OBARA ROBERT JEREMIAH

TERM PAPER SUBMITTED IN PARTIAL FULLFILMENT OF

BUS : PRINCIPLES OF MANAGEMENT

LECTURER: PRO: WAIGUCHU

APRIL, 2009.

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The Impact of Mc Gregor’s Theory X and Theory Y on Contemporary Management
Practice

I. Background information
Douglass Mc Gregor (1961) looked at different approaches to motivating people. He
classified management and supervisory styles according to attitudes exhibited under two
extremes, calling these extremes theory X and theory Y. Under theory x, each point
represents an assumption of negative, adversarial and conflicting working attitudes and
practices. Theory x managers assumed that:
1) People dislike work and will avoid it if they can.
2) People must be forced, bribed, bullied, cajoled or threatened to put out the right
effort.
3) People would rather be directed than accept responsibility
4) People avoid responsibility
5) People are motivated mainly by money
6) People are motivated by anxiety about their security
7) People have little creativity, except when it comes to avoiding rules and
prescribed directions.
Theory ‘Y’ managers assumed that:
1) Work is necessary to peoples’ psychological growth
2) People want to be interested in their work and under the right circumstances, they
can enjoy it.
3) People will direct themselves towards accepted and acceptable targets
4) People will seek and accept responsibility given any encouragement to do so.
5) The discipline that people impose on themselves is much more effective and can
be much more severe than any imposed on them by managers and supervisors
6) Under the right conditions, people are motivated by the desire to realize their
own potential
7) Creativity and ingenuity are present in everybody and grossly under-used in
organizations.

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Generally, theory X is the assumption that employees dislike work, are lazy, dislike
responsibility and must be coerced to perform.
Theory Y is the assumption that employees like work, are creative, seek responsibility
and can exercise self-direction.

This theory was based on Maslow's hierarchy of needs where he (Mc Gregor) grouped
Maslow’s hierarchy into “lower order" (Theory X) needs and "higher order" (Theory Y)
needs. He suggested that management could use either set of needs to motivate
employees subject to their characteristics and theory of description.

SA Theory Y - a set of
assumptions of how to
Esteem manage individuals
motivated by higher order
Love (Social) needs

Safety & Security
Physiological
Theory X - a set of
assumptions of how to
manage individuals
motivated by lower order
needs

( 1Ketts;32)

II. Statement of the problem

Improving performance at work is the essence of management. Even if the right
equipment, skills and organizational framework are in place, the employees must be
willing to work. Motivation is required if employees are to successfully undertake the
tasks that contribute to the achievements of organizational objectives. This motivation is
defined as the force that energizes behavior, gives direction to that behavior and underlies
its tendency to persist. It is a set of attitudes and values that influence a person to act in a
specific goal-directed manner. Motivating therefore is a process of arousing and
sustaining goal-directed behavior induced by the expectation of satisfying individual
needs. At the core of motivation is human needs satisfaction. In assuming that “lower
order” needs motivate individual behavior, theory X can do very little to harness the

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motivational energy of employees. In today’s competitive and ever changing business
environment, expectations are high, the tasks are demanding. The need to motivate
workers has never been more significant.

III. Thesis
Drawing on Maslow’s hierarchy, McGregor argues that a satisfied need no longer
motivates. Under Theory X the firm relies on money and benefits to satisfy employees’
lower needs, and once those needs are satisfied the source of motivation is lost. Theory X
management styles in fact hinder the satisfaction of higher level needs. Consequently, the
only way that employees can attempt to satisfy their higher level needs in their work is by
seeking more compensation, so it is quite predictable that they will focus on monetary
rewards. While money may not be the most effective way to self fulfillment, in Theory X
environment it may be the only way. Under Theory X, people use work to satisfy their
lower needs, and seek to satisfy their higher needs in their leisure time. But it is in
satisfying their higher needs that employees can be more productive. This paper seeks to
evaluate Douglas McGregor's most important legacy which was neither Theory X nor
Theory Y. “It was his insistence that managers question their core assumptions about
human nature...." ((2Heil et al;121) 2000).

IV. Methodology
This paper uses exploratory research technique including ordinary-concept research and
social problems research to identify, examine, interpret and define primary and secondary
information. This methodology sought to determine the relevance of the data collected,
its nature and dependability for the study. The study is qualitative in nature and seeks to
provide a qualitative understanding of the title.

V. Data Analysis
It is widely acknowledged that Douglas McGregor's landmark book, The Human Side of
Enterprise (1960), changed the path of management thinking and practice. Questioning
some of the fundamental assumptions about human behavior in organizations, he outlined
a new role for managers: rather than commanding and controlling subordinates, managers

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should assist them in reaching their full potential. At the foundation of McGregor's
Theory Y are the assumptions that employees are: (1) not inherently lazy, (2) capable of
self-direction and self-control, and (3) capable of providing important ideas/suggestions
that will improve organizational effectiveness. Thus, with appropriate management
practices, such as providing objectives and rewards and the opportunity to participate in
decision making, personal and organizational goals can simultaneously be realized. In
contrast to Theory Y, McGregor indicated that conventional managerial assumptions
(which he called Theory X) reflect essentially an opposite and negative view: that
employees are lazy; are incapable of self-direction and autonomous work behavior; and
have little to offer in terms of organizational problem solving.

It is reported that by the time The Human Side of Enterprise was republished in 1985, it
had become a classic. Writers like Drucker hailed it as "ever more relevant, more timely,
and more important. Kanter claimed it contained "profound and timeless truths."
Waterman declared it "a classic text that is a fundamental touchstone for anyone in
management and organizational development." Bennis wrote "... this book, more than any
other book on management, changed an entire concept of organizational man and
replaced it with a new paradigm that stressed human potentials, emphasized human
growth, and elevated the human role in industrial society" (3McGregor, 1985: iv).

However, as Miner noted in his comprehensive (2002) text on organizational behavior

theories and research, "there are very few direct tests of McGregor's formulation in the
literature ... Furthermore, McGregor himself conducted no research related to his
formulations, nor did he attempt to make his variables operational in any kind of
measurement procedures" (4miner; 261). In his view, McGregor's theorizing about the
effects of individual differences in managerial assumptions has remained virtually
unexamined due to the absence of prior construct validation research. Clearly, it is not
possible to test McGregor's theory if the central construct--the assumptive world of the
focal manager--lacks a published, construct-valid measure. To reinforce his theory,
McGregor identified a number of management practices that he thought were consistent
with Theory Y assumptions. This he described as participative leadership, delegation, job

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enlargement and performance appraisals. Moreover, he recognized that implementation
of these practices with a Theory X mindset would be limitedly successful, with
employees seeing such techniques as disingenuous manipulations (5Heil et al;26: 2000;
McGregor;51: 1966, 1967).

At the heart of McGregor's argument is the notion that managers' assumptions/attitudes

represent, potentially, self-fulfilling prophecies. The manager who believes that people
are inherently lazy and untrustworthy will treat employees in a manner that reflects these
attitudes. Employees, sensing that there is little in the job to spur their involvement, will
exhibit little interest and motivation. Consequently, and ironically, the manager with low
expectations will lament that "you can't get good results nowadays," oblivious as to the
actual nature of cause and effect. Closing the serf-reinforcing cycle, the manager feels
vindicated; that is, his/ her low expectations were warranted. Conversely, the manager
who believes that employees are generally trustworthy and desirous of growth will
facilitate their achievement. McGregor's explanation was that the manager had created
conditions that enabled "the individual to achieve his [her] own goals (including those of
self-actualization) best by directing his [her] efforts toward organizational goals" (6Mc
Gregor; 78). Subsequently, numerous, more intricate, psychological and social-
psychological mechanisms have been invoked to explain this phenomenon (e.g.,
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Bandura and Locke, 2003; Eden, 1990; Heil et al., 2000; McNatt and Judge, 2004).

McGregor (1957, 1967) noted that some businesses were adopting practices that could be
expected to yield superior results, such as decentralization and delegation, job
enlargement, participative/consultative management, and performance appraisal.
However, he also observed that these programs often were unsuccessful due to the way
they were implemented. When those executing the programs did so with Theory X
attitudes or within organizations with Theory X climates, the programs would be likely to
fail--perhaps another self-fulfilling prophecy.

Eden (1990) reported on numerous field experiments demonstrating that when managers
were led to have high expectations of some subordinates (based on fictitious

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information), the subordinates outperformed their peers. Attempting to apply this finding
to leadership training but without using deception, Eden et al. found weak results in seven
field experiments, results they characterized as "a disheartening basis for practical
application" (2000: 195). Indeed, Eden et al. went on to say that leadership training, in
general, may be unrealistic; some managers "have it naturally and some do not, and those
that do not cannot be trained, coaxed, or coached to have it" (2000: 204; emphasis
added). However, neither the early nor the latter studies by Eden and his colleagues speak
to McGregor's theorizing; in all of Eden et al.'s research, expectations were artificially
manufactured. In contrast, McGregor's theory relates to organic differences in managers'
assumptive worlds. Given the implications of theory Y, If Theory Y holds, Mc Gregor
implies that a firm can do many things to harness the motivational energy of its
employees:
• Decentralization and Delegation – If firms decentralize control and reduce the
number of levels of management; each manager will have more subordinates and
consequently will be forced to delegate some responsibility and decision making
to them.
• Job Enlargement – Broadening the scope of an employee’s job adds variety and
opportunities to satisfy ego needs.
• Participative Management – Consulting employees in the decision making
process taps their creative capacity and provides them with some control over
their work environment.
• Performance Appraisals – Having the employee set objectives and participate in
the process of evaluating how well they were met.

If properly implemented, such an environment would result in a high level of motivation

as employees work to satisfy their higher level personal needs through their jobs.

VI. Conclusion
"Douglas McGregor's most important legacy was neither Theory X nor Theory Y. It was
his insistence that managers question their core assumptions about human nature...."
((8Heil et al;56) 2000). This lasting legacy of McGregor's The Human Side of Enterprise

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and his Theory X and Y is that it shows how far management thinking has come.
Objecting to the dominance of Theory X in the workplace of the time, McGregor noted
that 'if there is a single assumption that pervades conventional organization theory, it is
that authority is the central, indispensable means of managerial control.' McGregor then
put forward an alternative perspective. Theory Y was based on the opposite set of
assumptions, namely that people need not only to work but want to work.

Under Theory Y, the worker finds that physical and mental effort at work are as natural as
in leisure; that external control and threats are not the sole means of control in an
organization; that the average human learns not only to accept but to seek responsibility;
and that most of us have a capacity to display a high degree of imagination, and ingenuity
in sorting out problems.

It is true that neither of McGregor's two polar opposites are attainable in any
organization. Even the most turgid corporate giant has human spirit lurking within it,
while the most off-beam creative firms require an organizational underpinning.
McGregor recognized this fact and was busy devising a hybrid of organizational human
endeavor, theory Z, when he died. While most firms settle for a theory Z-style middle
way of matching people with profits, all companies now aspire to the Theory Y
perspective. Its obvious desirability is McGregor's lasting legacy. Theory Y may seem
unattainable and out of touch with management, but it remain desirous.

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Footnotes:
1
F. R Ketts, “Ideology of work”, Tavistock Press, p.32.
2
Heil et al, “Healthy organizations”, Routledge publishers p.121.
3
McGregor, “The human side of enterprise”, 25th anniversary printing, p.iv.
4
Miner, “Management by theory”, Hardback press, p.261.
5
Heil et al, “Healthy organizations”, Routledge publishers p.26.
5
McGregor, “The human side of enterprise”, 25th anniversary printing, p.51.
6
McGregor, “The human side of enterprise”, 25th anniversary printing, p.78.
7
Bandura and Locke, “Needs and human satisfaction”, Smith Press.
8
Heil et al, “Healthy organizations”, Routledge publishers p.56.