What are Theory X and Theory Y? Theory X and Theory Y In A Nutshell

Theory X and Theory Y were developed in the 1960s by American management professor and social psychologist Douglas McGregor. McGregor believed there were two fundamental approaches to managing people in the workplace to get things done and benefit the organization. Theory X and Theory Y are theories of motivation used by managers to increase the performance of subordinates.

Understanding Theory X and Theory Y

These approaches were based on the idea that every manager has a personal view regarding what motivates people.

These views affect what the manager does and how they behave. In other words, their management or leadership style.

The two approaches McGregor named Theory X and Theory Y. In the next section, we’ll discuss both theories in more detail.

Theory X and Theory Y

1 – Theory X

Theory X describes an authoritarian leadership style where managers give direct instruction and supervise subordinates closely.

Theory X is based on the following assumptions:

The employee dislikes work and is unmotivated, lazy, gullible, and unintelligent.
The employee shirks responsibility and as a result, prefers for someone else to lead.
The employee is self-centered and indifferent toward the interests of the organization.
Management is responsible for assembling money, material, people, and equipment.
Management is required to control employees by modifying their behavior to comply with or suit organizational needs.
Management must also ensure employees work toward economic goals through persuasion, incentivization, punishment, and control.

2 – Theory Y

Theory Y describes a participative leadership style where managers assume employees are self-motivated and directed toward accomplishing organizational goals.

As a result, these leaders attempt to receive maximum employee output for minimum managerial effort.

Theory Y is based on the following assumptions:

The average employee is creative and self-motivated and does not inherently dislike their work.
Since employees are self-directed and self-controlled, punishment is not the only way to increase motivation.
Employee commitment is positively correlated with the reward received, with the largest rewards associated with satisfaction of the ego and self-actualization.
The average employee is ambitious and does not shirk responsibility. As a result, they readily adopt leadership roles.
Employees use a relatively high degree of imagination and creativity in solving complex organizational problems. What’s more, the capacity for creativity spreads throughout a company.

Implications of Theory X and Theory Y

We can observe that Theory X management takes a pessimistic view of employee behavior and capabilities.

McGregor believed authoritarian leadership was not effective because it relied on lower-level needs such as food, money, job security, and shelter to motivate employees.

Monetary compensation works for a time, but the motivation to perform disappears as soon as these lower-level needs have been met.

This causes unmotivated employees to go to work simply to collect a paycheque and use their leisure time to satisfy higher-level needs.

With all of that said, McGregor did acknowledge that authoritarian leadership was useful in managing subordinates still in the developmental stage.

Theory Y has a far more optimistic view of employees.

McGregor suggested participative leadership encouraged harmonious team relations and stimulated collaborative decision-making.

Importantly, employees under this management style could be motivated for longer because higher-level needs around self-actualization and self-esteem are never truly satisfied.

Under Theory Y, there is also an opportunity for managers to align personal goals with organizational goals by using an employee’s need for self-actualization as the motivator.

In determining the best approach, McGregor suggested neither was optimal. In the authoritarian approach, hostile employees lower their output and frequently involve unions in disputes.

In the participative approach, management is permissive and seeks harmony in the hope that employees will cooperate in return.

This hope-based approach also results in employees expecting progressively larger rewards in exchange for progressively diminishing effort.

Key takeaways

Theory X and Theory Y are theories of motivation used by managers to increase the performance of subordinates. Both were developed by social psychologist Douglas McGregor in the 1960s.
Theory X describes an authoritarian leadership style where managers give direct instruction and supervise subordinates closely. Theory Y, on the other hand, describes a participative leadership style where managers assume employees are self-motivated and directed toward accomplishing organizational goals.
McGregor believed neither theory was a totally effective management approach. Authoritarian leaders create hostile work environments where employees involve unions and deliberately lower their output. Participative leadership can also create a decrease in output because the reciprocal relationship between managers and subordinates is based on hope.