CLEP Principles of Management 1

Mcgregor developed a philosophical view of humankind

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McGregor developed a philosophical view of humankind with his Theory X and Theory Y in 1960. His work is based upon Maslow's Hierarchy of Needs , in that he grouped the hierarchy into lower-order needs (Theory X) and higher-order needs (Theory Y). He suggested that management could use either set of needs to motivate employees, but better results would be gained by the use of Theory Y, rather than Theory X. These two opposing perceptions theorized how people view human behavior at work and organizational life: McGregor's book Human Side of Enterprise described Theory Y which was simply put, Maslow's need hierarchy applied to management. Theory Y was essentially a summary of Maslow's theory. Douglas McGregor defined Theory X and Theory Y, which are two sets of assumptions made by managers.
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Theory X - management's role is to coerce and control employees. People have an inherent dislike for work and will avoid it whenever possible. People must be coerced, controlled, directed, or threatened with punishment in order to achieve objectives. People prefer to be directed, do not want responsibility, and have little or no ambition. People seek security above all else. Theory Y - mgmts role is to develop the potential in employees & help them to release potential towards common goals. Work is as natural as play and rest. People will exercise self-direction if they are committed to the objectives (they are NOT lazy). Commitment to objectives is a function of the rewards associated with their achievement. People learn to accept and seek responsibility. Creativity, ingenuity, and imagination are widely distributed among the population. People are capable of using these abilities to solve an organizational problem. People have potential. 28. 29. BOUNDED RATIONALITY THEORY 30. According to Herbert Simon's bounded rationality theory, individuals pick the first choice that meets predetermined acceptance criteria. The ability to consider only some of the alternatives, or only some of the information required to evaluate a possible course of action is called bounded rationality. Simon believed that people have limited cognitive abilities and often have to deal with an overwhelming amount of information. Consequently they tend to take cognitive shortcuts when making decisions. 31. 32. Herbert Simon came up with the Administrative Man Model of decision-making and the 3 phases of decision making (intelligence, design, and choice). Herbert Simon was the Nobel Prize winner who developed these two concepts. In the Administrative Man Theory , the economic man is the all-knowing completely rational decision-maker who finds the best possible choice. Simon described the "economic" man, who knows everything and therefore can make the perfect decision. In reality, no decision maker can fit the economic man profile.
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