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 that have been used in human
resource management, organizational behavior, organizational communication and
organizational development. They describe two very different attitudes toward workforce
motivation. McGregor felt that companies followed either one or the other approach. He also
thought that the key to connecting self-actualization with work is determined by the managerial
trust of subordinates.

Theory X and Theory Y represent two sets of assumptions about human nature and human
behavior that are relevant to the practice of management. Theory X represents a negative view of
human nature that assumes individuals generally dislike work, are irresponsible, and require
close supervision to do their jobs. Theory Y denotes a positive view of human nature and
assumes individuals are generally industrious, creative, and able to assume responsibility and
exercise self-control in their jobs. One would expect, then, that managers holding assumptions
about human nature that are consistent with Theory X might exhibit a managerial style that is
quite different than managers who hold assumptions consistent with Theory Y.

The first section explains the development of Theory X and Theory Y. Second, the effect of
Theory X and Theory Y on management functions is discussed. Third is a criticism of Theory Y
followed by the concluding section, Theory X and Theory Y in the twenty-first century.

CONCEPTUALIZATION AND DEVELOPMENT

After the Hawthorne experiments and the subsequent behavioral research of the 1930s and
1940s, the human relations approach to management joined the classical perspective as a major
school of management thought. Whereas the classical school as espoused by management
pioneers such as Frederick Taylor and Henri Fayol focused on principles of management,
scientific selection and training, and worker compensation, the human relations approach
emphasized behavioral issues such as job satisfaction, group norms, and supervisory style.

The human relations model was hailed as a more enlightened management paradigm because it
explicitly considered the importance of individual and how managers could increase productivity
by increasing workers' job satisfaction. The end goal for management increased employee
productivity; the assumption was that satisfied workers would be more productive compared
with workers who felt antagonized by the companies they worked for.

In the 1950s, Douglas McGregor (1906-1964), a psychologist who taught at MIT and served as
president of Antioch College from 1948-1954, criticized both the classical and human relations
schools as inadequate for the realities of the workplace. He believed that the assumptions
underlying both schools represented a negative view of human nature and that another approach
to management based on an entirely different set of assumptions was needed. McGregor laid out
his ideas in his classic 1957 article "The Human Side of Enterprise" and the 1960 book of the
same name, in which he introduced what came to be called the new humanism.

McGregor argued that the conventional approach to managing was based on three major
propositions, which he called Theory X:

Management is responsible for organizing the elements of productive enterprise-money,

materials, equipment, and people-in the interests of economic ends.

With respect to people, this is a process of directing their efforts, motivating them, controlling
their actions, and modifying their behavior to fit the needs of the organization.

Without this active intervention by management, people would be passive-even resistant-to

organizational needs. They must therefore be persuaded, rewarded, punished, and controlled.
Their activities must be directed. Management's task was thus simply getting things done
through other people.

According to McGregor, these tenets of management are based on less explicit assumptions
about human nature. The first of these assumptions is that individuals do not like to work and
will avoid it if possible. A further assumption is that human beings do not want responsibility
and desire explicit direction. Additionally, individuals are assumed to put their individual
concerns above that of the organization for which they work and to resist change, valuing
security more than other considerations at work. Finally, human beings are assumed to be easily
manipulated and controlled. McGregor contended that both the classical and human relations
approaches to management depended this same set of assumptions. He called the first style of
management "hard" and identified its methods as close supervision, tight controls, and coercion.

The hard style of management led to restriction of output, mutual distrust, unionism, and even
sabotage. McGregor called the second style of management "soft" and identified its methods as
permissiveness and need satisfaction. McGregor suggested that the soft style of management
often led to managers' failure to perform their managerial role. He also pointed out that
employees often take advantage of an overly permissive manager by demanding more but
performing at lower levels.

McGregor drew upon the work of Abraham Maslow (1908-1970) to explain why Theory X
assumptions led to ineffective management. Maslow had proposed that man's needs are arranged
in levels, with physical and safety needs at the bottom of the needs hierarchy and social, ego, and
self-actualization needs at upper levels of the hierarchy. Maslow's basic point was that once a
need is met, it no longer motivates behavior; thus, only unmet needs are motivational. McGregor
argued that most employees already had their physical and safety needs met and that the
motivational emphasis had shifted to the social, ego, and self-actualization needs. Therefore,
management had to provide opportunities for these upper-level needs to be met in the workplace,
or employees would not be satisfied or motivated in their jobs.
Such opportunities could be provided by allowing employees to participate in decision making,
by redesigning jobs to make them more challenging, or by emphasizing good work group
relations, among other things. According to McGregor, neither the hard style of management
based on the classical school nor the soft style of management inspired by the human relations
movement were sufficient to motivate employees. Thus, he proposed a different set of
assumptions about human nature as it pertains to the workplace.

McGregor put forth these assumptions, which he believed could lead to more effective
management of people in the organization, under the rubric of Theory Y. The major propositions
of Theory Y include the following:

Management is responsible for organizing the elements of productive enterprise-money,

materials, equipment, and people in the interests of economic ends.

People are not by nature passive or resistant to organizational needs. They have become so as a
result of experience in organizations.

The motivation, potential for development, capacity for assuming responsibility, and readiness to
direct behavior toward organizational goals are all present in people-management does not put
them there. It is a responsibility of management to make it possible for people to recognize and
develop these human characteristics for themselves.

The essential task of management is to arrange organizational conditions and methods of

operation so that people can achieve their own goals by directing their efforts toward
organizational objectives.

Thus, Theory Y has at its core the assumption that the physical and mental effort involved in
work is natural and that individuals actively seek to engage in work. It also assumes that close
supervision and the threat of punishment are not the only means or even the best means for
inducing employees to exert productive effort. Instead, if given the opportunity, employees will
display self-motivation to put forth the effort necessary to achieve the organization's goals. Thus,
avoiding responsibility is not an inherent quality of human nature; individuals will actually seek
it out under the proper conditions. Theory Y also assumes that the ability to be innovative and
creative exists among a large, rather than a small segment of the population. Finally, it assumes
that rather than valuing security above all other rewards associated with work, individuals desire
rewards that satisfy their self-esteem and self-actualization needs.

Although McGregor did not believe that it was possible to create a completely Theory Y-type
organization in the 1950s, he did believe that Theory Y assumptions would lead to more
effective management. He identified several approaches to management that he felt were
consistent with the precepts of Theory Y. These included decentralization of decision-making
authority, delegation, job enlargement, and participative management. Job enrichment programs
that began in the 1960s and 1970s also were consistent with the assumptions of Theory Y.
In the 1970s, 1980s, and 1990s, McGregor's conceptualization of Theory X and Theory Y were
often used as the basis for discussions of management style, employee involvement, and worker
motivation. Empirical evidence concerning the validity of Theory X and Theory Y, however,
was mixed. Some writers suggested that organizations implementing Theory Y tended to revert
back to Theory X in tough economic times.

Others suggested that Theory Y was not always more effective than Theory X, but that the
contingencies of each managerial situation determined which of the approaches was more
appropriate. Still others suggested extensions to Theory Y. One of these, William Ouchi's Theory
Z, attempted to combine the strength of American management philosophies based on Theory Y
with Japanese management philosophies.

Along with writers such as Argyris and Likert, McGregor was one of several important humanist
writers of the mid-twentieth century who argued that traditional organizational hierarchies create
a state of dependence between subordinates and their managers and served as a bridge between
the human relations school and a new form of organizational humanism based on Theory Y.

Theory X
In this theory, which has been proven counter-effective in most modern practice, management
assumes employees are inherently lazy and will avoid work if they can and that they inherently
dislike work. As a result of this, management believes that workers need to be closely supervised
and comprehensive systems of controls developed. A hierarchical structure is needed with
narrow span of control at each and every level. According to this theory, employees will show
little ambition without an enticing incentive program and will avoid responsibility whenever they
can. According to Michael J. Papa (Ph.D., Temple University; M.A., Central Michigan
University; B.A., St. John’s University), if the organizational goals are to be met, theory X
managers rely heavily on threat and coercion to gain their employee's compliance. Beliefs of this
theory lead to mistrust, highly restrictive supervision, and a punitive atmosphere. The Theory X
manager tends to believe that everything must end in blaming someone. He or she thinks all
prospective employees are only out for themselves. Usually these managers feel the sole purpose
of the employee's interest in the job is money. They will blame the person first in most situations,
without questioning whether it may be the system, policy, or lack of training that deserves the
blame. A Theory X manager believes that his or her employees do not really want to work, that
they would rather avoid responsibility and that it is the manager's job to structure the work and
energize the employee. One major flaw of this management style is it is much more likely to
cause Diseconomies of Scale in large businesses.

Theory Y
In this theory, management assumes employees may be ambitious and self-motivated and
exercise self-control. It is believed that employees enjoy their mental and physical work duties.
According to Papa, to them work is as natural as play [1]. They possess the ability for creative
problem solving, but their talents are underused in most organizations. Given the proper
conditions, theory Y managers believe that employees will learn to seek out and accept
responsibility and to exercise self-control and self-direction in accomplishing objectives to which
they are committed. A Theory Y manager believes that, given the right conditions, most people
will want to do well at work. They believe that the satisfaction of doing a good job is a strong
motivation. Many people interpret Theory Y as a positive set of beliefs 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 this creates. He thinks that
Theory Y managers are more likely than Theory X managers to develop the climate of trust with
employees that is required for human resource development. It's here through human resource
development that is a crucial aspect of any organization. This would include managers
communicating openly with subordinates, minimizing the difference between superior-
subordinate relationships, creating a comfortable environment in which subordinates can develop
and use their abilities. This climate would include the sharing of decision making so that
subordinates have say in decisions that influence them. This theory is a positive view to the
employees, meaning that the employer is under a lot less pressure than some one who is
influenced by a theory X management style.

Theory X and Theory Y combined

For McGregor, Theory X and Y are not different ends of the same continuum. Rather they are
two different continua in themselves. Thus, if a manager needs to apply Theory Y principles, that
does not preclude them from being a part of Theory X & Y.

CRITICISM OF THEORY Y

The goal of managers using Theory X management styles was to accomplish organizational
goals through the organization's human resources. McGregor's research suggested that when
work was better aligned with human needs and motivations, employee productivity would
increase. As a result, some critics have suggested that, rather than concern for employees, Theory
Y style managers were simply engaged in a seductive form a manipulation. Even as managers
better matched work tasks to basic human motivational needs through participative management,
job rotation, job enlargement, and other programs that emerged at least partly from McGregor's
work, managers were still focusing on measures of productivity rather than measures of
employee well-being. In essence, critics charge that Theory Y is a condescending scheme for
inducing increased productivity from employees, and unless employees share in the economic
benefits of their increased productivity, then they have simply been duped into working harder
for the same pay.

THEORY X AND THEORY Y IN THE TWENTY FIRST CENTURY

McGregor's work on Theory X and Theory Y has had a significant impact on management
thought and practice in the years since he first articulated the concepts. In terms of the study of
management, McGregor's concepts are included in the overwhelming majority of basic
management textbooks, and they are still routinely presented to students of management. Most
textbooks discuss Theory X and Theory Y within the context of motivation theory; others place
Theory X and Theory Y within the history of the organizational humanism movement.

Theory X and Theory Y are often studied as a prelude to developing greater understanding of
more recent management concepts, such as job enrichment, the job-characteristics model, and
self-managed work teams. Although the terminology may have changed since the 1950s,
McGregor's ideas have had tremendous influence on the study of management.

In terms of the practice of management, the workplace of the early twenty-first century, with its
emphasis on self-managed work teams and other forms of worker involvement programs, is
generally consistent with the precepts of Theory Y. There is every indication that such programs
will continue to increase, at least to the extent that evidence of their success begins to
accumulate.

EFFECT ON MANAGEMENT FUNCTIONS

Under Theory X, managers' leadership styles are likely to be autocratic, which may create
resistance on the part of subordinates. Communication flow is more likely to be downward from
manager to the subordinates. In contrast, Theory Y may foster leadership styles that are more
participative, which would empower subordinates to seek responsibility and be more committed
to goal achievement. Theory Y leadership should increase communication flow, especially in the
upward direction.

In regard to control, Theory X is likely to result in external control, with the manager acting as a
performance judge; the focus is generally on the past. Conversely, Theory Y should lead to
control processes based on subordinates' self-control. The manager is more likely to act as a
coach rather than a judge, focusing on how performance can be improved in the future rather
than on who was responsible for past performance. Although the conceptual linkages between
Theory X and Theory Y assumptions and managerial styles are relatively straightforward,
empirical research has not clearly demonstrated that the relationship between these assumptions
and managers' styles of planning, organizing, leading, and controlling is consistent with
McGregor's ideas.
 Maslow's Hierarchy of Needs
Maslow's hierarchy of needs is a theory in psychology, proposed by Abraham Maslow in his
1943 paper A Theory of Human Motivation. In summary, the theory describes that:

o Human beings have wants and desires which influence their behavior. Only unsatisfied
needs influence behavior, satisfied needs do not.
o Since needs are many, they are arranged in order of importance, from the basic to the
complex.
o The person advances to the next level of needs only after the lower level need is at least
minimally satisfied.
o The further the progress up the hierarchy, the more individuality, humanness and
psychological health a person will show.

Maslow's hierarchy of needs is often portrayed in the shape of a pyramid, with the largest and
most fundamental levels of needs at the bottom, and the need for self-actualization at the top.
The most fundamental and basic four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": esteem, friendship and love, security, and physical needs. With
the exception of the most fundamental (physiological) needs, if these "deficiency needs" are not
met, the body gives no physical indication but the individual feels anxious and tense. Maslow's
theory suggests that the most basic level of needs must be met before the individual will strongly
desire (or focus motivation upon) the secondary or higher level needs.

Physiological needs

The requirements for human survival. If these requirements are not met, the human body simply
cannot continue to function, i.e. air, water, and food are metabolic requirements for survival in
humans.

In work, money plays the role of physiologic needs, since money allows an individual to buy
food, water, and other basic needs.

Safety needs

Individual's safety needs take precedence and dominate behavior after physiological needs are
satisfied. These needs have to do with people's yearning for a predictable orderly world in which
perceived unfairness and inconsistency are under control, the familiar frequent and the
unfamiliar rare.

In the world of work, this safety needs manifest themselves in such things as a preference for job
security, grievance procedures for protecting the individual from unilateral authority, savings
accounts, insurance policies, reasonable disability accommodations, and the like.

o Safety and Security needs include:

o Personal security
o Financial security
o Health and well-being

Safety net against accidents/illness and their adverse impacts

Love and belonging

After physiological and safety needs are fulfilled, the third layer of human needs is social and
involves feelings of belongingness. This aspect of Maslow's hierarchy involves emotionally
based relationships in general, such as:

o Friendship
o Intimacy
o Family
Humans need to feel a sense of belonging and acceptance, whether it comes from a large social
group, such as clubs, office culture, religious groups, professional organizations, sports teams,
gangs, or small social connections (family members, intimate partners, mentors, close
colleagues, confidants). They need to love and be loved (sexually and non-sexually) by others. In
the absence of these elements, many people become susceptible to loneliness, social anxiety, and
clinical depression.

This need for belonging can often overcome the physiological and security needs, depending on
the strength of the peer pressure; an anorexic, for example, may ignore the need to eat and the
security of health for a feeling of control and belonging.

Esteem

All humans have a need to be respected and to have self-esteem and self-respect. Also known as
the belonging need, esteem presents the normal human desire to be accepted and valued by
others. People need to engage themselves to gain recognition and have an activity or activities
that give the person a sense of contribution, to feel accepted and self-valued, be it in a profession
or hobby. Imbalances at this level can result in low self-esteem or an inferiority complex. People
with low self-esteem need respect from others. They may seek fame or glory, which again
depends on others. Note, however, that many people with low self-esteem will not be able to
improve their view of themselves simply by receiving fame, respect, and glory externally, but
must first accept themselves internally. Psychological imbalances such as depression can also
prevent one from obtaining self-esteem on both levels.

Most people have a need for a stable self-respect and self-esteem. Maslow noted two versions of
esteem needs, a lower one and a higher one. The lower one is the need for the respect of others,
the need for status, recognition, fame, prestige, and attention. The higher one is the need for self-
respect, the need for strength, competence, mastery, self-confidence, independence and freedom.
The latter one ranks higher because it rests more on inner competence won through experience.
Deprivation of these needs can lead to an inferiority complex, weakness and helplessness.

Maslow also states that even though these are examples of how the quest for knowledge is
separate from basic needs he warns that these “two hierarchies are interrelated rather than
sharply separated” .

Self-actualization

This level of need pertains to what a person's full potential is and realizing that potential. Maslow
describes this desire as the desire to become more and more what one is, to become everything
that one is capable of becoming. This is a broad definition of the need for self-actualization, but
when applied to individuals the need is specific. For example one individual may have the strong
desire to become an ideal parent, in another it may be expressed athletically, and in another it
may be expressed in painting, pictures, or inventions. As mentioned before, in order to reach a
clear understanding of this level of need one must first not only achieve the previous needs,
physiological, safety, love, and esteem, but master these needs.
Criticism

In an extensive review of research based on Maslow's theory, Wahba and Bridgewell found little
evidence for the ranking of needs Maslow described, or even for the existence of a definite
hierarchy at all. Chilean economist and philosopher Manfred Max-Neef has also argued
fundamental human needs are non-hierarchical, and are ontologically universal and invariant in
nature—part of the condition of being human; poverty, he argues, may result from any one of
these needs being frustrated, denied or unfulfilled.

The order in which the hierarchy is arranged (with self-actualization as the highest order need)
has been criticised as being ethnocentric by Geert Hofstede. Hofstede's criticism of Maslow's
pyramid as ethnocentric may stem from the fact that Maslow’s hierarchy of needs neglects to
illustrate and expand upon the difference between the social and intellectual needs of those raised
in individualistic societies and those raised in collectivist societies. Maslow created his hierarchy
of needs from an individualistic perspective, being that he was from the United States, a highly
individualistic nation. The needs and drives of those in individualistic societies tend to be more
self centered than those in collectivist societies, focusing on improvement of the self, with self
actualization being the apex of self improvement. Since the hierarchy was written from the
perspective of an individualist, the order of needs in the hierarchy with self actualization at the
top is not representative of the needs of those in collectivist cultures. In collectivist societies, the
needs of acceptance and community will outweigh the needs for freedom and individuality.

Maslow’s hierarchy has also been criticized as being individualistic because of the position and
value of sex on the pyramid. Maslow’s pyramid puts sex on the bottom rung of physiological
needs, along with breathing and food. It views sex from an individualistic and not collectivist
perspective: i.e., as an individualistic physiological need that must be satisfied before one moves
on to higher pursuits. This view of sex neglects the emotional, familial and evolutionary
implications of sex within the community.
 McGregor’s Theory X and Y is better than Maslow’s Hierarchy of
Needs

In understanding of Maslow’s Hierarchy of needs and McGregor’s Theory, there is close

relationship between the two theories. McGregor has developed his work by using Maslow’s
Hierarchy of Needs. In doing so, McGregor has provided solutions on the flaws that are
involved in Maslow’s theory. Maslow’s theory is criticized by following a hierarchy, it is argued
that fundamental needs are non hierarchal, ontologically universal and invariant in nature. It is
based on individual who sacrifices their basic physiological needs, safety and security to gain
belonging and acceptance, thus making individuals have different priorities in their needs that
needs to be achieved. McGregor developed a solution by grouping Maslow’s hierarchy into
“lower order” (Theory X) needs and “higher order” (Theory Y) needs, allowing the use of either
the two set of needs in motivating employees. Maslow identifying the individuals needs, that
can be use to motivate an individual, it does not provide an approach on employees. Whilst
McGregor despite having been criticized on the approaches of “soft and harsh” approach, this
approaches can still be proven effective in different situation that requires a leaders direction on
individuals, i.e., in emergency situations. In providing this comparisons, McGregor has
developed a better theory on Maslow’s Hierarchy of Needs, which is the McGregor’s Theory X
and Y.

Why
McGregor’s Theory X and
Theory Y
is better than
Maslow’s Hierarchy Needs?

Group B
Edcel Rose Poselero

Princess Hope Salvador

Elizabeth Martin