‘The greatest waste in organisations today is the waste in human potential.’
This book has been wonderfully brought back into the sunshine and placed in the modern setting by Joel Cutcher-Gershenfeld, Senior Research Scientist in MIT’s Sloan School of Management.
Let me start by stating for transparency that my own book Sense and Respond: The Journey to Customer Purpose(2005) has been cited in this updated classic as providing modern evidence of the Theory Y organisation in action. McGregor’s work has been very influential in my management approach.
The Human Side of Enterpriseis a forgotten landmark in the history of management research and thinking, which is very surprising considering it clearly provides an explanation for the pitiful state we find within many organisations today. Maybe it’s been ignored because it shines a clear light on the fallacious assumptions many organisational designers and developers have about human beings. Maybe it has been ignored because people in influential positions feel threatened by the perceived loss of power and control any change of assumption might bring.
Whatever the reason, we are left feeling that the greatest waste in organisations today is the waste in human potential, and this, McGregor points out, is a result of the wrong-headed and unscientific assumptions management has about encouraging the best from people.
McGregor’s system and research demonstrates clearly that systems designed to control people certainly provide control, but we must ask, ‘What type of control and at what cost to productivity, innovation, enterprise, society and human fulfilment?’
It is no mistake the title is The Human Side of Enterpriseand not The Human Side of THE Enterprise. We are talking here about the enterprise of humans as a natural instinct, not the organisational enterprise that is an unnatural construct.
Traditional management systems are an invention to maintain control over power and resources in an effort to maintain compliance. This creates organisations where everything is forbidden unless permitted and limits the enterprise and potential of human beings.
Traditional organisations try to maintain control, narrow the focus and close down possibilities, hence the need for extrinsic rewards and punishments to make people do what they would not otherwise do. However, enabling the human side of enterprise opens possibilities by designing organisations around assumptions that people will respond to purpose, autonomy and intrinsic rewards because the ends and means are rewards in themselves.
Creating an enterprise where everything is permitted, unless forbidden, encourages human enterprise and creates healthier workplaces and societies.