The only thing that your manager has is an incredible lack of understanding of management. Certainly, fear can motivate. When a manager walks into the office and threatens to terminate anyone who does not obey, the troops are going to obey, at least for a while.
The reality is that virtually every study on the effectiveness of fear as a motivator finds that its motivational impact is short term at best. It is just a matter of time before the employees start to respond with resistance, rebellion, and retaliation. Your manager has totally missed the concept of treating the employees as individuals and trying to link their needs and objectives to departmental or organizational objectives, and this is at the heart of motivation.
As a footnote, since employees tend to learn many of their managerial skills from their prior managers, it will be particularly important for you to avoid emulating this manager's style. Using fear as a motivator can be effective on a short-term basis, but it is ultimately most effective at motivating people to leave.
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