Douglas M.

McGregor (Background)

Professor Douglas McGregor (1906-1964)

Douglas McGregor, MIT professor and author of the highly influential book "The Human
Side of Enterprise," was born in Detroit, Michigan in 1906. While in high school, McGregor
worked as night clerk at the McGregor Institute, a family affair originally established by his
grandfather, but managed by his father and his uncle to provide temporary accommodation for
around 100 transient workers at a time. McGregor played piano there at its regular services. At
17, McGregor briefly considered becoming a lay preacher.

He chose instead to pursue a psychology degree at what is now Wayne State University
in Detroit. After two years, he married, dropped out of college, and worked as a gas station
attendant in Buffalo, New York. By 1930 he had risen to the rank of regional gas station
manager.

When the Detroit Department of Public Works handed the McGregor Institute a large
subsidy to increase its facilities, McGregor decided to resume his studies while also working
part-time at the much expanded Institute. He completed a B.A. in 1932 from Wayne State
University, while also organizing soup kitchens for the unemployed and helping to manage the
Institute.

Soon after graduation, he entered Harvard University where he studied for three years,
earning an M.A. and Ph.D. in psychology. It’s interesting to note that the color-blind
McGregor chose “The Sensitivity of the Eye to the Saturation of Colors” for his PhD topic. He
remained at Harvard for two years as a psychology lecturer.

In 1937 he took the short trip down Massachusetts Avenue to help set up the Industrial
Relations Section at the Massachusetts Institute of Technology (MIT). McGregor became
Executive Director of the MIT Industrial Relations Section, which years later was renamed the
Institute for Work and Employment Research (IWER). IWER still exists today and is housed in
the MIT Sloan School of Management.
 McGregor held the position of Professor of Management at the MIT Sloan School of
Management until 1947, and then became president of Antioch College from 1948 to 1954. He
also taught at the Indian Institute of Management in Calcutta.

McGregor’s 1960 book, The Human Side of Enterprise, had a profound influence on
education practices. He contributed much to the development of management and
motivational theory. He is best known for his Theory X and Theory Y, which splits corporate
thinking into two camps. Theory X holds that employees are inherently disinclined to work
and needed to be strictly controlled. Theory Y holds that employees should be trusted and
empowered. McGregor showed—at a time when labor-management relations were becoming
more adversarial—that there was another way to view workers and leadership.

In The Human Side of Enterprise McGregor was among the first scholars to emphasize
influence as key to managerial leadership, commenting: “The power to influence others is not a
function of the amount of authority one can exert. It is, rather, a function of the appropriate
selection of the means of influence which the particular circumstances require…. relinquishing
authority is seen as losing the power to control. This is a completely misleading conception.” He
adds that there was a dynamic between the views of managers and workers. Where the
workforce is held in low esteem (theory X), he comments, “they will have relatively limited
expectations concerning the possibility for achieving their own goals and so reciprocate by
holding management in low esteem.”

While McGregor is often viewed as a proponent of Theory Y, MIT Emeritus Professor Ed

Schein clarified that perception in his introduction to McGregor’s posthumous (1967) book
entitled The Professional Manager: “In my contacts with Doug, I often found him to be
discouraged by the degree to which Theory Y had become as monolithic a set of principles as
those of Theory X—an over-generalization that Doug was fighting….” Instead, in The Human
Side of Enterprise McGregor urges managers to reflect on their own assumptions and come to
their own conclusion. The book was voted the fourth most influential management book of the
20th century in a poll of the Fellows of the Academy of Management.

McGregor died at the age of 58 in Massachusetts. In 1994, the School of Adult and
Experiential Learning at Antioch College was renamed the McGregor School in his honor.
 What Is Theory X and Theory Y?

In the 1960s, social psychologist Douglas McGregor developed two contrasting theories
that explained how managers' beliefs about what motivates their people can affect their
management style. He labeled these Theory X and Theory Y. These theories continue to be
important even today.

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.

Conceptual Framework of Theory X

According to the McGregor’s Theory X, it is a hard approach where manager’s role is to

control their employees strictly and forcefully (Robbins and Judge 189; Iqbal, Sumaira, Madiha
and Anam 12).

In addition, Iqbal, Sumaira, Madiha and Anam (12) stated that Theory X based on
coercion, close supervision, implicit threats; on the other hand, Robbins and Judge (189) said
that Theory X assumes that lower order needs dominate individuals of the Maslow’s
framework, therefore, the managers under this approach never consider participative decision
making.

However, mainly four factors influence the managers to use autocratic approach, such as –

 Workers naturally dislike work and endeavor to avoid it (Robbins and Judge 189);
 As they are not interested to perform, they must be controlled strictly with punishment
to reach objectives (Iqbal, Sumaira, Madiha and Anam 12);
 In addition, the employees are self-centered and have no ambition, so, try to avoid
responsibility (Robbins and Judge 189);
 They are also concentrating more on the security issue avoiding aims of the company
(Robbins and Judge 189);

However, four leadership styles fall under Theory X and these are:

In the era of globalisation, most of the multinational companies avoid this approach considering
the key characteristics of this style, for instance, the oldest and hardest Autocratic approach is
power-centered, which ignoring preferences of the employees, though some times leaders
provide rewards and penalties for the outstanding performance.

Under this approach, the leaders enjoy ultimate and unlimited power to take their decisions
and the workforces have to pursue the direction of the managers strictly, though this approach
is not effective in modern society because the business world experienced rapid changes where
different organizations involved in high-level competition (Iqbal, Sumaira, Madiha and Anam
13; Kurfi 9).
Problems and Challenges of Theory X in Context of Needs of the Businesses

According to this theory, the companies mostly concentrate on money and benefits to
satisfy the employees, but the source of motivation is lost when their needs fulfilled in such
way; at the same time, this hypothesis hinders the satisfaction of higher-level needs; therefore,
this predicted negative relationship influence the workforce of the companies to seek
additional payments.

The rationale to provide Theory Y was existing dilemma of this process, for instance,
financial benefit is one of the effective systems to satisfy lower needs, but the employees need
additional facilities leisure time to fulfill higher needs, as a result, the workforce again lose their
interest on the job and evade responsibility, which makes Theory X a self-fulfilling prediction.
 Companies with Theory X Approach – Apple, easyJet and Ford Motor

Branson (6) stated that Stelio – the former chief executive officer of easyjet was
followed Theory X approach in some extent as it was sentential for the leader to control the
employees implementing comparatively hard approach while it had a number of young and
relatively inexperience employees.

Carolyn McCall is a new CEO for budget airline easyJet was former leader of Guardian
Media Group (where she made some high-profile changes during her tenure); however, she has
no experience of the airline industry, but she intends to restructure the company to meet the
objectives in the post recessionary economy; thus, she will follow hard approach in some
extent.

According to the view of theorists, Late Steve Jobs, former CEO of Apple was a great
leader of Apple’s history who had followed no uniform leadership style to governed the
company operations; however, Chaushuri stated that he was a role model for other leaders as
he showed how to control the company and the employees to keep effort on innovation.

Chaushuri (1) stated that the CEO of Dell proudly claimed in 1997 that Dell’s value more
than $28.10 billion while Apple’s value only US$3.1 billion, however, that scenario had changed
within few years, and Apple is the most valuable company at present since its current value is
about US$568.8 billion; it was the great contribution of Steve Job.

Moreover, here it is important to mention that Steve Job brought this excellent success
using an autocratic leadership style, for example, he forced to the employees to manufacture
products in accordance with his instruction otherwise he fired the staff; at the same time,
renowned scholars stated that Jobs never considered democratic approach in digitalization
process (Chaushuri 1).

Most importantly, Steve had some specific objectives and he was keen to reach these
goals, consequently, he dominated Apple’s workers and directed them correctly with his
authoritarian leadership approach; nevertheless, Steve’s departure meant a major
transformation for the company in terms of coping up with new organizational styles.
 On the other hand, current and former workforce of this company have admired Job’s
leadership style because he had aptitude to direct people without any training; in spite of huge
success of Jobs, Little (1) suggested that Tim Cook, the new CEO to be a democratic leader along
with quite cohesive-leader and create an organisational-culture of shared-leadership.

Conceptual Framework of Theory Y Approach

As suggested by McGregor (67), the conceptual framework of Theory Y approach is

based on the idea where the organization presumes that workers can be determined and self-
motivated, and can apply self-restraint; moreover, it is believed that workers get pleasure from
the tasks and possess the capability of innovative problem-solving, but their aptitudes remain
unused in the majority of corporations

McGregor (47) also pointed out that according to the Theory Y concept, creating
dedication towards goals is a task of rewards; in addition, it is presupposed that Theory Y-
managers think that workers would gradually, get enthusiastic to search and admit duties and
apply self-agenda in achieving goals, moreover, in exact circumstances, nearly everyone would
feel like performing competently at workplace.

This kind of managers think that the contentment of carrying out good-work is a
powerful-motivation; therefore, most researchers, infer Theory Y as optimistic viewpoints
regarding workforce; however, Douglas McGregor urged managers to use a confident outlook
towards employees and also discussed about its benefits; in addition, he expressed that such
managers are more likely to develop trustworthy climate at workplace

According to Carson (9), Theory Y, also presents a HR improvement framework, which

offers an essential element for corporations and comprises of frank communication with
employees, diminishes distance between employee/ employer relations, and crafts comfortable
environment so that employees can develop their capabilities, providing a climate for
devolution of decision-making so that they could have an opinion in the decision-making
 Model of Theory Y Approach

According to McGregor (67), in order to apply a

Theory Y approach, firms, usually follow a number of
models for restructuring the organization in a way that is
suitable for adopting McGregor’s hypothesis:

1. Fragmentation of powers, along with devolution –

When the corporations disintegrate organizational
powers and empower worker as well as diminishing
the amount of administrative ranks, it could be seen
that every administrator would get additional workers
and as a result would be required to carry out
devolution and fragmentation of powers in order to
lower individual workloads
2. Occupational amplification – In order to develop the
self-esteem of the personnel, it is important to
intensify the capacity of their occupation, and adjoin
diversity into the particular professions, so that they
could stay gratified with their careers; moreover, such
a positive motivation could in turn increase the productivity of the personnel
3. Ensuring administrative partaking – This model of Theory Y includes discussing with human
resources, with regard to the decision-making procedure in order to bring out the potentials
of individual staff as well as utilizing the innovative aptitudes and affording authority to the
staff to certain extent throughout the working-period
4. Assessment of individual working standards – Another simple model of the theory, states
that it is imperative to fix aims for the personnel and then create a system through which
their working standards could be measured
5. Democratic approach of leadership – It is highly essential for the top- level executives or the
CEOs of the companies to assure democracy in the businesses by ensuring that every
worker is getting a chance to express individual viewpoints; however, the following figure
shows a simple model of the Theory Y approach:
 Facebook and Google: Companies with Theory Y Approach

Google follows a Theory Y approach for managing the operations; it is notable that Erik
Schmidt, the CEO of the company, has adopted a strategy to assure democracy in the
corporation by ensuring that every worker is getting a chance to express individual viewpoints,
even though these viewpoints, in some cases, could conflict with a decision of the top-level
managers.

Conversely, a group of friends created Facebook in a way so that each of them could
have a say in the organizational process; however, it is important to note that this simple
democracy at the early years of Facebook, still continues in order to include the opinion of the
workers who are placed at lower- levels of the organizational chart

References:

 https://www.mindtools.com/adi3nc1/theory-x-and-theory-y
 https://courses.lumenlearning.com/wmintrobusiness/chapter/reading-douglas-
mcgregors-theory-x-and-theory-y-2/
 https://mitsloan.mit.edu/institute-work-and-employment-research/douglas-m-
mcgregor
 https://ivypanda.com/essays/theory-x-and-theory-y-in-management-term-
paper/#:~:text=The%20purpose%20of%20this%20study,leaders%20to
%20achieve%20organizational%20goals.
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