ORGANIZATIONAL CULTURE Organizational Culture and Leadership, 3rd Edition

HUMAN NATURE, ACTIVITY, AND RELATIONSHIPS 173self-actualizers who need challenge and interesting work to provideself-confirmation and valid outlets for the full use of their talents(Argyris, 1964). Motivation theorists, such as Maslow (1954), organizedthese vying assumptions into a hierarchy: if the individual isin a survival mode, economic motives will dominate; if survivalneeds are met, social needs come to the fore; if social needs are met,self-actualization needs are released.McGregor (1960) observed that within this broad framework animportant second layer of assumptions was held by managers vis-àvisemployees. Ineffective managers tended to hold an interlockedset of assumptions that McGregor labeled Theory X. Theory X managersassumed that people are lazy and must therefore be motivatedwith economic incentives and controlled by constant surveillance.In contrast, effective managers held a different set of assumptionsthat he labeled Theory Y. These managers assumed that people arebasically self-motivated and therefore need to be challenged andchanneled, not controlled. McGregor and other researchers sawinsufficient financial incentives as “demotivators” but observed thatadding financial incentives would not increase motivation. Onlychallenge and use of one’s talents could increase motivation (Herzberg,1968). Whereas Theory X assumes that employees are intrinsicallyin conflict with their employing organization, Theory Yassumes that it is possible to design organizations that make it possiblefor employee needs to be congruent with organizational needs.Most current theories are built on still another set of assumptions,namely, that human nature is complex and malleable andthat one cannot make a universal statement about human nature;instead, one must be prepared for human variability. Such variabilitywill reflect (1) changes in the life cycle in that motives maychange and grow as we mature and (2) changes in social conditionsin that we are capable of learning new motives as may be requiredby new situations (Schein, 1978, 1990). Such variability makes itessential for organizations to develop some consensus on what theirown assumptions are, because management strategies and practicesreflect those assumptions. Both the incentive and control systems