McGregor’s

Theory ‘X’
and
Theory ‘Y’
McGregor’s Theory X and Theory Y:
Management’s action of motivating human beings in the
organization, according to McGregor, involves certain
assumptions, generalizations and hypothesis relating to
human behavior and human nature.
Theory X:
1. The average man is by nature, lazy – he works as little as
possible.
2. He lacks ambition, dislikes responsibility, prefers to be led.
3. He is inherently self-centered, indifferent to organizational needs.
4. He is, by nature resistant to change.
5. He is not very bright.
6. Management is responsible for organizing the elements of
productive enterprises – money, material, machine, men.
7. Process of directing their efforts, motivating them, controlling their
actions, modifying their behavior to fit the needs of the
organization.
8. People must be persuaded, rewarded, punished, controlled, and
their activities must be directed. This is management’s task.
Theory Y:
1. Physical and mental effort in work is natural as play or rest.
2. Average human being does not inherently dislike work.
3. Man will exercise self-direction and self-control in the service of
objectives to which he is committed.
4. Satisfaction of ego and self-actualization needs, can be a direct
product of effort directed towards organizational objectives.
5. Average human being learns under proper conditions not only to
accept, but to seek responsibility.
6. Capacity to exercise a relatively high degree of imagination and
creativity in the solution of organizational problems.
7. The intellectual potentialities of the average human beings are
only partially utilized.
 McGregor’s Theory X and Theory Y

Theory X Theory Y

owards work. üFor Human beings work is as natural as play.

ü
and try to avoid responsibilities in jobs.
üPeople have high ambitions and accept responsibilities in jobs.
ü
creativity üCreativity is widely distributed in the population.
ü
eds. üHigher order needs are more important.
ü
d require to be externally controlledüand
People
closely
are supervised
self-directed
toand
get creative
maximum and
output
prefer
from
self-control.
them.
ü
em and centralization of authority. üEmphasizes decentralization and greater participation in the decision making. Pr

hip üEmphasizes supportive leadership style.

Ouchi

Theory ‘Z’
Theory Z:
• Theory Z describes the major postulates of Japanese
management practices and how these practices
can be adopted to the environment of United
States and other countries.
• Theory Z, has made a comparative study of American
and Japanese management practices can be
adopted in American context.
Ouchi suggested 5 broad features of Theory Z
1. Trust
2. Strong bond between organization and
employee
3. Employee involvement
4. No formal structure
5. Role of managers to bring co-ordination in
human beings.
•
Trust:
• Trust between employees, supervisors, work
groups, unions, management and
government.
• When trust and openness exist, the chances of
conflict are automatically reduced to the
sminimum.
Strong Bond between Organizatin and Employees:
• Life time employment
• Provisions of highly conducive work environment and
challenges
• Participation in decisions.
• Accepting less profits or even moderate losses for a short
period of time during the situation of layout by share
holders and owners.
• More emphasis on horizontal movement of employees
which reduces stagnation.
• Career planning for employees should be prepared so that
every employee is suitably placed.
• Slowing down of promotion and financial incentives.
• Communicate the expectation of greater income in the
future without creating short-term incentives.
Employee Involvement:
• Employee Involvement through meaningful
participation.
• If any decision affecting employees in any way
should be taken jointly
• If there is any decision which management
wants to take individually, the employees
should be informed about this so that they do
not feel ignored.
• The idea is not to slow down the decision-
making process but to involve employees for
their commitment and giving due recognition
to them.
No formal Structure:
• Instead of formal structure, it must be a perfect
teamwork with co-operation along with
sharing of information, resources and plans.
• Emphasis on rotational aspect of employee
placement which provides opportunities to
him to understand how his work affects
others or is affected by others.
• Enables him to develop group spirit which is the
basic back bone of success.
Co-ordination of Human beings:
• Developing people’s skills and also the creation
of new structures, incentives and a new
philosophy of management.
• Leader must develop trust which consists of the
understanding of fundamentally compatible
goals of the desire for the more effective
working relationship together.
• To develop trust, there should be a complete
openness.
• Developing a common culture.