexual intimacy

Love/Belongin

g

security of body

security of

employment

security of moralitySafety

food and water

sleep

homeostasis

Physiological Necessities

Profitability is a central defining quality of most organisations, especially businesses.

Different managerial systems are effective in different situations, with efficiency based

“Efficiency, Effectiveness and Economy” management working well in manufacturing and

with value based “Evaluation, Empathy and Ethics” working better in the service sector,

(Black, 1990, pp. 123, 124). This essay will regard the profitability of each managerial

system in light of its most common application.

It is crucial to take into account the morality of the application of managerial techniques:

what they ask of the employer, work conditions and ability for the employee to dissent in the

case of a threat to base needs (safety and physiological needs as per Figure 1), or in case of a

difference of opinion. In amalgamating these factors, an analysis of the “morality” of the

workplace is possible.

An analysis of motivation, profit and morality allows for an evaluation of different

management practices.


Section 2: Domination

The simplest response to the problem of agency is the dominative method. When work is

scarce, the economic profit (net wages less next best alternative foregone (John Jackson,

2007, pp. 542, 543)) for the individual increases. This is only effective in a employer market.

If the organisation’s economic wage is normal, then they lose this leverage over the

employee. This idea is historically epitomised by the industrial revolution and the factory (see

appendix 1). The extract below highlights codified employee restrictions.

“Any persons found Smoking on the premises will be instantly dismissed. Any

person found away from their usual place of work, ...or Talking with any one out of

their own Alley, will be fined 2d for each offence”

(Water-Foot Mill, 1851)

Domination, according to Morgan, is a pervasive side effect of Taylorist bureaucratic

management systems and code-based authoritarian management systems.

Concerning Maslow’s hierarchy, domination motivates on a base level. The sense of

purposelessness derived from separate value bases and strips dominated employees of the

ability to fulfil higher needs through the workplace, diminishing this management system’s

effectiveness in inspiring loyalty, and, therefore, productivity.

Milgram explains the mode of the dominated worker perfectly (see Figure 2). The

employee becomes “Agentic” through Cultural Antecedent (being required to obey parents,

being a member of organisations), and Binding Factors (the apparent and unchallenged

authority of the employer). Furthermore, this Pavlovian deference to authority “teaches

[employees] to respond to impersonal Authorities” (Milgram, 1974, p. 137) such as “the

management”. Milgram continues to show that this state results in almost flawless obedience

(Milgram, 1974, p. 119).

.

However, given the correct conditions – an employer market, a relatively unskilled workforce

and little government regulation – this system is able to stimulate increases in productivity.

The typical examples of this are the sweatshop and the production line. According to “The

Global Players”, a globalisation think-tank from Flinders University, this type of


management is beneficial for the employer, who benefits from cheap labour (The Global

Players, 2008, p. 5).

Whilst this practice has been persistent, the consensus is that this is a relatively ineffective

form of management, since it leads to the stratification of society, alienation and horrible

working conditions (Watson, 2005, pp. 551, 554). Furthermore, because of the absolute

authority of the “agents” (management), the worker is not able to dissent, at least without

moral support from peers (Milgram, 1974, pp. 116, 117).

An analysis of this management technique shows Domination as being fundamentally flawed.

Employee inspiration is superficial and coercion based. This results the exacerbation of the

problem of agency (The Global Players, 2008, p. 4), decreasing profits and practicing

unethically. This essay has shown that, by failing to meet the corporate goals of profits, and

the social goal of ethics, this management theory is ineffective.


Figure 2: The Agentic State (Milgram, 1974, p. 136)

Section 3: Value-Based Management

One of the first industrialists to realise the flaws in dominative management was

Henry Ford, who attempted to solve the problem of agency by paying Ford employees a third

more than the industrial average in between 1914-1922 (Lewchuck, 1993, p. 841: Table 3).

This pay inspired productivity dually; the profit motive positively compels the worker to

appease the employer and the resultant creation of an elite “fraternity” of employees provided

an optimum environment for a corporate culture.

Ford created a corporate culture that increased productivity: “Ford developed a

fraternalist labor strategy, a men’s club, whos objective was to ... maximise labour

productivity” (Lewchuck, 1993, p. 824). Ford appealed to the worker in a positive through

ritual, symbolism, mottoes and social imperative; all of which are tools described as means of

manipulating employee views and values (Buchanan, 2004, p. List). By stating the possibility

for growth, as well as the risk of emasculation, “[if you work hard] you will be [able] to ...

say: I AM A MAN” (Auto Worker News, 1927, p. 4), the employee is required to fulfil work

requirements.

The humanist method of managing values is flexible, assigning independence and

responsibilities to different work groups (Akroyd, 1990, p. 4). The culture method, as

discussed through Ford’s attempts at social propaganda and the instillation of a corporate

culture, is rather proscriptive. Both seek to inspire productivity by appealing to the

employees’ psyche, not rationality, to solve the Agency Problem.

This motivation proves to be deeper than the motivation of a dominated employee

because of the nature of the Masloan wants to which this method appeals. The

synchronisation of views and values allows for the fulfilment of all needs, including esteem,

belonging and self-actualisation needs. This increases the employee’s connection with the

workplace: self-definition and social connection (Rosen, 1988, pp. 477, 478) becomes

intrinsically dependant on the organisation.

The notion of volunteerism is central to value-based management. This invites the

employee to respond to work criteria with more than necessary vigour, extra productivity not

required but volunteered. Milgram describes the power of volunteerism when coupled with a

created Agentic state.Johanan (Yochi) OttensooserStudent: 10873305 of 13

“[In this case] the principle sanctions for disobedience come from within the person...

[they are] not dependent upon coercion, but ... [on] the individual’ sense of

commitment to his role. In this sense, there is an internalised basis for his obedience,

not merely an external one”

(Milgram, 1974, p. 141)

Value-based management is extremely effective at motivating the employee. Profitability,

however, is the central aim of businesses. Value based management seeks to replace external

motivation with “an internalised obedience” (Milgram, 1974, p. 141). This cuts costs in the

requirement for supervision and competitive wages. Not only does this reduce costs; it

improves output through competition and self-management (Akroyd, 1990, pp. 3, 4, 11, 12).

Both methods of imbuing values on the employees, however, have different shortcomings, as

well as different moral issues to deal with. The humanist approach, that is, allowing for the

“spontaneous formation ... of occupational cultures” (Akroyd, 1990, p. 4), suffers from a lack

of distinct moral guidelines. Akroyd and Crowdy discuss the case of the English

Slaughterman: they are productive because of self-management (Akroyd, 1990, pp. 11, 12).

This freedom, however, comes with gross brutality and disobeyed health regulations

(Akroyd, 1990, pp. 6, 7, 8), which can in turn lead to contingent liabilities.

The proscriptive nature of corporate culture reduces the potential for ethical breaches.

Most culture-based organisations have induction programs with proscriptions against

immorality: sexual harassment and anti-bullying training. Corporate culture faces two

distinct setbacks: dramaturgical behaviour (Knights, 1982) and “looking up and looking

around” (Jackall, 1988). Dramaturgical behaviour is performing with the knowledge of the

performance, paying a kind of lip service to the officialised corporate culture whilst not

believing in it because of a fear of showing contempt for the beliefs of the organisation. A

South Park episode “Something Wall-Mart This Way Comes” portrays this notion: the

management says out loud “I love working at Wall-Mart”, at which point he writes on a

placard “kill me now” (Parker, 2004). This is an exaggeration, but, in organisations, the

dramaturgicisation of corporate culture leads to reduced motivation, thus rendering the

corporate culture ineffective. Furthermore, deviation towards the safe and established

hinders an employee’s decision to dissent and make individual independent decisions.


Excessive consequences of risks and the precedence of short-term goals over long-term goals

lead to this: by “looking up and looking around” the manager is able to pass on the risk and

the blame (Knights, 1982).

The delegation of authority, motivation and supervision is a central facet of value-centric

management. This allows for high levels of motivation as well as increased output,

especially in the service industry (Black, 1990, pp. 123, 124), and positive, non-coercion

based employee-employer relations. Moral issues are a product of ineffective management

within this theoretical frame. The moral issue of free will is, furthermore, central to this

debate: with the management of views and values, does an employee lose individual identity?

The Jewish, traditional answer to this question is articulated by Maimonides stated that

during work, an employee must say abridged prayers. This has been expanded by later

Rabbi’s to mean that during the time of work, he must embody the values of the organisation

unless they contradict natural law (Maimonides, 1170-1180).

Knights and Roberts deny the existence of argument altogether:

“By virtue of being self-conscious creatures, individuals always retain some control

over their action, and coercion [or, in this case, management’s manipulation of

employee views and values] can therefore never ... [leads to the] complete control

over another”

(Knights, 1982, p. 50)

Value based management, if executed effectively, solves the problem of Agency, at

once allowing for profitability, good work conditions and morality. This essay, therefore, has

shown that – being more effective than coercive/dominative management theory – value

based management should be used by managers.


Conclusion

This essay has shown the limitations and proficiencies of dominative and value-based

management systems. Dominative value based management motivates superficially, and is

only effective in specific situations. Value-based management motivates intrinsically, tying

self-definition with the organisation, not to mention the power of volunteerism suggested by

Milgram. Both are profitable, but, again, value management pulls ahead, with limitless

possible productivity increases. Whilst value management can be morally questionable, these

moral grey areas, through effective management, can be minimised, unlike the social costs of

domination: class struggles, horrible work conditions, etc. As such, this essay has shown that

value-based management is highly effective, solving the principle-agent problem, thus,

managers should use it.

There is an implicit danger in recommending management systems: that this practice will

assume the role of “best-practice”. The problem is the reduction of the “morally charged job

of managing other human beings to a process of memorising and applying techniques”

(Roberts, 1984). This has been the case, with the increasing popularity of “management

bibles” diluting proper management theory. Furthermore, due to its popularity, value-based

management has become self-propagating, as, since its inception, the nascent immorality of

other management theories has caused them to lose face. Thus, whilst it might be the most

effective, it must still undergo continual critical analysis to ensure its validity.


Appendix 1

Rules to be observed by the hands employed in this mill (Water-Foot Mill, 1851)

1. All the Overlookers shall be on the premises first and last.

2. Any Person coming too late shall be fined as follows : - for 5 minutes 2d, 10 minutes 4d. and 15 minutes 6d, &c.

...

9. Any person leaving their Work and found Talking with any of the other workpeople shall be fined 2d for each offence.

10. For every Oath or insolent language, 3d for the first offence, and if repeated they shall be dismissed.

...

13. The Masters would recommend that all their workpeople Wash themselves every morning, but they shall Wash themselves at least twice every week, Monday Morning and Thursday morning; and any found not washed will be fined 3d for each offence.

14. The Grinders, Drawers, Slubbers and Rovers shall sweep at least eight times in the day as follows, in the Morning at 7 ½, 9½, 11 and 12; and in the Afternoon at 1½, 2½, 3½, 4½, and 5½ o’clock; and to notice the Board hung up, when the black side is turned that is the time to sweep, and only quarter of an hour will be allowed for sweeping. The Spinners shall sweep as follows, in the Morning at 7 ½, 10 and 12; in the Afternoon at 3 and 5½ o’clock. Any neglecting to sweep at the time will be fined 2d for each offence.

15. Any persons found Smoking on the premises will be instantly dismissed.

16. Any person found away from their usual place of work, except for necessary purposes, or Talking with any one out of their own Alley, will be fined 2d for each offence.

17. Any person bringing dirty Bobbins will be fined 1d for each Bobbin.

18. Any person wilfully damaging this Notice will be dismissed.

The Overlookers are strictly enjoined to attend to these Rules, and they will be responsible to the M. Workpeople observing them.


Appendix 2

Fraternalism in the Auto Industry: Would you be a MAN? (Auto Worker News,

1927)

“One of the most priceless possessions still retained by modern man is what is called

manhood.... [Sic.] Would you be a MAN – free, proud, independent, POWERFUL? Then get

together with your fellow worker, ORGANIZE YOURSELF, and you will be in a position to

proudly look into the eyes of foremen, straw bosses, and all the world and say: I AM A

MAN”


Bibliography

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Jackall, R. (1988). Looking up and looking around. In R. Jackall, Moral mazes: the world of corporate managers (pp. 75-100). Oxford: Oxford University Press.

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Parker, T. (Director). (2004). Something Wall-Mart This Way Comes [Motion Picture]. South Park: Season 8, Episode 120.

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