The Importance of Managerial Strategies and Their Effectiveness

The importance of managerial strategies and their effectiveness has long been emphasized and discussed by many theorists. Managers of different organizations have been using different approaches in order to reach set goals and objectives. Douglas McGregor, who argues that managers have contrasting views over their employees, has introduced two different assumptions about the nature of human beings. He developed two opposing theories, called Theory X and Theory Y in which he argues that managerial behavior and style on the one hand reflects the manager's attitude towards its employees as well as on the other hand influences the employee's effort in maximizing the work effect (Mullins, 2004, chapter 7). Mary Kay Ash once said "A good manager's success depends on the ability to develop and motivate others" (Mary Kay On People Management, Macdonald & Co., 1984). The case study discussed in this essay will shed a light on Ash's words and will discuss her approach in defining "manager's success" by considering different theories. In this case the company General Electric (GE) stands on the edge to a downfall due to money losses. A new strategy needs to be developed in order to save the firm. The following essay will highlight the company's attempt to make changes as well as focusing on and linking it to the theories of Douglas McGregor. The first section of the essay will present the contents of both theories and discuss the case itself with the attempt to link the evidence to the theories. In the second section the essay will include the question of scientific management and how this classical approach can be associated with and be applicable to the case. Douglas McGregor, known as one of the "greatest contributors" (Hannagan, 1995, p.39), worked with two different theories labeled as Theory Y and Theory X. Theory X focuses on "the assumption that employees dislike work, are lazy, seek to avoid responsibility, and must be coerced to perform" (Robbins and DeCenzo, 2005, p. 322). Employees act unmotivated and need control and guidance in order for them to work towards an objective or goal. Thus managers provide security and direction through harsh, strict and authoritarian methods (Hannagan, 1995, p. 40). In Comparison to McGregor’s Theory X, Theory Y makes the assumption of an enthusiastic, responsible, creative and self-directing employee (Robbins and DeCenzo, 2005, p.322). Based on a positive and optimistic view of an employee managers respond through allowing certain access to participation, responsibility and involvement as well as comforting and encouraging the employee by achieving organizational objectives with co-orporative character. Although considered as leaders, their tasks do not follow authoritarian pattern but rather encourage towards "the development of self-managed teams" as well as the attempt to "develop people's own motivation by involvement in the organization" (Hannagan, 1995, p.74). Both theories can be applied to the case of General Electrics. GE's Appliance Park, a manufactory, which embodies the whole company, is "facing losses of $45 million a year" selling domestic appliances (Greenberg & Baron, 1997, p.30-31). In order to save the company and 9000 jobs GE needs to come up with a strategy to work against the yearly losses. In this case, GE appliance executives not only try to recover through improvement of the quality of a certain product; the washing machines; but also consider a change of their managerial style and strategy. The fact that GE's Appliance Park consists of "15 million square feet of manufacturing space in five factories over 1500 acres in which 9000 employees work" shows how big the company actually is (Greenberg & Baron, 1997, p.30-31). GE orientates and measures its managerial success by profit or loss. The high amount of $45 million the company loses every year shows that the business has been suffering from weaknesses. Looking at the fact of loss and at the company's possibility to break down the atmosphere of unmotivated workers rises and tightens. As a result more managerial authority could be needed in order to prevent the company from a risky outcome. GE's appliance executives took the initiative and started to change the overall managerial strategy and structure towards McGregor's Theory Y. By moving towards Theory Y one can assume their former approach, in practice, included characteristics from the opposite- Theory X. The case provides some clear information and describes a Theory X as a previous managerial strategy used by the company. The assumption that the company followed the rules of Theory X can be seen in veteran Bill Hamilton's statement in the end of the case study where he says that "the employees and management used to be pulling in opposite directions" which describes