Theory ‘X’ and Theory ‘Y’

McGregor’s Theory X and Theory Y: Management’s action of motivating human beings in the organization, according to McGregor, involves certain assumptions, generalizations and hypothesis relating to human behavior and human nature.

Theory X: 1. The average man is by nature, lazy – he works as little as possible. 2. He lacks ambition, dislikes responsibility, prefers to be led. 3. He is inherently self-centered, indifferent to organizational needs. 4. He is, by nature resistant to change. 5. He is not very bright. 6. Management is responsible for organizing the elements of productive enterprises – money, material, machine, men. 7. Process of directing their efforts, motivating them, controlling their actions, modifying their behavior to fit the needs of the organization. 8. People must be persuaded, rewarded, punished, controlled, and their activities must be directed. This is management’s task.

Theory Y:
1. 2. 3. 4. 5. 6. 7. Physical and mental effort in work is natural as play or rest. Average human being does not inherently dislike work. Man will exercise self-direction and self-control in the service of objectives to which he is committed. Satisfaction of ego and self-actualization needs, can be a direct product of effort directed towards organizational objectives. Average human being learns under proper conditions not only to accept, but to seek responsibility. Capacity to exercise a relatively high degree of imagination and creativity in the solution of organizational problems. The intellectual potentialities of the average human beings are only partially utilized.

McGregor’s Theory X and Theory Y

Theory X

Theory Y

üFor Human beings work is as natural as play. ü üPeople have high ambitions and accept responsibilities in jobs. and try to avoid responsibilities in jobs. ü üCreativity is widely distributed in the population. creativity ü üHigher order needs are more important. eds. ü üPeople are self-directed get maximum output from them. d require to be externally controlled and closely supervised toand creative and prefer self-control. ü em and centralization of authority. üEmphasizes decentralization and greater participation in the decision making. Pr üEmphasizes supportive leadership style.

owards work.



Theory ‘Z’

Theory Z:
• Theory Z describes the major postulates of Japanese management practices and how these practices can be adopted to the environment of United States and other countries. Theory Z, has made a comparative study of American and Japanese management practices can be adopted in American context.

Ouchi suggested 5 broad features of Theory Z 1. Trust 2. Strong bond between organization and employee 3. Employee involvement 4. No formal structure 5. Role of managers to bring co-ordination in human beings.

Trust: • Trust between employees, supervisors, work groups, unions, management and government. • When trust and openness exist, the chances of conflict are automatically reduced to the sminimum.

Strong Bond between Organizatin and Employees: • Life time employment • Provisions of highly conducive work environment and challenges • Participation in decisions. • Accepting less profits or even moderate losses for a short period of time during the situation of layout by share holders and owners. • More emphasis on horizontal movement of employees which reduces stagnation. • Career planning for employees should be prepared so that every employee is suitably placed. • Slowing down of promotion and financial incentives. • Communicate the expectation of greater income in the future without creating short-term incentives.

Employee Involvement: • Employee Involvement through meaningful participation. • If any decision affecting employees in any way should be taken jointly • If there is any decision which management wants to take individually, the employees should be informed about this so that they do not feel ignored. • The idea is not to slow down the decisionmaking process but to involve employees for their commitment and giving due recognition to them.

No formal Structure: • Instead of formal structure, it must be a perfect teamwork with co-operation along with sharing of information, resources and plans. • Emphasis on rotational aspect of employee placement which provides opportunities to him to understand how his work affects others or is affected by others. • Enables him to develop group spirit which is the basic back bone of success.

Co-ordination of Human beings: • Developing people’s skills and also the creation of new structures, incentives and a new philosophy of management. • Leader must develop trust which consists of the understanding of fundamentally compatible goals of the desire for the more effective working relationship together. • To develop trust, there should be a complete openness. • Developing a common culture.

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