It Can’t Be All About You: Lewin, Drucker, and the Social Psychology of Leadership

I. Introduction

An old saw states that, in one way or another, some managers are “leaders” and others are just “bosses.” But all managers are, whether they realize it or not, leaders, and must be. Management and leadership are just two sides of the same coin, performed by the same individual.

In this paper, we discuss the social psychology of leadership and why in order to maximize the productive effort supply of people, it is important to secure their commitment. We argue that to secure commitment, certain conditions must be met. Let us begin our discussion of these matters by first highlighting the work of managers and the work of leaders.

Management is the work of getting things done through other people, of making decisions and assuring that they are implemented. Leadership is the work of securing the commitment of a group, a team, or a whole organization to those decisions. The greater the commitment secured, the more productive effort will be supplied by the team, the group, or the whole organization in implementing those decisions. If the prime directive of management is to maximize the productive effort supply of its people, then the work of leadership (assuming a measure of technical business competence) is to accomplish this.

If a decision happens to be solely the product of the manager’s personal judgment, he/she must nonetheless be able to “sell” it to their staff and possibly within the larger organization, and to secure commitment that way. Otherwise, as will be shown below, commitment can be secured by way of a bi-lateral decision process that takes place between the manager and his/her team.

Whether managers are aware of it or not, they create and administer group processes. Even transactional leaders with “low EQs”^[1] create group processes. They make most of the important decisions unilaterally and then tell their subordinates what to do. They allow subordinates to ask clarifying questions but are not usually receptive to alternative points of view, even from subordinates who may “know better.” This boss, if he/she is diligent, will invest effort in communicating information and carrying out surveillance and follow-up actions to make sure that the subordinates are doing what they have been told to do. Ultimately, this approach may create distrust of management, or even fear. When it does, people will work just hard enough to stay off the boss’s radar screen. Thus, unused productive effort may remain “on the table,” and if employment opportunities are relatively abundant elsewhere, employees may be more likely to leave the organization, incurring turnover costs. This situation is one that the Gallup Organization reports (2013, 2017, 2022) refer to as “low engagement.” Where it exists, productive effort is suboptimized, and when employment opportunities exist elsewhere, turnover costs will make an additional dent in profits. Note that this is a group process that is co-created by a manager and his/her subordinates, though they are not, in this case, working “together.”

Other managers, attempting a different approach, consciously seek to create goodwill with the team members by engaging them in bi-lateral decision processes, whether in one-on-ones or in groups, so that whatever the decision turns out to be, it is jointly owned by the manager and the subordinate(s). Under this type of regime, people are more likely to trust their managers. They enjoy coming to work, and prima facie, they are likely to provide more productive effort than they could “get away with.” They do what they do on the job because they are committed to doing the “right” things, independently of how much they are paid. This is an example of what the Gallup Organization refers to as “high” engagement.^[2] All three of the Gallup reports referred to here provide evidence that high engagement is associated with higher profitability than that associated with low engagement. Note that this situation is also a group process co-created by a manager and his/her subordinates. But in this case, they are intentionally working “together” to create it. Less unused productive effort is left on the table, and turnover costs are relatively lower than is the case with “low” engagement.

The question is why, and under what circumstances, does “high” engagement result in higher profitability? Is there a theoretical explanation that could generate testable hypotheses in this connection? One such theory is developed and proposed in what follows. It is a rational action model based on a synthesis of classical utility theory, enhanced by the concept of “identity utility” proposed by economists George A. Akerlof and Rachel E. Kranton (2000, 2010), Kurt Lewin’s classic article (1947) on using group methods to create change, and some generally accepted truths about “trust” from the disciplines of sociology and social psychology (Festinger [1957], Garfinkel [1963; 1967], Goffman [1959; 1971], Mills (1941), Scott & Lyman [1968], and Turner [1974]).

Let us now consider a statement of the utilitarian concept of rational action:

Every action is an attempt by the “agent” to maximize his/her utility, subject to the constraints of his/her material resources.

Since this is a “rational action” model, our objective in what follows will be to create a “model agent” that endeavors to maximize its utility and to apply this to understanding why Lewin’s group process methods work (when they do work). We will subsequently extend this result to analyzing the effectiveness of Drucker’s “management by objectives” (when it is effective).

To accomplish this, we will address the following topics in sequence:

1. Kurt Lewin’s group decision methods (Section II)

2. Akerlof’s and Kranton’s theory of “identity utility” (Section III)

3. Trust Preference (Section IV)

With identity utility and the Trust Preference in hand, the efficacy of Lewin’s group decision methods, both in the example he provides in the article discussed below and in general, can be rigorously explained. From this result, we will complete the argument of this paper in the following sections:

4. The Fundamental Principle of Engagement and its application to Drucker’s (1955) Management by Objectives (MBO) (Section V)

5. The Expanded Trust Conditions and their impact on the quality of engagement (Section VI)

In Section VI, we will explain the conditions under which Lewin’s methods and Drucker’s MBO are likely to be less effective or even ineffective. The result of our argument is the recommendation, at the end of this paper, that management is most likely to fulfill its prime directive^[3] by adhering to the Fundamental Principle of Engagement:

Those who do the work of implementing a plan should participate in the process of deciding the “best way” to do this work up to their levels of competency to do so.

In proving this principle, we hope to have shown that it cannot be “all about you, the manager.” And it is not all about “them” (your people), either. It’s about transforming “I” and “them” into a “we.” But now, for the proof…

II. Kurt Lewin’s Method

In 1947, Kurt Lewin published a paper, “Frontiers in Group Dynamics,” that is arguably a key ancestor, if not the key ancestor, of modern change management methodologies. It was in this paper that Lewin provided the (now) classical model of planned change: Unfreezing, Moving, Re-freezing.^[4] Before going further, and for the benefit of readers who may not be familiar with Lewin’s model, a summary of Lewin’s model may be in order.

In order to change people’s priorities and commitment to a set of norms that drive organizational efficiency and effectiveness, the first step is to “unfreeze” those priorities and commitments. This is typically done using the following method: First, a vision of an almost certain future, if current priorities and norms remain unchanged, is presented. Second, an alternative, more appealing future that could occur if certain changes were made is presented.

Assuming that the people receiving these messages are convinced that the presenter of these alternatives is trustworthy, and that the alternatives are both believable, the second phase of Lewin’s method—“Moving”—can be initiated. In this phase, those whose efforts are needed are engaged in a bi-lateral conversation aimed at co-creating (with the facilitator, who may also be their manager) alternative beliefs, practices, and behaviors.

When these changes have been developed and tested with positive results, the third phase—“Refreezing”—takes place. In an organization, this phase may involve formally recording and announcing the new beliefs and practices and getting everyone to agree that, from now on, these are the new norms, policies, and practices that they will abide by.

This approach is embedded in the working knowledge of organizational development practitioners^[5] and professional project managers.^[6] The fact that the methods they use have been tested and widely used in practice for the past half century or so indicates that they must be, in some sense, “true.” But in what sense are they “true”? Would it not be preferable to think that they work because they are based on some objective truth, a deduction from a system of axioms regarded as true, rather than merely “true because they work”? It is one thing to describe a recurring sequence of activities, and another to explain why it recurs. We wish to explain why Lewin’s method works when it does work. Under some circumstances, it may not work. We should be able to explain that as well.

Building on research available at the time, Lewin advocated the application of group decision-making to changing practices and peer group standards (and the thought processes that would drive those changes) in contrast to unilateral, top-down decision-making. That is not to say that top-down decision-making doesn’t have its place. It does, especially if the decision-makers and those who must implement their decisions are “on the same page,” so to speak. But what if they are not on the same page? What if a significant change is desired? A good rule-of-thumb for identifying a “significant” change is the emergence of resistance to it. When this is the case, it’s often more efficient to get the people whose behavior you want to change involved in the conversation than to issue an edict and follow up with mechanisms aimed at securing compliance, whether the people like it or not.

Lewin (1947) gave the following illustration of how this can be done.^[7] It involved an experiment aimed at encouraging mothers to increase their children’s consumption of fresh milk. (This experiment took place in the 1940s.) Two forms of “training” were to be applied:

• A lecture, i.e., a formal presentation aimed at informing the recipients of training as to what to believe, how to do something, and why they should believe or do it.

• A group discussion, in which, with the help of a facilitator, the members would reason out amongst themselves what to believe is true and right, how best to do something, and why they should do it. (Lewin, 1951 [1947] 229-30)

The first group was presented a “good” lecture on this topic. The second group was involved in a discussion leading step by step to the decision to increase fresh milk consumption. Lewin was careful to point out that pressure by the facilitator was intentionally avoided. He added that the amount of time used by the two groups was equal. The results, after two and four weeks, respectively, were telling, as illustrated in Table 1. The percentage of mothers who were informed by the lecture method increased the amount of fresh milk they provided their children by 10-15% two weeks after the presentation and remained at that level another two weeks after that. The percentage of mothers who participated in the group discussion had increased the amount of fresh milk they provided their children by 40% after two weeks, and by 50% two weeks after that. The results are summarized in Table 1:

Clearly, the group discussion approach was more effective.^[8] But why did it work? That is the question. In his explanation, Lewin formulated his (now) classical model of organizational change: Unfreezing, Moving, and Re-freezing of group norms.

But while those stages are descriptive of what happens when a change is successfully implemented, they do not explain why the process works (when it does work). After all, groups do not act; the individual members do.^[9] To address this question, we will assume that the individuals in the experiment Lewin described were behaving rationally, i.e., maximizing their respective utilities. But in what sense? To develop our explanation, we need to add some conceptual machinery, after which point we shall revisit this result.

The first new element to be added concerns the utility function of the model agent. Following the contributions of Akerlof and Kranton (2000, 2010), we will expand the ordinary utility function of economics to include “identity utility.” Then, we will equip the model agent with a special preference—the “Trust Preference.”

III. Identity Utility

To simplify the presentation of the concept of identity utility, consider the following example, presented by Tom Peters and Robert Waterman in 1982, in their book, In Search of Excellence. In that text, commenting on a Fortune magazine article that celebrated the achievements of Honda, they wrote:

One of our favorite stories in support of Fortune’s analysis is about a Honda worker who, on his way home each evening, straightens up windshield wiper blades on all the Hondas he passes. He just can’t stand to see a flaw in a Honda! (Peters & Waterman [1982] 37)

Apparently, there had been a batch of Hondas in which the wiper blades had been incorrectly applied, and this man had taken it upon himself to fix that problem every time he saw it, even when he was walking home from work. From an orthodox economic standpoint, his actions were irrational, or at best, “non-rational,” since he was expending effort—a “material” resource—while receiving nothing material in return. To reconcile the anomaly, an orthodox economist could judge him as “irrational” or “non-rational,” kick the can down the street to the psychologists and sociologists, and let them figure it out.

Akerlof and Kranton, to their credit, would not be so quick to dismiss the Honda worker as a fool or madman. Rather, they proposed that the utility function for individual agents in economic theory and research be expanded to include, in addition to the usual creature comforts and pleasures associated with material goods and services, an additional element, which they termed “identity utility.”

Relative to this expanded notion of utility, the model agent gains identity utility when, after having performed an action and reflecting upon it, he looks “good” to himself and/or to “relevant others.” If, by contrast, he performs an action that makes him look “bad” to himself or to relevant others, he loses identity utility. The standards against which he performs such audits are moral standards. These moral standards have both subjective (internally experienced) and objective (the empirically observable reactions of relevant others) components. Agents gain or lose identity utility according to whether, and to what extent, they are subjectively (inwardly) committed to those standards or committed to looking “good” to relevant others, or both. In the subjective case, to say that an agent is committed to a moral standard is the same as saying that, if he follows it, he looks “good” to himself and “feels good” as a result, with whatever physiological correlates are associated with “feeling good” about oneself. If he does not follow a standard to which he is inwardly committed, he looks “bad” to himself, feels badly about that, and experiences anxiety or remorse, the physical correlates of either of these being unpleasant. If relevant others are observing, he may feel embarrassment or shame if he does not comply—embarrassment and shame having their own, generally unpleasant physical correlates. Hence, like all the ordinary sources of utility, identity utility involves pleasure and pain, which are at least partially experienced physically.

In their exposition of the concept of identity utility, Akerlof and Kranton (2010) used it to deal with several economic puzzles. One of their examples is particularly germane to the present discussion: They addressed the question of why workers will, under certain circumstances, and independently of how much they are paid, exert more productive effort than they could “get away with.” To address it, they made a distinction between “insider” Labor, which consists of individuals who are committed to the norms and goals of the Firm, and “outsider” Labor, which consists of individuals whose orientation to work resembles that of the rational agent of orthodox economics: Outsider Labor optimizes the yield on their efforts (their paychecks) by doing the least they can “get away with,” while staying off the managerial radar screen. Outsider Labor supplies “low” effort.

Insider Labor, on the other hand, sees itself as “building a cathedral.”^[10] It supplies “high” effort. Outsider Labor is just “cutting stone” in exchange for a paycheck. The authors argued that, to secure equivalent effort from outsiders, they would have to be paid a premium, since they only react to material incentives (2010, pp. 42–43). Therefore, concluded Akerlof and Kranton, it is incumbent on Management, acting on behalf of the Firm, to try to convert outsiders into insiders (2010, p. 59). Clearly, the Honda worker in the above narrative was an “insider.”

A perfunctory interpretation of this narrative might suggest that the man from Honda personally identified with his company’s products, its brand equity, its goals, its values, and its mission. This is clearly what Peters and Waterman thought. A more skeptical view of the matter might be that he was doing his part to save the face of his department, which had produced the faulty wiper assemblies. If this had been the case, the point is that he cared about the face of his department and was committed to that.

In either case, the key point is that he was committed to something other than a paycheck.

And in either case, he was an “insider.” Now, let us attribute to him an expanded utility function that includes, in addition to the “ordinary” economic utilities—loosely, utilities derived from goods and services that can be purchased in markets with resources earned from his labor—the element dubbed “identity utility” by Akerlof and Kranton. In this example, we see that identity utility and income utility are separable. The Honda worker’s subjective cost in utility, represented by the effort he spent in fixing those wiper blades, was clearly more than offset by the identity utility he derived from doing it. It does not matter whether he was committed to the company goals and mission of Honda, as implied by Peters and Waterman, or was trying to save the “face” of his team. The point is that he gained identity utility from doing the “right thing” relative to some moral standard, regardless of whether he was paid for it. Hence, he increased his total utility by fixing those wipers on his way home from work, because the identity utility he gained from doing this exceeded the ordinary economic utility he sacrificed—his time and energy—in so doing. It was simply a trade-off between different utilities. Thus, the Honda worker was rational, after all.

As to how to transform outsiders into insiders, Akerlof and Kranton suggested some form or other of “indoctrination” but did not go into much detail about it, though a nicer word for this activity might be “training.”^[11] This points back to where we began with Lewin’s example of the mothers who were “trained” in two different ways on the desirability of feeding their children fresh milk.

Before recurring to that topic, let us refine our concept of the model agent. For present purposes, this agent will be equipped with the following attributes:

• He/she is rational and seeks to optimize relative to an expanded utility function that includes, in addition to the ordinary economic utilities (things that can be purchased in markets with monetary income), “identity utility.”

• He/she has a “trust preference.”

In the next section, we will define and discuss the “trust preference.”

IV. Trust Preference

Assume that the model agent maximizes his/her utility relative to the expanded utility function of Akerlof and Kranton, which includes identity utility in addition to material goods and services that can be acquired in markets. We know from experience and introspection that there are many, many preferences that distinct individuals take into consideration when they evaluate their options and seek to optimize the yield on their material resources, including their income and potential effort supplies. But there is one preference that appears to be universal: The Trust Preference. To define this preference, let us first propose the underlying “Trust Conditions.”

Trust Conditions

1. The agent’s observed actions and accounts are mutually consistent. In common-sense parlance, the agent has “integrity.”

2. Over time and in varying circumstances, the agent’s accounts for his/her actions are mutually consistent. In other words, the agent has identifiable “principles” and continuously observes them.

With these conditions in hand, research, theory^[12] and common sense strongly suggest that human beings have a trust preference.

Trust Preference

When given a choice, people prefer to affiliate with people they trust over those they do not trust. Knowing this, they prefer to be regarded by significant others as trustworthy. In the service of this aim, human agents are inclined to exert effort into complying with the Trust Conditions, i.e., to make their words and actions consistent, and to show that they “have principles.”

Notwithstanding, it could be argued that people violate the Trust Conditions every day. But consider: Billions of people in this world yearn to be wealthy. Most of them are not wealthy and never will be. Does that mean they do not prefer having more money to less? The same holds for the Trust Preference. People prefer to be trusted. Trust makes it easier for them to secure acceptance and cooperation from other people. Being distrusted makes it more difficult to secure the cooperation and acceptance of others, which incurs avoidable costs when they need cooperation or wish to be accepted. In addition, being distrusted makes people look bad, to at least someone, and presumably to themselves. They prefer to look good. Thus, it is reasonable to conclude that people prefer more trust to less, and gain or lose identity utility as they are successful (or not) in satisfying the Trust Conditions. In the service of this preference, even the clumsy and the slothful, not to mention con artists, exert effort to make their words and deeds match, and to show consistency relative to their espoused principles. By the foregoing arguments, this preference is rational because it helps advance their benefits and reduces their costs in securing the cooperation of others. As a corollary to item 1 of the Trust Conditions, people will lose the trust of others if they fail to keep their promises or tell lies.

Application to the “Fresh Milk” Experiment—and Beyond

Let us now apply the trust preference and the concept of identity utility to the mothers in the “group” method of Lewin’s experiment. They were provided with a compelling narrative—a “vision” of the future—that was compelling precisely because it benefited their children, and because mothers presumably care about the well-being of their children. This would be the “unfreezing” portion of the change process. Since the intervention for this group was interactive by design, the participants would have taken turns at talking and made statements in the presence of one another and the facilitator that they “should” provide their children with fresh milk. In making what were in effect promises to change their policies about fresh milk, they not only became accountable to the other participants, but—assuming that their statements were “sincere”—became accountable to themselves. This would be the “moving” portion of the change process. The internalized pressure to follow the “fresh milk policy” clearly varied between them, since not all those mothers followed through, as shown by Lewin’s table of results. The ones who did follow the “fresh milk policy” and were still doing so after 4 weeks showed a successful “refreezing” of that policy in their practices.

One obvious inference is that the mothers in this group who did not comply may have lost identity utility, since they failed to consistently implement the new policy to which they had agreed in the group discussion. Presumably, this would be due to their trust preference, since they did not follow through on an implied promise they had made in the presence of their group. It is reasonable to infer, however, following the model espoused here, that the savings in effort and money that would have been involved in switching to fresh milk were worth more than their losses in identity utility. Thus, they made a trade-off that still maximized their total utilities, just in a different way.

Lewin did not specify whether the mothers in this experiment had anything to do with one another after the study. At the end of his discussion of this experiment, he commented: “The experiments show, however, that even decisions concerning individual achievement can be effective which are made in a group setting of persons who do not see each other again” (Lewin, 1951 [1947], 233).

Now, suppose they had shown up at the same place on a regular basis and discussed their approaches to feeding their children fresh milk. In that case, would significantly more than 50% of the mothers in the second group have been feeding their children fresh milk 4 weeks later? Would they have looked “bad” to their peers if they did not? Some might have lost more identity utility from not following this policy than they saved from their withheld efforts and, possibly, the incremental costs of fresh milk. To avoid this, they would have been inclined to change their practices regarding the feeding of fresh milk to their children. Had this been the case, we may surmise that the percentage of mothers who complied would have been higher than the figures shown in Table 1. But, in the absence of additional social pressure, it was easier (less costly) for them to default to pure resource optimization (money and effort).

Now, let us change the setting. Suppose that the compelling narrative of the mothers was replaced by a compelling vision of the mutual benefits for Labor and the Firm of changing the approach of Labor to its supply of productive effort (part of an “unfreezing” exercise). If the policy of fresh milk was replaced by an alternative set of practices of a group of workers aimed at increasing output, and if this group held its members accountable for complying with them, Lewin’s experiment would be an example of using participative methods to increase a “peer group standard” of productive effort supply. The new peer group standard would be established by explicit or implied promises made during the group discussions and by the Trust Preferences of its members (the “moving” element). The forces of compliance would come from their peers, their leader, and their internal, subjective pressures to make their deeds consistent with their spoken words. Moreover, in this work setting, the group of workers would have repeated interactions with one another. As time went on, the group, constrained by its Trust Preference, would, by accretion of precedents (Lewis, 1968), produce a new, and presumably more productive peer group standard. This eventuality would be an example of “refreezing,” resulting in a new, higher equilibrium of productive effort supply. The existence and persistence of these new norms may or may not be accompanied by formal written procedures. What makes them permanent is the likelihood that individuals will be held accountable for noncompliance with them. When this is obtained, re-freezing has been accomplished.

In his own reflections on the fresh milk experiment and others cited in his paper, Lewin surmised that the re-freezing effect “…is partly due to the individual’s tendency to ‘stick to his decision’ and partly to the ‘commitment to a group’” (1951 [1947], 233).

The Trust Conditions and Trust Preference we introduce in this paper can be viewed as an axiomatization of Lewin’s intuition and those of other notable social theorists. “Commitment to a group” is easily translated into our expanded utility function: An individual is committed to a group if and only if he/she would lose identity utility from violating group norms.

V. The Fundamental Principle of Engagement and Application to Drucker’s Management by Objectives

Now that we have discussed the Trust Conditions and Trust Preference, let us attempt to codify the foregoing demonstration into a theorem.

Trust Theorem

If the agent’s loss in total utility would exceed the value of the effort (to the agent) it takes to fulfill a public commitment, the agent will be inclined to honor his/her verbal commitment by supplying effort to implement it.

In plain language, “commitment” to a given level of productive effort means that the loss in identity utility from reducing productive effort (from this purported level) more than offsets the utility gained from the saved effort.

If this theorem is true, then an efficient way to secure the commitment of “Labor” is to apply what we propose is the Fundamental Principle of Engagement:

Those who do the work of implementing a plan should participate in the process of deciding the “best way” to do this work up to their level of competency to do so.

Is this approach the most efficient way to secure the commitment of “Labor”? While we believe it is, we invite dialogue on this matter.

Peter Drucker (1955), in introducing the concept of “Management by Objectives” (1955, pp. 150–168), argued that, in making a business plan (and securing commitment to it), top management should formulate the Firm’s strategic objectives, and then allow subordinate layers of managers to translate them into the objectives of their respective departments and units. Each level of management in the system is handed a set of objectives from the level above it and is then left “room” to decide the best ways to go about accomplishing them. The similarity between this method and that of Lewin will become obvious as soon as it is realized that at each level of the planning process, there is a discussion—either one-on-one or in a group—in which a bi-lateral decision is made between the manager and his/her subordinates. To the extent that the decision is the result of a “genuine” (read: honest) dialogue in which the subordinate is “listened to,” the subordinate’s commitment to the resulting plan is secured by the Trust Preference. In this way, it is conceivable that the management of the whole organization would become committed to its strategic objectives, i.e., its business plan.

It was essential for Drucker that at each level, the manager should develop the set of objectives for his/her unit him/herself. For Drucker, MBO also means “…that every manager should responsibly participate in the development of the objectives of the higher unit of which his [or hers] is a part” (Drucker, 1955, p. 159). Significantly, he added, “To ‘give him [or her] a sense of participation’ (to use a pet phrase of the ‘human relations’ jargon) is not enough. Being a manager demands the assumption of genuine responsibility” (1955, p. 159). “Responsibility” means having control and the accountability that comes along with it.

Drucker’s MBO was not originally designed to roll all the way down to the “shop floor,” as one would realize after scouring The Practice of Management for evidence to the contrary. But it is reasonable to infer that the benefits of MBO could be reaped by pushing the process down to the “shop floor.” A notable example of those benefits is Toyota, where assemblers work with their supervisors and engineers to review production and quality data on a periodic basis (say, daily or weekly), identify process problems (e.g., statistical glitches in quality, duration time, etc.), discuss possible root causes, and then propose hypothetical solutions, which are then tested. When a suitable solution is agreed upon—again by the workers, their supervisors, and engineers in a “conversation”—work procedures are modified and remain in place until they need to be improved again. As Jeffery K. Liker, who studied Toyota for years put it, “The Toyota Way is to enable those doing the work to design and build in quality by writing the standardized work procedures themselves” (Liker, 2004, p. 143; the authors’ italics).^[13] By the model developed throughout this paper, their Trust Preferences incline them to commit to these instructions and to do so with diligence. For those who may feel that the phrase, “down to the shop floor,” is a bit dated in the post-industrial U.S. economy, the same idea should be applied—even more appropriately—to “knowledge workers.”

In the original version of Drucker’s analogy (Note 8), the manager was the one who “saw the cathedral.” Labor was either cutting stone for a paycheck or trying to be the best stonecutter in the whole county, and perhaps more concerned with that than with the end product. But it should be obvious that MBO can, and should be, extended all the way down to the operative level, even, or perhaps especially, for non-professional employees. After all, they make the final “turn of the screw.” And for that reason, it’s critical that they, too, “see the cathedral,” and most importantly, “care” about helping to build it. The fact that Drucker did not advocate driving MBO all the way down to the shop floor does not, in any case, affect its validity, as we have tried to show.

VI. The Expanded Trust Conditions and their impact on the quality of engagement

Common sense tells us that the quality of any bi-lateral decision dialogue depends on the level of trust that the participants have for one another. How much information they will share depends on their estimations of what the other will do with it. If the subordinate believes that, by sharing his/her knowledge of the details of what they (and by extension, their peers) do, someone might be laid off—perhaps them—they might withhold information or perhaps distort some of the information that they do share. If a meeting of production operatives is called and they are asked to “provide input,” their participation might range from lukewarm to disingenuous if they do not trust their manager (or the company’s management). As a result, the benefits of participation are likely to be partly or completely lost. The reason for this is clear: The extent and quality of their participation are limited by the amount of trust they have for management, or more to the point, for the particular manager who is asking them for input. Thus, to mobilize the Trust Preference, another element should be added to the Trust Conditions. That additional element is the third one on the list below, but now the conditions are stated from the standpoint of Labor, assessing the trustworthiness of Management.

Expanded Trust Conditions

1. Management’s observed actions and accounts are mutually consistent. In common-sense parlance, Management has “integrity.”

2. Over time and in varying circumstances, Management’s accounts for its actions are mutually consistent. In other words, Management has identifiable “principles” and continuously observes them.

3. Management “cares” about Labor’s well-being.

If, for example, Management (or at least, the person’s immediate supervisor) practices “servant leadership” (Greenleaf, 1998), the probability that Labor trusts them on all three of these conditions is relatively high, and the Trust Theorem holds. As suggested above, without trust for Management, Labor’s participation in a group process is likely to be lukewarm or disingenuous, and the potential benefits of “participation” would be attenuated or completely lost.

Thus, while it cannot be all about you (the manager), you are essential. It is essential, apart from your competency in the technical knowledge needed for your position, that your team trusts you, specifically with respect to the Expanded Trust Conditions. Without that trust, your team will, in effect, become “outsiders” and work accordingly. That is, they will optimize like the model agent of orthodox economics: They will work just hard enough to keep their paychecks coming, but no harder than that.

Full engagement depends on meeting all three of the Expanded Trust Conditions. And it is worth accentuating the third element noted under the Expanded Trust Conditions, which underscores the importance of caring about the well-being of people. The manager should realize that people notice if you care about them. And they will be able to see and sense if you don’t.

(Note: At the end of this paper, we present a more detailed analysis of “engagement,” integrating our proposed Fundamental Principle of Engagement and Expanded Trust Conditions. Please see the Appendix, following the References.)

VII. Conclusion: It can’t be all about you, but without you, it won’t happen…

Trust is developed over time and is forged by consistent actions. For a manager to be considered “consistent,” he or she must reliably deliver on their promises. A manager who follows through on commitments and keeps their word demonstrates consistency, earning employees’ trust. To establish trust, it is also important for the manager to be perceived as “being truthful” and open in communication. Honesty reduces uncertainty and signals integrity, a quality associated with holding moral principles.

Also important is the question of whether employees feel that they are being heard. By practicing active listening, that is, by paying close attention to what someone is saying, both verbally and nonverbally, by fully engaging with the speaker, showing genuine interest, asking clarifying questions, and avoiding distractions, managers can validate employees’ emotions and create an emotional connection. According to Kluger and Itzchakov (2022), listening benefits both the listener and the speaker (including the supervisor-employee), as it leads to a state of “togetherness” in which the conversation partners experience a feeling of shared connection, a meeting of minds. Effective listening yields clarity, facilitates engagement, and augments employees’ sense of their influence at work. And over time, listening also helps to strengthen the connection with the conversation partner, further building trust between the supervisor and the employee. Under such conditions, increased quality of dialogue and the likelihood that a decision will be viewed by both parties as “co-authored” are likely outcomes. Along with this co-authorship comes commitment, as argued in the body of this paper.

Creating an environment where people feel comfortable sharing thoughts and concerns, and valuing employees’ opinions, contributions, and individuality is essential to building trust. But for people to speak up, they must feel it is safe to express their ideas and take risks without fear of judgment or punishment. As Amy Edmonson and Zhike Lei (2014) explain, psychological safety is essential for fostering openness and building a climate of trust within an organization. In a climate of psychological safety, employees are more likely to contribute new ideas, ask for help, and voice concerns and opinions. Edmonson and Lei argue: “For people to feel comfortable speaking up with ideas or questions, without fear of ridicule or punishment, managers must work to create a climate of psychological safety” (Edmondson & Lei, 2014, p. 39). Perforce, psychological safety is an essential component of any participative decision process. The environmental conditions mentioned here—that Management allocates to Labor the right to “sit at the table,” the right to speak, with the correlative obligation of Management to actively “listen,” and establishes a regime of psychological safety—correspond to the third of the “Expanded Trust Conditions,” i.e., they suggest that Management “cares” about Labor’s well-being.

Do employees have the right to sit at the table where important conversations are held? Do they also have a right to speak? Do they feel safe in expressing their thoughts while sitting at the table? Here, “important conversations” can be defined as conversations that directly affect the way they do their jobs. The answers to all three of these questions are fully within the control of the manager. Making the answers to all three of them “yes” requires work and diligence. If the manager succeeds, he/she will be trusted, with all the benefits that come from that. So, it is about you. But it is also about them, or more accurately, it is about transforming “you” and “them” into a “we” or an “us.”

We should add that making this transformation is about the character and quality of the relationship between the manager and his/her staff, not about the personal attributes of the manager, unless they happen to impede the process. To cite one example, the question of whether the manager is an introvert or an extrovert is a matter of secondary importance…if, indeed, it matters at all.