Juan Antonio Pérez López - Foundations of management

When we discussed the features of an anthropological model—the organization as an institution—we noted that, whether it makes them explicit or not, every human organization has values. The contents of these values determine both the conception of the person and the conception of the company's mission that its managers attempt to realize through their decisions.

In sum, a manager can approach his work by attempting to achieve three different types of values:

1. A good ratio between what his company produces and what it consumes.

2. A degree of actual satisfaction for the people involved with the company.

3. A contribution to the personal development of the people cooperating with him, in so far as this depends on what the company requires of them or gives them.

When all three types of values are present in the decision-making process, the manager is building an institution. If only the first two are present, he is developing an organism. If his decisions only pursue goals at the first level, what he wants to do is to manage a technical system.

As we have already seen, what the manager pursues with his work will depend on his own motives, since these are what will determine the model he will use—consciously or unconsciously—to make his decisions. The greater risk that the company faces, in comparison with many other human organizations, of being reduced to a technical system, is due to the fact that the nature of its purpose grants a fundamental importance to the first of these values: the economic one.

A company must produce more than it consumes; otherwise it will cease to exist as a company. It would be senseless for the cell charged with creating wealth in the social organism to consume more than it produces. Therefore, a necessary indicator (although not sufficient on its own) of a manager's professional competence is his ability to achieve goals with an economic value.

However, it is not the same thing to recognize companies’ (and managers’) need to achieve economic goals and to say that these goals are the only ones. The latter statement is completely false—as would be the statement that the only goals are those that might be set for the other two types of values.

It cannot even be said that a company's performance improves when the difference between what is produced and consumed increases. One would first have to analyze what sacrifices have been made with respect to the other two values to achieve this result. Nor must one equate the statements that the company must obtain a positive balance between economic value produced and economic value consumed is a necessary condition for operating, and that its most important task is to maximize this difference.

The latter statement would be logically equivalent to saying that the company's only goals are economic ones. The immediate consequence of this mistake is to approach the company as a technical system. When a manager makes his decisions on this basis, his actions necessarily tend to destroy the company's organic and institutional reality, that is, to destroy it as a human organization.

1Herbert Simon, Administrative Behavior (New York: The Free Press. 3rd ed. 1976), p.39. See also Simon's comments on this point on pp. xxviii. of the introduction to the third edition.

It is generally acknowledged that people work to satisfy their needs or desires. Disagreement ensues when it comes to defining what these desires are.

Of course, the philosophers have discussed the issue at considerable length, and very intelligently, throughout the centuries, but often their discussions have served as a basis for formulating theories, without any intention to convert them into practical action. From the practical viewpoint, these theories have sometimes been useful for bringing to light real situations in which certain needs went unsatisfied, and consequently have been an influential force to bring about changes in reality, although the way in which they had influenced is not always clear.

When making decisions in the practical world of business, it is assumed that plain common sense is sufficient to understand everything we need to know about human needs. Given that the activity of business is to produce goods and services that satisfy human needs, it also seems evident that if a person cooperates with a business organization, he must be doing so in order to obtain some part of these goods and services, or the equivalent in economic value.

If the business operates well, it seems that it will be able to generate the sufficient economic value to satisfy those who contribute with their effort to generating it. Otherwise, it will not be able to induce them to work in exchange for what it can offer them.

Although we may not be particularly aware of it, these are the underlying ideas—the basic paradigm—in the back of our minds when we try to understand what is happening within business organizations. For instance, if we ask anyone why he works for a company, he will most likely answer, “to earn some money”. Very seldom will we stop to think that although he has told us the truth, it is not the whole truth. It is very easy to find out that, most probably, there are many other factors that motivate him to perform the particular job he is doing, instead of some other, different job that he might also have the opportunity to do. If we were to be offered a different job in which we could earn a little more money, probably many of us would not accept the change. The only argument given for not changing may be “better the devil you know than the devil you don't”. However, even this shaky argument is enough to show that it is not only money that motivates us.

These trivial truths, basically a matter of common sense, are not easy to take into account when formulating theories; it is therefore no surprise that for many years they have been ignored by theorists of human work in business organizations. In the following pages, we will briefly discuss the various theories on the subject.

The first scientific analyses of the behavior of business organizations did not deal with the question of how to motivate people to perform the work required of them; that is, they tended to ignore the question of why a person would want to cooperate with an organization instead of deciding not to.

In the back of the analysts' minds was the conviction that this issue was too trivial to be worth analyzing explicitly. Their attitude was like that of the character in the old story who, when told, “You have helped me enormously; I don't know how I can thank you,” answered without hesitation, “Sir, since the Phoenicians discovered money, no intelligent person doubts as to how. at the very most he might wonder how much, and that is much easier to negotiate”.

Thus, we already possess a considerable body of theoretical work on business and the way it operates which attempts to find solutions to the following problems:

a) How best to define what each person must do in order for an organization to operate as well as possible.

b) How to arrange matters so that each person knows most exactly what is expected of him, while ensuring that he is capable of performing the task.

c) How to ensure that each person actually wants to do what is asked of him, starting with the assumption that a particular person will or will not be motivated to do his job depending only on the things (usually money) that are offered him in exchange.

We could synthesize the contents of all these studies by saying that they discuss how to plan the organizational action, how to communicate the individual actions required to achieve the organizational action and how to motivate people to perform their assigned tasks.