Chester I. Barnard, one of the pioneers of management thought, in his extremely influential book, The Functions of the Executive, tells us:
“I have found it impossible to go far in the study of organisations or of the 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 do we mean by a person?’ ‘To what extent do people have a power of choice or free will?’ The temptation is to avoid such difficult questions, leaving them to the philosophers and scientists who still debate them after centuries. It quickly appears, however, that even if we avoid answering such questions definitely, we cannot evade them. We answer them implicitly in whatever we say about human behaviour; and, what is more important, all sorts of people, and especially leaders and executives, act on the basis of fundamental assumptions or attitudes regarding them, although these people are rarely conscious that they are doing so.”
This quotation shows how important it is for managers to have a sound understanding of human nature. The decisions they will make on many important issues will ultimately depend on their views on this issue. While granting this point, some people might think that most of us already have a reasonably sound understanding of human beings; after all we are human beings and we know ourselves. Maybe we do not have a precisely articulated theory about the nature of human beings, but the knowledge is there, at the back of our minds.
The reality is that that is not the case. Of course, we know that most human beings have two arms and two legs, emotions, and some sort of intelligence. But as soon as we face more specific issues we realise that our knowledge is seriously deficient. For instance: Are we really free? If we are, what does that mean? Can we assume that most human beings will act rationally in important occasions? Is it possible to get people to act as we want them to? Confronted with such questions many people will give an opinion today … and, if asked again, they might give a different opinion next month. They just have no firm view on most of these issues. Obviously, this is not a good foundation on which to base a whole career of managing human beings.
A significant concern is that many courses within the standard MBA curriculum rely on the economic model of human beings without question. Neoclassical economics assumes that individuals act rationally and strive to maximize their individual utility. Although economists acknowledge that these assumptions are unrealistic, they maintain that their theories remain valid and can provide insightful explanations of human behavior. While this model may be useful for certain purposes, the issue is that students often accept it as an accurate portrayal of human nature, which can create substantial difficulties, especially for those studying management. These students will need to work with actual human beings in their professional lives, not just models of them.
