Likert’s management systems are management styles developed by Rensis Likert in the 1960s. He outlined four systems of management to describe the relationship, involvement, and roles of managers and subordinates in industrial settings. He based the systems on studies of highly productive supervisors and their team members of an American Insurance Company. Later, he and Jane G. Likert revised the systems to apply to educational settings. They initially intended to spell out the roles of principals, students, and teachers; eventually others such as superintendents, administrators, and parents were included.
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Exploitative authoritative (I)
In this style, the leader has a low concern for people and uses such methods as threats and other fear-based methods to achieve conformance. Communication is almost entirely downwards and the psychologically distant concerns of people are ignored. People are supposed to work more than specified work hours. The top management forced to carryout extra work load, but the wages, monetary benefits and work satisfaction would be lost. people found highly demotivated due to exploited by owner/ management.
Benevolent authoritative (II)
Less controlling than the exploitative authoritative system, under this system motivation is based on the potential for punishment and partially on rewards. The decision making area is expanded by allowing lower-level employees to be involved in policy-making but is limited by the framework given to them from upper-level management. Major policy decisions are still left to those at the top, who have some awareness of the problems that occur at lower levels. This creates mainly downward communication from supervisors to employees with little upward communication, causing subordinates to be somewhat suspicious of communication coming from the top. The managers at the top feel more responsibility towards organizational goals than those employees at the bottom, who feel very little responsibility. This contrast in feelings toward responsibility can result in a conflict and negative attitudes with the organization's goals. Subordinates in this system can become hostile towards each other because of the competition that is created between them. Satisfaction among workers is low to moderately-low and productivity is measured at fair to good.
Consultative system (III)
This theory is very closely related to the human-relations theory. Motivation of workers is gained through rewards, occasional punishments, and very little involvement in making decisions and goals. Lower-level employees, in this system, have the freedom to make specific decisions that will affect their work. Upper-management still has control over policies and general decisions that affect an organization. Managers will talk to their subordinates about problems and action plans before they set organizational goals. Communication in this system flows both downward and upward, though upward is more limited. This promotes a more positive effect on employee relationships and allows them to be more cooperative. Lower-level employees are seen as consultants to decisions that were made and are more willing to accept them because of their involvement. Satisfaction in this system improves from benevolent authoritative as does productivity.
Participative system (IV)
Likert argued that the participative system was the most effective form of management. This system coincides with human-resources theory. This system promotes genuine participation in making decisions and setting goals through free-flowing horizontal communication and tapping into the creativity and skills of workers. Managers are fully aware of the problems that go on in the lower-levels of the organization. All organizational goals are accepted by everyone because they were set through group participation. There is a high level of responsibility and accountability of the organizational goals in all of the employees. Managers motivate employees through a system that produces monetary awards and participation in goal setting. Satisfaction among employees is the highest out of the four systems as is production.