Humanistic management is an approach to management theory based on the idea of human needs and human values. Employees are seen not merely as economic assets valued primarily for their productivity but as people with complex needs and a desire for meaningful and varied daily tasks. Implementing humanistic management concepts is difficult due to the complexity of human behavior and of ethical questions in general, and it has many challenges.
Humanistic management theories were developed in the 20th century in reaction to earlier theories of scientific management that emphasized productivity and profit above all other concerns. According to the Humanistic Management Center, an approach to management must include three key dimensions to be considered humanistic. The first is a respect for the basic dignity and humanity of employees, customers and anyone else affected by the company's actions. The second is that all business decisions must include thoughtful ethical analysis. The third is that business decisions should be made in dialogue with all those who will be affected by them.
Respect for the inherent dignity of employees is one of the defining characteristics of humanistic management. This respect is conveyed through the reorganization of the company's management structure and processes to give workers the highest level of autonomy and control over their own work possible. One challenge of this approach is that it can seem to be aimed at enhancing employee job satisfaction when the real goal is to improve productivity. If employees believe that new processes and structures are really intended to manipulate them, they will respond with resentment or passive resistance. Business owners wishing to implement humanistic principles cannot do so with an ulterior motive. Employees will only respond positively to this management style if the company owners genuinely concern themselves with employee well-being.
Humanistic management theory initially concentrated on the relationship between the company and its employees and between employees and their work. More recently, business ethics and corporate social responsibility have been included in the concept. The challenge in any form of business ethics is that the topic of ethics is confusing and complicated. Philosophers have been debating ethical questions for thousands of years without reaching firm conclusions on many issues. Even with the best intentions, it would be hard for a business owner to consistently know what the best ethical choice would be in any given situation. To address this question, a businessperson interested in humanistic management could research different philosophies of business ethics and adopt one as a consistent guideline for decision-making.
Humanistic management theories include the concept that business decisions should be made in consultation with stakeholders. A stakeholder is any person or group of people who will be affected by a business decision. Two challenges arise from this concept. One is that it is not always easy to identify all stakeholders and another is that stakeholders can have conflicting needs and priorities. For instance, a development project that brings much-needed jobs to one group of stakeholders may displace another group from their homes or raise environmental concerns. Balancing the conflicting demands of stakeholders will always be a challenging task in humanistic management.