Rensis Likert’s:
The Human Organization
by Don Brown
Introduction
Dr. Likert’s culminating work, The Human Organization, carries on in the spirit of Douglas McGregor – with the foundational premise of “applying the results of quantitative research to improve the management of human resources” (Likert, 1967, p.vii). Don’t be fooled in Likert’s titling of the first chapter as “NEW FOUNDATIONS FOR THE ART OF MANAGEMENT” (Likert, 1967, p.1), Dr. Likert clearly states his perspective as to art versus science with his own descriptor of his work, a “science-based system of management” (Likert, 1967, p.2).
In stating that “Research is beginning to be substituted for practitioner judgment in all aspects of management” (Likert, 1967, p.2), Likert sets up The Human Organization as the case study collection that it is. Starting with a more in-depth description of the work that he first put forth in New Patterns of Management (Likert, 1961), Dr. Likert substantiates his approach with documented “principles and practices of the highest-producing managers” (Likert, 1967, p.2), and finishes by examining experiences – his own studies and others – in the process of helping organizations move to science-based management.
I have divided the significant learnings of this article into the data sources presented in Dr. Likert’s work, his findings and results, a consideration of specific variables, and a final summary paragraph.
Data Sources
I have seen the word science best defined as “the observation, identification, description, experimental investigation, and theoretical explanation of phenomena” (American Heritage Dictionary of the English Language, 1975, p. 1162). Of significant personal impact to me was the realization of the extent to which Dr. Likert followed and embodied this definition. His research is based on (and resulted in the refinement of) a comprehensive “table of organizational performance characteristics” (Likert, 1967, p.4-10). Through the Institute of Social Research, thousands of individuals completed an assessment of the highest and lowest performing work groups within their organizations against the sixteen performance characteristics displayed on pages four through ten. It was the database collected against this 4 x 16 matrix that established Dr. Likert’s management systems and provided his template to interpret results. Dr. Likert modified this instrument as a means of comparative analysis of each of his four management systems against assumptions, theories and variables accepted in common practice.
The assessment tool vertically lists a series of sixteen organizational variables from “the extent to which superiors have confidence and trust in subordinates” (Likert, 1967, p.4), all the way to the extent to which “control data…are used for self-guidance or group problem solving…” (Likert, 1967, p.10). Horizontally, an evaluative scale with descriptive phrases is provided under the headings of System 1, System 2, System 3 and System 4. Participants in the study (and readers of the book itself, actually) are asked to complete the form by; “thinking of the highest producing department, division, or organization you have known well. Then place the letter “h” on the line under each organizational variable…to show where this organization would fall” (Likert, 1967, p.3). They are then asked to “think of the lowest producing department, division or organization you know well. Then put the letter “l” on the line under each organizational variable…where the least productive organization falls” (Likert, 1967, p.3).
Under Likert’s initial work, the descriptors of Exploitive Authoritative, Benevolent Authoritative, Consultative and Participative Group were used in the place of Groups 1, 2, 3, and 4 respectively. Regardless of the headings used, the descriptors in place under System 4 all describe the highest levels of what we now understand to be rapport, trust, open communication, participation, responsibility, self-direction, collaborative decision-making and empowerment. System 1 descriptors all describe the lowest levels of the dynamics just described.
In collecting this data, Likert and his associates were able to discern patterns as to under what management system the lowest and highest groups in terms of productivity and effectiveness tended to fall. Findings, without fail, and “irrespective of the field of experience of the manager – production, sales, financial, office, etc.” (Likert, 1967, p.11), showed that “high producing departments are seen as using management systems…toward System 4, and low producing units as…toward System 1” (Likert, 1967, p.11).
Findings and Results
In interpreting the massive amounts of data, Likert’s research gave rise to the now well-known broad classification of variables; “causal, intervening and end-result” (Likert, 1967, p.26). These were used to help articulate, explain and analyze the data collected. The causal variables were defined as “independent variables…that included the structure of the organization and management’s policies, decisions, business and leadership strategies, skills and behavior” (Likert, 1967, p.29). Intervening variables reflected the “internal state and health of the organization…loyalties, attitudes, motivations…and perceptions” (Likert, 1967, p.29), whereas the end-result variables were the “dependent variables, which reflect the achievements of the organization, such as productivity…costs…and earnings” (Likert, 1967, p.29). Classification and analysis in this fashion provided the mechanism to organize and “reveal…the actual pattern of relationships which exist among the variables at that time” (Likert, 1967, p.212).
Overwhelmingly, Likert’s data show that “Improvement in performance follows a shift toward System 4” (Likert, 1967, p.36). Through his Weldon plant experiments specifically, measurements showed that “changes in the management system resulted in substantial increases in productivity” (Likert, 1967, p.37). By moving toward System 4 management practices, productivity increases were achieved – without taking a toll on the intervening variables. “Improvement in cooperative relationships were noted…positive change in motivation and morale was reflected…turnover dropped to half of its former level…length of employee training was substantially reduced…and vastly more friendly attitudes toward the company were demonstrated” (Likert, 1967, p.38), all while average earnings went up and manufacturing costs went down! Other studies showed parallel outcomes – not only did the end-result variables improve as the result of a shift in causal variables to System 4, but intervening variables were strengthened (versus weakened) when productivity increases were gained by shifting to System 1.
Larger scale intervening variable indicators improved with moves to System 4. Labor relations progressed to a point where “there was a great increase in the capacity to attain acceptable solutions to difficult problems” (Likert, 1967, p.44) in shifting away from System 2 toward System 4. Equally important to me was Likert’s summary that “the converse tends to be the case for companies or departments whose management system is well toward System 1” (Likert, 1967, p.46).
Specific Variables
Starting in Chapter Four Likert focuses on three specific causal variables as basic concepts of System 4 management; “the use by the manager of the principle of supportive relationships, his use of group decision making and group methods of supervision, and his high performance goals for the organization” (Likert, 1967, p.47). Supportive relationships are described as those that are “ego-building rather than ego-deflating” (Likert, 1967, p.47), and his findings were that the more often ego-building, the higher the performance. Of course, building or deflating is defined from the subordinates’ perspective, not the leaders'.
The second variable, that of the use of group decision making (defined as overlapping versus man-to-man), where interaction and decision-making “rely heavily on group processes” (Likert, 1967, p.50), also pointed to higher output. The third variable, high performance aspirations by the manager for the group, was also born out as an effective causal variable in terms of productivity increases and positive impact on intervening variables. “Managers who apply supportive relationships well, and also have high performance goals are much more likely to have better sales units” (Likert, 1967, p.53), and “when sales managers apply supportive relationships…use group methods…and have high performance aspirations, they are much more likely to have higher-performing sales offices” (Likert, 1967, p.59). The data is there, it is very clear.
In closing this consideration of specific variables, Likert sums up the nature of the leader/follower or management interface with; “causal variables have two essential characteristics; they can be modified or altered, and they are independent variables…and the level or condition of intervening variables are produced largely by the causal variables, and in turn have an influence on the end-result variables” (Likert, 1967, p.77). I’ve never seen a better case for System 4 management (by any name, then or now) then in The Human Organization, with all the data in the world to back it up.
Summary
In this era of arguably the greatest economic downturn in current memory, organizations are looking to improve their end-result variables - some to improve positioning, some simply to survive. I think that Likert’s most prophetic statement of all in The Human Organization is a header on page 95; “Cash from Liquidation is Not Earnings” (Likert, 1967, p.95). His point here in introducing the concept of human asset accounting is that organizations were moving to System 1 in order to improve results – and while seeing short-term improvements in end-result variables, were not considering (or accounting for) the dissolution of intervening variables. In one case, the human organization is positioned as being worth two years of payroll (in this case a $350 million payroll). In this instance, the organization reported increased output, gained through System 1 efforts, without realizing they had in the process “liquidated” $70 million dollars worth of their human organization (p. 103) and that that was where 28% of the total earnings came from, not from process improvements! Fifty years later I now see first-hand several examples of organizations that are liquidating their human organization in the name of shareholder value, earnings and profit.
Questions for further discussion include:
- Which management system would be more prevalent today, almost 50 years after the book was written? Why is that?
- What is the “worth” of the human organization today…more than two years of payroll…less?
- Why do managers/organizations move toward System 1 when such overwhelming data makes the case for System 4?
- Are Systems 1,2,3 and 4 directly synonymous with Leadership Styles 1,2,3 and 4?
- How does Likert’s work support the situational framework in your mind…are they compatible?
References
Likert, Rensis. (1967). The Human Organization). New York: McGraw-Hill
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