Businesses require a new kind of leadership if they're to thrive during the 1980s, claims Michael Maccoby, social psychologist and author of The Gamesman, the 1976 bestseller on management styles.

The Leader, Maccoby's latest book (see Books, December 1981), describes a manager who is willing to share power, inspires cooperation rather than competition, and is more flexible and tolerant that his predecessors. It is based on case histories of six managers -- three in industry, two in government, and one in a labor union.

His thesis in both books is that the most successful managers understand, and often embody, the positive elements of the existing "social character," Maccoby's term for the dominant attitudes and values of Americans during a given era.

In The Gamesman, Maccoby identified four management types: "The Craftsman holds the traditional values of the early 1900s, with a concern for quality and thrift, and for his craft. In the past he may have been a furniture maker; today he may be the leader of a research and development team.

The Jungle Fighter sees both life and work as a struggle for power in which his peers are either accomplices or enemies, his subordinates resources to be manipulated. Past examples include such empire-builders as Andrew Carnegie. Now the Jungle Fighter may be the turnaround artist who is brought in to clean house and reorganize a troubled company.

The Company Man came to the fore during the tranquil '50s. His modesty, loyalty, sense of responsibility, and negotiating skills lent stability to corporate environments. He adapts to a company as if it were another family; his weakness may be greater concern for security than for success. Now he most often excels as a middle manager in a large company.

The Gamesman fit the management needs of the 1960s and early 1970s when fast-growing high-technology companies thrived on competition, innovation, flexibility, and aggressive leadership of project teams. Today he may manage a semiconductor firm. His career is a game, full of possibilities and options; his goal is winning.

In the current decade, one of limited resources and increasing international competition, the assets of the Gamesman are becoming liabilities, says Macoby. He can no longer motivate his team by continually promising more. He may inspire counterproductive competition and distrust, and he can alienate subordinates by his lack of compassion in dealing with people.

The Gamesman is giving way to the Leader, a manager who understands the changing attitudes of the late 1970s and early 1980s. What are those attitudes, how do they shape this new style, and how can managers of smaller companies adopt traits that will make them more effective? Michael Maccoby answered these and other questions during a recent interview with INC. senior writer Sharon Frederick.

INC: The leader you describe as the model manager for the 1980s sounds almost too good to be true. Is it a leadership style that's feasible for most managers, and, if so, how does one begin to develop such a style?

Maccoby: Good leaders today are not people who are "perfect." They all have faults. The difference between them and old-style managers is that they acknowledge and struggle with those faults, rather than ignoring and becoming defensive about them.

There are no easy rules for becoming what I call a leader. You start by looking at yourself, at your strengths and weaknesses as a manager and a leader. One way to do that is to find somebody you're close to and trust, and say, "Look, I really mean this: You'd be doing me a great favor if you'd talk to me about my strengths and weaknesses as you see them." You'il be amazed at how much you can learn.

Another way is to look at other people and how they operate. That's the reason I use six models of good manager-leaders as the basis for my book. If you honestly think about yourself in comparison to Pehr Gyllenhammar, chief executive of Volvo, or Irving Bluestone, former United Auto Workers vice-president, you'll see differences between the way you manage and the way they manage.

INC: I find it hard to believe the head of Volvo, or a UAW official, has much in common with managers in small companies.

Maccoby: They do have some things in common. What may be more revealing, however, is what they don't have in common. If you have an entrepreneurial temperament, you'll see you operate very differently from someone like Gyllenhammar. You may see that the same traits that got you where you are today can keep you from going any farther, particularly because you're going to have trouble motivating and managing today's employee.

Most limiting is the entrepreneur's tendency not to listen to anybody else. Successful entrepreneurs are often people who have done something when everybody else said it couldn't be done. If you've survived and brought a company to $1 million or $10 million in sales, you know you've succeeded where many others have failed. You've stayed on the edge of the cliff while they've fallen off. So you think: Why should I listen to anyone else?

You may also tend to think of yourself as father-knows-best. People are either with you -- in the family and under your protection -- or are enemies, outsiders. You want to control most situations and won't give up power to anybody unless you're sure the person is totally loyal. That paternalism limits an entrepreneur's effectiveness and creates dislike and resistance among employees.

There's also a certain ruthlessness to many entrepreneurs. They simply don't pay attention to what effects they have on other people. They don't try to be destructive; they just push ahead, regardless of the risks for themselves or others. That may have worked in the past, for the jungle fighters like Andrew Carnegie. I don't think it works well for managers today.

The best models for entrepreneurs today are the Hewletts and Packards. They've articulated values that go beyond getting rich or winning. They've learned to work cooperatively and to respect individuals who are different from themselves.

The weakness of the jungle fighter character is its lack of caring about people who aren't part of the company "family." If you're that kind of person, you're never going to be the kind of leader I'm talking about, unless you really wake up to your deep distrust of those you don't control and learn to take some risks with people.

But I think we all have the capacity to learn and to develop ourselves.So you can work at understanding how you operate and how you affect people. As Heraclitus said, everyone should know himself and act with moderation. You can't demand change, but you can demand moderation.

INC: You say some managers are people-sensitive, others are not. Don't most managers recognize that satisfied, motivated people are essential to the success of a company?

Maccoby: Sure, all chief executives make speeches saying human beings are our most important resource. It's almost an incantation that they feel obligated to repeat. But that's the end of it.

You may say: We want to work like a real team here. But then take an honest look at how things really work. Start with your relationship to your managers. If your relationship to them is one of domination, maybe even controlled humiliation, that's the way they're apt to act with everyone else. Or, they'll act as a buffer between you and the organization, protecting people from you and filtering information so you don't hear some things.

Take a look at all your systems, both formal and informal. For example, are you eveluating people just in terms of their immediate payoff, their contribution to the bottom line, or on how they're helping to build the organization? If employees hear you say you want teamwork, but see that you don't reward people who care about building that team and developing younger people, they get cynical.

They become even more cynical when you try to solve problems of employee motivation by gimmicks. You may bring in a program like quality-control circles and say: We're going to be like the Japanese and get everybody to participate. If you don't then make the changes to move in that direction, you're messing up your organization.

Unless you're serious about change, don't use gimmicks that create cynicism and make people distrust you. People prefer a bastard who makes no pretense of being sensitive to people over someone who talks one way and acts another.

INC: How does the successful manager, someone who fits your model of the leader, motivate his employees?

Maccoby: Most of us assume that what motivates us motivates everybody. We believe there's something called human nature that causes people to react in predictable ways, and that what we ourselves feel and want is a good example of human nature. You hear the idea all the time, in President Reagan's philosophy, for example. It's built on the entrepreneurial ethic which says: Give people opportunity and they'll work hard.

There's a certain truth there, but it's a partial truth. It doesn't take into account differences in individual character, which you see most clearly by living in another culture where people and their motivations are very different. To show those differences, in The Leader I used two models from outside this country: Gyllenhammar of Sweden and Jim Hughes, a plant manager in Scotland.

People who will be successful leaders and managers in the '80s recognize that what motivates them may not motivate others. They see that people very different from themselves can still contribute a great deal. And they see that only by respecting those differences and trying to understand them can they get people really working.

For example, you may be willing to make many sacrifices to build a business, but that may not be true of some of the people you hire. They can still be very valuable contributors, but they have simply made a decision not to sacrifice everything for their work.

Managers should also realize that they may have several different work ethics coexisting within a single organization. Some employees may identify closely with the new social character, others may not. Some old-style workers prefer old-style management and structured work; others want to work as a team supervising themselves. Your best bet is to be flexible, allowing employees different roles as much as possible.

INC: Frankly, this new style of managing begins to sound like more trouble than it may be worth, especially in an uncertain economy when many managers are worrying about simple survival.

Maccoby: If you feel that way, I think the best approach is to be honest with employees. Say to them: Look, I'd like to think working here is enjoyable as well as productive and profitable. I know people are talking more and more about things like participation. But right now we're in a crunch; we've got to put all our efforts into improving our products and building our markets. If we get past this, I promise you we can start talking about how to improve the work situation here.

Before you do that, though, I'd look closely at the time and effort you're wasting by poor communication and lack of teamwork. Then, I'd look at the money lost on absenteeism, turnover, grievances, and the like.Finally, I'd look at whether you're attracting the caliber of people you'd like. You might well find that whatever resources you put into improving employee morale and motivation would pay off very quickly.

INC: Let's assume you do want to work on improving employee morale. Where do you begin?

Maccoby: First you put aside time to talk with your employees. Be honest with yourself and recognize that many times when you think you're doing that, you're talking at, not with. I recently spoke with the manager of a small plant who was very concerned about his workers and about providing a well-run, clean, safe factory. Then I talked with his employees and they complained that the boss never listened to them, even though they thought they had good ideas for improving things.

Later the same manager asked me to describe what I'd seen in his company, and I answered that I'd seen a communication problem. He agreed with me, saying, "I keep trying to communicate with these people and they don't hear me." I replied, "No, you don't understand me. It's a two-way communication problem." His response was, "Yes, I've tried two ways -- talking and writing memos, and neither works."

I never could get my point across, because he was so paternalistic, so convinced he knew everything, including what was wrong with his workers. Now that's a man who's not capable of running a bigger business; he'll never be able to handle more than a hundred employees.

The key is: Be willing not just to talk, but to listen to employees. Ask them what they want out of life and work.

INC: Will workers be honest with managers who ask that kind of question?

Maccoby: That's up to the manager. You can't sit down and say: Now Joe, what do you want out of work? I know, of course, you want to make a lot of money and get promoted, but what else?

You've already destroyed the conversation at that point, and you'll never get honest answers. There are many subtle ways in which people pretend to have a conversation but show very clearly that they've already made certain assumptions, that they really aren't interested in listening.

A lot of entrepreneurs have gotten ahead precisely because they didn't listen to other people, as I said earlier. Often, in fact, an entrepreneur is the kind of person who is accustomed to selling himself all the time, so it can be awfully hard to get through to him. If he really wants to hear what people have to say, he's got to work at it. It's not enought to simply give employees the opportunity, because very few are going to have the quickness and aggressiveness to hold their own against him.

INC: Aren't you asking managers to play psychologist?

Maccoby: If you're an engineer or scientist, you recognize that you've got to work with the nature of materials. You can't change or mold plastics or metals as you'd like; you've got to do it within the limits of the material.

What I'm saying is that the human material you have to work with now is different from what it was when our society was based on a craft ethic, or an entrepreneurial ethic. The better you understand that material, the better you can work with it and the more effective an organization you can develop.

The current change in your human material is not just a fad or fashion. When we moved from a society of small businesses and farms to a large organized society, where less than 10% of us are self-employed, that meant a shift in emphasis on what's important for success: away from independence and toward flexibility and cooperation.

At the same time, technology began to demand new skills. Brain work has been replacing physical work, and brain work requires more educated people. More education means more diversity in the way people think. That, in turn, is encouraging a value system that says: No authority has the right to tell me what to do without giving me a good reason.

These changes are deeply rooted. Unless you take account of them and understand them, you're not apt to inspire employees, especially younger ones.

These people are oriented much more to self than to a craft or money-making or winning. Why? Because the whole modern organization of society has made it a problem for people to develop a sense of identity, a feeling of belonging somewhere. For many people, it just doesn't happen naturally, the way it used to.

INC: Are you suggesting that we're moving away from from the independence and individualism that lead to self-employment? Aren't others -- for example, members of the Reagan Administration -- saying just the opposite?

Maccoby: Yes, to both questions. There's been a great deal of romanticism, which isn't supported by the evidence, about a new entrepreneurial revolution. The question I think we must ask is: What percentage of our population is willing and able to succeed as entrepreneurs and small business owners? My own answer is that the percentage of self-employed will hold fairly level, at around 8% of the total work force, or decrease.

We no longer can look forward to the unlimited growth that spawned the great entrepreneurial era when we were building this country. Now we have a very complex, interdependent society. Nothing is simple, nothing is unlimited. I think entrepreneurs will continue to thrive in areas of business where there's no economy in scale and in new areas like software, genetic engineering, and other high-technology fields. The latter are open to only a small segment of the population, though -- the highly technical, highly educated, and unusually energetic. We're kidding ourselves if we think self-employment is realistic for the vast majority of us.

Yet, it's true that many people want their own businesses. They are not going to be able to succeed at them, however, and that will lead to a great deal of frustration. That frustration is one reason we're going to need such good managers; these people will have to be managed so they'll feel productive and challenged, not like losers.

At the same time, I think we're starting to see a waning in the desire to be self-employed as part of the new social character. People don't want to put as much of themselves into their work as it takes to run your own business. In The Leader I cite studies that show even currently self-employed people are less satisfied than they were 10 years ago. They're unhappy with the insecurity, the risk, the long hours.

This has some serious implications for society, which we should deal with realistically, not by painting romantic pictures or lapsing into pessimism. Any social character has both positives and negatives, and this one is no different. The positives are that more people are concerned with developing and improving themselves. More people are experimental and tolerant, and want to participate in what they consider an equitable and meaningful enterprise.The negatives are a tendency toward selfish escapism, flexibility so extreme it becomes prostitution to whatever comes along, and a lack of respect for authority that can mean getting as much, and giving as little, as you can in order to beat the system.

Which set of attitudes do you get? I think it depends largely on what kind of leaders you have, whether in a company or a country. Never before has leadership been so crucial, in fact, because never before has the social character been so flexible and volatile.

I believe that leadership in the work-place is absolutely essential in terms of how people choose to lead their leves. You have so much opportunity: either to manage the same old way and create the cynicism that results in people saying, "All I want to do is draw my paycheck," or to really involve people and bring out the best in this new social character.