Theory X and Theory Y

Theory X' and 'Theory Y' are theories of human motivation and management. They were created and
developed byDouglas McGregor at the MIT Sloan School of Management in the 1960s. These theories
describe two contrasting models of workforce motivation applied by managers in human resource
management, organizational behavior, organizational communication and organizational development.
McGregor terms the two models as 'Theory X', which stresses the importance of strict supervision and
external rewards and penalties; and 'Theory Y', which highlights the motivating role ofjob
satisfaction and allows scope for workers to approach tasks creatively.

Theory X[edit]
Theory X considers that on the whole, workers dislike their work, and have little inherent motivation to
perform well. Therefore, if organizational goals are to be met, 'Theory X' managers must rely heavily on
detailed rules and instructions, on close monitoring, and on the threat of punishment to gain employee
compliance. When practiced, this theory can lead to mistrust, highly restrictive supervision and a punitive
atmosphere. The 'Theory X' manager believes that all actions should be traced and the responsible
individual given a direct reward or a reprimand according to the action's outcomes. This managerial style
is more effective when used to motivate a workforce that is not inherently motivated to perform. It is
usually exercised in professions where promotion is infrequent, unlikely or even impossible and where
workers perform repetitive tasks. A flaw of this management style is that it limits the employee's potential
and discourages creative thinking.[citation needed]

Theory Y[edit]
Theory Y, in contrast, is based on the belief that, given appropriate working conditions, most people
perform well. The worker is considered as the most important asset of the company. It is believed that
workers can derive satisfaction from their physical and mental work, viewing it as a game or as
something to be enjoyed. Workers can take responsibility and can solve problems in a creative way, so
that they do not need to be shadowed constantly; workers will commit to objectives in proportion to the
satisfaction they get from achieving them. Thus, Theory Y managers consider that to achieve the
objectives of the company, they must treat each worker as a mature and responsible individual, and
adopt a style of participatory, democratic leadership, based on self-direction and self-control and
requiring little external control.

Synthesis of Theory X and Theory Y[edit]

For McGregor, Theory X and Y are not opposite ends of the same continuum, but rather two different
continua in themselves. In order to achieve the most efficient production, a combination of both Theories
may be appropriate. It is likely that a manager will need to take both approaches depending on the
evolving circumstances (internal and external) and personalities.

Concepts similar to Theory X and Theory Y have formed part of the theory of military command and
control, with Theory X suggesting a more hierarchical and centralized approach and Theory Y
suggesting a more decentralized one, allowing greater scope for individual initiative. [1]

LMX theory
The quality of the relationship between supervisors and "subordinates" is the focus of leader-member
exchange theory(LMX). In F. Sahin's account, LMX theory perceives that "leaders develop unique
relationships with different subordinates and that the quality of these relationships is a determinant of
how each subordinate will be treated." [2] Workers (subordinates) develop feelings of effective
commitment if supervisors, in addition to overseeing their work, treat them as important to the
organization.[3] While McGregor identified two overall management styles, based on Theory X and
Theory Y, Sahin recognizes that management style may vary between individual relationships. He
argues that the quality of these relationships is in general higher when a Theory Y approach is taken
than it is with the more distant and impersonal exchange relationship resulting from a Theory X
approach.[4]

McGregor and Maslow's hierarchy[edit]

Theory X and Theory Y relate to Maslow's hierarchy of needs, which may be applied to show that human
behavior and motivation should be main priorities in the workplace in order to maximize outputs. In
adopting Theory Y, the organization is trying to create a symbiotic relationship between the managers
and workers, and fulfilling Maslow's needs for self-actualization and esteem.[citation needed]

Theory Z
Theory Z is a name for various theories of human motivation built on Douglas McGregor's Theory X and
Theory Y. Theories X, Y and various versions of Z have been used in human resource management,
organizational behavior, organizational communication and organizational development.
One Theory Z was developed by Abraham H. Maslow in his paper "Theory Z" and the other is Dr.
William Ouchi's so-called"Japanese Management" style popularized during the Asian economic boom of
the 1980s. The third was developed by W. J. Reddin in Managerial Effectiveness.

McGregor's Theory Y in contrast to Theory X, which stated that workers inherently dislike and avoid
work and must be driven to it, and Theory Y, which stated that work is natural and can be a source of
satisfaction when aimed at higher order human psychological needs.
For Ouchi, Theory Z focused on increasing employee loyalty to the company by providing a job for life
with a strong focus on the well-being of the employee, both on and off the job. According to Ouchi,
Theory Z management tends to promote stable employment, high productivity, and high employee
morale and satisfaction.
Ironically, "Japanese Management" and Theory Z itself were based on Dr. W. Edwards Deming's famous
"14 points". Deming, an American scholar whose management and motivation theories were more
popular outside the United States, went on to help lay the foundation of Japanese organizational
development during their expansion in the world economy in the 1980s. Deming's theories are
summarized in his two books, Out of the Crisis and The New Economics, in which he spells out his
"System of Profound Knowledge". He was a frequent advisor to Japanese business and government
leaders, and eventually became a revered counselor. Deming was awarded the Second Order of the
Sacred Treasures by the formerEmperor Hirohito, and American businesses tried to use his "Japanese"
approach to improve their competitive position.

Pre Theory Z[edit]

Abraham Maslow, a psychologist and the first theorist to develop a theory of motivation based upon
human needs produced a theory that had three assumptions. First, human needs are never completely
satisfied. Second, human behavior is purposeful and is motivated by need for satisfaction. Third, these
needs can be classified according to a hierarchical structure of importance from the lowest to highest
(Maslow, 1970).
1. Physiological need
2. Safety needs
3. Belongingness and love needs
4. The esteem needs self-confidence
5. The need for self-actualization the need to reach your full potential
Maslow's hierarchy of needs theory helps the manager to understand what motivates an employee. By
understanding what needs must be met in order for an employee to achieve the highest-level of
motivation, managers are then able to get the most out of production. Theory X, Y and Z all play a role in

how a company should manage successfully. Theory X and Theory Y were both written by Douglas
McGregor, a social psychologist who is believed to be a key element in the area of management theory.
In Mc.Gregor's book The Human Side of Enterprise (1960), Mc.Gregor describes Theory X and Theory Y
based upon Maslow's hierarchy of needs, where McGregor grouped the hierarchy into a lower order
(Theory X) needs and a higher order (Theory Y) needs. Mc.Gregor suggested that management could
use either set of needs to motivate employees, but better results could be gained by the use of Theory Y,
rather than Theory X (Heil, Bennis, & Stephens, 2000).

Implications for leaders in modern organizations[edit]

Psychology helps to explain changes in human behavior, sociology studies people in their relationships
with other human beings. Social psychology was created when the two concepts were blended, so that
the focus is on influences of people on one another to anthropology and political science.
With Theories X, Y, and Z, implications for the modern organization include new challenges and
opportunities. As we learn from these theories and work to implement the ideas in them, we must be
aware of the modern issues of working with people from different cultures and overseeing movements of
jobs to countries with low-cost labor. Also, we must embrace diversity as the U.S. demographics change
and understand that our new managers must recognize and respond to the different culture changes
that will surely ensue with their growing diverse working population.
These theories have proven with many Fortune 500 companies and others that when applied, do
improve quality and productivity and also help to strengthen company labor issues. In addition to the
changing work demographic, new problems and issues have risen since the X, Y and Z theories were
formed. Some issues include fewer skilled laborers, early retirements, and older workers. Other
opportunities that have been implied while companies use Theory Y and Z include an improvement of
people skills, empowering their employees, stimulating change, helping employees balance work with
life conflicts, and improving ethical behavior.
Modern implications for companies using these theories have shown improvements in turnover rates,
productivity, effectiveness, efficiency, organizational behavior, and job satis