We hear the lament again and again that vast numbers of today’s workers remain unmotivated, disengaged, or even counterproductive. Traditional managing proves not only inadequate to deal with employee disengagement, it actually causes it by denying the very humanity of workers. Employing a way of managing that embraces workers as human beings – at their very core – instead gives free rein to their intrinsic motivation.
In Laws of Managing we took a radically objective look at the business world to reveal the essence of enterprises – two fundamental elements, humanity and activities, that embody seven aspects of value creation, each of which have an associated function of managing. The first two humanity-related functions of managing address the who and why aspects of value creation: inducing engagement and effecting alignment. The next four activity-related functions address the where, how, what, and when of value creation: discovering opportunities, generating knowledge, creating offerings, and producing wealth. And the seventh function, related to the overall enterprise, addresses bringing everything together to address in what way the overall enterprise creates value: integrate aspects. This understanding allows us to look anew at managing and gain the perspective required to discover the first principles and even the law associated with each of the seven functions.
So let’s kick this deeper investigation off with the first question regarding enterprise value creation: Who creates value for the enterprise? The answer we observed, however elementary: the people who choose employment in the work offered by the enterprise. This means managing functions to induce engagement in order to provide employment, the domain of enterprise value creation that connects the skills and knowledge of each individual worker to the enterprise. Researching how to do this we uncovered two first principles regarding the nature of people.
The Whole Person First Principle:
Peter F. Drucker best expressed the whole person principle back in 1954 in the seminal publication on managing, The Practice of Management, when he called for managers to view people as human resources rather than as human resources.(1) He drove home the point further by identifying the need for enterprises to employ the “whole man not an economic subsection thereof.”(2) Every enterprise, in other words, must treat every employee as a whole person, and not instrumentally as a mere means to the enterprise’s ends. To do otherwise, in fact, is inhumane.
The Innate Needs First Principle:
The innate needs principle comes from human psychology researchers Edward L. Deci and Richard M. Ryan. In their classic article for Psychological Inquiry, “The ‘What’ and ‘Why’ of Goal Pursuits: Human Needs and the Self-Determination of Behavior,”(3) they reveal that human beings fundamentally possess three innate needs: autonomy, the freedom of self-regulated action; competence, growing personal effectiveness in a rewarding pursuit; and relatedness, a sense of belonging with security in one’s interrelationships. Deci & Ryan further show that people whose innate needs are fulfilled become intrinsically motivated and therefore fully engage in their work. This intrinsic motivation, in turn, unleashes a person’s fullest potential.
From Drucker’s whole person and Deci & Ryan’s innate needs first principles, we deduce the first law of managing:
The Law of Potential
Only the enterprise that unleashes potential,
through meeting its workers’ innate needs,
induces human engagement to its fullest.
Between the first principles and this law, note the radical difference between meeting the innate needs of people in order to bring about intrinsic motivation and employing the typical extrinsic motivation practices of conventional managing, which pays people to behave and perform in a prescribed manner. In the first case, the enterprise builds its value-creation capability on the unleashed potential of intrinsically motivated workers. In the second, the enterprise attempts to shape the behavior of people to create economic value in the way the enterprise deems fit, with little regard for the innate needs of its employees nor the unforeseen value-creating potential of every worker.
Of course this is exactly what you would expect from the practice of extrinsic motivation as it comes from the mechanistic view of humanity that arose with the beginning of the industrial age. Just find the right knobs and levers to get the machine, sorry, the person to perform in the manner you already designed for each particular job, and then the system will hum! Although today few if any dare admit they view their employees as machines, most managers still rely solely on extrinsic motivation with its silent but oh-so-powerful mechanistic message to induce employees to work.
While most everyone today professes to be more enlightened than at the dawn of Mass Production over a century ago, most companies still stop short of inducing engagement by meeting each person’s innate needs, fueling intrinsic motivation, and letting the extrinsic rewards follow. They instead lead with extrinsic motivation and then apply countermeasures, such as empowerment and job enrichment, in an attempt to overcome the negative effects of the mechanistic view of people at the core of their motivation practices. These countermeasures may have some positive effects, but they also entail great risks, such as alienating employees with what they rightly perceive as manipulation.
Of course it is doubtful that any enterprise will ever fully and completely meet every employee’s innate needs, but building your motivational practices on the foundation of the true nature of whole people, not economic subsets thereof – holistically rather than mechanistically – gets you far down the path of releasing the full human potential of your enterprise.
Every law points to an associated imperative for managing. For the law of potential this is:
Imperative to Induce Engagement: Unleash Potential
In adherence to the law of potential, managing must
unleash potential within workers, engendering intrinsic
motivation by fulfilling their innate needs.
This brings forth the full possibility of each person and,
therefore, the enterprise as a whole.
Realize that extrinsic motivation practices, if truly necessary, must be subservient to and fall in line with the fulfillment of innate needs. Leading with extrinsic rewards extinguishes people’s intrinsic motivation. It overrides their seeking to satisfy their innate needs, lessens their engagement, and in many circumstances actually decreases their performance. Even in relatively rigid production jobs there exists a vast human potential to be unleashed when leading with intrinsic rather than extrinsic motivation. Only the former induces the full engagement that unleashes human potential that then produces extrinsic benefits as an outcome.
In the process of managing in a way that fulfills people’s innate needs, you will find an even deeper need, the most fundamental need of all that answers why people do what they do: why they exercise their autonomy, why they seek to grow their personal competence, and why they seek relatedness. Up next, the second humanity law, the law of meaning.
(1) Peter F. Drucker, The Practice of Management (New York: Harper & Row, 1954), p. 263.
(2) Ibid, p. 269.
(3) Edward L. Deci and Richard M. Ryan, “The ‘What’ and ‘Why’ of Goal Pursuits: Human Needs and the Self-Determination of Behavior,” Psychological Inquiry, Vol 11 No 4, 2000, pp. 227-268.