Understanding Theory X and Theory Y

Theory X and Theory Y were first explained by McGregor in his book, "The Human Side of Enterprise,"
and they refer to two styles of management – authoritarian (Theory X) and participative (Theory Y).

If you believe that your team members dislike their work and have little motivation, then, according to
McGregor, you'll likely use an authoritarian style of management. This approach is very "hands-on" and
usually involves micromanaging people's work to ensure that it gets done properly. McGregor called this
Theory X.

On the other hand, if you believe that your people take pride in their work and see it as a challenge,
then you'll more likely adopt a participative management style. Managers who use this approach trust
their people to take ownership of their work and do it effectively by themselves. McGregor called this
Theory Y.

The approach that you take will have a significant impact on your ability to motivate your team
members. So, it's important to understand how your perceptions of what motivates them can shape
your management style.

We'll now take a more in-depth look at the two different theories, and discover how and when they can
be useful in the workplace.

Theory X

Theory X managers tend to take a pessimistic view of their people, and assume that they are naturally
unmotivated and dislike work. As a result, they think that team members need to be prompted,
rewarded or punished constantly to make sure that they complete their tasks.

Work in organizations that are managed like this can be repetitive, and people are often motivated with
a "carrot and stick" approach. Performance appraisals and remuneration are usually based on tangible
results, such as sales figures or product output, and are used to control staff and "keep tabs" on them.

This style of management assumes that workers:

 Dislike their work.

 Avoid responsibility and need constant direction.
 Have to be controlled, forced and threatened to deliver work.
 Need to be supervised at every step.
 Have no incentive to work or ambition, and therefore need to be enticed by rewards to achieve
goals.

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According to McGregor, organizations with a Theory X approach tend to have several tiers of managers
and supervisors to oversee and direct workers. Authority is rarely delegated, and control remains firmly
centralized. Managers are more authoritarian and actively intervene to get things done.

Although Theory X management has largely fallen out of fashion in recent times, big organizations may
find that adopting it is unavoidable due to the sheer number of people that they employ and the tight
deadlines that they have to meet.

Theory Y

Theory Y managers have an optimistic, positive opinion of their people, and they use a decentralized,
participative management style. This encourages a more collaborative, trust-based relationship between
managers and their team members.

People have greater responsibility, and managers encourage them to develop their skills and suggest
improvements. Appraisals are regular but, unlike in Theory X organizations, they are used to encourage
open communication rather than control staff.

Theory Y organizations also give employees frequent opportunities for promotion.

This style of management assumes that workers are:

 Happy to work on their own initiative.

 More involved in decision making.
 Self-motivated to complete their tasks.
 Enjoy taking ownership of their work.
 Seek and accept responsibility, and need little direction.
 View work as fulfilling and challenging.
 Solve problems creatively and imaginatively.

Theory Y has become more popular among organizations. This reflects workers' increasing desire for
more meaningful careers that provide them with more than just money.

It's also viewed by McGregor as superior to Theory X, which, he says, reduces workers to "cogs in a
machine," and likely demotivates people in the long term.

Theory X and Theory Y in the Workplace

Most managers will likely use a mixture of Theory X and Theory Y. You may, however, find that you
naturally favor one over the other. You might, for instance, have a tendency to micromanage or,
conversely, you may prefer to take a more hands-off approach.

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Although both styles of management can motivate people, the success of each will largely depend on
your team's needs and wants and your organizational objectives.

You may use a Theory X style of management for new starters who will likely need a lot of guidance, or
in a situation that requires you to take control such as a crisis.

But you wouldn't use it when managing a team of experts, who are used to working under their own
initiative, and need little direction. If you did, it would likely have a demotivating effect and may even
damage your relationship with them.

However, both theories have their challenges. The restrictive nature of Theory X, for instance, could
cause people to become demotivated and non-cooperative if your approach is too strict. This may lead
to high staff turnover and could damage your reputation in the long term.

Conversely, if you adopt a Theory Y approach that gives people too much freedom, it may allow them to
stray from their key objectives or lose focus. Less-motivated individuals may also take advantage of this
more relaxed working environment by shirking their work.

If this happens, you may need to take back some control to ensure that everyone meets their team and
organizational goals.

Circumstance can also affect your management style. Theory X, for instance, is generally more prevalent
in larger organizations, or in teams where work can be repetitive and target-driven.

In these cases, people are unlikely to find reward or fulfillment in their work, so a "carrot and stick”
approach will tend to be more successful in motivating them than a Theory Y approach.

In contrast, Theory Y tends to be favored by organizations that have a flatter structure, and where
people at the lower levels are involved in decision making and have some responsibility.

Key Points

The concept of Theory X and Theory Y was developed by social psychologist Douglas McGregor. It
describes two contrasting sets of assumptions that managers make about their people:

 Theory X – people dislike work, have little ambition, and are unwilling to take responsibility.
Managers with this assumption motivate their people using a rigid "carrot and stick" approach,
which rewards good performance and punishes poor performance.

 Theory Y – people are self-motivated and enjoy the challenge of work. Managers with this
assumption have a more collaborative relationship with their people, and motivate them by
allowing them to work on their own initiative, giving them responsibility, and empowering them
to make decisions.

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Though your assumptions about what motivates your people will likely have the biggest impact on which
of these two approaches you take, your choice can also be shaped by several other factors. These
include your organizational structure (tiered or flat), the type of work that your people do (repetitive or
challenging), and their skill level (amateur or experienced).

McGregor and Maslow

McGregor's Theory X and Theory Y and Maslow's hierarchy of needs are both rooted in motivation
theory. Maslow's hierarchy of needs consists of physiological needs (lowest level), safety needs, love
needs, esteem needs, and self-actualization (highest level). According to Maslow, a human is motivated
by the level they have not yet reached, and self-actualization cannot be met until each of the lower
levels has been fulfilled. Assumptions of Theory Y, in relation to Maslow's hierarchy put an emphasis on
employee higher level needs, such as esteem needs and self-actualization.

McGregor also believed that self-actualization was the highest level of reward for employees. He
theorized that the motivation employees use to reach self-actualization allows them to reach their full
potential. This led companies to focus on how their employees were motivated, managed, and led,
creating a Theory Y management style which focuses on the drive for individual self-fulfillment.
McGregor's perspective places the responsibility for performance on managers as well as subordinates.

Theory X

Theory X is based on assumptions regarding the typical worker. This management style assumes that the
typical worker has little ambition, avoids responsibility, and is individual-goal oriented. In general,
Theory X style managers believe their employees are less intelligent, lazier, and work solely for a
sustainable income. Management believes employees' work is based on their own self-interest.
Managers who believe employees operate in this manner are more likely to use rewards or punishments
as motivation. Due to these assumptions, Theory X concludes the typical workforce operates more
efficiently under a hands-on approach to management. Theory X managers believe all actions should be
traceable to the individual responsible. This allows the individual to receive either a direct reward or a
reprimand, depending on the outcome's positive or negative nature. This managerial style is more
effective when used in a workforce that is not essentially motivated to perform.

According to McGregor, there are two opposing approaches to implementing Theory X: the hard
approach and the soft approach. The hard approach depends on close supervision, intimidation, and
immediate punishment. This approach can potentially yield a hostile, minimally cooperative workforce
that may cause resentment towards management. Managers are always looking for mistakes from
employees, because they do not trust their work. Theory X is a "we versus they" approach, meaning it is
the management versus the employees.

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The soft approach is characterized by leniency and less strict rules in hopes for creating high workplace
morale and cooperative employees. Implementing a system that is too soft could result in an entitled,
low-output workforce. McGregor believes both ends of the spectrum are too extreme for efficient real-
world application. Instead, McGregor feels that an approach located in the middle would be the most
effective implementation of Theory X.

Because managers and supervisors are in almost complete control of the work, this produces a more
systematic and uniform product or work flow. Theory X can benefit a work place that utilizes an
assembly line or manual labor. Using this theory in these types of work conditions allows employees to
specialize in particular work areas which in turn allows the company to mass-produce a higher quantity
and quality of work.

Theory Y

Theory Y managers assume employees are internally motivated, enjoy their job, and work to better
themselves without a direct reward in return. These managers view their employees as one of the most
valuable assets to the company, driving the internal workings of the corporation. Employees additionally
tend to take full responsibility for their work and do not need close supervision to create a quality
product. It is important to note, however, that before an employee carries out their task, they must first
obtain the manager's approval. This ensures work stays efficient, productive, and in-line with company
standards.

Theory Y managers gravitate towards relating to the worker on a more personal level, as opposed to a
more conductive and teaching-based relationship. As a result, Theory Y followers may have a better
relationship with their boss, creating a healthier atmosphere in the workplace. In comparison to Theory
X, Theory Y incorporates a pseudo-democratic environment to the workforce. This allows the employee
to design, construct, and publish their work in a timely manner in co-ordinance to their workload and
projects.

Although Theory Y encompasses creativity and discussion, it does have limitations. While there is a more
personal and individualistic feel, this leaves room for error in terms of consistency and uniformity. The
workplace lacks unvarying rules and practices, which could potentially be detrimental to the quality
standards of the product and strict guidelines of a given company.

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