McGregor Theory X

and Y and
Contemporary Era
Rachael Shoemaker

Christian Slack

Jalil Singleton

Gianni Gamble
 Douglas McGregor

• Born in Detroit , Michigan in 1906

• Graduated From Wayne University in 1932 with a B.A.

• Graduated from Harvard University in 1935 earning a M.A. and Ph.D. in

psychology

• In 1937 he became Executive Director of Massachusetts Institute for

Technology (MIT) industrial relations then was later named the Institute for
Work and Employment Research.

• he became the President of Antioch College from 1948-1954

• Mcgregor died at the age of 58 from a heart attack in 1964

Douglas Mcgregor

• Mcgregor showed- at the time when labor-management relations

were becoming more adversarial- that there was another way to
view workers and leadership.

• Mcgregor formulated theory X and Y in 1960, which suggest two

aspects of human behavior. Theory X is negative and assumes
employees dislike work. Theory Y is positive and assumes that
employees are capable of self-direction and seek responsibility.

• Mcgregor's 1960s book, The Human Side of Enterprise, had

profound influence of education practices. He contributed much to
the development of management and motivational theory.
Theory X

Theory X is based on the assumptions that:

 The average Human being has an inherent dislike of work and avoid if he can

 Because of this the human characteristics of dislike of work, most people must be coerced, controlled,
directed, threatened with punishment to get them to put forth adequate effort toward the achievement of
organizations.
 The average human being prefers to be directed, wishes to avoid responsibility, has relatively little
ambition, wants security above all

(Mcgregor, 1960, pp 33,34)

Theory X
• A theory X management style therefore requires close, firm supervision with clearly
specified task and the treat of punishment or the promise of greater pay as motivation
factors.

• A manager working under these assumptions will employ autocratic controls which can
lead to mistrust and resentment from those they manage.

• Mcgregor acknowledges that the 'carrot and stick' approach can have a place but will not
work when the needs of people are predominantly social and egoistic.

(McGregor, 1960,)
Theory X
Pros: Cons:

• Quick decision making • Employee dissatisfaction of leadership

• Clear structure of chain of command • Low on creativity and innovation

• Reduction of mistakes implementing • Reduction of group energy and

plans collaboration

• Consistency in delivery of work • Increases turnover rate

• Brings clarity • HOW trust

Theory Y

Theory Y is based on the assumptions that:

1) The Expenditure of physical and mental effort in the work place is as natural as play or rest. The average human being does not
inherently dislike work. Depending upon controllable conditions, work may be a source of satisfaction (and will be voluntarily
preformed) or source of punishment (and will be avoided if possible).

2) External controls and the threat of punishment are not the only means for bringing about effort towards organizational objectives.
Man will exercise self-direction and self-control in the service of objectives to which he is committed.

3) Commitment to objectives is a function of the rewards associated with their achievement. The most significant of such rewards,
e.g., the satisfaction of ego and self-actualization needs, can be direct products of effort directed towards organizational objects.

(Mcgregor, 1960, p. 47)

Theory Y
Theory y is based on assumptions that (continued):

1) The average human being learns under proper conditions, not only to accept but to seek
responsibility. Avoidance of responsibility, lack of ambition, and emphasis on security are
generally consequences of experience, not inherent human characteristics.

2) The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the
solution of organizational problems is widely, not narrowly, distributed in the population.

3) Under the conditions of modern industrial life, the intellectual potentialities of the average
human being are only partially utilized.

(McGregor, 1960, p. 48)

Theory Y
• McGregor recognized that theory Y was not a panacea for all ills. By highlighting theory
Y, he hoped instead to persuade managers to abandon the limiting assumptions of theory
X and consider using techniques suggested by theory Y.

• McGregor put theory Y into practice in a Californian electronics factory. However, he

found that an organization driven solely by theory Y could not succeed, as some sense of
direction and structure was required. Theory Y has been criticized for being too
idealistic
Theory Y
• Effective problem solving • Time consuming poor and poor decision

• Promotes creativity making

• Increases motivation and job • Communication failure

satisfaction • Security issues

• Encourages group input • Lack of accountability

• Effective decision making • Increased time cost

• Enhances trust and respect

 SWOT Analysis:
Strengths: This Photo b y Unknown autho r is licensed under CC BY-NC .

• Strong Brand Reputation: Amazon has a powerful and positive image globally due to the fact of their exceptionally good customer satisfaction rating. As
stated by the American Customer Satisfaction Index (ACSI), Amazons customers satisfaction rate was rated at 84 out of 100. Which was the largest improvement
out of all online retailers. Amazon is able to achieve these stats because of their customer-centric approach and multiple delivery options.

• Innovative Technology: One of Amazon's most efficient strengths is its ability to adapt and create technology quickly and efficiently. Amazon has created
world class technology with the creation of Alexa, which is a physical AI assistants. This is the reason why Amazon is among Top 10 Most Innovative Companies
in the world according to Forbes. That list include other companies like Tesla, Netflix, and Facebook.

• Magnificent Delivery System: Amazon has the most-broad delivery system of all companies in the e-commerce world. Amazon has over 1 million delivery
partners and multiple world class fulfillment centers. Amazon has multiple delivery options, which include standard, one-day, same-day, and even Whole Foods
delivery. Amazon's broad selection of delivery options have allowed the company to surpass other carrier companies such as UPS in parcel volume.

• Strong Financial Position: Amazon has been able to maintain a great balance sheet, with positive cash flow, substantial assets, and they have manageable debt.
In the year 2023, Amazon has cash equivalents of $43.4 billion and total assets of $386 billion. The annual revenue for the company stands at about $524.89
billion. Amazon's financial position allows the company to keep the ball rolling when unexpected events occur, such as something like COVID Pandemic. It also
allows the company to invest in other new growth opportunities.
 SWOT Analysis:
Weakness:.
• Dependence on Third-Party Sellers: Amazon heavily depends on third-party sellers for a significant portion of its product offerings, posing potential risks. The
reliance raises concerns about fraud and low-quality products, which could harm Amazon's reputation and result in lost sales if customers have negative experiences.
Challenges in product control and customer satisfaction arise as Amazon lacks complete oversight over third-party products, impacting quality, availability, and delivery.
While this reliance has fueled Amazon's exponential growth, it also exposes the company to risks associated with dependence on partnerships. Disputes, termination of
partnerships, and challenges related to tax avoidance, employee issues, and data usage controversies with sellers can disrupt operations and threaten access to specific items
or services.

• Care of Employees: In recent years, Amazon has faced criticism and scrutiny over its warehouse labor practices, including high productivity demands, long working
hours, and insufficient breaks, raising concerns about worker well-being. In 2021, the company received a $60,000 fine from the Occupational Safety and Health
Administration for failing to protect employees from ergonomic hazards. In 2022, a lawsuit was filed by a group of workers in New York City, alleging that Amazon
violated labor laws by not providing adequate breaks. While Amazon has implemented some changes, such as increased wages and improved working conditions, reports
suggest that not all concerns about the company's labor practices have been adequately addressed.

• Tax Avoidance: Amazon is currently confronted with lawsuits from several countries, including Japan, the US, and the UK, accusing the company of
attempting to evade taxes. The issue of tax avoidance by tech giants, including Amazon, has drawn international scrutiny. Former US President Donald Trump
has also criticized Amazon over tax matters. Notably, a report by the Fair Tax Foundation reveals that Amazon's tax conduct has been questioned, as the
company reportedly paid only $3.4 billion in income taxes in the United States over the past decade, despite generating a net profit of $26.8 billion on a
revenue of $960.5 billion.
 SWOT Analysis:
Opportunity:
• Artificial Intelligent (AI) and Machine Learning: Amazon is actively investing in AI and machine learning to enhance customer experience, operational
efficiency, and overall business growth. The company utilizes proprietary AI models for optimizing supply chain operations, preventing fraud, and improving
customer interactions through AI-powered chatbots and virtual assistants. Noteworthy AI technologies include Amazon Comprehend Medical, which extracts
information from unstructured medical text, and Amazon Forecast, which accurately predicts future demand and trends.

• Robotics and Automation: Amazon, a frontrunner in warehouse automation, has created diverse robotic systems, such as experimental transport robots and
advanced autonomous mobile robots, to enhance operational efficiency. The company can build on its leadership by investing further in robotics and automation
technologies, deploying more robots for tasks like picking, packing, sorting, inventory management, and warehouse maintenance to further optimize its fulfillment
operations.

• Expanding Physical Stores: Expanding its physical store presence presents a strategic opportunity for Amazon to attract new customers and provide a tangible
shopping experience. Despite having fewer physical stores compared to other retailers, Amazon has experimented with innovative formats like Amazon Go,
offering convenience. This expansion can enhance Amazon's competitiveness against traditional retailers, especially in markets with lower e-commerce
penetration. To succeed, Amazon needs to assess risks and rewards in each market, tailor strategies to local preferences, and leverage technology. Despite
significant growth, there are untapped markets like Africa and Asia. For instance, the recent launch of the cashier-less Amazon Go store in the UK signifies
Amazon's commitment to this strategy, aiming to open around 3,000 such stores globally in the next 3 to 5 years.
 SWOT Analysis:
Threats:
• Security Threat: Amazon, like other tech companies, faces the constant risk of various cybersecurity threats, including data breaches, social engineering attacks, DDoS
attacks, malware, ransomware, and insider threats. The evolving nature of these threats poses ongoing challenges for the company, especially given its handling of substantial
customer data. The potential consequences of cyberattacks include the compromise of sensitive customer information, leading to lost trust and potential legal liabilities. To
mitigate these risks, Amazon needs to invest in robust security measures, regularly monitor, and update its systems to stay ahead of emerging threats. With increasing cybercrimes,
customer concerns about data exposure affect Amazon and other e-commerce platforms, highlighting the importance of developing technologies to combat cyber threats.

• Intense Competition: Amazon faces fierce competition across various segments, contending with rivals like Flipkart and eBay in e-commerce, Microsoft and Google in cloud
services, and Target and Walmart in retail. The company operates in highly competitive markets, requiring constant innovation to maintain its edge and attract customers. In e-
commerce, Walmart dominates the physical space, while Alibaba Group leads in China. Streaming services competition includes Disney+, Netflix, and Hulu, each with its unique
content and subscriber base. In cloud computing, Microsoft Azure and Google Cloud pose significant competition to Amazon Web Services. In the realm of digital assistance,
Amazon contends with Apple Siri and Google Assistant, both integrated into widespread devices and platforms. Amazon's ability to adapt and innovate in this competitive
landscape is crucial for sustaining its market share and profitability.

• Regulatory Issues: Amazon, due to its global reach and diverse business activities, faces scrutiny from regulators and legal entities in multiple jurisdictions. The
government's focus on breaking monopolies is evident in the introduction of new laws to foster competition in various industries. Amazon is obligated to navigate
and comply with evolving domestic and international regulations, covering areas such as data privacy, taxes, cross-border trade, and labor practices. Non-
compliance could result in substantial penalties or a complete cessation of operations, emphasizing the importance for Amazon to stay abreast of regulatory
changes to ensure continued business operations.
Contemporary • The Contemporary era follows the end of World War
II

Approach • Many elements of the earlier approaches to

management theory continue to influence how
managers manage. Most of these earlier approaches
focused on managers concerns inside the
organization. (Robbins, Coulter, 2020, p.30)

• Starting in the 1960s, management researchers began

to look at was happening in the external environment
outside the boundaries of the organization. (Robbins,
Coulter, 2020, p.30)

• Many modern-day businesses use contemporary

approach management, emphasizing characteristics
like decentralization authority and increased
flexibility.

• Two contemporary management perspectives- systems

and contingency theory. (Robbins, Coulter, 2020,
p.31)
This Photo by Unknown author is licensed under CC BY.
Contemporary Approach
Decentralization of Increased
Characteristics: Use of technology Increased flexibility
authority independence
• Innovation software • Contemporary • Due to • Globalization and
can complete many management uses a decentralization advanced
tasks, from creating hierarchal structure (system where top, technology
schedules to to understand which middle, and lower contribute to today's
tracking employee employees have levels of fast paced business
performance, authority over management environments
allowing others, but it is more participate in
management teams decentralized than decision making)
to streamline traditional
employee management
workflows and models.
enhance
productivity.
Contemporary Approaches
Systems Theory:

 Systems theory is a basic theory in the physical sciences but had never been applied to organized
human efforts. (Robbins, Coulter, 2020, p.30)

 A system is a set of interrelated and independent parts arranged in a manner that produces a
unified whole. Closed systems are not influenced by and do not interact with their environment.
Open systems are influenced by and do interact with their environment. (Robbins, Coulter,
2020, p.30)

 Organizations takes in inputs (resources) from the environment and transforms or processes these
resources into outputs that are distributed into the environment. (Robbins, Coulter, 2020, p.34)
Contemporary Approach
Systems theory:

• This approach provides a framework to help managers understand how all the interdependent units
work together to achieve the organization's goals and that decisions and actions taken in one
organizational area will affect others. (Robbins, Coulter, 2020, p.34)

• How the systems theory contributes to our understanding of management, -researchers imagined
organizations as complex systems comprised of many components, including individuals, groups,
structure, goals, status, and authority. What this means is that managers coordinate work activities in
the various parts of the organization, they ensure that all these [arts are working together so the
organization's goals can be achieved. The systems theory implies that decisions and actions in one
organization will affect other areas. (Robbins, Coulter, 2020, p 31)
Contemporary Approach

Contingency Theory:
• Sometimes called the situational approach, says that organizations are
different, face different situations, and require different ways of managing.
(Robbins, Coulter, 2020, p.31)
• Good way to describe contingency is "if, then." If this is the way my situation
is, then this is the best way for me to manage in this situation. (Robbins,
Coulter, 2020, p.32)
• The primary value of contingency approach is that it stresses there are no
simplistic or universal rules for management to follow. (Robbins, Coulter,
2020, p32)
Contemporary Approaches
Contingency theory continued:
• Contemporary managers are using Big Data, among other things, to predict what
customers might want to buy, identify potential problems before they occur, and allocate
scare resources. (Robbins, Coulter, 2020, p32)
• Finally, no contemporary history management would be complete without recognizing
the important influence that technology and computerization have played in defining
current practices.
• Example: your grandfather could get a job in a factory with a high school education or
less. The demands of those jobs required little skill. Today's factories are highly
computerized and require employees with the skills to operate complex equipment.
Teamwork and
Leadership

• As our group worked on our project,

everyone had their own specific roles. These
roles were based off our general
comprehension of the assignment and who we
thought best fit each roll.
• We double checked each other's work and
asked each other questions along the way.
• Finally, we put all our work together
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