Theory and X and Theory Y

Introduction

McGregor developed two theories of human behaviour at work: Theory and X and Theory Y.

He did not imply that workers would be one type or the other. Rather, he saw the two theories as two extremes - with a whole spectrum of possible behaviors in between.

Theory X workers could be described as follows:

- Individuals who dislike work and avoid it where possible

- Individuals who lack ambition dislike responsibility and prefer to be led

- Individuals who desire security

The management implications for Theory X workers were that, to achieve organizational objectives, a business would need to impose a management system of coercion, control and punishment.

Theory Y workers were characterized by McGregor as:

- Consider effort at work as just like rest or play

- Ordinary people who do not dislike work. Depending on the working conditions, work could be considered a source of satisfaction or punishment

- Individuals who seek responsibility (if they are motivated0

The management implications for Theory X workers are that, to achieve organizational objectives, rewards of varying kinds are likely to be the most popular motivator. The challenge for management with Theory Y workers is to create a working environment (or culture) where workers can show and develop their creativity.

Theory X and Theory Y was an idea devised by Douglas McGregor in his 1960 book “The Human Side of Enterprise”. It encapsulated a fundamental distinction between management styles and has formed the basis for much subsequent writing on the subject.

Theory X is an authoritarian style where the emphasis is on “productivity, on the concept of a fair day’s work, on the evils of feather-bedding and restriction of output, on rewards for performance … [it] reflects an underlying belief that management must counteract an inherent human tendency to avoid work”. Theory X is the style that predominated in business after the mechanistic system of scientific management had swept everything before it in the first few decades of the 20th century.

Theory Y is a participative style of management which “assumes that people will exercise self-direction and self-control in the achievement of organizational objectives to the degree that they are committed to those objectives”. It is management’s main task in such a system to maximize that commitment.

Theory X assumes that individuals are base, work-shy and constantly in need of a good prod. It always has a ready-made excuse for failure—the innate limitations of all human resources. Theory Y, however, assumes that individuals go to work of their own accord, because work is the only way in which they have a chance of satisfying their (high-level) need for achievement and self-respect. People will work without prodding; it has been their fate since Adam and Eve were banished from the Garden of Eden.

Theory Y gives management no easy excuses for failure. It challenges them “to innovate, to discover new ways of organizing and directing human effort, even though we recognize that the perfect organization, like the perfect vacuum, is practically out of reach”. McGregor urged companies to adopt Theory Y. Only it, he believed, could motivate human beings to the highest levels of achievement. Theory X merely satisfied their lower-level physical needs and could not hope to be as productive. “Man is a wanting animal,” wrote McGregor, “as soon as one of his needs is satisfied another appears in its place.”

There are parallels with Abraham Maslow’s hierarchy of needs, and Maslow was indeed greatly influenced by McGregor. So much so that he tried to introduce Theory Y into a Californian electronics business, but found that the idea in its extreme form did not work well. All individuals, he concluded, however independent and mature, need some form of structure around them and some direction from others. Maslow also criticized Theory Y for its “inhumanity” to the weak, and to those not capable of a high level of self-motivation.

Example:

Edward and Martine came across as Theory Y managers, believing in the intrinsically positive motivation of people, whereas Helmut appears to represent a Theory X approach to human motivation – displaying a pessimistic view of human nature and an autocratic leadership style in making sure that people do what he wants. Martine emphasizes leadership as providing a sense of direction and strategy to pursue it, a sense of mission or purpose that focuses on the company’s sole or primary reason for existence – the customer, humanistic goals beyond return-on-investment (ROI) that give meaning and value to work, a culture of learning and development for people together with creativity and innovation, especially when times are good, so that success is maintained. All of this is admirable in her leadership philosophy and practice. Edward is even more admirable in this respect. He introduces the importance of passion for what you do and that this can spin off to those around you. He also introduces a very important but equally controversial belief: shareholders should not be the priority because they are only one of a range of stakeholders. Shareholders are not responsible for a company’s growth and prosperity, though they can destroy it. Agreeing with Martine on the importance of the customer, he goes further: to be most effective you need to focus on those employees who directly deal with customers and satisfy their needs. He also emphasizes the importance of shared goals, teamwork and creativity and innovation. Helmut is the least admirable leader. He emphasizes shareholders over employees, believing they wield influence and are “responsible” for the business. Not true. The company directors are responsible, and in fact more than that; they are accountable. And they provide only one resource – funds – whereas a business requires many other resources, not least the human variety. Helmut’s autocratic tendencies are likely to demoralize staff, and he seems to think that he can only get what he wants by demanding it from them. His saving grace is his belief in a collective ownership scheme to encourage commitment. Yet even that is economic – an example of transactional leadership. Leadership today emphasizes the need to engage people in their work. Martine and Edwards display some of the necessary ingredients for this, but more could be made of the need for shared values and empowerment and how we achieve these in a company. An increasing need to provide opportunities for people to fulfill their needs and aspirations by coming to work every day. Expectations are rising, most notably in the developing world, in countries like China and India, and this is a particular challenge for leaders there. And in the West managers are increasingly uncomfortable and questioning about the meaning, value and worthiness of what they do. While people live by bread alone when there is no bread, in the West we are more and more seeking satisfactions and achievements beyond economic goals, where wealth is not an end in itself but a means to greater ends. Another critical issue, characterized by the recent global financial fiasco, is the global challenge for leadership. This entails cross-cultural intelligence and a win-win attitude to doing business with partners, customers and suppliers in diverse cultures. A related critical issue is the ability to exercise leadership during a crisis or emergency, which calls upon additional and exceptional qualities and skills.