Theory X and Theory Y

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 1960s. He avoided descriptive labels and simply called the Theory 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: ('Authoritarian management' style)

Management that believes in theory-X assumptions, creates stick-and-carrot approach based firms with restrictive discipline and pervasive controls.

Assumptions of Theory X:

• Most people dislike work and will avoid it to the extent possible, therefore
• They must be continually coerced, controlled, and threatened with punishment to get the work done, and that
• They have little or no ambition, prefer to avoid responsibility, and choose security above     everything else. 

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.

Theory Y: ('Participative management' style)

Theory-Y believers create trust based firms with empowered employees.

Assumptions of Theory Y:

• Physical and mental effort are natural and most people (depending on the work environment) find work to be a source of satisfaction,
• They generally, on their own motivation, exercise self-control, self-direction, creativity, and ingenuity in pursuit of individual and collective (company) goals,
• They either seek responsibility or learn to accept it willingly, and that
• Their full potentials not tapped in most organizations. These assumptions serve as powerful behavioral models reflected in the way an organization is structured.

The challenge for management with Theory Y workers is to create a working environment (or culture) where workers can show and develop their creativity.

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, whilst in Theory Y, the management style is participative: Management 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 and Appraisals

Theory X organizations work on a ‘carrot and stick’ basis, and performance appraisal is part of the overall mechanisms of control and remuneration. In Theory Y organizations, appraisal is also regular and important, but is usually a separate mechanism from organizational controls. Theory Y organizations also give employees frequent opportunities for promotion.

Application 

Although Theory X management style is widely accepted as inferior to others, it has its place in large scale production operation and unskilled production-line work. Many of the principles of Theory Y are widely adopted by types of organization that value and encourage participation. 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 benefits from Theory Y principles to encourage knowledge sharing and continuous improvement.