2015

Theory X and Theory Y

Submitted to: Sir.Hamid Cheema
Submitted by:

Noor Amna (28)

Hania Ahmad (14)
Tehreem Sherazi (138)

BBA 5th Regular

12/14/2015

Theory X and Theory Y

Douglas McGregor:

Murray McGregor (1906 1 October 1964) was

a management professor at the MIT Sloan School of Management and
president of Antioch College from 1948 to 1954.] He also taught at
the Indian Institute of Management Calcutta. His 1960 book The Human
Side of Enterprise had a profound influence on education practices.
Douglas

Douglas McGregor is a contemporary of Abraham Maslow. Likewise,

he also contributed much to the development of the management and
motivational theory. He is best known for his Theory X and Theory Y as
presented in his book The Human Side of Enterprise (1960), which
proposed that managers individual assumptions about human nature and
behavior determined how individual manages their employees.

Theory X and Theory Y

Career:
McGregor was born in Detroit. He earned a B.E. (Mechanical) from
Rangoon Institute of Technology, an A.B. from Wayne State
University in 1932, then earned an M.A. and Ph.D. in psychology
from Harvard University in 1933 and 1935 respectively.

The Human Side of Enterprise:

In the book The Human Side of Enterprise, McGregor identified an
approach of creating an environment within which employees are
motivated via authoritative, direction and control or integration and selfcontrol, which he called theory X and theory Y, respectively. Theory Y
is the practical application of Dr. Abraham Maslow's Humanistic School
of Psychology, or Third Force psychology, applied to scientific
management.
He is commonly thought of as being a proponent of Theory Y, but,
as Edgar Schein tells in his introduction to McGregor's subsequent,
posthumous (1967), book The Professional Manager : "In my own
contacts with Doug, I often found him to be discouraged by the degree
to which theory Y had become as monolithic a set of principles as those
of Theory X, the over-generalization which Doug was fighting....Yet
few readers were willing to acknowledge that the content of Doug's
book made such a neutral point or that Doug's own presentation of his
point of view was that coldly scientific".
Graham Cleverley in Managers & Magic (Longman's, 1971) comments:
"...he coined the two terms Theory X and theory Y and used them to
label two sets of beliefs a manager might hold about the origins of
human behavior. He pointed out that the manager's own behavior would
be largely determined by the particular beliefs that he subscribed
to....McGregor hoped that his book would lead managers to investigate
the two sets of beliefs, invent others, test out the assumptions underlying

Theory X and Theory Y

them, and develop managerial strategies that made sense in terms of
those tested views of reality. "But that isn't what happened. Instead
McGregor was interpreted as advocating Theory Y as a new and
superior ethic - a set of moral values that ought to replace the values
managers usually accept."
The Human Side of Enterprise was voted the fourth most influential
management book of the 20th century in a poll of the Fellows of
the Academy of Management.

Legacy:
McGregor died, age 58, in Massachusetts. In 1994, the School of Adult
and Experiential Learning at Antioch College was renamed the
"McGregor School" in his honor. It was later renamed "Antioch
University McGregor" and then "Antioch University Midwest."

Theory X and Theory Y

Introduction:
'Theory X' and 'Theory Y' are theories of human
motivation and management. They were created and developed
by Douglas McGregor at the MIT Sloan School of
Management in the 1960s. These theories describe two
contrasting models of workforce motivation applied by
managers in human resource management, organizational
behavior, organizational communication and organizational
development. McGregor terms the two models as 'Theory X',
which stresses the importance of strict supervision and external
rewards and penalties; and 'Theory Y', which highlights the
motivating role of job satisfaction and allows scope for workers
to approach tasks creatively.
Theory X and Theory Y pertain to employee motivation and
have been used in human resource management, organizational
behavior analysis, and organizational
development. EmpXtrack an Integrated Human Capital and
Talent Management Tool is based on such theories and helps
organizations to transform their human resource practices.
Generally, the study of Psychological interaction between the
management of an organization and the subordinate employees
are very wide. Before considering distribution of works, an
organization must decide from the outset how to deal with
employees. In order to lead to improved performance for the
company and possibly to improved employee relations, a strong
understanding of the relationship should be practiced. Thus,
numerous theories have been designed related to the
psychological interaction between the management of an
organization and the subordinate employees. Theory X and Y
which deals with the motivational factors that influence

Theory X and Theory Y

employee behavior was one of the theories. Since Theory X and
Y dealing with a complete system of interaction, similar to how
a physical model simulates the behavior of a physical system,
Theory X and Y considered as models. Douglas McGregor is
the one who constructed Theory X and Y in the 1960s. Theory
X and Y created by McGregor has been a valid basic principle
from which to develop positive management style and
techniques. McGregor's ideas suggest that there are two
fundamental approaches to managing people. Several managers
influenced by theory x, and generally get poor results. On the
other hand, liberal managers use theory y, which produces better
performance and results, and allows people to grow and
develop. Moreover, McGregors concept relatively relate to
modern understanding of the Psychological Contract, which
provides several ways to appreciate the unhelpful nature of XTheory leadership, and the useful constructive beneficial nature
of Y-Theory leadership. The aim of this research is to review
and synthesizing concepts and ideas from related sources relying
on literature reviews to argue that there is a relationship between
Theory X, Theory Y management style with fulfillment of
Psychological Contract.

Literature review:
Theory X and Theory Y was an idea devised by Douglas
McGregor in his book The Human Side of Enterprise 1960. It
encapsulated a fundamental distinction between management
styles and has formed the basis for much subsequent writing on
the subject.

Theory X and Theory Y

Theory X and Theory Y: Theories of employee
Motivation:

Theory X and Theory Y, created

and developed by Douglas McGregor at the MIT Sloan School
of Management in the 1960s, pertain to employee motivation
and have been used in human resource management,
organizational behavior analysis, and organizational
development. They describe two very different attitudes towards
workforce motivation. McGregor felt that companies followed
either one of these approaches.

Theory X:
In the first few decades of the 20th century Theory X is the style
that predominated in business after the mechanistic system of
scientific management had swept everything away. Theory X is
an authoritarian style where the emphasis is on productivity, on
the concept of a fair day's work, on the evils of feather-bedding
and restriction of output, on rewards for performance (Tim
Hindle 2003). Latterly Theory X has been considered as a
negative way of dealing with employees. In this theory its
assume that employees are, by nature, reluctant to fulfill the
obligations of their job and instead will find ways to avoid work
or otherwise reduce their work output in a bid to expend the
least amount of effort possible. When there is more motivated

Theory X and Theory Y

management staff and owners urge the employees into making
them work, the company will be successful and have productive
employees as conceived by Theory X. In order to detect
attempts by the staff to avoid work it is demanded a strict
control and monitoring of behavior. The authority must keep a
careful eye out for sabotaging effects by self-interested
employees and find the cause of disruptions, handing out
penalties in the belief that a sincere wish to avoid responsibility
is the root cause for the majority of trouble.
In this theory management assumes employees are inherently
lazy and will avoid work if they can. Because of this, workers
need to be closely supervised and comprehensive systems of
control put in place. A hierarchical structure is needed, with
narrow span of control at each level, for effective management.
According to this theory employees will show little ambition
without an enticing incentive program and will avoid
responsibility whenever they can.
The managers influenced by Theory X believe that everything
must end in blaming someone. They think most employees are
only out for themselves and their sole interest in the job is to
earn money. They tend to blame employees in most situations,
without questioning the systems, policy, or lack of training
which could be the real cause of failures.
Managers that subscribe to Theory X tend to take a rather
pessimistic view of their employees. A Theory X manager
believes that it is the managers job to structure the work and
energize the employee. The result of this line of thought is that
Theory X managers naturally adopt a more authoritarian style

Theory X and Theory Y

based on the threat of punishment. Critics believe that a Theory
X manager could be an impediment to employee morale &
productivity.
Theory X considers that on the whole, workers dislike their
work, and have little inherent motivation to perform well.
Therefore, if organizational goals are to be met, 'Theory X'
managers must rely heavily on detailed rules and instructions, on
close monitoring, and on the threat of punishment to gain
employee compliance. When practiced, this theory can lead to
mistrust, highly restrictive supervision and a punitive
atmosphere. The 'Theory X' manager believes that all actions
should be traced and the responsible individual given a direct
reward or a reprimand according to the action's outcomes. This
managerial style is more effective when used to motivate a
workforce that is not inherently motivated to perform. It is
usually exercised in professions where promotion is infrequent,
unlikely or even impossible and where workers perform
repetitive tasks. A flaw of this management style is that it limits
the employee's potential and discourages creative thinking.

Theory x ('authoritarian management' style)

The average person dislikes work and will avoid it he/she

can.
Therefore most people must be forced with the threat of
punishment to work towards organizational objectives.

Theory X and Theory Y

The average person prefers to be directed; to avoid
responsibility; is relatively unambitious, and wants security
above all else.

Theory Y:
Theory Y is a participative style of management which
assumes that people will exercise self direction and self-control
in the achievement of organizational objectives to the degree
that they are committed to those objectives. It is management's
main task in such a system to maximize that commitment (Tim
Hindle 2003). In many ways, Theory Y is, the diverse to that of
Theory X. Rather than taking the view that employees must be
forced to do what management want and that they will not,
under any circumstances, do anything beneficial for the
company under their own direction, Theory Y states that
employees actually become more productive when more trust
and responsibility is delegated to them. According to Theory Y,
employees do wish to work and be productive and the act of
doing well at work is itself a strong motivator. Moreover if the
employees will seek responsibility and ways to be productive, if
they are allowed to do so. Regarding to Charles M. Carson,
(2005), McGregor theory Y stands in a unique place in
management history and advocated a heightened awareness of
management's responsibility for the human side of employeremployee relations. In a nutshell, according to McGregor: Man
is a wanting animal and as soon as one of his needs is satisfied,
another appears in its place. McGregor urged companies to
adopt Theory Y. Only it, he believed, could motivate human
beings to the highest levels of achievement. Theory X merely

Theory X and Theory Y

satisfied their lower-level physical needs and could not hope to
be as productive.
Management influenced by this theory assumes that employees
are ambitious, self-motivated, and anxious to accept greater
responsibility and exercise self-control, self-direction, autonomy
and empowerment. Management believes that employees enjoy
their work. They also believe that, given a chance, employees
have the desire to be creative at their work place and become
forward looking. There is a chance for greater productivity by
giving employees the freedom to perform to the best of their
abilities, without being bogged down by rules.
A Theory Y manager believes that, given the right conditions,
most people will want to do well at work and that there is a pool
of unused creativity in the workforce. They believe that the
satisfaction of doing a good job is a strong motivation in itself.
A Theory Y manager will try to remove the barriers that prevent
workers from fully actualizing themselves.
Many people interpret Theory Y as a positive set of
assumptions about workers. A close reading of The Human
Side of Enterprise reveals that McGregor simply argues for
managers to be open to a more positive view of workers and
the possibilities that create enthusiasm.

Theory y ('participative management' style)

Effort in work is as natural as work and play.

People will apply self-control and self-direction in the
pursuit of organizational objectives, without external
control or the threat of punishment.

Theory X and Theory Y

Commitment to objectives is a function of rewards

associated with their achievement.
People usually accept and often seek responsibility.
The capacity to use a high degree of imagination, ingenuity
and creativity in solving organizational problems is widely,
not narrowly, distributed in the population. In industry the
intellectual potential of the average person is only partly utilized.

Characteristics of the x theory manager:

Perhaps the most noticeable aspects of McGregor's XY Theory and the easiest to illustrate - are found in the behaviors of
autocratic managers and organizations which use autocratic
management styles.
What are the characteristics of a Theory X manager? Typically
some, most or all of these:

results-driven and deadline-driven, to the exclusion of

everything else
intolerant
issues deadlines and ultimatums
distant and detached
aloof and arrogant
elitist
short temper
shouts
issues instructions, directions, edicts
issues threats to make people follow instructions
demands, never asks
does not participate

Theory X and Theory Y

does not team-build

unconcerned about staff welfare, or morale
proud, sometimes to the point of self-destruction
one-way communicator
poor listener
fundamentally insecure and possibly neurotic
anti-social
vengeful and recriminatory
does not thank or praise
withholds rewards, and suppresses pay and remunerations
levels
scrutinizes expenditure to the point of false economy
seeks culprits for failures or shortfalls
seeks to apportion blame instead of focusing on learning
from the experience and preventing recurrence
does not invite or welcome suggestions
takes criticism badly and likely to retaliate if from below or
peer group
poor at proper delegating - but believes they delegate well
thinks giving orders is delegating
holds on to responsibility but shifts accountability to
subordinates
relatively unconcerned with investing in anything to gain
future improvements
Unhappy.

Theory X and Theory Y

How to manage upwards - managing your X theory
boss:
Working for an X theory boss isn't easy - some extreme X
theory managers make extremely unpleasant managers, but there
are ways of managing these people upwards. Avoiding
confrontation (unless you are genuinely being bullied, which is a
different matter) and delivering results are the key tactics.

Theory X managers (or indeed theory Y managers

displaying theory X behavior) are primarily results oriented
- so orientate your own discussions and dealings with them
around results - i.e. what you can deliver and when.
Theory X managers are facts and figures oriented - so cut
out the incidentals, be able to measure and substantiate
anything you say and do for them, especially reporting on
results and activities.
Theory X managers generally don't understand or have an
interest in the human issues, so don't try to appeal to their
sense of humanity or morality. Set your own objectives to
meet their organizational aims and agree these with the
managers; be seen to be self-starting, self-motivating, selfdisciplined and well-organized - the more the X theory
manager sees you are managing yourself and producing
results, the less they'll feel the need to do it for you.
Always deliver your commitments and promises. If you are
given an unrealistic task and/or deadline state the reasons
why it's not realistic, but be very sure of your ground, don't
be negative; be constructive as to how the overall aim can
be achieved in a way that you know you can deliver.

Theory X and Theory Y

Stand up for yourself, but constructively - avoid

confrontation. Never threaten or go over their heads if you
are dissatisfied or you'll be in big trouble afterwards and
life will be a lot more difficult.
If an X theory boss tells you how to do things in ways that
are not comfortable or right for you, then don't questioning
the process, simply confirm the end-result that is required,
and check that it's okay to 'streamline the process' or 'get
things done more efficiently' if the chance arises - they'll
normally agree to this, which effectively gives you control
over the 'how', provided you deliver the 'what' and 'when'.

And this is really the essence of managing upwards X theory

managers - focus and get agreement on the results and deadlines
- if you consistently deliver, you'll increasingly be given more
leeway on how you go about the tasks, which amounts to more
freedom. Be aware also that many X theory managers are forced
to be X theory by the short-term demands of the organization
and their own superiors - an X theory manager is usually
someone with their own problems, so try not to give them any
more.

Implementation of theory in management:

In practice Theory X managers tend to be autocratic and
controlling, and feel it is up to them to ride people and make
them do their work (i.e., managers are policemen). These
managers tend to micro-manage, be extremely task oriented and
not put much emphasis on building positive relationships. Little
emphasis is shown towards developing a positive work
environment, and recognition and appreciation would be rare.

Theory X and Theory Y

People working for these managers tend to be motivated by fear
and feel unappreciated.
Working for an X theory boss isn't easy - some extreme X
theory managers make extremely unpleasant managers, but there
are ways of managing these people upwards. Avoiding
confrontation (unless you are genuinely being bullied, which is a
different matter) and delivering results are the key tactics.

Theory X managers (or indeed theory Y managers

displaying theory X behavior) are primarily results oriented
- so orientate your own discussions and dealings with them
around results - i.e. what you can deliver and when.
Theory X managers are facts and figures oriented - so cut
out the incidentals, be able to measure and substantiate
anything you say and do for them, especially reporting on
results and activities.
Theory X managers generally don't understand or have an
interest in the human issues, so don't try to appeal to their
sense of humanity or morality. Set your own objectives to
meet their organizational aims and agree these with the
managers; be seen to be self-starting, self-motivating, selfdisciplined and well-organized - the more the X theory
manager sees you are managing yourself and producing
results, the less they'll feel the need to do it for you.
Always deliver your commitments and promises. If you are
given an unrealistic task and/or deadline state the reasons
why it's not realistic, but be very sure of your ground, don't
be negative; be constructive as to how the overall aim can
be achieved in a way that you know you can deliver.

Theory X and Theory Y

Stand up for yourself, but constructively - avoid

confrontation. Never threaten or go over their heads if you
are dissatisfied or you'll be in big trouble afterwards and
life will be a lot more difficult.
If an X theory boss tells you how to do things in ways that
are not comfortable or right for you, then don't questioning
the process, simply confirm the end-result that is required,
and check that it's okay to 'streamline the process' or 'get
things done more efficiently' if the chance arises - they'll
normally agree to this, which effectively gives you control
over the 'how', provided you deliver the 'what' and 'when'.

And this is really the essence of managing upwards X theory

managers - focus and get agreement on the results and deadlines
- if you consistently deliver, you'll increasingly be given more
leeway on how you go about the tasks, which amounts to more
freedom. Be aware also that many X theory managers are forced
to be X theory by the short-term demands of the organization
and their own superiors - an X theory manager is usually
someone with their own problems, so try not to give them any
more.
Applying Theory Y
Modern research and your own life experiences validate that,
generally speaking, the Theory Y leadership style will lead to
better resultsboth for your people and for you as a manager. It
is important to determine which style of leadership you want to
followthen do it.
It can be valuable to get regular feedback through direct
questions, surveys and third parties to assess how effective your
leadership style is. The bottom line is that most people will

Theory X and Theory Y

respond positively to a Theory Y leadership approachand its
up to us to provide it.
Lets get specific: how do we practice Theory Y management?
Here are a few pointers:
Vision and Expectations: paint a positive vision of a better
future, and be clear about expectations. Express your confidence
in your team to be great. As John Steinbeck said: It is the
nature of man to rise to greatness if greatness is expected of
him.
Leadership approach: be a servant leader, not a serve me
leader. Minimize differences between the management-staff
relationship.
Planning and Decision Making: be participative, not
autocratic. Seek and listen to input from your team members.
Communication: err on the side of over communication rather
than under communication. Be honest, realistic and positive
and be a good listener too.
Control: it is important to have policies, procedures and work
standards in place. But avoid being over-controlling and micromanaging the work. Showing trust in your people will lead to
higher morale and motivation. Also, encourage your people to
share their ideas and use their ingenuity and creativity to do the
work smarter and better serve your teams stakeholders.
Recognition: provide regular informal and formal recognition.
A recent study suggested the ratio of positive (appreciative)
statements to constructive statements should be at least 5:1 to
maximize relationships and motivation.
Let me close with a quote from Sam Walton: Outstanding
leaders go out of their way to boost the self-esteem of their

Theory X and Theory Y

personnel. If people believe in themselves, its amazing what
they can accomplish.
Good luck as you apply the Theory Y approach and help your
people and teams achieve their potential

Criticism:
. Theory X:
Theory X suggests that individual's have an instilled dislike for
work and try to avoid it. Thus, all workers dislike work, try to
avoid work, are born inherently lazy, must be constantly
dominated into doing a honest days work and only turn up to
work to collect their pay. This means that employees must be
controlled by threat in order to perform. Such an employee
prefers to be directed, avoids responsibility, is explicit, and
prefers security above all else.
Criticism: These assumptions of the Theory X employee may
lead to various problems, such as a tough management (that
believes in punishment and tight controls) and a soft
management (who strives for harmony in the workplace, at the
expense of efficiency). It does not make allowance for
employees who need a feeling of self-fulfillment. Theory X
managers also expect employees to behave in an expected,
predictable fashion.
Theory Y:
Theory Y assumes that employees basically like to work and
view work as something rather natural; moreover the worker

Theory X and Theory Y

views this as a potentially enjoyable and positive experience. It
propounds that there are ways to make individuals perform other
than through control and punishment. If the employee is
committed to the mission of the department s/he will become a
self directed employee. Job satisfaction means commitment to
the department and its mission. Under the proper conditions, the
employee will learn and lead in to acceptance of responsibility.
Many employees by the use of creativity, imagination and
ingenuity, can solve problems - no matter how big or small.
Criticism: Theory Y may be hard to utilize where there are a
large number of employees, but can be utilized on the
departmental/divisional managers of an organization. This
theory also effects the management of promotions, salaries, and
development of effective managers.
Some of McGregors theories are unrealizable in practice, but
the basic assumption can be adhered to, and put into operation.

Conclusion
Theory X-Y by McGregor is one of the easy ways to conduct
people with natural rules, in daily business which goes through
pressure. The concept of McGregor says that there are two
fundamental approaches to managing people. Several managers
influenced by theory x, and generally get poor results. On the
other hand, liberal managers use theory y, which produces better
performance and results, and allows people to grow and
develop. Theory Y managers are the effective leaders who could
fulfill the psychological contract of employees. Its believed that

Theory X and Theory Y

mainly Theory Y managements style is about psychological
contract fulfillment and this area of study is suggested for future
research.