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Humanistic management

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 18. Humanistic management
Cristian R. Loza Adaui and André Habisch

INTRODUCTION

The adjective ‘humanistic’ derives from Humanism. Literature about humanism tackles
this concept in two main senses. In a wider sense humanism is understood as a kind of
Weltanschauung stressing the dignity and worth of human beings and the search of good
for them. Humanism in this wider sense has been proposed with different nuances and
a variety of approaches throughout history, sometimes stressing the rational capacity of
man and rejecting transcendent realities (Huxley, 1957, 1961) and sometimes embrac-
ing religion and transcendent values (Maritain, 1936). In this wider sense humanism
includes very diverse approaches ranging from: the homo mensura definition given by
Protagoras: ‘man is the measure of all things’, to the multiple post-humanistic or even
anti-humanistic approaches developed in the late 20th century which were built over
the failures of past humanist experiments. The structuralism of authors such as Michel
Focault, Claude Lévi-Strauss, Jacques Lacan and Louis Althusser might be perceived
as in that perspective. Other post-humanistic approaches reflect contemporary concerns
about global climate change and the unpredictable influences of technology and biotech-
nology on human nature (Hayles, 1999; Sloterdijk, 1999; Badmington, 2000) or question
anthropocentrism and the role of men in society (Regan & Singer, 1989).
In a more narrow sense, humanism refers to an intellectual movement born within
the Italian renaissance of the 15th century, which offers a renewed attention to the
classical cultures and in particular to its study: the studia humanitatis, which refers to
the study of classical disciplines as grammar, rhetoric, poetry and moral philosophy
(Davies, 2008).
The origin of the word humanism and the meaning it has today refers to the German
term ‘Humanismus’ used by the theologian and philosopher F.I. Niethammer (1808) in
his book The dispute between Philanthropinism and Humanism in the Educational Theory
of our Time (Der Streit des Philantropinismus und des Humanismus in der Theorie des
Erziehungsunterricht unserer Zeit). Niethammer describes as humanistic the ‘reformed
education system inspired by the romantic hellenism of Winckelmann and Goethe’
(Davies, 2008, p. 2).
Throughout history humanism, including its diverse developments and propositions,
had been influencing the way of thinking and acting of people in society. Management
considered in a broader sense as a discipline aimed at the effective administration of
enterprises has always been influenced by traditions of cultural thought. Thus, in a
certain sense, management has always been a potential playing field for humanism.
However, direct references to Humanistic management can be traced back only to the
last decades.

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 192 Handbook on the economics of reciprocity and social enterprise

DISMAL SCIENCE? TOWARDS THE PROGRAM OF

HUMANISTIC MANAGEMENT

Finding fault with Thomas Malthus’ population theory, Victorian historian Thomas
Carlyle qualified economics as ‘the dismal science’. Primarily focussing on scarcity as
a basic human condition, economists (and in their tradition management scholars)
systematically base their analysis on the limits of human rationality, on unintended
side effects and on organisational constraints. Moreover, with the strong focus on
profit orientation and the ‘instrumentalization’ of man as a ‘human resource’ they
seem to mistake the instrument-goal ratio. However, it has to be seen that even with
this apparently ‘inhumane’ methodical approach economic analysis clearly follows
a (sometimes hidden) humanistic program. That becomes especially obvious in the
literature on economic systems. Most scholars would agree that the overall goal of col-
lective economic activity is to overcome scarcity, fight poverty and illiteracy and allow
human beings to live a life in dignity according to their value convictions. Building
the institutional framework of a market economy and creating competitive business
organizations within that context are therefore an expression of civility and thrive
towards humanization.
The disputed question is whether labour is a mere – and sometimes necessarily inhu-
manly structured – instrument of achieving this ethically qualified goal; or whether
(and to what extend) the overall humanistic goal should also structure the economic
activities and labour relations as such, which are in themselves an expression of the
human nature of man. Particular cultural traditions like the civil economy in Italy
(Bruni and Zamagni, 2007), the Lutheran professional Ethics, the Catholic Social
Teaching tradition of the late 19th and early 20th century, the social market economy
of the Freiburg School of Economics (W. Eucken being the son of the philosopher and
Nobel Prize laureate Rudolph Eucken) and many others stress the later. However, they
have rarely been able to spell out the implications on an organizational and manage-
rial level. This concretisation has to be a basic subject of any form of management,
which calls itself ‘Humanistic’. Such a new paradigm will not be limited to niche issues
like corporate responsibility, communication, corporate citizenship, social entrepre-
neurship or even human resource management but rather embrace all managerial
disciplines including its most important tools like strategy, accounting, operations,
organization etc. It will have to account for the human factor of economic success in a
systematic way spelling out the paradigm shift even in the development of innovative
tools and techniques.

HUMAN BEINGS IN MANAGEMENT HISTORY

During the still rather short history of management theory a reference to human
beings was central, but not all managerial models could be named humanistic.
In the following we present the principal management approaches from the 20th
century categorizing them according to their underlying conceptualization of human
person.

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 Humanistic management 193

Productivity-centred Approaches

At the beginning of the 20th century Frederick Taylor, an American engineer, who aimed
to find the most efficient way to complete jobs, proposed the Principles of Scientific
Management (1964 [1911]). Applying the scientific method to improve productivity
Taylor, for example, suggested to break a job into a series of simplified jobs. Following
that line Henry Gantt in his books Work, wages and profits (1913) and in Organizing for
work (1919) made use of scientific methods to increase workers’ efficiency. Gantt intro-
duced the incentive system for workers and foremen: workers were paid a bonus if the
job was completed before established deadlines. Foremen were paid for each worker who
made the deadline and received additional bonuses if all workers under their direction
were able to do so. Contemporarily to Gantt, the German-American psychologist Hugo
Münsterberg published his book Psychology and Industrial Efficiency (1913). He applied
psychology to the study of working people and was able to identify problems such as
monotony, attention and fatigue including their physical and social consequences on
workers. Henry Fayol, the pioneer of the General Administrative Theory, focussed on
the activities of managers. In his book Administration Industrialle et Generalle (Fayol
1916) he proposed forecasting, planning, organizing, commanding, coordinating and
monitoring as the five functions of management and identified another 14 principles for
management which could be taught in schools and universities.
Following the transformative power of industrialization during the first decades of
the 20th century the attention of management scholars was oriented more towards
efficiency and productivity than towards workers an their labour condition, conceiving
men and women in a mechanistic way (Melé, 2003, p. 77). Scholars like Gantt, Taylor
and Fayol were engineers and their approaches were certainly linked to that academic
background. They perceived the managerial task as a ‘fight against nature’ with ‘labour’
being an important factor of production. However, recent historical research on Taylor’s
scientific management tries to threaten the widespread notion of an underlying negative
image of human nature. Wagner-Tsukamoto (2008) reconstructs Taylor’s portrayal of
managers as naturally good and heartily cooperative persons, uncovering conceptual
misunderstandings on the Taylorian image of human nature and reopening the research
agenda on this topic.

Psychological Approaches

The Hawthorne studies, conducted at the western Electric Company from 1924 through
1932 were designed to examine the effects of physical working conditions on employee’s
productivity and fatigue. This marks the beginning of a behavioural approach towards
humans in management. Fritz Roethlisberger was the lead researcher in the Hawthorne
project and the first to publish the findings, which were reprinted in a more comprehen-
sive edition as Management and the Worker (Roethlisberger & Dickson, 1939). One of
the researchers of these studies was Elton Mayo; he and his colleagues were concerned
about the scientific vision of man, which saw human beings as self-interested optimiz-
ers and exclusively extrinsically motivated. On the contrary Mayo accounted for the
psychosocial complexity of human beings and accepted the multiplicity of individual
needs, desires and goals (Mayo, 1933). But he was also aware of the crucial role that

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membership in different social groups and human relations in organizations played

in business and society. In his book The Social Problems of an Industrial Civilization,
written in 1945 but first published in 1949 he states:

Humanity is not adequately described as a horde of individuals, each actuated by self-interest,

each fighting his neighbour for the scarce material of survival. . . For all of us the feeling of
security and certainty derives from membership of a group. If this is lost, no monetary gain,
no job guarantee, can be sufficient compensation. (Mayo, 1949, pp. 51, 67, for an overview see
Bruce, 2006)

The psychologist Abraham Maslow, who is remembered as the founder of the

Humanistic psychology, developed a theory of human motivation, presenting a hierar-
chy of needs, which can be applied to deal with employee motivation. Maslow assumes
that the basic inner nature of human beings was good and that unsatisfied human
needs motivate behaviour. For Maslow needs can be presented in a hierarchy, he iden-
tified five different levels: psychological needs, safety needs, belongingness and love
needs, esteem needs and self-actualization needs (Maslow, 1943). One consequence of
that concept is that non-pecuniary factors could also serve as (‘intrinsic’) motivational
instrument for an employee. Thus managers have to develop positive relationships
with workers in order to comprehend their motivational needs. Maslow used also the
term meta-motivation to clarify why some self actualized people are sometimes driven
by innate forces that lead them to go beyond their basics need to reach their full poten-
tial. In his own words meta-motivated people ‘are dedicated people, devoted to some
tasks “outside themselves”, some vocation, or duty, or beloved job’ (Maslow, 1971,
p. 301)
The reflection on self-actualization of men was also a part of Douglas McGregor
approach to human beings in his book titled The Human Side of Enterprise (McGregor,
2008[1960]), here he developed the Theory X and Theory Y. Theory X presented people
who have to be supervised closely because they have little ambition, dislike work and
avoid responsibility. Theory Y describes people who can exercise self-direction, accept
responsibility and consider work as natural. Many scholars and especially managers
interpreted McGregor’s theories directly as managerial advices; however, E. Schein, a
colleague of his at the MIT, argues that ‘there is nothing in this theory [Theory X and
Theory Y] that says a manager should behave in any particular manner, only that how he
or she behaves is driven by deep cognitive assumptions that may not be very changeable
in adulthood’ (Schein, 2011, p. 157).

Work-Satisfaction-Centred Approaches

Mary Parker Follett recognizes that organizations could be viewed from a perspective
of individual and group behaviour. She argued that organizations should be focused
on a group ethic rather than on individualism and emphasized employee participation,
autonomy and the building of cross-functional teams. Managers should search the
coordination of group efforts and view workers as partners.
According to D. Melé one of the first humanistic management approaches can be
attributed to Mary Parker Follett. For her ‘there were no psychological, ethical or
economic problems, but human problems and these cover aspects which could be psy-

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chological, ethical, economic and whatever’ (Melé, 2003, p. 79). Her holistic approach to
human condition permit her to understand the dynamics of power within groups (Melé
& Rosanas, 2003).
Another humanist and management scholar was Chester Barnard, who argued that
organizations were social systems, which required human cooperation in order to
achieve success. One of Barnard’s frequent citations directly considers the inquiry into
human nature as an indispensable prerequisite of the study of organizations:

I have found it impossible to go far in the study of organizations or of behaviour of people in

relation to them without being confronted with a few questions which can be simply stated. For
example: ‘What is an individual?’ ‘What is a person?’ ‘To what extent do people have power of
choice or free will?’ The temptation is to avoid such difficult questions, leaving them to philos-
ophers and scientists who still debate them after centuries. It quickly appears, however, that even
if we avoid answering such questions definitely, we cannot avoid them. (Barnard, 1938, p. 8)

Organizational-culture Approaches

According to D. Melé (2003) also organizational culture literature is ingrained by

humanism, in particular the works of scholars as Pettigrew (1979), Deal and Kennedy
(1982), Peters and Waterman (1982) and Schein (1984; 1985; 1990). According to Schein
organizational culture can be defined as:

the pattern of basic assumptions that a given group has invented, discovered, or developed in
learning to cope with its problems of external adaptation and internal integration, and that
have worked well enough to be considered valid, and, therefore, to be though to new members
as the correct way to perceive, think, and feel in relation to those problems. (Schein, 1984, p. 3)

These basic assumptions can also be expressed as beliefs and as values. According to
Sathe (1983, p. 7) beliefs are ‘basic assumptions about the world and how it works’; in
difference to beliefs, values express a kind of duty, an ‘ought to’ (Sathe, 1983 p. 7).
Since these foundational studies, organizational culture has developed itself as a
research focus relating organizational culture with many other management variables
ranging from motivation to ethical behaviour. Melé considers these approaches as an
expression of humanism because they enlarge and enrich the study of organizations
by including not only motivations and needs by paying particular attention to other
elements present in culture. In his words:

if culture is part of human life and organizational cultures have such an influence on the behav-
iour of its members, there is no doubt that considering organizational culture is a better way to
understand the human condition than considering only human needs (Melé, 2003, p. 82).

Peter Drucker on Human Management

Peter Drucker insisted recurrently in the centrality of human beings for management. In
his own words:

No part of the productive resources of industry operates at lower efficiency than the human
resources. The few enterprises that have been able to tap this unused reservoir of human

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 196 Handbook on the economics of reciprocity and social enterprise

ability and attitude have achieved spectacular increases in productivity in the great majority of
enterprises – so that the management of men should be the first foremost concern of operating
managements, rather than the management of things and techniques on which attention has
been focused so far. (Drucker, 1950, p. 158 as quoted by Stein, 2010 p. 102)

Moreover, Drucker reflects the formative responsibility of management for the corporate
culture:

A manager develops people. Through the way he manages he makes it easy or difficult for them
to develop themselves. He directs people or misdirects them. He brings out what is in them or he
stifles them. He strengthens their integrity or he corrupts them. He trains them to stand upright
and strong or he deforms them. (Drucker, 1955, p. 298)

In other words:

Management is about human beings. Its task is to make people capable of joint performance, to
take their strengths effective and their weaknesses irrelevant. This is what organization is about,
and it is the reasons that management is the critical, determining factor. (Drucker, 1990, p. 221)

In these sense Drucker is to be considered as a pioneer of humanistic management

although he never used this expression.

CONTEMPORARY TENDENCIES

Even in contemporary management literature there are always more elements with a
background of humanism finding their way into the mainstream of management and
management research. Melé (2009, p. 136) present four transitions:

1. ‘from rigid job design towards searching a better fit between persons and organiz-
ational structures’;
2. ‘from organizations in which each person is just a cog of the business machine to
organizations in which people are put first, with a greater degree of involvement,
commitment, and participation’;
3. ‘from perceiving firms as a net of contracts to considering business as a self-
governing community of people’; and
4. ‘from a management aligned to maximization of shareholder value to management
by values’.

To be sure, these developments as such are not enough to speak already about human-
ism in management. Probably the most intensively discussed feature in the context of
humanism is the dichotomy individual – community. According to Morden, ‘humanists’
believe that mankind should seek to satisfy both individual needs and the needs of the
community at the same time’ (Morden, 2004, p. 190). This idea of community is recur-
rent discussion among humanist and had brought some scholars to identify humanism
as a feature of the management styles of some geographical areas were community rep-
resents an important social feature. In that sense Lessem and Neubauer (1994) stress the
importance of cultural roots and consider the best examples for humanistic management

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 Humanistic management 197

styles those born in regions were family business and strong regionalized cooperational
traditions flourish.
European humanistic management as presented by Lessem and Neubauer (1994, p. 41) is
the result of a transition from family businesses to socio-economic networks, where manag-
ers became a kind of social architects evolving from a mere patriarchal manager they used
to be in the past. The study of Lessem and Neubauer focussing on european management
styles can be well complemented with the findings from a recent publication edited by the
members of the Humanistic Management Network. They present the inputs of 19 compa-
nies from all over the world in different industries and even with different ownership struc-
tures and sizes in order to ‘explore the principles of humanistic management and examine
its theoretical merits by assessing its practical feasibility’ (von Kimakowitz et al, 2011, p. 2).
The members of the Humanistic Management Network understand the main goal
of management as: ‘the promotion of human flourishing through economic activities
that are life-conductive and add value to society at large’ (von Kimakowitz et al. 2011,
pp. 4–5). Their proposal of a humanistic view on the business organizations is presented
according to five different features:

1. Business strategies in which ‘shared value-creation processes are theoretically and

practically imperative; a balance between multiple stakeholders and between short
and long-term interests is essential’ (Pirson et al, 2011, p. 318).
2. Governance mechanisms focused more on strategic support for corporate leaders
than controlling manager’s opportunistic behaviour (Pirson et al, 2011, p. 319).
3. Organizational structures are ‘extremely decentralized and focus on self-governance’,
thus supporting the development of human capabilities and focus on effectiveness
(Pirson et al, 2011, p. 320).
4. Transformational leadership styles ‘based on moral values, oriented to inspire fol-
lowers, stimulate them intellectually, and engage them emotionally with organiza-
tional tasks’ (Pirson et al, 2011, p. 321).
5. Organizational cultures that ‘allow constant organic change and evolution’, ‘open
and participative not only within but also outside the organization’; cultures ‘capable
to create organizational identities based on inter-human relations (relationally) and
inclusive of a larger group (communal) (. . .) aimed to promote human flourishing
within, but also outside, the organization’ (Pirson et al, 2011, pp. 321–322).

Another approach of humanistic management stresses the importance of community

for realizing personal values. They consider the firm fundamentally as communities of
persons (Bruni, 2009, Mion and Loza Adaui, 2011, Melé, 2011) and consider the relation
of humanism and business and economics in different religious and cultural traditions
for example the work of Vittal (2004) on Indian management and more recently Grassl
and Habisch (2011) within the Christian Social Tradition.

LIMITS AND FUTURE RESEARCH

The history of market economy and business organizations reminds us that moral
calls for ethics and humanism have periodically also been contra-productive for their

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followers. Only some quick points should indicate a necessary discussion on limits and
frameworks for humanistic management:

● Important aspects of humanism are human rights and economic freedom. This has
to be pointed out to avoid any tendency towards self-sufficiency, in-group biases,
intolerance or even totalitarianism.
● Humanistic goals have still to be implemented in a competitive market economy.
Thus, from a business perspective professionalism is an important aspect, here.
Mutual inspiration between goals of humanism on the one hand and profes-
sional tools or techniques on the other should invigorate management education
(Gagliardi & Czarniawska, 2006; Arenas, 2006).
● Secular developments redefining the concept of man should also resonate in
humanistic management. For example family relationships (including division of
labour among genders, parent-child relations etc.) have undergone dramatic trans-
formations recently. This should also be reflected in organizational research where
work-life arrangements for both parents and increasing responsibility towards
elder parents should invigorate humanistic business solutions.
● Economic relations and empirical evidences should also instruct humanistic think-
ing and start a dialogue of mutual learning. For example a complete neglect of the
role of incentives for organizing effective cooperation may threaten humanistic
goals and ultimately promote cynicism and moral apathy. Humanism may serve
as ‘heuristics’ meanwhile economics plays the role of restriction analysis.

In order to promote managerial goals humanistic research and education in business

should avoid any normative bias. It is neither the task of the humanist philosopher
to ‘domesticate’ the dismal science of economics or management nor the role of the
manager or economist to destroy seemingly utopian ideals of the humanist; rather both
should engage in a cooperative search for better organizational and strategic solutions
for the pressing challenges of the 21st century.

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