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Rensis Liker and his associates conducted an intensive study on the patterns and styles of managers for three decades and developed an interesting theory, popularly known as Likert’s Four Systems of Management. For developing four systems of management, he considered about eight variables – leadership, motivation, communication, interaction influences, decision making process, goal setting, role of informal groups and control process.
Therefore, it is not purely a leadership theory but a management theory, as apart from leadership, other variables have been considered for developing the four system theory. Here the discussion is limited to following three leadership variables, which are inclusive of eight variables earlier:
i. Confidence and trust in subordinates
ii. Subordinate’s feeling of freedom
iii. Superior seeking involvement with subordinates
On the baisis of varying degrees of these three variables, four systems have been developed. Likert’s Four Systems Theory of Management, in relation to leadership styles, consists of four styles as follows:
i. Exploitative Autocrat (System 1)
ii. Benevolent Autocrat (System 2)
iii. Participative (System 3 )
iv. Democratic (System 4)
i. System 1 (Exploitative Autocrat Style)
In this system control process is entirely centralized at top level, where all decisions are made and communicated downwards for implementation using threats, punishment and occasional rewards.
ii. System 2 (Benevolent Autocrat Style)
It is marked by master-servant type of relationship involving some delegation of control and decision making o middle and lower levels and application of rewards and actual potential punishment as a measure to motivate employees.
iii. Style 3 ( Participative Style)
It is characterized by substantial confidence and trust in subordinates, adequate delegation of control and decision making processes to lower levels, two-way flows of communication and use of rewards, occasional punishment and some involvement for motivating workers.
iv. System 4 (Democratic style)
It involves complete confidence and trust in subordinates, delegation of full responsibility for the control and decision making processes, three way communication flows and application of participation and involvement of subordinates in establishing financial rewards, setting goals and evaluating progress towards attainment of these goals with a view to hardened their motivation.
Likert on the basis of intensive research, has shown that high and low producing department in several organisation that were surveyed are marked by System 4 and System 1, respectively.
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