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Wednesday, January 7, 2015

MOVING FROM THEORY Y TO THEORY X

BRYCE ON MANAGEMENT

- Transforming a company from empowerment to dictatorship.

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Not long ago I wrote on the three fundamental styles of management, "Theories X, Y, Z." In a nutshell, Theory X represents top-down autocratic rule (e.g., micromanagement); Theory Y represents a bottom-up philosophy where workers are empowered to take on assignments and supervise themselves, and; Theory Z encourages mutual trust between workers and management, and promotes cooperation as opposed to competition.

Locally, I am watching a distributor of manufacturing supplies change its corporate culture from Theory Y to X, and it is a bit disheartening to witness. The distributor is a sales/service outlet for a nationwide chain that has been in existence for 60 years. With the passage of time, a new line of management has emerged which is changing the company to its very roots.

Prior to the latest management regime, the franchise felt empowered, regularly made or exceeded sales quota, and developed a good reputation for service with their customers. Employee morale was good, the staff felt confident and the facilities were kept spotless, particularly the warehouse. On the corporate website they touted their commitment to their customers, such as being highly responsive and offering quality and professional service.

At one time this was true, but over the last year, as the management team changed, policies changed and the company embraced a strong Theory X form of government whereby everyone was managed by some form of metrics. Remarkably, cash flow and customer service was not included. Instead of analyzing sales volume, they focused on product brands sold, number of cold calls made, and telephone calls. There was no interest in product overhead being stored in the warehouse, or length of time. Nor was there concern if there were enough supplies available to adequately accommodate customers within the territory. Veteran sales and support people were demoted to make way for a younger generation with far less experience. Beyond all this, it was made vividly clear to the staff they were to make no decision without the approval of management.

This led to a noticeable decline in morale as employees felt powerless and afraid to make a decision. Consequently, customer service suffered radically. Shipments were sent slowly, sometimes not in accordance with purchase orders. Frankly, employees couldn't care less. Sales also suffered as the sales staff felt encumbered as to what they could or could not sell. Slowly, a paralysis set in. Not surprising, the employees became apathetic towards their work, the office took on a sloppy appearance, particularly the warehouse, and workers began to move on to other companies.

Whereas employees before felt empowered and in control of their destiny, now they felt useless and their jobs meaningless.

From an outsider's perspective, it appeared management was setting up the company for failure and takeover by a competitor. The reality though was the young management team honestly believes this bean counter approach to management will work. Maybe they are right, but it is certainly not the type of company I would want to work for. It is very dehumanizing. Then again, young people graduating from college do not know any better and may readily adapt to such a culture. Until the transition is complete, the company will remain in limbo. The question then becomes, how long will their customers accept this? I suspect not for long. Already, sales have slowed radically and customers are transferring to other companies where they are empowered and allowed to make their own decisions.

I'll be curious to see if the company can survive another year.

Keep the Faith!

Note: All trademarks both marked and unmarked belong to their respective companies.

Tim Bryce is a writer and the Managing Director of M&JB Investment Company (M&JB) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com

For Tim's columns, see:   timbryce.com

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Copyright © 2015 by Tim Bryce. All rights reserved.

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