Douglas McGregor who set forth in his book “Human Side of Enterprise” two pairs of assumptions about human beings which he thought were implied by the actions of autocratic and permissive managers. The first set of assumptions is contained in “Theory X” and the second set of assumptions in “Theory Y”. It is important to note that these sets of assumptions were not based on any research, but is intuitive deductions.
Theory X’ believes that autocratic managers often make the following assumptions about their subordinates. Accordingly, the subordinate in general:
- Has an inherent dislike for work and will avoid it, if he can;
- Is lazy and avoids responsibility.
- Is indifferent to organisational goals; and
- Prefers to be directed, wishes to avoid responsibility, has relatively little ambition and wants security above all.
According to McGregor, this is a traditional theory of what workers are like and what management must do ot motivate them. Workers have to be persuaded and pushed into performance. This is management’s task. Management can offer rewards to a worker who shows higher productivity and can punish him if his performance is below standard. This is also called ‘carrot and stick’ approach to motivation. It suggests that threats of punishment and strict control are the ways to control the people. McGregor questioned the assumptions of Theory X, which followed carrot and stick approach to motivation of people and suggested autocratic style of leadership. He felt that management by direction and control is a questionable method for motivating such people who’s physiological and safety needs have been satisfied and whose social esteem and self-actualization needs are becoming important. For such people, Theory Y seems to be applicable.
Managers with Theory Y orientation make the following assumptions about their subordinates. Accordingly, the subordinate in general:
- Does not inherently dislike work. Depending upon controllable conditions, work may be a source of satisfaction or a source of punishment;
- Will exercise self-direction and self-control in the service of objectives to which he is committed;
- Commitment to objectives is a function of the rewards associated with their achievement;
- Learns under proper conditions, not only to accept, but also to seek responsibility; and
- The capacity to exercise a relatively high degree of imagination, ingenuity and creativity in the solution of organisational problems is widely, not narrowly, distributed in the population.
Theory Y assumes that goals of the organisation and those of the individuals are not necessarily in-congruent. The basic problem in most of the organisations is that of securing commitment of workers to organisational goals. Worker’s commitment is directly related to the satisfaction of their needs. Thus, this theory places great emphasis on satisfaction of the needs, particularly the higher once, of the employees. It does not rely heavily on the use of authority as an instrument of command and control. It assumes that employees exercise self-direction and self-control in the direction of the goals to which they feel themselves committed. They could be motivated by delegation of authority, job enlargement, and management by objectives and participative management practices.
Analysis of Theory X and Theory Y
Theory X as previously stated is where a manager thinks that all employees are lazy, dislike work and will try to avoid doing work. With that being said, theory X managers will try to counter the laziness of the employees. They would ensure that employees work hard by closely monitoring their performance. In this type of situation, theory X managers would create a work environment with strict rules; implement a well-defined system of performance appraisal to control employees. For example, Henry Ford, according to McGregor was a manager who has adopted theory X as Henry Ford closely monitored his employees. In opposition of Theory X, theory Y goes against everything theory X says. Theory Y’s assumptions are that managers should shape the company’s work culture into a way where opportunities for subordinates to exercise initiative and self-direction would be facilitated to.
McGregor felt that traditional leadership was leaning more toward theory X which is hierarchical and very controlling where employees were very dependent on their managers as there are controlled very tightly. He continued on saying that this mode of managing could lead to a waste of human talent and potential. An example of this could lead down to something as simple as the saying, two heads are better than one. Clearly, theory X function almost like a dictatorship which doesn’t take into account the ideas and creativity of employees. In a situation like this theory Y would benefit a company much more. Unless the company is a large corporation such as Coca cola, where the company is divided into many divisions such as production, marketing and human resources. For example in the production division, employees which are involved in manufacturing of the bottle would be only be expected to carry out their purpose of making the bottles which is a repetitive process. Theory X here would be more beneficial as there is no need for innovation or creativity. Whereas, in the marketing division, innovation and creativity are essential for success.
McGregor’s Theory X and Theory Y gives managers a new understanding of how different leadership methods has an effect on the productivity of employees. Theory X and Theory Y are not opposites and neither is one completely better than the other one. The theories are just a guideline on how which way (theory X or theory Y) would better suit the company and produce a better work environment as well as increasing productivity.
Application of Theory X and Theory Y
Theory X and theory Y represent two extremes to draw the fencing within which the organisational man is seen to behave. No man would belong completely to either theory X or theory Y. each person possesses the traits of both in varying degrees under different situations. Thus, these theories of motivation are important tools in understanding the behavior of human beings and in designing the incentive schemes to motivate the employees. Neither of the two sets of assumptions is applicable fully in all situations and to all types of people.
It has been noted that theory X is more applicable to unskilled and uneducated lower-level workers who work for the satisfaction of their basic needs of food, clothing and shelter. Theory Y seems to be more applicable to educated, skilled and professional employees who understand their responsibility and are self-controlled. However, there can be exceptions. A lower-level employee may be more responsible and mature than a well-qualified higher-level employee. The examples of highly placed employees in modern organisations shirking responsibility are not uncommon. Therefore, the management should use an amalgamation of both the theories to motivate different employees.