1. FINAL EXAM PAPER
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Final Exam Paper: MGMT/MBA 530A
Jonathan Gogola
Benedictine University
Winter Quarter 2013

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Brief
overview
of
Theory
X
and
Theory
Y
Throughout
this
composition,
I
will
be
continually
referring
to
theory
X
and
theory
Y
in
the
discussions.
I
would
like
to
use
this
as
an
opportunity
to
introduce
you
to
an
overview
of
what
these
theories
are.
Started
by
McGregor,
the
two
theories
attempt
to
explain
two
distinctive
management
styles.
Theory
X
Theory
X
is
considered
to
be
the
conventional
approach
to
management.
This
approach’s
motto
is
that
humans
are
lazy
and
need
constant
direction.
Theory
X
managers
are
defined
by
three
core
propositions:
1) Management
is
responsible
for
organizing
the
elements
of
productive
enterprise
in
the
interest
of
economical
ends.
2) With
respect
to
people,
this
is
a
process
of
directing
their
efforts,
motivating
them,
controlling
their
actions,
and
modifying
their
behavior
to
fit
the
needs
of
the
organization.
3) Without
active
intervention
by
management,
people
would
be
passive
–
even
resistant
–
to
organizational
needs.
They
must,
therefore,
be
persuaded,
rewarded,
punished,
controlled
–
their
activities
must
be
directed.
(Baum,
Head,
Cooperrider,
Sorensen
Jr,
Yaeger,
2007,
pg.
10)
Theory
X
utilizes
three
approaches
to
management
style:
hard,
soft,
and
firm
but
fair.
Coercion,
threats,
direct
supervision,
and
firm
levels
of
control
characterize
hard
management
styles.
This
style
removes
personal
freedom
from
subordinates
and
creates
a
highly
structured
organizational
culture.
Soft
managers
can
be
more
permissive.
They
focus
on
satisfying
other
people’s
demands
and
attempt
to
achieve

3. FINAL EXAM PAPER
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harmony
in
the
workplace.
These
managers
are
seen
as
weak
and
can
be
easily
manipulated.
A
middle
ground
has
been
established,
known
as
firm
but
fair,
that
combines
aspects
of
both
the
hard
and
soft
styles.
Theory
Y
Theory
Y
is
a
more
unconventional
approach
to
management.
McGregor
established
theory
Y
under
more
adequate
assumptions
of
human
nature
and
motivation.
This
theory
postulates
that,
unlike
Theory
X,
humans
are
not
passive
or
lazy.
According
to
the
text,
there
are
4
key
assumptions
that
compose
Theory
Y:
1) Management
is
responsible
for
organizing
the
elements
of
productive
enterprise
–
money,
materials,
equipment,
people
–
in
the
interest
of
economical
ends.
2) People
are
not
by
nature
passive
or
resistant
to
organizational
needs.
They
have
become
so
as
a
result
of
experience
in
organizations.
3) The
motivation,
the
potential
for
development,
the
capacity
for
assuming
responsibility,
the
readiness
to
direct
behavior
toward
organizational
goals
are
all
present
in
people.
Management
does
not
put
them
there.
It
is
a
responsibility
of
management
to
make
it
possible
for
people
to
recognize
and
develop
these
human
characteristics
for
themselves.
4) The
essential
task
of
management
is
to
arrange
organizational
conditions
and
methods
of
operation
so
that
people
can
achieve
their
own
goals
best
by
directing
their
own
efforts
toward
organizational
objectives
(Baum
et
al.
2007,
pg.
17).

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Three
approaches
to
Theory
Y
can
be
utilized
to
assist
in
the
creation
of
such
management
cultures.
Decentralization
and
delegation
can
be
used
to
create
freedom
of
movement
throughout
the
organization
and
limit
the
close
control
of
conventional
management.
Job
enlargement
encourages
responsibility
from
the
bottom
up
in
an
organization.
For
example,
instead
of
training
laterally
for
one
position
where
the
only
outcome
would
be
an
increase
in
the
amount
of
the
same
work
one
does,
if
you
begin
to
train
them
to
do
work
that
is
also
a
part
of
the
position
above
them,
two
results
create
a
positive
impact
on
production:
1)
the
employee
will
no
longer
have
to
seek
a
supervisor
for
little
things,
which
frees
up
the
supervisor,
and
2)
by
giving
the
subordinate
this
increase
in
personal
power,
it
creates
a
sense
of
accomplishment
that
could
lead
to
increased
productivity.
Performance
appraisals
are
also
a
key
component
for
Theory
Y.
Unlike
conventional
appraisal
systems
where
subordinates
are
inspected
and
judged,
Theory
Y
appraisals
are
more
goal
oriented.
In
some
instances
companies
have
allowed
the
employees
to
set
their
own
goals
and
targets
to
reach
in
a
given
time
period.
Managers
of
the
Theory
Y
style
during
these
reviews
focus
more
on
encouragement
and
positive
feedback,
making
the
employee
feel
a
greater
sense
of
responsibility
and
contribution
to
the
organization.
Brief
overview
of
“Top
and
Bottom
of
Clock”
organizations
Just
like
Theory
X
and
Theory
Y,
the
concept
of
“Top
of
the
Clock”
and
”Bottom
of
the
Clock”
organizations
will
be
discussed
throughout
the
composition.
These
two
terminologies
came
from
the
interpretation
of
the
Organizational
Culture
Inventory
(OCI)
scoring
sheet.
While
the
OCI
will
be
discussed
in
detail
in
another
section,
the

5. FINAL EXAM PAPER
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scoring
system
creates
an
organizational
culture
profile
(see
appendix
A).
This
profile
is
a
circular
diagram
that
resembles
a
clocks
face.
Top
of
the
Clock
Top
of
the
clock
organizations
are
located
in
the
11
o’clock
to
2
o’clock
positions
on
the
scoring
sheet
called
the
Constructive
Styles.
These
styles
include
characteristics
like
achievement,
self-­‐actualizing,
humanistic
encouraging,
and
affiliative.
The
higher
scores
in
any
or
all
of
these
categories
indicate
the
strength
of
the
characteristic
in
the
organization.
Within
an
organization
these
characteristics
are
associated
with
high
levels
of
both
performance
and
job
satisfaction.
Bottom
of
the
Clock
Bottom
of
the
clock
organizations
are
usually
found
in
the
8:00
to
5:00
positions.
These
areas
split
two
different
styles:
aggressive/defensive
styles
and
passive/defensive
styles.
Commonly,
bottom
of
the
clock
organizations
score
high
in
characteristics
such
as
avoidance,
oppositional,
dependent,
and
similar
others.
Bottom
of
the
clock
organizations
tend
to
be
more
power
assertive
and/or
bureaucratic
with
low
levels
of
job
satisfaction.
Motivation
What is motivation, and how does it affect employee productivity? Motivation
can be defined in several ways depending on the context in which it is used. Webster’s
dictionary defines motivation in two ways: “the act or process of motivating; the
condition of being motivated” and “a motivating force, stimulus, or influence” (Merriam-
Webster.com, 2013). The APA dictionary of Psychology has a much broader definition

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of the term motivation. The definition they use that most closely represents the purpose
of this article is: “the act or process of encouraging others to exert themselves in pursuit
of a group or organizational goal. The ability to motivate followers is an important
function of LEADERSHIP” (VandenBos, 2007, pg. 594). Simply put, motivation is the
why in anything that we do.
So what is that special ability to motivate and lead others in the accomplishment
of a goal? What factors and functions do people find that motivate them? This article
will discuss six different theories of motivation. It will give an overview of each of the
theories along with some advantages and disadvantages of each. Finally, this article will
take a personal look into the author’s professional life and examine which of these
theories has been experienced in action.
Classical Theory
In order to fully understand the progression of motivational techniques throughout
time, we must look into the classical theories. These theories are the original ways that
the sciences’ examined the reasons of human behavior. Although there are many others,
the main authors of the classical theories are Freud, Jung, Adler, and Maslow.
Motivation, being a driving force of human action, belongs under the umbrella of
psychology, and one cannot discuss classic psychology without mentioning Freud.
Freud’s studies into the human condition are still misunderstood by many. The
main idea that Freud’s work conveyed is that motivation comes from the “realm of non-
conscious phenomena” (Baum,
et
al., 2007, pg. 63). Freud believed that humans
developed in stages. Allowing for the principles of the id (instincts), ego (moderator
between id and reality), and superego (morality), Freud determined that all humans

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develop through a series of stages. He assigned each developmental stage to a specific
part of the body as they reflected specific needs stages.
According to Freud, the only way for a person to develop beyond each stage was
to find ways of decreasing any associated tensions from the previous stage. The id, being
a purely unconscious factor, was the creation of needs. If a person fails to advance
through the stages, Freud determined that a fixation occurs. When these fixations occur,
they leave a lasting stoppage in the developmental process that has an effect on the core
personality. Freud believed that all behavior, including the motivations behind it, are
found in the unconscious and linked through the personality.
Carl Jung, a student of Freud, created his own theory of human development and
motivation. Like his mentor Sigmund Freud, Jung’s theory is broad, trying to explain the
overall human condition. Jung theorized that the human personality revolved around a
collective unconscious and that all personalities were predisposed to items that Jung
referred to as Archetypes. Jung theorized that human motivation was the direct response
to the body’s use of psychic energy. This energy is distributed to each action on the basis
of the perceived value of the persona. Jung stipulated that there are two purposes to the
use of this energy: primarily, energy uses are for instinctual and life needs while anything
not being used in these pursuits will be devoted to spiritual and cultural activities (Baum,
et al., 2007).
Alfred Adler was another protégé of Sigmund Freud. Adlerian motivation stems
from the belief that, like Freud and Jung, everyone has a unique personality in regards to
motives, traits and values. However, Adler also believed that “man is a social animal and
is motivated by social urges” (Baum et al., 2007, pg. 65). The context of this theory

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details how motivation is not primarily found in personality as Adler begins to show
motivation as a conscious factor. Adler’s theory is based on two major forces: the
striving for superiority and compensating for the belief of inferiority.
The first major scientific contribution to motivation as it related to employment
was Abraham Maslow. Maslow defined a hierarchy of needs that, at the time, explained
why humans were motivated to certain actions. His hierarchy is based on five specific
needs: physiological, safety, social, esteem, and self-actualization. Maslow concluded
that each one of these needs is a driving factor of human responses. The basis of
Maslow’s needs theory, as it related to employee motivation, was two simple principles:
“ 1) man is motivated to satisfy the lowest level of unmet need and 2) a satisfied need
cannot serve as a source of motivation” (Baum et al., 2007, pg. 66).
A key disadvantage to the classical theories is that these theories (specifically
Freud and Jung) are far too broad. These theories originally were focused on the
development of humans in a general sense. Managers today would have a difficult time
not only understanding but also correctly applying the theories. With special
consideration to Freud, if motivation were an unconscious function, then there actually
would be no way to consciously motivate people.
Maslow’s work was the most widely accepted theory of all the classical theories.
The needs hierarchy was utilized by most businesses for most of the early 20th
century.
What made this theory so popular is that it began to give managers an insight into what
made employees want to work harder. However, a major pitfall in Needs Theory is that
“managers have never found a way to really apply the hierarchy to solve actual
motivational problems” (Baum et al., 2007, pg. 67). The classical theories of motivation

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gave us new insights into motivation and human behavior, but they did not actually create
any applications that could have ben utilized.
Dual-factor theory
Dual-Factor theory, developed by Frederick Herzberg, had the basis that job
design itself was a factor of employee motivation. Herzberg determined that the
principles of satisfaction and dissatisfaction are distinct to employee motivation, and he
attached these principles to anchor positions on a spectrum of employee needs. Similar
to Maslow’s Hierarchy of Needs, Herzberg theorized that there is only two major needs:
Hygiene needs and Motivators. Herzberg labeled these two factors as anchors.
Motivator factors measure a level of satisfaction and are related to Theory Y.
When present, these factors create satisfaction; when absent, they create a neutral state
that Herzberg labeled a lack of satisfaction. Motivators are the internal drivers of an
employee. Some examples of what constituted motivators are: pride, personal growth,
autonomy, achievement, and others (Baum et al, 2007).
The Hygiene factors, related to Theory X, are named after the concepts of
community hygiene and are factors that deal directly with dissatisfaction. These factors
occur outside the individual and are directly related to the job itself. When present these
factors create a lack of dissatisfaction; when absent, they create dissatisfaction.
Examples of hygiene factors could be: pay, working conditions, supervision, coworkers,
and others (Baum et al., 2007). Herzberg’s theory stipulated “the most desirable situation
was one where the employee was both satisfied and lacking satisfaction” (Baum et al.,
2007, pg. 72).

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The primary advantage to managers from Herzberg’s theory was the creation of
the job enrichment technique. This two-step process enables managers to first address
any hygiene factors that might create dissatisfaction and then to attempt to redesign the
jobs to incorporate as many motivator factors as possible. This process of incorporating
motivators, or vertical job loading, allows for the addition of higher-level job duties
(typically managerial or supervisory) being added into the jobs. This addition acts to
strengthen the motivators.
Three distinct disadvantages of the Dual-Factor theory have been raised. First,
Herzberg’s theory came under criticism as being “far to simplistic, especially regarding
the minimal role played by hygiene variables” (Baum et al., 2007, pg. 73). Other
disadvantages and criticisms were that the theory was too universal. Managerial
practices cannot have an all-encompassing factor; there always must be contingency
model(s). Critics believe that Herzberg also made an enormous mistake in his theory by
directly associating satisfaction and motivation as identical concepts.
Behavior modification
Being completely a theory X style, behavior modification, also known as operant
conditioning, is a system designed to use a reward/punishment system to create desired
behavior in individuals. In the business world, behavior modification theorists agree on
two principles: “the employee has failed to perform because the manager has failed to
motivate” (Baum et al., 2007, pg.124) and “the reward that is contingent upon good
performance in a given work situation acts as a motivator for future performance” (Baum
et al, 2007, pg. 124). The basis of modification is to utilize four different types of

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reinforcement as they are applied to three different contingencies. These contingencies
are work environment, task performance, and consequences of reinforcement.
The four types of reinforcement are to be used to achieve different results. (1)
Positive reinforcement is the attachment of positive stimulus to desired behaviors in order
that the behavior can be controlled and repeated. (2) Escape conditioning, also called
avoidance learning, is a system used by the manager to motivate an employee to get
through an unpleasant task with the reward of moving (escaping) onto a more pleasant
one. These two types of reinforcement tools are widely considered as methods of
strengthening desired behavior. (3) Extinction is a non-reward repetition that is used to
decrease undesired behaviors. According to B.F. Skinner, extinction when used in
tandem with positive reinforcement leads to the best possible outcomes. The fourth type
is punishment. Punishment is the only negative reinforcement and is solely used to
decrease undesirable behaviors.
The primary advantage of behavior modification is the creation of lasting positive
behaviors when used properly. Many managers use this technique improperly, by using
intuition instead of a purely performance driven method, managers can only create
temporary results. Since behavior modification focuses on positive thinking, there can be
significant increases in employee morale and self-esteem as a result of the positive
feedback. Disadvantages of behavior modification can stem from problems with its
application. Some of these problems can include incorrect application, unnecessarily
harsh punishment, and the occasional undesirable behavior slipping through. Another
problem with behavior modification is the narrowness of its scope. To Behaviorists,

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positive reinforcement is the only factor that can increase the likelihood of repeated
behaviors.
Equity theory
Equity theory is closely related to Theory Y. It is a motivational theory that
focuses on the employee’s views of fair compensation. The basis of equity theory is that
if an employee believes that his level of contribution is equal to the reward that he is
receiving, then he will continue to be motivated to work at that level of production.
However, this theory also incorporates that the employee’s personal reward levels are not
the only things taken into consideration. Being that humans are social animals, Equity
Theory also postulates that a social factor is rendered in the decision on compensation as
well. Employees will not only look at what their personal level of contribution/reward is,
but also at what their co-workers contribution/reward levels are, and how they compare
against each other.
Some of the advantages of equity theory are that it can accurately predict
behavior, it recognizes social comparisons, and that it can be used along with other
theories as a motivational tool. Equity theory models were the first of the models
discussed that incorporated social comparisons into its model. Through these social
comparisons, the theory reflects human behavior on the premise of humans’ inherent
nature of wants. When we see another of our peers with something better than what we
have, we want it and will strive to also possess it.
One key disadvantage of equity theory is that not everyone is equal. Therefore,
for managers, it becomes more difficult to reward employees because of the naturally un-
level playing field. This respective difference in individual performance can create a

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great amount of tension with employees. The theory also does not allow for the
individual differences in social comparison. While individuals notice what their peers
and coworkers possess, it doesn’t always mean that they also covet the same possessions.
For example, where one person might covet luxury items (a $50,000 Rolex watch),
another worker may think that money could be used for something more practical (a car
or a home).
Expectancy Theory
Also known as Path-Goal theory, “the expectancy model assumes that motivation
in the guise of effort is essential for performance; however, it is by no means all that is
required” (Baum et al., 2007, pg.103). Employees must have four key factors in addition
to the standard motivational drive: ability, role clarity, role acceptance, and opportunity
to perform. Expectancy theory can be broken down to its simplest form in the equation
M= (EèP)(PèO)V. This equation states that motivation is a combination of three
different components: effort to performance, performance to outcome, and valence.
Expectancy theory can be either a Theory X or a Theory Y depending on the relevant
rewards. Rewards that are related to Maslow’s needs 1,2, and 3 are predominantly
Theory X; while rewards related to Maslow’s needs 4 and 5 are predominantly Theory Y.
Effort to performance is determined after the employee attempts to figure out
whether or not a task can be accomplished, when the employee determines the amount of
effort he/she has to put towards the goal. Some inhibitors to this determination could be:
job ambiguity, lack of ability, tools and technology, and rules and regulations. The
second assessment an employee makes is assessing whether the performance will yield a
satisfactory outcome. This could be inhibited by either merit systems or managerial

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performance appraisals. Valence is the final stage when the employee adds a value to
that outcome, which has to be relevant to each individual. The main premise of this
theory is that performance, and therefore motivation, are distinctly linked to one’s levels
of satisfaction. There are two levels of rewards intrinsic and extrinsic. Intrinsic rewards
are more closely linked to motivation because they are rewards given to oneself (Baum et
al, 2007).
An advantage of using the expectancy theory is the emphasis on rewards.
Although equally emphasized in equity theory, which is why the two work well when
used together, expectancy theory also focuses on satisfaction as a factor in employee
motivation. One disadvantage to using expectancy theory is that, in reality, rewards are
not directly correlated to performance. There are reward systems that can create tension
such as over- and under-rewarding.
Management by objective
Management by objective, or MBO, is very different from the other theories
because it allows for managers and subordinates to engage each other to determine a set
of objectives that the employee is going to be tasked to complete. According to
Businessdictionary.com “the objectives must meet five criteria: they must be (1) arranged
in order of their importance; (2) expressed quantitatively, wherever possible; (3) realistic;
(4) consistent with the organization's policies; and, (5) compatible with one another”
(2013). Management by objective is strongly a Theory Y perspective due to its increased
flexibility and employee freedom. When managers and employees can agree on goals
and objectives the employee is given both freedom and autonomy to reach his/her
objectives. Managers are only present to establish and support the employee objectives

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not to control the employee. A predominant feature of MBO is that it not only works
well in “top of the clock” organizations, but it can also bring up “bottom of the clock”
organizations that are highly dependent on management and structure.
According to a Scribd.com article, some pros of MBO are: 1) it creates role
clarity; 2) it encourages commitment to goals and clearly defines purposes; 3) it
encourages more effective planning; and, 4) it “forces managers to think about planning
for results, rather than merely planning activities or work” (n.d.). Also, according to
Scribd.com, several disadvantages to MBO are: 1) it can take years to become effective;
2) improper training can hinder those giving appraisals by not giving appraisals properly;
3) MBO can generate a lot of paperwork; 4) if a company’s targets are raised too high, it
creates frustration within employees; and, 5) appraisals by results can hurt companies
when employees set too easy of goals (n.d.).
Experiences
Throughout this author’s career life, I have really only experienced Theory X
styles of motivation. The Walgreens Corporation managers are strongly behavior
modification oriented with a strong preference to punishment as their “attempted”
motivator. That will be discussed more in Section 4. A few other places that I have
worked mostly used hygiene factors as motivators, always allowing for promotions and
financial rewards to motivate employees without regard for personal enrichment. I
remember the words of one former employer who told me once, “better yourself on your
own time, your only role is to make the company money.”

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Leadership
An organization cannot function without a leader. As proper motivation moves
the organization along its path, without stable leadership, that path may not lead to the
desired outcome. John C. Maxwell once said, “A leader is one who knows the way, goes
the way, and shows the way” (Maxwell, n.d.). Unfortunately, the way that leaders show
might lead to ruin as well as riches. In this section, I will discuss four distinct styles of
leadership: Transformational, Transactional, the Managerial Grid, and Situational or
Lifecycle leadership theory.
Before getting into an explanation of the theories, we should explore what really
makes a leader? Are Leaders born or are they trained over time? Fundamentals and
characteristics of leadership can be a long list. A few that quickly come to mind are:
charisma, excellent communication, moral fortitude, innovation, and so on. While all
leaders need to be excellent communicators and willing to fight for what they believe in,
not all leaders necessarily need to be innovators. Charisma can either help or hurt a
leader and the organization that he/she represents. Charisma is a whirlwind of passion,
flair, and magnetic charm. When used positively it can produce leaders like Kennedy,
Reagan, Rockefeller, and Ford. When used negatively however, leaders such as Hitler,
Stalin, Mussolini, and Saddam Hussein can use that power to rein terror.
Let’s go back to the second question: is there such a thing as a natural born
leader? As this statement is normative and up for debate, there really isn’t an official
answer as of yet. While some of the characteristics of leadership may be present in an
individual’s personality, the “how” of being a leader must be a learned trait. It is in my
opinion that from infancy, everything that happens to us is a learning experience. The

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human brain cannot be prewired with a skillset in utero. The human brain is a constantly
evolving center for knowledge. We learn skills from either personal experience or
outside influences (i.e. teachers, mentors, parents); they are not naturally borne to us.
Transformational leadership
Transformational leadership is a style that is highly task oriented based on the
belief that overall corporate objectives will motivate employees to band together to
achieve these common goals. I refer to this style as “Corporate Communism” because of
the aspect that all individuals are equally working towards this common goal regardless
of position in the organization. These leaders are characterized as being visionary risk-
takers who often have a charismatic appeal that motivates and inspires.
Transformational leadership is a Theory Y concept. Managers and leaders that
follow this form of leadership need high standards of ethics and morality. James Burns
(1978) made two key statements on transformational leadership. He stated that
transformational leadership occurs when “one or more persons engage with others in such
a way that leaders and followers raise one another to higher levels of motivation and
morality (pg.20). Later in the same article, Burns (1978) once again refers to morality and
ethics in transformational leadership; “[transformational leaders] are guided by near-
universal ethical principles of justice such as equity of human rights and respect of
individual dignity” (pg. 42)
According to Bernard Bass (1985) three achievements accredited to
transformational leaders are: 1) guide followers to the importance of task outcomes, 2)
encourage followers to transcend personal interest for the organizations needs, and 3)
move followers closer to achieving higher-order needs. Through these principles the

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followers of transformational leaders are more likely to respect, trust, and show increased
loyalty to their leaders, all of which aid in increasing motivation and production. Bass
(1997) also alluded to four categories of behavior exhibited by transformational leaders:
idealized influence, individualized consideration, inspirational motivation, and
intellectual stimulation. These principles allow leaders to: serve as outstanding roll
models, articulate an appealing vision and challenge followers to achieve it, question old
assumptions and stimulate new perspectives, and provide a supportive environment for
their followers (Bass, 1997; Northouse, 2007).
Five advantages for the use of transformational leadership are: 1) Leaders that use
Transformational Leadership emphasize community. It is this emphasis that encourages
the collaboration needed to be a successful organization, no one individual can do
everything, or to use a well–known historical motto “united we stand, divided we fall”; 2)
Transformational Leadership shows great adaptability. This adaptability is not only for
the overall business operations, but also in the way that leaders can support the
enrichment of their followers; 3) There is a great amount of stability in the leadership
levels of organizations that use transformational leadership techniques; 4) The emphasis
is on cooperation; and 5) Transformational leaders must adhere to the highest standards
in morality and ethics.
Disadvantages of Transformational Leadership are:
1) Transformational organizations can become overly dependent on their leaders. When a
leadership starts to decay, the entire organization will decay with it as the followers will
no longer be motivated by leadership and there will be nothing to replace it;

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2) Conformity bias exists within these organizations. Some workers may work better
individually instead of within the confines of a collaborative environment, which renders
these potentially high value employees constrained;
3) Along with the conformity bias, Transformational Leadership also puts pressures on
over– and under–producers. The pressure of this bias refers to the established
“community” of workers where overachievers may feel held back and under performers
may feel that they are being pushed too hard; and
4) It is difficult to measure when cooperation becomes conformity or the act of just
“following the crowd.”
Transactional leadership
In direct opposition to transformational leadership, transactional leadership is a
strong Theory X method of leading. Transactional leaders are basically organizational
dictators. These leaders use a strong reward/punishment system and demand the
unmitigated obedience of their subordinates. Like the classic theories described above,
transactional leaders believe that subordinates are not able to self motivate and need
direct supervision to stay productive. Accordingly, transactional leaders motivate and
direct by appealing to their followers own self interests, thus the reward/punishment
methodology. This leadership style is most commonly found in organizations that have a
well-defined organizational hierarchy. This level of hierarchy is crucial to the theory
because it creates the distinction between “master” and “subordinate”.
According to Bass (1997) and Northouse (2007) transactional leaders have three
categorical behaviors:

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1) All management functions are contingent on reward. Transactional managers offer
rewards in order to achieve the desired outcome;
2) Managers lead with an active style of management by exception. This active style
allows managers to not only observe their subordinates behavior, but also to take
corrective actions when subordinates are not performing;
3) Managers also lead by taking a passive style of management by exception. This
version of manager sits idle and does not intervene until a serious problem occurs, thus
ignoring his/her responsibilities to subordinates.
Although this style of leadership may seem harsh, it does have advantages to its
use. One such advantage is that it is extremely simplistic, allowing for very little formal
training and easy execution. Second, the ease in distribution of the reward/punishment
system makes it easier to evaluate subordinate behavior, and control production output.
“Transactional leaders are found to be quite effective in guiding efficiency decisions
which are aimed at cutting costs and improving productivity”
(managementstyleguide.com, 2012). Lastly, due primarily to the efficiency of having a
one set supervisor making all the decisions, transactional leaders can be beneficial to
organizations that run on short deadlines.
The strictness of the management and the enforcement of the organizations
inflexibility can be a disadvantage to this particular leadership style. Transactional
leaders who use reward/punishment-based approaches to force the organizations will on
their subordinates all to often disregard the emotional and social values of those
subordinates. This disregard for their value, at the very least, detracts from morale. This
lack of interest in the emotional growth of subordinates manifests itself in transactional

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managers’ belief that people are only motivated by rewards or punishments. This style of
leadership can be extremely exploitive. Finally, transactional organizations have a strong
dependence on a small group of leaders. This small pool is similar to an exclusive club,
as members move on; it is difficult to introduce replacements.
Managerial Grid
Created by Robert Blake and Jane Mouton, the managerial grid is a self–
assessment inventory used by managers to discover what their management style is.
Each management style is plotted on a chart, or “the Grid” (see appendix B) and each of
the five location points are associated with a different management style. On the grid,
there are two measurable components: the vertical (Y) axis measures a manager’s
concern for people; the horizontal (X) axis measures a manger’s concern for production
or results.
The five points of the grid are numerically plotted. Point (1,9) is called the love
conquers all, or country club approach. These managers are high in people orientation
and low in results orientation. These managers are the people pleasers. They believe that
motivation comes from being overly focused on their peoples’ needs and making sure
that they are happy workers (i.e., the boss that brings donuts every morning for his/her
staff). Its direct opposite is point (9,1) called authority obedience or task management.
These managers are characterized as being highly results driven with very low concern
for their people. Task managers consider their employees as just a means to an end in the
production line (Smith, J, Sorenson, P, 2013).
The lowest form for managers on the grid is point (1,1), the hard to notice or
impoverished management. These managers have low concern for both results and their

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people. There could be different reasons for why managers would end up at this point on
the grid. Two examples would be that either the managers were improperly trained or
under qualified or they are reaching the end of their careers and just holding out till they
leave the organization. The opposite and most wanted point position is (9,9)
involvement-participation commitment or team management. These managers score high
on both people and results. Managers with these characteristics are empowering their
followers to achieve not only the organizational goals, but personal goals as well (Smith,
J, Sorenson, P, 2013).
The fifth point on the grid is directly in the center of the grid (5,5) and is called
middle of the road or status quo. These managers are mediocre managers who are just
there to try to reach a balance and not to make any waves or push any boundaries. Two
additional styles have been added since the original model. These styles are called
opportunistic style or OPP and paternalistic style or PAT. Opportunistic managers are
managers that can adapt any of the five style points on the grid to any situation and thus
continually change management styles to fit their particular needs. This form of manager
is someone who doesn’t care how it gets done, just that it gets done and done correctly.
Paternalistic managers are manages that migrate from position (1,9) to position (9,1).
They praise good performance but will discourage their followers from thinking outside
the box.
The Managerial Grid uses a combination of Theories X and Y. The points on the
grid associated with Theory X are (9,1); (1,9); (1,1); and (5,5). Point (9,9) is the only
point on the Managerial Grid that is associated to Theory Y (Smith, J, Sorenson, P,
2013). Two advantages of using the managerial grid are that it is highly used and that it

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measures personal performance. A key disadvantage is the assessment itself. Being a
self-assessment, the participants are rating themselves, which creates a bias. Also the
inventory does not take into consideration the views of others with whom you interact,
the business environment, or other variables to leadership.
Situational Leadership
To correct some of the disparities of the managerial grid style, Paul Hersey and
Ken Blanchard adapted the situational leadership theory or life cycle theory. While
Blake and Mouton focused primarily on what type of leader you were, Hersey and
Blanchard focused on the question of “how do I lead?” Their model is based on the
assumption that there are different leadership styles for different situations. This model
takes your employee competencies and helps you align your leadership style to their
unique ability level.
Similar to the managerial grid, the situational leadership model is placed on a
four-quadrant grid (see appendix C). However, unlike the managerial grid where you are
fixed on a specific point, situational leaders move in a fluid motion throughout the four
quadrants depending on the skill level of each employee. Employee skill levels are set
into a similar scale of four levels (appendix C): D1, D2, D3, D4, where the D stands for
development level. An employee develops throughout his/her career life as they would in
natural life, hence life–cycle theory.
Level D1 is called unconsciously incompetent. This level is reflective of new
employees who have no knowledge of the task; therefore they are insecure about
performing the task. D2 level is consciously incompetent. This second task relates to
employees who are unable to complete the task, but who are willing and confident

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enough to try. The hardest transition for the employee is the transition from D2 to D3.
D3 is consciously competent. These employees are able to complete the task but are
unwilling and insecure to face it without assistance. The final stage is the D4 or
unconsciously competent. These employees are fully trained and can operate
independently and effectively.
The managerial side of the grid is reflective of two managerial behaviors: task
direction and relationship. These two behaviors change from low to high depending on
the maturity, or development, of the employee. Managerial quadrant S1, or directing
leadership style, relates to managing the D1 level employees. This style shows high
levels of task (direction) and low levels of relationship. Found primarily in
micromanagers, this style allows for constant supervision in all tasks with little relational
behaviors.
S2 quadrant, or coaching style, is used when employees are in the D2 level of
maturity. This style of management still relies on high task direction but now entails a
higher level of relationship behaviors. Using this increases the level of two-way
communication between the manager and subordinate, but it still maintains a higher level
of instruction. One good use of this style is working with interns. S3 quadrant, or
supporting style, manages employees in the D3 level. As much as the hardest shift for
employees is from D2 to D3, the shift from S2 to S3 is the hardest for managers. These
managers are now high in relationship behaviors and low in task behaviors. Managers in
this category work closely with teams and potentially share decision-making roles. The
final level of development for both managers and employees is the S4, or delegating
style, as it associates with the D4 level of maturity. Managers at this level are both low in

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relationship and low in task direction behaviors. This manager is confident his
subordinates can complete their projects without his/her supervision. This frees the
manager to focus on other organizational aspects.
Life cycle theory is the most used form of leadership model and has several
advantages. One advantage is that the theory is so simplistic that it can be universally
applied to any business model. Situational leadership theory also focuses on the maturity
and competence of employees in relation to management styles. A key disadvantage of
this model is that it may not be applicable to all leadership roles within an organization,
such as administrators. There may also be situations, such as time constraints or task
complexity, where this model could be ineffective. Whichever leadership style one
chooses to use for their current organization, a true leader is adaptable to each situation.
As ancient Chinese philosopher Lao Tzu (n.d.) said: “when the effective leader is
finished with his work, the people say it happened naturally”.
Organizational Structure
Leadership and motivation are pivotal components of production within an
organization. What aspects decide who leads, the arrangement of those that lead, and the
overall arrangement of the organization? Organizational structures explain the basic
foundations of organizations and set up the “corporate ladder”. This section will look at
three different organizational models; mechanistic organizations, organic organizations,
the 4 systems model, and a discussion on the principles of the Differentiation–Integration
model. Works of Paul Lawrence, Jay Lorsch, Tom Burns, and Joan Woodward will also
be discussed.
Contingency theory

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Theorist Joan Woodward (1958, 1965) adapted a contingency theory to
organization structure. In general contingency theory, also accredited to the works of
Burns, Lawrence, Lorsch, and Stalker, maintained that there is no single correct structure
for any organization, they should be organized contingent to their internal and external
environments. Woodward (1958) argued that organizational developments should be
reflective of the technologies available. These certain types of technologies could
determine areas of structural organization such as span of control, centralization of
authority, and the formalization of rules and procedures.
Mechanistic organizations
Theorists Tom Burns and G.M. Stalker identified two basic forms of
organizational structure. Their research labeled these two forms as Mechanistic and
Organic. The Mechanistic model is a strongly Theory X model that is the classical
structural design. Primarily found in manufacturing and production firms, this type of
organization thrives on environments with institutionalized hierarchies and gradual,
incremental changes (Birnberg, Sisaye, 2012). These companies have low task but high
departmental differentiation and large divisional units that act independent of each other.
Some examples of mechanistic cultures would be: chain restaurants, postal and parcel
services, assembly companies, retail, and government agencies.
Mechanistic organizations are highly bureaucratic in nature. This bureaucracy is
established through a several-layered hierarchy containing both horizontal and vertical
arrangements. One way to describe a mechanistic hierarchy is the traditional pyramid
design of corporate structure. The pyramid design of organizational structure has a “top-
down” approach in the flow of information and all key decisions are made only at the

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higher levels of the hierarchy. In architecture, the pyramid is one of the most stable
designs you can construct; in business, pyramid organizations share that same stability.
This stability makes mechanistic organizations very attractive to transactional
leaders. As stated in the last section these leaders are the “dictators” of the business
world. They, like the mechanistic organization, are highly structured and don’t respond
well to rapid changes in their environment. Mechanistic organizations, through their
hierarchical structure, create a highly institutionalized management control systems.
These controls are based primarily on the scientific management principles of
McGregor’s Theory X model.
The pyramid structure of a mechanistic organization allows for extensive
differentiation and departmentalization throughout the organization. This extensive
differentiation can minimize the exchange of information throughout the company. Often
times in this structure there is not a departmental bridge to allow the flow of information
from one department to another, for example from the research and development
department to the production department, to the sales department. In a mechanistic
organization these three departments will be separate entities within the organization, and
often not even be in the same building. This departmentalization extremely limits
interdepartmental cooperation, which could hinder production, sales, and/or profitability.
Organic organizations
In sharp contrast to the highly structuralized mechanistic organizations, organic
organizations are highly adaptable and free flowing. The term organic was used as a
reference to nature. In nature something has to readily adapt to sudden changes in its
environment if it wishes to survive; organic organizations are established under this same

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principle. While mechanistic organizations are a Theory X subtypes, organic
organizations are completely Theory Y. This style of organization is characterized by
high task differentiation, high integration, and limited use of divisional units. Examples
of organic organizations would be; technology firms, marketing firms, and other
organizations that need to be highly adaptable to the ever-changing marketplace.
Organic organizations do not necessarily have vertical hierarchies in their
organizational designs. However, organic cultures are comprised of a horizontal
structure of hierarchies. This allows for a more open communication stream to flow from
person-to-person. Horizontal only organizations have several attributes that differ from
the vertical and horizontal structures. These characteristics are: little departmental
differentiation, limiting of the chain of command, minimal bureaucratic features, and the
decentralization of the decision-making process.
This horizontal structure and limited bureaucracy is perfect for transformational
leaders to flourish. Transformational leaders are the highly adaptive, community
conscious, charismatic leaders with the belief that all individuals are equally working
towards a common goal, regardless of their position in the organization. These leaders are
the visionary risk-takers that are needed to effectively navigate an organization through
rapid changes in the marketplace environment.
In contrast to the pyramid structure of the mechanistic approach, organic
organizations horizontal structure facilitates open channels of communication throughout
the entire organizational structure. This free exchange of information both increases and
encourages departmental cooperation. Departmental coordination integrates the
organization together so that output can run smoothly from process to process.

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The high task differentiation of organic structures allow for specialized groups to
work in key areas to increase response time and efficiency. This improvement in
efficiency allows for increased productive outputs and faster problem response times.
These specialized groups are the basic component of these organizations decentralized
decision-making cores. With organic structure, decisions are not limited to upper
hierarchies holding the primary power of decisions. Given the uncertainty and dynamic
atmosphere that organic organizations work in, there is a need to involve everyone in the
decision process, especially the lower level members.
4-systems model
Dr. Renesis Likert originally designed the 4-systems as a model for management
and leadership. The effectiveness in those roles allowed the model to be altered for use
in the development of organizational structures. The four systems are: 1)
exploitive/authoritative, 2) benevolent/authoritative, 3) consultative, and 4) participative.
Managers of each system respond differently in regard to confidence in their
subordinates, rewards systems, communication, decision-making tactics, and goal setting.
This section will replace the word “manager” with the word “organization”. As it relates
to both the theory and this composition the two words have become interchangeable.
System–1, the exploitive/authoritative system, is the first of the systems based on
McGregor’s Theory X. This system is a classic mechanistic style organization, and
would be fitting of transactional or other Theory X style leaders. System–1 organizations
show no confidence in subordinates to make decisions with all decisions made at the top
levels of the organizations. They use a reward/punishment system that punishes more

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than rewards. These organizations have vertical communication channels that always
flow from “top–down”. All goal setting is issued from this same channel.
System–2, the benevolent/authoritative system, is the second of the systems based
on McGregor’s Theory X. This system is still a mechanistic style organization, and
would be fitting of Theory X style leaders. System–2 organizations show condescension
to subordinates and assume a master/servant style relationship with them. Decisions are
made at the top levels of the organizations, with smaller decisions allowed at lower
levels. They use a reward/punishment system that rewards more than punish. These
organizations have vertical communication channels that flow from “top–down”. Goal
setting is issued from this same channel; however, lower levels may have an opportunity
to comment on the goals.
System–3, the consultative system, is the first of the systems based on
McGregor’s Theory Y. This system begins the transition from a mechanistic to a more
organic style organization, and would be fitting of either Theory X or Theory Y style
leaders. System–3 organizations show substantial confidence in subordinates but still
wish to maintain control of decisions. Broad policy decisions are made at the top levels
of the organizations while more specific decisions can be made at lower levels. System–3
organizations use a rewards system with occasional punishment and show increased
involvement with members. These organizations have vertical communication channels
that move both down and up the chain. Goals are set after discussions with subordinates.
System–4, the participative system, is almost McGregor’s Theory Y in practice.
This system is completely an organic style organization, and would be fitting of
transformational or other Theory Y style leaders. System–4 organizations maintain

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complete confidence and trust in their subordinates. All decisions are made through all
levels of the organizations by utilizing integrated, overlapping groups. They use a reward
system with complete involvement. Management aids in setting and achieving personal
goals of members. These organizations have open flow communication channels. Goal
setting involves the collaboration throughout the organization with exception of
emergency situations.
The relationships between the systems relate to three leading variables: causal,
intervening, and end–result. Causal variables do not differentiate between high and low
level systems and are comprised of managerial behavior, organizational structure, and
subordinate behaviors. Causal variables interact with the intervening variables of
perception, communication, motivation, decision-making, control, and coordination.
Intervening variables differentiate between high and low level systems, where lower level
systems are based on compliance and fear. The combinations of these two variables lead
to the end–result variables of health/satisfaction and production/performance. Two
potential difficulties among these relationships are that there are an infinite number of
feedback loops at any level and the element of time is not factored into the model.
Differentiation–Integration
Differentiation was defined by Paul Lawrence and Jay Lorsch (1967) as: “the
state of segmentation of the organizational system into subsystems, each of which tends
to develop particular attributes in relation to the requirements posed by its relevant
external environment” (pg. 3-4). In organizational design, differentiation is simply a
formal system of labor division. Lawrence and Lorsch (1967) also define integration as:

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“the process of achieving unity of effort among the various subsystems in the
accomplishment of the organization’s task” (pg. 4).
The differentiation–integration model maintains four attributes of organizational
subsystems: degree of structure, orientation of members toward others, time orientation
of members, and goal orientation of members. Structure refers to number and types of
levels within an organization and how they are all connected. Orientation of members
consists of the measurements of interpersonal style of the members of each subsystem
according to the Least Preferred Coworker instrument developed by Fred Fiedler. Time
orientation attribute refers to the results of time spent working on activities that would
directly affect the organizations profit margin within a specific period. Finally, goal
orientation specifies that each subsystem would develop goals that are relevant to their
unique sub–environment (Lawrence, Lorsch, 1967).
Throughout organizations, different divisions become subcultures and
subenvironments unto themselves. Even though they are all working towards the same
organizational goal, one organizations sales, production, and research and development
divisions could be completely independent of each other. Conflict in organizations
comes from differences and interdependences between divisions. In the example above,
the sales division is different from the production division. However, the production
division is both different but interdependent on the research and development division.
The conflict arises when the departments fail to interact with each other. While
controlled and resolvable conflicts are useful in business dynamics, unresolvable
conflicts can be detrimental.

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As differentiation increases so must integration. Although the more differentiated
the organization is the harder it is to integrate. One way to assist in the integration
process is to create cross-functional teams. Cross-functional teams go through several
stages in their own development. The first stage is the liaison stage. This develops into a
task force or temporary team. Task forces eventually grow into permanent teams. These
permanent teams become a matrix and can act as their own division that is fully
integrated into the organization.
Real world implementation
In this section I will looking into my own organization for the purpose of analysis
and hypothetical restructuring utilizing the principles, theories, and inventories discussed
in Benedictine University MGMT/MBA 530A, EDUC650A Organizational Behavior
class winter 2013 term. As I am only a low level employee in my organization and have
little information on the day-to-day workings of the corporate office I will be discussing
this perspective as if I was in a position such as a store manager or district manager. This
section will be split into two parts an evaluation and analysis of the company as it stands,
from my and fellow employees perspectives, and the identification of strategies that may
be used to optimize the performance within my division.
Company overview
I have worked for the Walgreens Corporation for 10 years and have seen a steady
decline in several areas throughout my time there. I will talk about the company from the
perspective of myself, fellow employees (who wish their names and stores to remain
anonymous), and from a web community called Glassdoor.com, which allows employees
to review their companies anonymously. At this point I would like to clarify that I will

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be talking about things that are related to my specific store/district as well as some
policies that have come down from the corporate office. When discussing
corporate/chain–wide policies I will label them as such. As a final disclaimer; when
talking about store level issues I will ask that the reader keep in mind that situations and
experiences may vary from store to store and these do not necessarily reflect the entire
chain of stores equally.
The Walgreens Corporation calls itself “the pharmacy America trusts” and they
can say this with relative honesty. Walgreens is one of, if not the oldest, retail
pharmacies in America at approximately 112 years old. The Walgreens corporate
structure is highly mechanistic. The organizational structure is graphically represented
by the classic pyramid design from the board of directors down to the lowest clerk.
Walgreens also maintains many divisions of its brand that are differentiated. Some
examples include: Walgreens brick and mortar stores (further divided by state, region,
and district), Walgreens.com web-store, distribution centers, online pharmacy, and so on.
All these divisions can, and often do, function independently from each other with the
exception of the interdependency of the brick and mortar stores and the distribution
centers.
At the store level there is even more differentiation. Stores are further separated
into divisions. Management, pharmacy, Photo, Cosmetics, SIMs (System Inventory
Management), and clerks all represent the levels of the store. Inside of each division are
smaller hierarchies comprised of department heads and associates. Information systems
always flow from the top down, characteristic of this organizational structure with limited
decisions being made at the lower levels.

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At the operations level, the Walgreens Corporation follows Likert’s system–2
model of organizational/managerial systems. Like the mechanistic approach, information
flows downward from the top. All policies are dictated from corporate, while the store
levels can make minute changes to fit their locations. Evaluations and reviews are
reward/punishment based. Corporate and other higher-level individuals seem to have a
condescending attitude towards subordinates and lower level employees. The apparent
overall affect of the management systems on employees is one of bureaucratic order and
master to servant mentality.
Now that I have covered the overview of the corporate structure, it is time to
discuss the existing situation within the company. I have decided to split this into four
sections: 1) management, 2) employee motivation, 3) corporate level issues, and 4)
operational issues. A reminder of the disclaimer, this material comes from a slightly
closed perspective, mainly my personal store, the district office, and in other employee
comments I found online in the web community of Glassdoor.com. Walgreens as a
company seems to, in the broadest sense, not be very favorable with its own employees.
When you type in the search “I hate Walgreens jobs” into Google™ you get
approximately 16,200,000 results. Most of these results are blogs and communities of
both customers and employees. When you type in the opposite search “I love Walgreens
jobs” in the same search engine the results are only 3,050,000.
The management in my store is classic Theory X management. Bureaucratic
hierarchies and systems aim to control all subordinate behaviors. This stores particular
managers operate between Likert’s system–1 and system–2 and are more transactional in
their leadership approach. Management seems both under qualified and improperly

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trained. Several of the managers, including the store manager are not even college
graduates. This particularly effects their interactions with any subordinate that may hold
advanced degrees.
Performance evaluations are based on the system–1 levels of reward/punishment
systems. However, this particular manager uses favoritism in dealing with certain
subordinates. Favoritism creates an “elitist” class within the store, where those that
belong can invariably do anything and those that don’t get punished severely. This
elitism also affects the work output of each subordinate. The “in–crowd” are allowed to
slack off leaving the employees that actually produce more work to take on. This
transactional level of over expectations drives the managers to create unpleasant work
environments and punish those that cannot keep up with their demands. The approach to
management at this level of organization is delegation; the managers delegate all tasks
out and do very little work themselves. This lack of responsibility and motivation effects
subordinate motivation and morale as well.
Employee motivation in our store has degenerated into a “monkey-see, monkey-
do” mentality. When employees see that their leaders are not doing any work, they will
also slack off as well. At my particular store this also relates back to managerial
favoritism. The managers “friends” have no accountability. These problems destroy
production on all levels. Employee morale has also declined rapidly due to massive
changes at the corporate level over the years.
Corporate policies such as the new salary caps and the redesign of positions at the
store level are deflating employee morale quickly. Under the new salary cap and position
restructuring policy, specialty designations are removed. Where one might have been a

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Certified Photo Specialist or Beauty Advisor, now they are just Associates. Even the
Management Trainee or Assistant Manager position is being phased out. With all these
changes the most common issue that I have noticed employees speak about is job
security. To increase the discomfort from the lack of job security, salary caps are now
being put into place.
These caps affect every level employee in similar ways. The most detrimental
way for example is that if you are currently making more than your position, you’re your
pay will automatically decrease to that cap and never increase until the cap increases.
The example given to us in the staff meeting about this change was:
Say that you are photo associate currently working at $13.00 hourly regardless of
experience. When the new salary caps start your position will change to be
“Associate” and the salary cap for an associate is $11.00 hourly. Being that you
are over your salary cap for your position you will have to take a mandatory pay
cut to whatever the caps level is. While you are at the salary cap level you will
not be eligible for any raises until the salary cap itself is raised or you become
promoted to a higher level.
That is how the salary caps were explained to us.
Also pertaining to positional restructuring we were told that “department heads
will stay the same, Management Trainees will have the option to become ‘Team Leads’
there will only be 2 team leads per store, Executive Assistant Managers will become
assistant managers and there will only be 4 per district or ‘community’.” Given this
information and the number of managers currently in the Walgreens system, this new
structure will increase the difficulty and unlikelihood of promotions. If you want to

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move up in the company outside of store level, you can’t. On several occasions multiple
people at our corporate office have told me “Walgreens does not hire store level
employees to fill corporate level openings”.
Operationally our store is highly ineffective. High employee turn around (our
store itself has lost approximately 20 employees to transfers, terminations, or voluntary
leaving since the current manager has taken over) has created an organizational
nightmare where we spend more time training new employees than actually being
productive. Failing inventory control management and flawed ordering practices are
increasing our inventory and costing us budget dollars that could be beneficial elsewhere.
Although, the corporation is slowing resolving this problem, outdated equipment is
hindering our ability to fulfill our duties. According to several anonymous members on
the web community Glassdoor.com (2013) one of the largest operational problems was
that procedures seem to differ from store to store and that there are no particular set rules
governing overall store operations.
Performance optimization strategies
In this section I will institute to the best of my knowledge and training a program
to optimize my organization at the store level. As the overall goal is to increase
efficiency and production, as well as create a friendly and positive work environment I
will begin by collecting data through the proper use of survey inventories. While the
corporation currently uses surveys to assess employee’s feelings about the job in general,
their personal job satisfaction, and their direct supervisors review, these surveys do not
actually change anything and are even viewed by the employees as a waste of time. This
view also creates a bias in the survey results because they are not taken seriously.

39. FINAL EXAM PAPER
39
In order to better establish the employee’s views of their own jobs and the
corporate culture as a whole I would use the Organizational Culture Inventory (OCI) and
Job Diagnostic Survey (JDS). Introduced in the overview section the OCI is comprised
of 120 descriptive statements of behaviors and personal styles either expected or
implicitly required of members of organizations. After the participant ranks them on a 5–
point scale of relevance to their organization they can be scored and a culture pattern
becomes visible. Individually this information is not worth much, but if you average out
the scores of the entire group, you will have a good assessment of how your members
view the culture of the organization.
The JDS is a five–section assessment. According to JDS designers J. Richard
Hackman and Greg R. Oldham (1974):
The instrument described here specifically was designed to be useful both in the
diagnosis of the characteristics of jobs prior to their redesign, and in research and
evaluation activities aimed at assessing the effects of redesigned jobs on the
employees who perform them (pg. 2).
The questionnaire covers descriptors of your job; how you feel about your job;
measurements of job satisfaction; and a list of several characteristics that you are to rate
in order of which ones would you like to have present in your job. This information will
allow me to see where dissatisfaction is and what characteristics to try to work into the
new job designs to increase employee motivation.
Once those baselines have been established I can work toward changing the job
structure, starting from the top down. Management in this location is the first division
that needs to be redesigned. A special survey, Supervisory Attitudes: X–Y scale, will be

40. FINAL EXAM PAPER
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used within the management division to ascertain where on the spectrum they fall. The
ultimate goal is to shift slowly into a more Theory Y system-3 leadership approach, as the
corporate structure will not allow for a complete shift to system-4. Within this shift
several factors will need to be removed. Managerial favoritism and special privileges
need to be removed and employees will need to be treated on a more level playing field.
Expectations need to be redirected and lowered to a more reasonable, but still productive
level, as to not create unnecessary dissatisfaction. Improper training in management
should be fixed with training seminars and future screening changes in the hiring process.
Motivation, both managerial and non-managerial is a serious problem in this subsystem.
Another inventory can be used here. The Measuring Motivation using
Expectancy Theory survey can be a useful tool to assess “why employees are motivated
or not, what the strength of motivation is in different parts of the organization and how
effective different rewards are for motivating performance” (Baum, et al., 2007, pg.717).
Administered by a third party consultant this inventory will not only show how to
increase motivation, but subordinate answers may also aid managers to lower the
turnover rate at store level and potentially retain effective employees.
Turnover is another major issue inside of this subsystem, and hypothetically
throughout the entire organization. While the retail world commonly experiences high
turnover, any organization should be attempting to retain high achieving employees.
Thomas Head and Trina Lynn Stone complied a survey on managing turnover. Their
conclusion was that, while you cannot eliminate turnover completely, you can control
negative turnover by establishing a corporate culture based on three principles:

41. FINAL EXAM PAPER
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1. Creates an environment where each individual feels comfortable, secure,
and appreciated;
2. With jobs that challenge the individuals to grow and improve while at the
same time provide a sense of responsibility and achievement;
3. And rewards the individuals with praise, financial enumeration, and a
collection of benefits that satisfy the employee’s needs (Baum, et al.,
2007, pg. 630).
The establishment of these principles through the redesign of job descriptions, cross
training, establishing leadership development programs, and working within budget
availability can potentially decrease the loss of effective employees.
Lastly, on the corporate level, the organization needs to do some restructuring of
broad policy initiatives. Three distinct changes that need to be made on an organizational
level would be:
1. Increases in retail location budgets will ensure that optimal coverage is
possible at the front–end retail level. This will increase customer service
times and costumer satisfaction rates. These increases will increase sales
and consumer traffic through our locations.
2. Close unproductive and underproductive stores. Walgreens as a company
has taken the saying “there’s a Walgreens on every corner” to literally.
Walgreens locations, especially in the Chicago-land area, are so close
together that Walgreens are competing with other Walgreens. If you go to
Walgreens.com and search for stores in the zip code of 60516 you will

42. FINAL EXAM PAPER
42
find 10 stores within 3.5 miles of that postal code, some are even only a
few miles apart on the same street.
3. Create proper rules and regulations that are universal for Walgreens store
practices and enforce them. Stores cannot operate independently within a
non-franchise corporate structure.
Article Review
Article 1
The first article is entitled 11 simple concepts to become a better leader and was
written and posted online by Dave Kerpen (2013). As a CEO, best selling author, and
keynote speaker; Kerpen asserts that being a good leader can stem from your likeability.
After several interviews with successful business leaders Kerpen established a list of
what he considers to be the 11 most important principles of leadership. These 11
variables are:
1. Listening
2. Storytelling
3. Authenticity
4. Transparency
5. Team Playing
6. Responsiveness
7. Adaptability
8. Passion
9. Surprise and delight
10. Simplicity

43. FINAL EXAM PAPER
43
11. Gratefulness
Above all else, Kerpen also cites the “golden rule” as an ever present respect for leaders.
These 11 principles are Theory Y principles of leadership. Each of these
principles allows for the manager to respect the subordinates underneath them and give
them the common courtesy and respect that they deserve. Great leaders need to be able
to feel that they have a connection to their subordinates and visa versa. It is through this
connection that the leader has the ability to truly lead. While any leader can bark out
orders and command obedience, true leaders get their people to do what is required out of
their own personal want to do it.
These 11 principles, as arranged by Kerpen, show that the best leaders can use
several aspects to achieve a connection to their workers. That connection builds
professional relationships that allow for workers to work with them and not just for them.
This is the heart of Theory Y management. Through encouragement, motivation, and
mutual understanding with your members, a leader can become successful.
Article 2
Article 2 is When teams can’t decide by Bob Frisch printed in the November 2008
Harvard Business Review. Bob Frisch (2008) discusses an issue in business decision
making that he calls “ Dictator-by-Default”, which is when corporate team members
cannot reach a decision and the CEO has to make an executive decision that is usually
against the popular opinion. He alludes to the “voting paradox” where no matter what
your trying to decide on, the more people you have and the more options there are; one
will never reach a unanimous majority. Frisch (2008) gives five tactics that he finds will
improve decision-making. The five tactics are: 1) specify the desired outcome, 2)

44. FINAL EXAM PAPER
44
provide a range of options for achieving that outcome, 3) test fences and walls, 4) surface
preferences early, and 5) assign devil’s advocates.
In the corporate world a team’s decision-making ability is a key factor in
operating a business. When a company cannot decide what direction to go or how to
precede the business might fail. Having the ability to be able to have your decision-
making groups work effectively is imperative. Group dynamics play a solid part in the
decision making process. Everyone has different opinions and different motivations to
seeing things accomplished, hence the “voting paradox”.
While no manager can ever fully eliminate the paradox, constructive leaders will
adjust to allow for a focused decision making process. By allowing for a more focused
discussion with a broad spectrum of what needs to be accomplished and several ways to
accomplish it, it is more likely that a decision can be reached that will be acceptable. A
key element in the avoidance of deadlock in a decision process is the articulation of the
desired outcome. Group dynamics in most cases will allow members to more rapidly
agree on goals if they are thoroughly understood.
Article 3
Paul Rodgers and Marcia Blenko’s (2010) article who has the D? deals with the
role clarity in organizational decision-making processes. Their article found that one of
the most common problems in business decisions is the ambiguity over accountability.
The lack of defined roles led them to develop a model that they called RAPID. This
model focuses on decision-making role assignments. RAPID is an acronym for these
assignments: recommend, agree, perform, input, and decide. They also discuss a few
decision-roll pitfalls to avoid when utilizing this model.

45. FINAL EXAM PAPER
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The key to business is decisions than the person that makes the decisions can
directly impact your success. As a leader you not only have to make the decisions, but
sometimes you have to decide who else gets to make them too. Role ambiguity in
business can be disastrous. Defining roles within group decision-making allows for
multiple views to be seen throughout the process. This type of decision-making is more
common in organic organizations with Theory Y leadership structures. While the authors
state that the acronym RAPID was only for the sake of ease of remembrance and was not
the order in which the process flowed.
The main point of the article is that you need to be both careful and clear when
assigning who makes the final decision (who has the D) so that other people do not
assume that they have it. Clearly defined organizational roles, decision-making or
structural, allow for the organization to move from project to project swiftly and
effectively. Along with any decision type, negotiation is always key in role assignments;
proper assignments should be considered thoroughly before any initial decisions are
made.
Article 4
David Garvin and Michael Roberto’s (2001) article entitled what you don’t know
about making decisions discusses two types of decision-making styles; advocacy and
inquiry. While advocacy is seen as being the least productive approach, inquiry is the
most productive. In order to use the inquiry method of decision-making one must
promote constructive conflict, accept ambiguity, and reach a balance of divergence and
unity throughout the entire process. The leader of the group must also master the “three
C’s” of decision-making: conflict, consideration, and closure.

46. FINAL EXAM PAPER
46
Advocacy is a more direct and Theory X style of persuasion where one member
tries to elevate his/her idea above another’s in order to have their idea validated. This
method tends to have people play to the strengths of their ideas. Advocates also tend to
avoid other, especially conflicting, views. Inquiry method followers are more open to all
views and consider a variety of options. These deciders work together in groups using
creative thinking to find solutions. Inquiry deciders are Theory Y deciders and are most
likely in organic organizations that thrive on group atmosphere.
Incorporating multiple views into the decision making process allows for a more
complex solution. Not all single idea solutions can fit all situations. The encouragement
of constructive conflict and the considerations of all team members create an
environment that encourages both personal and organizational development. One does
not want to reach a conclusion either too early or too late. Decisions that are reached to
early can stifle creative organizational solutions and when deliberated for too long can
stagnate and become unstructured.
Article 5
The Article how management teams can have a good fight explores the value of
constructive conflict in organizations. The key to maintaining constructive conflict is to
mitigate all conflicts when they turn interpersonal. The authors attribute six tactics to aid
in achieving this goal: focus on the facts, multiply the alternatives, create common goals,
use humor, balance the power structure, seek consensus with qualifications (Eisenhardt,
K. M., Kahwajy, J. L., & Bourgeois III, L. J, 1997).
The absence of conflict within an organization is more apathy than harmony. No
organization can operate without some level of conflict. The key in any organization is to

47. FINAL EXAM PAPER
47
utilize that conflict to better the organization. Conflict management is probably one of
the hardest assignments that any manager can be asked to do. Given the nature of the
human response to conflict it is all to often that the aggression will be unintentionally
internalized and personalized. When professional conflicts are seen as personal, the
attacks can be hazardous to the work and/or team environment.
Keeping conflicts from becoming personal can have a direct impact on the
effectiveness of your organization. One way to help to depersonalize conflicts is to retain
high task objectivity. By establishing the parameters and decision-maker and holding to
distinct time lines leaders can curtail the ability to let situations become personal.

48. FINAL EXAM PAPER
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Appendix
A
Organizational
culture
inventory:
Current
Culture
Profile1
1
Retrieved
from:
http://www.extraordinaryteam.com/wp-­‐
content/uploads/OCI.png

49. FINAL EXAM PAPER
49
Appendix B
Blake–Mouton Managerial Grid2
2
Retrieved
from
http://www.12manage.com/images/picture_blake_mouton_managerial_grid.gif

50. FINAL EXAM PAPER
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Appendix C
Hersey–Blanchard Situational Leadership Model3
3
Retrieved
from
http://2.bp.blogspot.com/_qVqOWUwhcqM/R3CcMlWd_QI/AAAAAAAAAGI/i6DAs1
vV2t0/s400/Situational+LeadershipII.gif

51. FINAL EXAM PAPER
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