Part II – “People are our greatest Asset” – Human Capital Management

Part II – “People are our greatest Asset” – Human Capital Management


Human Relations Approach and Behavioral Science Approach to Management

In my previous articles, I discussed the Classical and Neo Classical Approaches  to management. Three important management principles were discussed. The Scientific Management, The 14 Principles of Management and Bureaucracy. Although the origins of these principles go back to 19th Century, today in the 21st Century most of our organizations are still governed by them with minor modifications. One of the major criticism of the Classical School was due prominence was not given to people who work in the organizations. Ie the employees. This laid the foundation to the human relations approach.

The Hawthorne Experiment – Elton Mayo (1924- 1932)

Mayo initially wanted to study the impact of organization environment on productivity of employees in an organization.  The lighting conditions in the working environment were increased and measured the impact on productivity. Similarly the lighting conditions were decreased and measured the impact on productivity. No significant differences was visible. He found out that other environmental conditions such as supervision, extra attention given by management have an impact on employee productivity.

This experiment was a significant milestone in management thinking because it emphasized the importance of people involvement in organization, ie the work groups, leadership, motivation, communication and other social factors. Therefore the management manipulated these social factors to engage people in organizations towards achieving managerial aims and objectives.

Are you using the same control strategy in your organization to motivate your employees?

One of the main criticisms of the human relation approach was that they focused on “People without the Organization “ ie assumed that employees were solely motivated by fulfilling their social needs. The resources available for an organization is limited hence need to focus on economical utilization towards achieving its objectives Hence need to struck a balance between cost and benefits on spending on people.

This gave rise to neo human relations approach to management in early 1950s and 1960s , where more emphasis were given towards relationships between management and employees, working groups , providing organization structure and leadership . Two important writers were Abraham Maslow (1908- 1970) and Douglas McGregor (1906-1954).

Hierarchy of Needs – Abraham Maslow (1908- 1970)

 The below diagram shows how the needs of a human being  arranged in a pyramid along with the motivation to satisfy that need. While this theory gives an important guide lines to management, it does not specify time scales to indicate when the satisfaction occur. Therefore organizations could not fulfill this need of employees, while many employees might satisfy their needs from somewhere else. Similarly based on the level at which an employee engage in an organization ie junior level, middle level , senior level , it is very difficult to assess the value of each level , in order to fulfill the needs; while a  combination of needs can be fulfilled by one action. The theory also does not specify if a need  satisfied  will lead to satisfaction of employee and hence improve the productivity.

Theory X and Theory Y – Douglas McGregor (1906-1954)

The below table shows the two extremes of people behavior.  According to this theory people motivation level and involvement in work varies from negative (X) to positive (y). As managers we need to identify the nature of the behavior of people before developing a strategy .

How relevant are these theories from today’s context. How many organizations carry out employee satisfaction or employee engagement surveys based on the theories given above? After discussing with few HR leaders, I found out that their answer lacks clarity. In this situation how will an organization identify a mechanism to motivate the employees at all levels towards adding value to organizations in order to value our employees as an asset?

Will look into some of the Content theories of motivation which will focus on what motivates an employee and some Process theirs of motivation which focus on How to motivate employees in our next edition.

About the writer

Mahesh Jayasinghe 

(PhD research student, Management Consultant, Executive Coach, Corporate trainer, lecturer and a Company Director, Forward your comments to


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