Psychology in Business Management:
Abraham Maslow’s Eupsychian Management
Perhaps one of the most prominent examples of how psychological theories can be
applied to a wide variety of other settings is the works of Abraham Maslow. In addition
to his mostly known concept of the `hierarchy of needs` and humanistic approach to
psychology, Maslow’s early conceptualizations of motivation, self-actualization and
synergy have offered several window opportunities for the managers, management
It was only by chance that Maslow met with the industrial settings as the real player in it.
In the mid-1940s he had a health problem characterized by an unexplainable extreme
fatigue and he had to resign from his teaching job for a while. However, the life was not
easy, he had to support his family. Luckily, one of his relatives offered him an easy job as
a plant manager at their family business Maslow Cooperage in rural Pleasanton, CA. He
was supposed to supervise the coopers who repaired wooden barrels for a nearby winery.
He left this job and returned back to teaching and doing research after getting recovered
from his illness, however, the observations that he made there proved to be invaluable for
his later conceptualizations.
In 1954, after his return to academy, Maslow wrote a book with the title of Motivation
and Personality. The positive outlook on human nature he depicted in this book was
taken by Douglas McGregor, who were a professor at MIT then, and incorporated into a
management theory. McGregor published a book, The Human Side of Enterprise, in 1960
based on Maslow’s humanistic approach and presented two different managerial
perspective, i.e. Theory X which views workers as inherently lazy and irresponsible and
Theory Y which views workers as inherently hardworking and cooperative. Within this
formulation, Theory Y was just a mirror of Maslow’s optimistic view of human nature.
In the summer of 1962, Maslow decided to take a sabbatical. Well, it was not unusual for
a professor at that time. What was not so common then was to choose a high-tech
company for that. After he published his book Toward a Psychology of Being in which he
presented his theory of hierarchy of needs, Andrew Kay, the president of a high-tech
company Non-Linear System (NLS), was interested in Maslow’s theory on motivation
and personality. NLS was planning to reorganize the work place in accordance with
Theory Y of management and invited Maslow to observe the work environment. Maslow
did not want to miss the opportunity of real-life testing of his theory and accepted that
invitation. The company’s work environment was being re-organized around the theme of
employee productivity, creativity and cooperation, and the results were great: Decreased
absenteeism and turnover accompanied by increased productivity and profits! The
managers were very surprised by these quick results, however, as it appeared in
Maslow’s diary he wrote during that days, he was rather skeptical about the underlying
reasons of this outcome. Rather than seeing the management as dichotomous (Theory X
vs. Theory Y), he suggested that it was the synergy that drives the convergence of the
company’s and employees’ interests through what he called `enlightened management`.
Based on his observations at NSL, in 1965 he published a manuscript with the title of
`Eupsychian Management` , referring to the ideal management. Since then, his insightful
ideas has become one of the basis for many American leaders’ activities in management
and education settings. By eupsychian management, Maslow argued that neither X nor Y
is a real representation of what is going on in business environment. As people move
from basic needs towards self-actualization needs in his so-called hierarchy of needs, the
sources of motivation change for them. At the very initial stage, while a highly paid job
could be a great motivator, at the later stages being creative, assuming independence or
finding a meaning in the job, relating it with the society could be more powerful sources
of motivation. He called this compensation (that you come to give more importance to
these than how much you are paid over time) as meta-pay. Thus, taking into account the
changing nature of the source of motivation for people as they move further in the
hierarchy of needs, and organizing the work environment accordingly are what give rise
to the enlightened management. So, the take-home message of the enlightened
management for managers was this: `You have to have different personnel policies for
different people in different situations for them to be truly efficient and effective!`.
The enlightened management reflects a great trust in employees and assumes that every
worker prefers to be a prime mover rather than a passive helper. Based on his
observations at NLS, Maslow wrote his book Maslow on Management, and described the
necessary conditions to be provided for workers to enable them to reach a point of self-
actualization and become more productive. He listed 36 principles of enlightened
management in that book. Here is the list of those principles:
Principles to assume
1. Everyone is to be trusted.
I. Trust in human nature
2. It is good-will present among all the members of the
organization rather than rivalry or jealousy.
3. Everyone is more likely to get more pleasure out of loving
than out of hating.
4. Everyone is more likely to prefer responsibility to
5. Hostility is primarily reactive rather than character-based.
6. Everyone is courageous enough for
7. Everyone has a conscience.
8. There is the wisdom and the efficacy of self-choice by
9. Every well-developed people would rather create than
10. Every well-developed people would rather be interested
than be bored.
11. Assume that people can take it, that they are tough, stronger
than most people give them credit for.
12. Everyone has the impulse to achieve.
II. Strong belief in the need for
13. Everyone has a tendency towards self-
self-actualization within human
14. Everyone is open to development.
15. Everyone prefers to be respected.
16. Everyone has the potential to grow through delight and
17. Everyone prefers to be a whole person, not a part.
18. Everyone prefers to be a prime mover rather than a passive
19. Everyone has the potential tendency to identify with more
and more of the world.
20. Everyone has metamotives and metapays.
21. Everyone prefers meaningful work to
22. Everyone prefers personhood, uniqueness as a person,
identity (in contrast to being anonymous or
III. Strong belief in capacity,
23. Everyone has the same ultimate managerial objectives.
cooperation and productivity of
24. Everyone can enjoy good teamwork, friendship, good group
25. Everyone has the preference for working rather than being
26. Everyone has a tendency to improve things.
27. Everyone involved in the organizations are healthy enough.
28. The organization is healthy enough, whatever this means.
29. People in eupsychian plants are not fixated at
the safety-need level.
IV. Preference for mutual
30. Everyone dislikes fearing anyone (more than he likes
exchange and fair performance
fearing anyone), but that he prefers fearing the boss to
evaluations within working
despising the boss.
31. Everyone likes to be justly and fairly appreciated,
preferably in public.
32. Everyone prefers or perhaps even needs to love his boss
(rather than to hate him), and that everyone prefers to
respect his boss (rather than to disrespect him).
33. Everyone has the "ability to admire".
34. Assume that there is no dominance-subordination hierarchy
in the jungle sense or authoritarian sense (or "baboon"
35. Everyone is to be informed as completely as possible of as
many facts and truths as possible, i.e., everything relevant to
V. Complexity of human nature
36. Every time we talk about a good trend in human nature, we
must assume that there is also a countertrend.
Is it really possible and cost-effective to achieve this ideal? It is open to argument,
however, it is really important to underline that no matter how positive and optimistic
Maslow was, he was a realist as well. He knew very well that those principles of
humanistic approach to business environment only worked under good conditions. That’s
to say, it was very clear for Maslow that it would be very hard to achieve the enlightened
management within an unstable economic environment with a fragile economy.
After making his theory of Eupsychian Management public, there has been a growing
movement towards humanizing the workplace. Maslow was elected to the presidency of
American Psychological Association in 1966, and until his death in 1970 he worked on
formulation of `Theory-Z` , i.e. an alternative approach to management that goes beyond
the dichotomous perspective proposed by McGregor.
Today Abraham Maslow’s theory of eupsychian management is still inspiring many
managers and management thinkers to create a humanized the workplaces despite the
increasing complexity of working environments.