Introducton

Theory X and Theory Y are theories of human

motivation created and developed by Douglas

McGregor at the MIT Sloan School of Management in
the 1960.
They describe two contrasting models of workforce

motivation.
Theory X and Theory Y have to do with the

perceptions managers hold on their employees, not the

way they generally behave. It is attitude not attributes.

His work is based upon Maslow's Hierarchy of Needs,

where he grouped the hierarchy into lower-order needs

(Theory X) and higher-order needs (Theory Y).
He suggested that management could use either set of

needs to motivate employees, but better results would be

gained by the use of Theory Y, rather than Theory X.
These two views theorized how people view human

behavior at work and organizational life.

Understanding the Theories

Our management style is strongly influenced by our beliefs

and assumptions about what motivates members of your

team: If you believe that team members dislike work, you
will have an authoritarian style of management; On the
other hand, if you assume that employees take pride in
doing a good job, you will tend to adopt a more
participation style.
Theory X assumes that people are lazy and will avoid work

whenever possible
Theory Y in other hand , assumes that people are creative and
enjoy work

Theory X

Theory X
- Theory X assumes that employees are naturally unmotivated and dislike
working, and this encourages an authoritarian style of management. According
to this view, management must actively intervene to get things done. This style
of management assumes that workers:
Dislike working.
Avoid responsibility and need to be directed.
Have to be controlled, forced, and threatened to deliver what's needed.
Need to be supervised at every step, with controls put in place.
Need to be enticed to produce results; otherwise they have no ambition or

motivation to work.

Theory X Continued
X-Type organizations tend to be top heavy, with managers

and supervisors required at every step to control workers.

There is little delegation of authority and control remains
centralized.
McGregor recognized that X-Type workers are in fact

usually the minority, and yet in large scale production

environment, X Theory management may be required and
can be unavoidable.

Theory Y

Theory Y
Theory Y shows a participation style of management that is de-

centralized.

It assumes that employees are happy to work, are self-motivated

and creative, and enjoy working with greater responsibility.

Take responsibility and are motivated to fulfill the goals they are

given.

Seek and accept responsibility and do not need much direction.

Consider work as a natural part of life and solve work problems

imaginatively.

Theory Y Continued
This management style tends to be more widely appropriate. In

Y-Type organizations, people at lower levels of the organization

are involved in decision making and have more responsibility.

Theory X and Theory Y relate to Maslow's hierarchy of needs in

how human behavior and motivation are main priorities in the

workplace in order to maximize output. In relation to Theory Y,
the organization is trying to create the most symbiotic
relationship between the managers and workers, which relates to
Maslow's needs for self-actualization and Esteem.

For self-actualization issues relate to Esteem when the manager

is trying to promote each team member's self-esteem, confidence,

achievement, happiness, respect of others, and respect by others.

Management Concept Using

Theory X and Theory Y
Management theory is a useful and simple reminder

of the natural rules for managing people and he

maintained that there are two fundamental
approaches to managing people
Theory X manager is an authoritarian manager and
generally gets poor results
Theory Y manager is a participativemanager which
produces better performance and results, and allows
people to grow

Comparison of Management
Theory X
o Motivational Style

o
o

o
o

Threats and diciplinary action are used

more effectively in this situation, also
monetory gain
Leadership
Authoritarian
Power & Authority
Arrogant, one way communicator
Conflict
Intolerant
Performance Appraisal
Appraisals occur on a regular basis

Theory Y
o Motivation Style

Rewarding
o Leadership
Participative
o Power& Authority
The manager would take suggestions from
workers, but would keep the power to
implement the decision
o Conflict
Workers might be given the opportunity to
exert negotiatingstrategies to solves
their own differences
Permormance Appraisals
Promotions also occur on a regular basis

THEORY Z
William G. Ouchi (born 1943) is an American

professor and author in the field of business

management.Ouchi first came to prominence for his
studies of the differences between Japanese and
American companies and management styles. His
first book in 1981 summarized his observations.
Theory Z: How American Management Can Meet
the Japanese Challenge and was a New York Times
best-seller for over five months. It currently ranks as
the seventh most widely held book of the 12 million
titles held in 4000 U.S. libraries. His second book,
The M Form Society: How American Teamwork Can
Recapture the Competitive Edge, examined various
techniques implementing that approach.

 Theory Z essentially advocates a combination of all

that's best about theory Y and modern Japanese

management, which places a large amount of freedom
and trust with workers, and assumes that workers have
a strong loyalty and interest in team-working and the
organisation. Theory Z also places more reliance on
the attitude and responsibilities of the workers,
whereas Mcgregor's XY theory is mainly focused on
management and motivation from the manager's and
organisation's perspective.

Japanese Management Style

(Theory Z)
Mc Gregor identified a negative set of assumptions about human

nature, which he called Theory X. He asserted that these

assumptions limited the potential for growth of many employees
Mc Gregor presented an alternative set of assumptions that he
called Theory Y and were more positive about human nature as it
relates to employees. In Mc Gregor view, managers who adopted
Theory Y beliefs would exhibit different, more humanistic, and
ultimately more effectives management styles and Theory Y became
a well known prescriptions for improving management practises
Concerns about the competitiveness os U.S.companies led some to
examine Japanese Management Practises for clues to the success
enjoyed by many of their industries. This led to many articles and
books purpoting to explain the success of Japanese companies.

Key Features of Theory Z

Theory Z is humanistic approach to management
approach by Willian Ouchi
Offer lifetime employment
Insist on mandatory retirement of core workers at
age 55
Employ a large number of temporary employees
mostly women
There is a high degree of mutual trust and loyalty
between management and employees

Key Features of Theory Z

Decision making is shared al all levels
Performance appraisal is long term
There is strong sense of collective responsibility for the

succes of the organization

And cooperation effort rather than individual
achievement is encouraged

 Although Ouchi recognizes that many of features of

Japanese management could not be translated into

Western industrial society, he believes that certain
features could be applied in a Western Context. The
move from the present hierarchical types of organization
to a Theory Z type organization is a process which, says
Ouchi :

Has the objective of developing the ability of the

organization to coordinate people, not technology to
achieve productivity

o In his view, this requires a new philosophy of managing

people based on a combination of the following features

Japanese management
Lifelong employment prospects

Shared forms of decision making

Relationship between boss and subordinate based on

mutual respect

 According to Ouchi the introduction of Theory Z approaches

into Western firms requires the following strategy :

Adoption of a Top Down approach, based on definition of
the new philosophy agreed and supported by the
organizations top management
Implementation of the new approach should be carried
through on the basis of consultation and communication with
the workforce and with full training support to develop relevant
skills for managers, supervisors and their teams.

Comparing Theory X and Theory

Y

Motivation

Theory X assumes that people dislike work; they want to

avoid it and do not want to take responsibility. Theory Y
assumes that people are self-motivated, and thrive on
responsibility.

Management Style and Control

In a Theory X organization, management is authoritarian,

and centralized control is retained, while in Theory Y, the
management style involves employees in decision making,
but retains power to implement decisions.

 Work Organization

Theory X employees tend to have specialized and often repetitive

work. In Theory Y, the work tends to be organized around wider
areas of skill or knowledge; Employees are also encouraged to
develop expertise and make suggestions and improvements.

Rewards

Theory X organizations work on a carrot and stick basis, and

performance is part of the overall mechanisms of control. In
Theory Y organizations, appreciation is also regular and
important, but is usually a separate mechanism from
organizational controls. Theory Y organizations also give
employees frequent opportunities for promotion. Accepting
creative and innovative ideas provided by employees.

Application
Although Theory X management style is widely

accepted as poor to others, but somehow, it has its

place of beneficial in large scale production operation
and unskilled production-line work.

Theory Y-style management is suited to knowledge

work and professional services. Professional service

organizations naturally evolve Theory Y-type practices
by the nature of their work; Even highly structure
knowledge work, such as call center operations, can
benefit from Theory Y principles to encourage
knowledge sharing and continuous improvement.

Comparison & Contrast of Management Theorists

Managemen
t
Concept

Douglas McGregor
(Theory X & Y)

William Ouchi
(Theory Z)

Motivation

Tends to categorise people as one type or

another: either being unwilling or
unmotivated to work, or being self
motivated towards work. Threats and
disciplinary action are thought to be
used more effectively in this situation,
although monetary rewards can also be
a prime motivator to make Theory X
workers produce more.

Believes that people are innately self

motivated to not only do their work,
but also are loyal towards the
company, and want to make the
company succeed.

Leadership

Theory X leaders would be more

authoritarian, while Theory Y leaders
would be more participative. But in both
cases it seems that the managers would
still retain a great deal of control.

Theory Z managers would have to

have a great deal of trust that their
workers could make sound decisions.
Therefore, this type of leader is more
likely to act as "coach", and let the
workers make most of the decisions.

Comparison & Contrast of Management Theorists

Managemen
t
Concept

Douglas McGregor
(Theory X & Y)

William Ouchi
(Theory Z)

Power &
Authority

As mentioned above, McGregor's

managers, in both cases, would seem to
keep most of the power and authority.
In the case of Theory Y, the manager
would take suggestions from workers,
but would keep the power to
implement the decision.

The manager's ability to exercise

power and authority comes from the
worker's trusting management to take
care of them, and allow them to do
their jobs. The workers have a great
deal of input and weight in the
decision making process.

Conflict

This type of manager might be more

likely to exercise a great deal of "Power"
based conflict resolution style,
especially with the Theory X workers.
Theory Y workers might be given the
opportunity to exert "Negotiating"
strategies to solve their own differences.

Conflict in the Theory Z arena would

involve a great deal of discussion,
collaboration, and negotiation. The
workers would be the ones solving
the conflicts, while the managers
would play more of a "third party
arbitrator" role.

Conclusion
McGregors Theory X
(Authoritarian Management Style)
produces strict and controlling supervision
McGregors Theory Y
(Participative Management Style)
associated and participative supervision
William Ouchis Theory Z
(Japanese Management Style)
managers must be more supportive and trusting of
their employees, in order to receive the benefit of increased
participation in the decisions of the company.