Organizational Theory - Theory X and Y - Case Study Example

 Table of Contents: Particulars Page No. Introduction 3 Organizational Theory 4 Theory X and Y 7 Critical Examination of theory X and Y 12 Summary 17 Conclusion 18 Introduction Organizational Behavior is a social science. In usual sense, it is an integration of behavioral sciences. It involves study of predicting, understanding and influencing the behavior of every individual in an organizational setup. Hence, it is concerned with organizational performance. This performance is measured in terms of every employed individual, group and towards the effective operation of the organization as whole. Slowly, this is emerging as its own separate study which may include changes over time according to the changes which the generations undergo. Nature of Organizational Behavior (OB): Identifying the current nature and methodology of Organizational Behavior is very useful. It helps in understanding the systems which every individual would apply towards finding solutions to complex problems which he faces in the organization. It can thus be identifies as: A Social science which has no standard disciplinary foundation of theory. As such, research is quite ambiguous. The analysis of such research is also very broad based. It has an orientation of interdisciplinary concepts, principles and processes which need to be synthesized further. It is more purpose oriented that several relevant things are integrated to be applied in the analysis of the organizational behavior. Though some research in this field is conducted in controlled situations to bring in standardization, it is basically an applied science in which creativity is very important. It is more of normative in nature wherein application of the various fields of knowledge is more important than just understanding pure science. Humanistic approach to people is more important. It believes that needs of people and the motivational factors to fulfill those needs are very important. Independence of every individual is believed to be the basic requirement for extracting the creative potential of every individual. Orientation towards organizational objective is very important in which every individual’s objective also should be intertwined. In this way, individual and organization tend to be independent and also interdependent on each other to be successful. The living system of every organization is viewed as an enlargement of a human being. The parameters which affect the perfect functioning of every organization have to be analyzed. At the same time, technical developments which can make these parameters simpler also have to be checked to ensure growth. Thus, organizational behavior is a normative science which has to be updated regularly taking growth into perspective. Fulfilling all the existing parameters and integrating growth makes this science complex. This complexity is further tightened due to its interdisciplinary nature. Synthesizing some of the established parameters into theory may make this field a bit simpler to imbibe growth factors in a faster manner. As such, organizational theory is developed to improve standardization in organizational behavior. (Prasad. L.M. 2006). Organizational Theory A theory to be acceptable should be in its standard form. It needs to: 1. Precisely define terms to avoid ambiguity. 2. Fulfill the objective of collection of data based on which the definition was derived. 3. Replicate the findings of the research to other such situations. 4. Approach systematically to have a cumulative effect of what is understood in the current research along with what was already established earlier. 5. Serve the purpose of understanding the respective factors contributing to a certain possibility under controlled conditions. Organizational theory accepts some accepted norms of science like generalization, categorization, stability and permanence which can lead to trustworthiness. However, its basic nature is to facilitate prediction through scientific understanding. This concept of prediction tends to manage or influence future through achieving control which leads to ambiguity. It tends to be both deductive and inductive in nature. Deductive approach requires a set of pre-established premises wherein experiments are conducted and the observations are put together. These observations form the basis of explanations which are established as theories. To avoid confusion of explanations, several experiments are conducted in independent circumstances and the results thus achieved are standardized. Inductive approach tends to take into consideration the existing circumstances and explanations are given to solve the purpose for the current problem. Its results are thus not standardized. Organizational theory tends to synthesize certain accepted behaviors. It also tries to predict certain future ambiguities under existing circumstances. Thus, it is more of a continuum from a deductive to an inductive approach. The degree of such continuum differs on a case to case basis. When the approach tends to be more towards inductive approach, new modifications may replace the deductive findings and thus those modifications tend to become deductive over a period of time. This replacement makes the theories easier to follow. In short, established organizational theories should be: Contributing to the organizational goals of understanding, prediction and influence facilitation. Clearly defined to draw the boundaries. Research driven to save time on certain established standardized realities. Testable in normally acceptable controlled conditions to ensure logic and easiness of performance. Focused to offer insights which are novel. Well written and have practical implications. Simple to be followed in most circumstances. Based on these theories, scientific decisions are drawn for which processes need to be established in the following manner: Considerably conservative that caution and skepticism is practiced in every aspect of the finding. This is to ensure standardization. The experiment performing scientists have to be neutral and have to spell out the statement based on the evidence accumulated at the times of research. Decision making should be based on controlled research and not on any hunch or biased predictions. Problems which were unsolved have to be researched again to draw conclusion. If wrong reporting of research is encouraged, then, problem identification in the later stages would be extremely difficult. These observations of the meaning of organizational theory and its application in organizational behavior are very essential to understand the synthesized theories in this particular science. In light of all these observations, we proceed further to examine the Theory X & Y which are very crucial in the subject. (Miner J.B., 2006) & (Prasad L.M., 2003). Theory X and Y: Origin: Earlier, in an organizational setup, it was the management which would take decisions and control its subordinate’s behavior. The employees were to be kept under control and the organizational objectives had the primary importance. Individual objectives were hardly realized. Thus importance on the individual perspective was absent. As such, the productivity was controlled to some extent and there was no room from creativity. Formation of the theory: In the 1960’s the human side was thought about in such an enterprise setting. There was a shift in thinking. They realized the truth that activity and management thinking could be based on assumptions of two different sets of people: These assumptions are: a) A manager could be a theory x individual (hard core manager) or b) He could be a theory y individual (Soft influential manager). The way a manager behaves on a particular situation should be analyzed to understand the assumption which he understands about people. The effectiveness or influence of a manager depends on the subtle assumptions which he unconsciously undergoes to fulfill the organizational objectives. It was found that in those times, the information from a research was proving to be quite contrary to the generally set up structure, systems, behavior and policies in many organizations. Managements were contrary on the point of views raised by the behavioral scientists. According to the theory x (traditional) managers, the following assumptions were observed: 1. Every average individual will have a natural tendency to dislike work and thus tries to avoid it if possible. It is the responsibility of the management to organize the enterprises inputs into productive ends. 2. Exercise of coercion, control, direction, motivation and sometimes threatening to punishment is required to push an individual towards effort. This active participation of management is required to achieve the organizational objectives. 3. Any average individual craves for security. He works for that security and hardly has any ambition. It is in the hands of the management to direct him towards work and take care that he does not avoid work. 4. He is self-centered inherently, and needs a leader. 5. He dislikes responsibility and is hardly concerned with organizational goals. 6. By nature, he is resistant to change and does not take the risk of being bright or creative. Hence, managers closely spell out the job responsibilities of every individual and impose goals to be achieved by them. The individuals are not involved when such goals are being set up. A worker is rewarded on fulfillment of his goals and otherwise, there may be contingent punishment. Though these assumptions are not stated in any written format, observation of the organizational working through their policies, procedures etc. will help us to understand this viewpoint. This is the way most managers act and they are quite confident about this assumption and never try to accept any deviation to this assumption. A theory Y manager is a soft manager. He assumes certain differences regarding the way the workers need to be managed: 1. Just as effort is required to play, effort can be expended in work to achieve results. It is the way in which the management deals that the worker is either satisfied or dislikes his work. If he is satisfied, he may inculcate ambitions. 2. If a worker is committed, he will bring in the control and effort towards achievement of objectives in his own self. He can be self-driven and self-control by setting his own targets of achievements. 3. Ego satisfaction and self actualization needs are the basic needs for every individual to direct his effort towards organizational objectives. His commitment is only a function of the reward which he may enjoy. Even without rewards also, he will still remain committed to earn it in future. 4. If a worker is provided proper conditions of work, he would accept and seek responsibility. Traits of avoiding responsibility and ambition are not inherent for any individual. Security emphasis is only developed only when there is threat to continuity in his job. 5. High degree of creativity, imagination and ingenuity is widely distributed in every individual. 6. Because of modern industrial conditions of life, these potentialities of every individual are only partially utilized. If they are inspired and motivated in the right manner, more results can be achieved. 7. Work should not be imposed and there should be room for independence and creativity. The workers should be involved while setting the goals to be achieved. Procedures and processes which may make the work easier also should be discussed and the manager should in fact help the worker to achieve his goals through continuous training of the worker. By gifting such independence and creativity, the worker is given ample scope to further his knowledge to achieve even tougher objectives. In this way, organizational performance could be improved. Comparison of X and Y theories: Planning: There is Centralization of authority wherein the manager holds the whole authority and responsibility of any achievement is the theme of theory X. Greater participation in responsibility and decentralization of authority is the crux of theory Y. There is no scope for creativity and standardized performance is regarded to be the ultimate in theory X. In theory Y, there is ample scope of creativity. Managers need to give the right drive and the distributed creativity in all the sub-ordinates could be utilized to achieve over and above standards. Directing: In theory X, it is assumed that human beings are literally averse to work while in theory Y, work is a natural phenomenon which every worker would love to do just as play, if given the essential amount of motivation. In the former, human beings never have any ambitions to be achieved while the reverse is applicable in the latter. Theory X lacks free flow of information and communication while the same is possible in Theory Y. Controlling and Appraisal: Motivating factors are the simple needs of existence in theory X while theory Y emphasizes on the needs of higher order in addition to the fulfillment of lower order needs also. In theory X, self motivation is lacking in the people and as such they need to be controlled externally to get the output to the maximum extent. In theory Y, self-direction and creativity is given due importance. The people under this theory prefer setting their own targets and achieving them. Theory X professes autocratic leadership wherein the manager hardly gives any importance to the worker’s needs. Theory Y is democratic in nature. It believes in supporting the employees to the maximum extent. When they are happy, they can deliver better results. So, if we take theory X and Y in the two extreme ends, a continuity scale can be developed: Theory X Theory Y. The middle line describes the degree of continuity. Implications of these theories: The basis of these theories is the need hierarchy model of Maslow given in the table below. When the economy is under developed, workers think of satisfying needs of safety and physiological needs. As and when the economy progresses, higher order needs are considered as motivational factors to induce the workers. (Maslow. A.H., 1954). Physiological needs are the lowest in order while Self-actualization needs which proclaim importance of an individual prove to be the needs of highest order. When there is poverty, theory X holds good. Due to continuous hard work, when the economy is flourishing, it tends to reach theory Y. Again when there are difficult times in businesses like the recent recessionary trends in the world’s economy, there is a general shift to theory X and gradually to proceed to Y. In this way, from deductive to inductive, this shift continues. But the interesting thing to be noticed is that it never reaches the extreme ends of Theory X and whenever possible, it tends to further the validity of Theory Y. ( Gordon J. 2003) & (Prasad L.M., 2006). Critical Examination of Theory X and Theory Y: Critical examination of theories can be done in three parts: a) With regards to the organizational behavior b) With regards to organizational theory c) With regards to the current economic trends in the world. With regards to organizational behavior (OB) the following points confirm with theory X and Y: a) OB is not a disciplinary foundation in which standards are established. Similarly, theory X and Y is also a continuum of approach from deductive (X) instance to an inductive (Y) instance. b) OB is oriented more towards purpose while the application of this theory of X and Y is also to understand the behavior of employers and employees to serve the purpose of the organizational objectives. c) OB is not standardized and there is room for ample creativity. This shows that OB is more inclined towards theory Y rather than X where there is limited scope for independence. d) OB is a normative science and is dependent on the effective application of the guidelines set forth. Theory X and Y refine this application to understand the implication of such application. Knowledge of this refinement would be useful to apply the set guidelines more confidently. e) OB is an approach which is human oriented. Theory X and Y also deal with the needs of human beings and their behavioral aspects to satisfy those needs. The following points do not confirm with OB in the case of theory X and Y: f) OB tries to serve the individual objective keeping in view the objectives of the firm and their fulfillment. Here Theory X coincides with objective fulfillment at the former stages of economic development. Theory Y intercepts with OB when the economy is in a more developed state. g) OB is an enlargement of an individual and his objectives. Theory X and Y try to understand the objectives of the individual and as such can contribute in effective execution of OB. In short, theory X and Y agrees with OB to a great extent except for slight deviations. With regards to Organizational Theory (OT) there is confirmation of theory X and Y in the following points: a) OT tries to fulfill the organizational objectives while undertaking responsibility. In theory X and Y, there is undertaking of responsibility. The only difference is that, in the former, responsibility if taken up by the higher level managers while in the latter, the lower cadre employees also take up some responsibility. b) OT should contribute to insights which are focused towards organizational objectives. Theory X and Y also try to perform the same function. Theory X and Y do not confirm in the following points with respect to OT: c) OT should understand, predict and facilitate influence to contribute to the organizational goals. Theory X tries to understand the human behavior and to some extent also predicts future mannerisms. But, it cannot influence. It only tries to control. Theory Y on the other hand can handle all above mentioned three applications. d) OT should be unambiguous and the definition of terms should be clear. Theory X can be defined clearly and there is no ambiguity in it. However, theory Y has some ambiguity of creativity factor in the journey of achievement of organizational goals. e) OT should be able to replicate its research findings to other situations. Theory X and Y findings are case sensitive. The results of the application of these theories differ on a scale of continuum from deductive to inductive approach. f) The understandings in OT are recorded in controlled conditions. There is a possibility of control in the case of theory X but the same is not possible in theory Y. g) The implicational practicalities in OT should be well written to provide a base for future research. Practicalities are recorded on a scale of gradualism in theory X and Y. It can form a base for future research only in certain conditions. h) OT should be simple to follow. Theory X and Y are not very simple to follow and are highly case sensitive. By the above discussion, we understand that theory X and Y do not really coincide with the definition of OT save some exceptions. However, there is a small link which at the same time cannot deny their relationship totally. With regards to current economic trends in the world: 2006 - 07 were the years of economic boom. World was enjoying the fruits of high productivity and high payments to the workers. As such, the physiological needs and the security needs for which there was greater emphasis in theory X were satisfied by many individuals and they were proceeding towards the realization of higher order needs like social, esteem and self actualization. From the end of 2007, owing to the sub-prime crisis, the economy was saturated and growth started to contract drastically. As such, employees started to experience contraction in their real power of money and then directly in their pays through job cuts and wage cuts. Again the continuum started to decelerate from inductive (Y) zone to the deductive (X) zone. Examination of theory X and Y with respect to some organizations: DHL couriers: There is an unstated bias towards theory X in this organization. Creativity is much controlled and only those findings which are useful to the serving of currently set objectives are encouraged. This can be seen from the fact that the company could not do very well in a highly developed market like U.S. and at the same time could flourish for years in the third world countries. (Anon. 1 & Lord, 2008/9). Ford Motors: The Company is more inclined towards theory Y control. This can be understood from the vision statement which emphasizes on unity of team, plan and goal. The mission statements are also very broad based and do not tend to force high targets on the employees. As such, it is struggling with the basic sustainability issues in this year. It is not even focusing on the growth of the company. (Anon. 3 & 4, 2008/9). By the above observation, we can conclude that too much reliance on either of theory X or Y is very dangerous. There should be gradual continuation in the scale and this should be achieved through achieving both the individual and organizational objectives in a comprehensive manner. Summary: A listing of all above discussed points would be helpful in summarizing whatever conclusions were arrived at: OB is a non-standardized discipline which has room for creativity and is normative in nature. It is more towards application side to achieve the organizational objectives from the humanistic point of view. Theory X and Y confirm to all those requirements of OB except for the fact that they interchange from X to Y on a case sensitive basis with regards to objective fulfillment and contribute towards execution of OB rather than replicating OB. OT tries to contribute to organizational goals through facilitating understanding, prediction and influence. It should be able to replicate its findings without ambiguity in all controlled conditions and the implications of such research should be well written. It should be simple to follow. Theory X and Y do not to a maximum extent confirm to the requirements of OT except for the fact that there is some understanding with respect to responsibility on the continuum scale and focused insights can be drawn by following this theory. Study of the current trends in the world economy has revealed that it is not suitable to accept any of the theory ends in the extreme. It is better to have the mark in the scale as a continuum with degree proceeding in a gradual phase towards theory Y. When it becomes too much close to Y, circumstances may reverse or, theory X may be replaced by theory Y and a new theory Y may further be developed for growth prospects. Conclusion: It is observed that theory X and Y is more of an organizational behavior rather than an organizational theory. To be practical, managers should tend to start from a point little further to theory X and proceed towards theory Y. In this way, growth of the organization can be guaranteed. Bibliography: Book References: Gordon. J. The Pfeiffer Book of Successful Leadership Development Tools: The Most Enduring, Effective & Value Training Activities for Developing Leaders. Pfeiffer inc. U.K. (2003). Chapter 5. Maslow. A.H. Motivatin and Performance. Harper & Row. New York. (1954). Miner . J.B. Organizational Behavior: Essential Theories of Practice and Structure. M.E. Sharpe Inc. U.K. (2006). Chapter 1. Prasad.L.M. Organizational Behavior. Sultan Chand & Sons. New Delhi.(2006). Chapters 3 &8. Internet References: Anonymous. (2009). DHL Company Portrait. History of DHL. 27th Aug., 2009. http://www.dhl.de/dhl?tab=1&skin=hi&check=yes&lang=de_EN&xmlFile=3001214 Lord. R.( 2008). DHL Cuts 9,500 Jobs, Pulls out of U.S. Digg.com. 27th Aug. 2009. http://www.tomsguide.com/us/DHL-Job-Cut-Market-Share,news-2920.html Anonymous. About Ford. Company Information. (2009). Last Accessed: 11th November, 2009. http://www.ford.com/about-ford/company-information Anonymous. Blue Print for Sustainability. Our Future Works. (2008/9). Last Accessed: 11th November, 2009. http://www.ford.com/doc/sr08-blueprint-summary.pdf Read More