Human-Side-Enterprise-Annotated Version: Douglas McGregor review by Stephen Parry

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Human-Side-Enterprise-Annotated Version: Douglas McGregor review by Stephen Parry

Human-Side-Enterprise-Annotated Version By Douglas McGregor

‘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.

Book Review by Stephen Parry.

Let me start by stating for transparency that my own book Sense and Respond: The Journey to Customer Purpose has been cited in this updated classic book as providing modern evidence of the Theory Y organisation in action.  Now onto the review.

The Human side of enterprise is 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 have 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? – the cost to productivity, innovation, enterprise, society and human fulfilment?

It is no mistake the book is called `The Human side of enterprise’ and not – The Human side of THE enterprise. We are talking here about the enterprise of humans as a natural instinct, not the organisational enterprise which 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 trying maintain control narrows focus and closes 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 societies.

2 thoughts on “Human-Side-Enterprise-Annotated Version: Douglas McGregor review by Stephen Parry

  1. Theory Y is the heart and mind of lean.

    When organizations question why lean does not work for them it is because they have not created Theory Y conditions.

  2. When I talk to my friend about his small business – a 10 employee architect’s bureau – it again and again strikes me how much more such small enterprises are working based on theory Y assumptions and with practices that look much more like ‘lean’ than in large organizations. These small business simply can not afford to design those typical c&c-organizational structures (would simply be too costly and heavy, inflexible) and over all can not afford to loose customer focus and flow (because too many of their few customers too soon would just turn away). And they are still dominantly driven by the few human beings who work there as human beings with reason and passion – and much less by any typical ‘management theory’ from the last century.

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