Douglas MacGregorDouglas MacGregor

Theory X and Theory YTheory X and Theory Y

The Human Side of EnterpriseThe Human Side of Enterprise

In his 1960 management book, In his 1960 management book, The Human Side The Human Side of Enterpriseof Enterprise, Douglas McGregor proposed two , Douglas McGregor proposed two theories by which managers view employee theories by which managers view employee motivation. He referred to these nearly opposite motivation. He referred to these nearly opposite management approaches as management approaches as Theory XTheory X and and Theory YTheory Y. Both of these theories assume that . Both of these theories assume that management's role is to organize resources, management's role is to organize resources, including people, to best benefit the including people, to best benefit the organization. However, after this common organization. However, after this common objective, there's little else they share.objective, there's little else they share.

Theory X and Theory Y are two sets of Theory X and Theory Y are two sets of assumptions about the nature of people as assumptions about the nature of people as managers.managers.

They describe the way that managers see They describe the way that managers see themselves in relation to others and do not themselves in relation to others and do not necessarily indicate "good" or "bad" viewpoints, necessarily indicate "good" or "bad" viewpoints, or the best way to manage.or the best way to manage.

Theory X and Theory Y are completely different Theory X and Theory Y are completely different views of people. views of people.

If a manager takes a Theory X perspective, he will If a manager takes a Theory X perspective, he will always set objectives for the workers without always set objectives for the workers without consulting them, will give instructions without consulting them, will give instructions without feedback and will punish or reward according to feedback and will punish or reward according to strict rules.strict rules.

In contrast, a manager who takes a Theory Y In contrast, a manager who takes a Theory Y perspective will involve his workers in decision perspective will involve his workers in decision making, encourage feedback during making, encourage feedback during communication and allow sufficient room for self communication and allow sufficient room for self control.control.

Assumptions of X and YAssumptions of X and Y

Theory Y Assumptions:Theory Y Assumptions:

People view work as being as natural as play and People view work as being as natural as play and restrest People learn to accept and seek responsibilityPeople learn to accept and seek responsibility People will be self-directed and creative to meet People will be self-directed and creative to meet their work and organizational objectives if they are their work and organizational objectives if they are committed to them. committed to them. People will be committed to their quality and People will be committed to their quality and productivity objectives if rewards are in place that productivity objectives if rewards are in place that address higher needs such as self-fulfilment. address higher needs such as self-fulfilment. The capacity for creativity spreads throughout The capacity for creativity spreads throughout organizationsorganizations..

Theory X Assumptions:Theory X Assumptions:

People must be coerced or controlled to do work to People must be coerced or controlled to do work to achieve objectivesachieve objectives

People prefer to be directed People prefer to be directed

Work is inherently distasteful to most people, who will Work is inherently distasteful to most people, who will attempt to avoid work whenever possible. attempt to avoid work whenever possible.

Most people are not ambitious, have little desire for Most people are not ambitious, have little desire for

responsibility, and prefer to be directed.responsibility, and prefer to be directed.

Theory X Assumptions:Theory X Assumptions:

Most people have little capacity for creativity in solving Most people have little capacity for creativity in solving organizational problems. organizational problems. Motivation occurs only at the physiological and security Motivation occurs only at the physiological and security levels of Maslow's Hierarchy of Needs levels of Maslow's Hierarchy of Needs Most people are self-centred. As a result, they must be Most people are self-centred. As a result, they must be closely controlled and often forced to achieve closely controlled and often forced to achieve organizational objectives organizational objectives Most people resist change. Most people resist change. Most people are gullible and not particularly intelligent. Most people are gullible and not particularly intelligent.

Applying Theory Y Management - Applying Theory Y Management - Business ImplicationsBusiness Implications

If Theory Y holds true, an organization can use the If Theory Y holds true, an organization can use the principles of management indicated below to improve principles of management indicated below to improve employee motivation:employee motivation:Decentralization and Delegation - If firms decentralize Decentralization and Delegation - If firms decentralize control and reduce the number of levels of management, control and reduce the number of levels of management, managers will have more subordinates and consequently managers will have more subordinates and consequently will be forced to delegate some responsibility and will be forced to delegate some responsibility and decision making to them. decision making to them. Job Enlargement - Broadening the scope of an Job Enlargement - Broadening the scope of an employee's job adds variety and opportunities to satisfy employee's job adds variety and opportunities to satisfy ego needs. ego needs.

Participative Management - Consulting employees in the Participative Management - Consulting employees in the decision making process taps their creative capacity and decision making process taps their creative capacity and provides them with some control over their work provides them with some control over their work environment. environment. Performance Appraisals - Having the employee set Performance Appraisals - Having the employee set objectives and participate in the process of evaluating objectives and participate in the process of evaluating how well they were met. how well they were met. If properly implemented, such an environment would If properly implemented, such an environment would result in a high level of motivation as employees work to result in a high level of motivation as employees work to satisfy their higher level personal needs through their satisfy their higher level personal needs through their jobs.jobs.

Applying Theory X Management - Applying Theory X Management - Business ImplicationsBusiness Implications

If Theory X holds true, an organization can use the If Theory X holds true, an organization can use the principles of scientific management to improve principles of scientific management to improve employee motivation:employee motivation:

Motivation through financial means Motivation through financial means

SupervisionSupervision

Simple TasksSimple Tasks

Strict HierarchyStrict Hierarchy

Authoritarian ManagementAuthoritarian Management