Social Theories for Software Management

• Social Exchange Theory: Relationships are based on a history of exchanges.
• Theory W: Make everyone a winner.
• Theory Y: Self-directed workers perform better.
• Theory Z: William Ouchi’s take on Japanese management practices.
• Theory Pi: Leo Mallette’s theory on managing scientists and engineers.

Social Exchange Theory

People develop relationships with others they exchange with. The way this exchange occurs and how frequently can affect relationship quality. There are two general types of relationships: economic and social.

• Economic exchanges are highly equal, visible, short-term and focused on the thing being exchanged. This is characteristic of employee-employer relationships.
• Social exchanges are less concerned with the urgency and equality of transactions, and are more concerned with longevity, empathy, and belonging in the relationship. Organizations try to create this in their culture, because it can cause employees to give effort selflessly.

See this article on Social Exchange Theory from the Annual Review of Sociology.

Theory W

Software project managers can only be successful if they make all project participants a winner. See this article on Theory-W software project management principles and examples in IEEE Transactions on Software Engineering.
Theory W employs the principles of alignment, cohesion, and responsibility.

Theory Y

People perform best when they are allowed to be self-directed, and perform work they have committed to. They need to be given the opportunity to take responsibility for their own work.

McGregor, D. (2000). The Human Side of Enterprise. Reflections, 2(1), 6-15. doi:10.1162/152417300569962

Theory Z

William Ouchi theorized that the key to better performance is employee loyalty. After observing management practices in Japanese factories, he wrote that managers can best influence performance by ensuring a secure employment environment for their workers. This is in fact an application of Social Exchange Theory to organizations.
Ouchi’s theory is discussed in this textbook on Theories of Motivation.
This theory relies on the principles of alignment, cohesion, commitment, collaboration, and transparency.

W. G. Ouchi. (1981). Theory Z, How American Business can Meet the Japanese Challenge. Reading, MA: Addison-Wesley.

Theory Pi

In Theory Pi, Leo Mallette asserts that, as a group, engineers and scientists tend to have characteristics that require a different management style than the average worker. He argues that they tend be self-motivated and focused, but that their loyalty is to their work, rather than to the organization.

L. A. Mallette. (2005). Theory pi - engineering leadership not your theory X, Y or Z leaders. Paper presented at the 2005 IEEE Aerospace Conference, pp. 4389-4397. doi:10.1109/AERO.2005.1559744

The following table summarizes the concepts used in these different management theories. It was taken from Mallette’s 2005 paper.

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Management Concept	Theory X Douglas McGregor	Theory Y Douglas McGregor	Theory Z William Ouchi	Theory Pi Leo A. Mallette
Motivation	Tends to categorize people as being unwilling or unmotivated to work. Threats and disciplinary action are thought to be used more effectively in this situation, although monetary rewards can also be a prime motivator to make workers produce more.	Tends to categorize people as being self-motivated towards work.	Believes that people are innately self-motivated to not only do their work, but also are loyal towards the company, and want to make the company succeed.	People are fiercely self-motivated by their task or project. They are loyal to their field of interest at the time – which may only be loosely related to the goals of the leadership of the company.
Leadership	Theory X leaders would be more authoritarian. But in both [X & Y] cases it seems that the managers would still retain a great deal of control.	Theory Y leaders would be more participative. But in both [X & Y] cases it seems that the managers would still retain a great deal of control.	Theory Z managers would have to have a great deal of trust that their workers could make sound decisions. Therefore, this type of leader is more likely to act as “coach”, and let the workers make most of the decisions.	Theory Pi leaders are hands-off to the point of abdicating responsibility. They only occasionally need to reel in a stray engineer when a project goes too far astray.
Power & Authority	As mentioned above, McGregor’s managers … would seem to keep most of the power and authority.	As mentioned above, McGregor’s managers … would seem to keep most of the power and authority. In the case of Theory Y, the manager would take suggestions from workers, but would keep the power to implement the decision.	The manager’s ability to exercise power and authority comes from the worker’s trusting management to take care of them, and allow them to do their jobs. The workers have a great deal of input and weight in the decision making process.	The leader’s authority stems from positional authority. Their power is rooted in their own expert knowledge, and in the technical depth of their staff.
Conflict	This type of manager might be more likely to exercise a great deal of “power” based conflict resolution style, especially with the Theory X workers.	This type of manager might be more likely to exercise a great deal of “power” based conflict resolution style, [but less than] with the Theory X workers. Theory Y workers might be given the opportunity to exert “negotiating” strategies to solve their own differences.	Conflict in the Theory Z arena would involve a great deal of discussion, collaboration, and negotiation. The workers would be the ones solving the conflicts, while the managers would play more of a “third party arbitrator” role.	Conflict resolution is always by logical reasoning and consensus. Managers would participate as an equal and sanction the decision.
Performance Appraisals	Appraisals occur on a regular basis. Promotions also occur on a regular basis.	Appraisals occur on a regular basis. Promotions also occur on a regular basis.	Theory Z emphasizes more frequent performance appraisals, but slower promotions.	Mandatory periodic appraisals are based on successful conclusion of (or progress on) projects, reports, published papers, or patent submissions. Promotions are rare since employees are motivated to continue working on their tasks.