Administrative Thought II: Human Relations (Mayo, Follett), Behaviouralism (Barnard, Simon), Motivation (Maslow, Herzberg, McGregor) and Organizational Humanism (Argyris, Likert)

Chester I. Barnard, president of the New Jersey Bell Telephone Company, wrote The Functions of the Executive (1938). He defined a formal organisation as "a system of consciously coordinated activities or forces of two or more persons", resting on three elements — willingness to cooperate, a common purpose and communication. People contribute only while the organisation offers enough inducements: the inducements–contributions equilibrium. His acceptance theory of authority holds that authority lies not with the person who gives an order but in the person who receives it; an order is accepted only if it is understood, consistent with the organisation's purpose, compatible with the person's interests, and within his capacity. Many orders fall within a zone of indifference, where they are accepted without question. The executive's functions are to maintain a system of communication, to secure essential services from individuals, and to formulate purpose. Barnard also treated informal organisation as necessary to formal organisation.

Herbert A. Simon — later a Nobel laureate in economics (1978) — made the decision the unit of analysis. In "The Proverbs of Administration" (1946) he dismantled the classical principles; in Administrative Behavior (1947) he built a replacement on logical positivism. Every decision has factual premises, which can be tested empirically, and value premises, which cannot; a science of administration can deal only with the factual. Real administrators are not the economic man of classical economics, who maximises with complete information, but administrative man, who has bounded rationality — limited information, limited time and limited capacity to compute consequences — and therefore satisfices, choosing the first alternative that is "good enough" (the word combines satisfy and suffice). Organisations cope by supplying decision premises — rules, training, communication, loyalty — that narrow each member's choices. Simon adapted Barnard's idea as a zone of acceptance.

Abraham Maslow's "A Theory of Human Motivation" (1943) and Motivation and Personality (1954) arranged needs in a hierarchy: physiological, safety, social (love and belonging), esteem, and self-actualisation. A lower need must be largely satisfied before the next becomes the dominant motivator, and a satisfied need no longer motivates. The first four are deficiency needs; self-actualisation is a growth need. Research has not confirmed a strict order, and Clayton Alderfer's ERG theory (existence, relatedness, growth) allowed several needs to operate at once and frustrated needs to "regress".

Frederick Herzberg, with Bernard Mausner and Barbara Snyderman, published The Motivation to Work (1959), based on interviews with about two hundred engineers and accountants in Pittsburgh using the critical incident method. Asked when they felt exceptionally good or bad about their jobs, respondents named different factors for each. Hygiene or maintenance factors — company policy and administration, supervision, salary, interpersonal relations, working conditions, status, job security — prevent dissatisfaction when adequate but do not motivate. Motivators — achievement, recognition, the work itself, responsibility, advancement and growth — produce satisfaction and effort. Satisfaction and dissatisfaction are therefore not opposite ends of one scale but two separate dimensions, and the managerial prescription is job enrichment (vertical loading of responsibility) rather than only better pay.

Douglas McGregor's The Human Side of Enterprise (1960) argued that managers' behaviour follows from their assumptions about people. Theory X assumes that the average person dislikes work, avoids responsibility, prefers to be directed and must be coerced and controlled. Theory Y assumes that work is as natural as play, that people exercise self-direction toward objectives they are committed to, that they seek responsibility under the right conditions, and that ingenuity is widely distributed. Theory X produces close supervision and self-fulfilling passivity; Theory Y supports delegation, participation and integration of individual and organisational goals. William Ouchi's later Theory Z (1981) described Japanese-style long-term employment and collective decision-making — it is Ouchi's, not McGregor's.

Chris Argyris, in Personality and Organization (1957), proposed the immaturity–maturity continuum: as people develop they move from passivity to activity, from dependence to independence, from few behaviours to many, from shallow to deeper interests, from a short to a long time perspective, from a subordinate to an equal or superordinate position, and from lack of self-awareness to self-awareness and self-control. Formal organisation — task specialisation, chain of command, unity of direction, narrow span of control — demands the reverse: it treats employees as immature, making them dependent and passive. The incongruence between a mature personality and the formal organisation produces frustration, apathy, absenteeism, defensive informal groups and a focus on pay. His remedies are job enlargement, participative leadership and reality-centred leadership. With Donald Schön he later distinguished single-loop learning, which corrects errors within existing assumptions, from double-loop learning, which questions the assumptions themselves.

Rensis Likert, founder of the University of Michigan's Institute for Social Research and inventor of the Likert scale, set out in New Patterns of Management (1961) and The Human Organization (1967) four systems of management along a continuum. System 1, exploitative-authoritative: decisions at the top, motivation by fear and threats. System 2, benevolent-authoritative: paternalistic, with rewards and some consultation. System 3, consultative: goals set after discussion with subordinates, substantial but not complete trust. System 4, participative group: full trust, group decision-making, open communication, high performance goals. Likert's research linked System 4 with the highest productivity. He also proposed the linking-pin model, in which each manager belongs to two groups — as leader of his own group and as member of the group above — so that the organisation is a set of overlapping groups rather than a chain of individuals.