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Management Implications of Theory ‘X’ and ‘Y’

Queensbury College London

COURSE: PGDBM (MANAGEMENT BEHAVIOR)

SUBMITTED TO: Mr. Sikander Wahla

SUBMITTED BY: Shahrukh Ali

COLLEGE ID: 100991

DATE OF SUBMISSION: 11 October 2010

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Table of contents

Management Implications of Theory ‘X’ and ‘Y’.............................................................1

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Queensbury College London.......................................................................................1
Course: PGDBM (MANAGEMENT BEHAVIOR)...................................1
Table of contents................................................................................................................2
Abstract............................................................................................................................3
Introduction .....................................................................................................................3
What is motivation?.........................................................................................................4
Theory ‘X’ (traditional assumption about employee)......................................................4
4.1. Theory ‘X’ management implications..................................................................5
4.2. Theory X - The Hard Approach and Soft Approach ............................................5
4.3. The Problem with Theory X.................................................................................5
Theory ‘Y’ (modern assumption about employee)..........................................................6
Theory ‘Y’ management implications.........................................................................6
5.2. Benefits of Theory ‘Y’..........................................................................................7
Critical appraisal of McGregor’s theories........................................................................7
Conclusion.......................................................................................................................8
References........................................................................................................................9
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Abstract
This essay seeks to analyze theory X and theory Y of employee motivation, proposed by
Douglas McGregor in his book “The Human Side of Enterprise” in the year 1960 and its
implications on managerial behavior. It will provide understanding of the word
‘motivation’ and will also attempt to create a critical appraisal of both the theories in
practice.

Introduction
In the book, Douglas McGregor came up with two theories by which he viewed
employee motivation. He avoided taking the actual names and called his theories: Theory
X and Theory Y. The theories began with the argument that management's function is to
pull together the factors of production, including workers for the overall financial benefit
of the organization. After this basic role, the two theories of management diverge on two
different angles. He also categorized managers into two types basing on these theories
Theory X and Theory Y managers. In his belief, mostly managers think that people are
work shirkers and only motivated by money. He called them, Theory X managers. On the
other hand, Theory Y managers assume that people tend to be more conscious about job
satisfaction than the money itself. If overall production and achievement level of the
company is low, managers should ask themselves if employees are being provided the
right working environment. In short, Theory Y managers tend to blame themselves for
the poor performance of the workforce rather than the workers. McGregor was also
against the stereotyped approach that money can always compensate a low out put from
an employee. He was also firm believer of the fact that money can never flourish an
environment needed for the motivation of the workforce. McGregor could foresee an
improvement in the overall working environment at the turn of the 19th century at all
levels of corporation.
Concluding from Maslow’s Theory of hierarchy of needs, he argued that by fulfilling the
basic needs of the workforce, the managers are in fact creating much higher needs. Now,
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it was time to satisfy those higher level needs. ‘McGregor’s work is not completely
original’. Theory X is derived from the work of F.W. Taylor and from Adam Smith’s
conception of ‘economic man’. Theory Y stems clearly from Mayo’s human relations
approach and Maslow’s work on human needs (A.V. Vedpuriswar, 2005: 69). No matter
what the circumstances, Theory X and theory Y are still referred to in the fields of
managerial behavior and employee motivation and empowerment. While the theories are
criticized for the rigidity of their model, even today, they still remain the foundation on
which management techniques are built. It still is pivotal to organizational development,
structure and to improving organizational culture. It is valuable and a simple reminder of
the basic rules for managing workforces, which even today are neglected by most of the
managers under work load and time constraints.

What is motivation?
‘The dictionary defines as the internal and external factors that stimulate desire and
energy in people to be continually interested in and committed to a job, role, or subject,
and to exert persistent effort in attaining a goal. Motivation is the energizer of behavior
and mother of all action. It results from the interactions among conscious and
unconscious factors such as the (1) intensity of desire or need, (2) incentive or reward
value of the goal, and (3) expectations of the individual and of his or her significant
others’(Yvonne A Jones, 2006). Seligman, Martin E.P. (1990) describes motivation as
‘the activation of goal oriented behavior’. ‘Motivation is the inner power or energy that
pushes toward acting, performing actions and achieving’ (Remez Sasson, 2005:35).

Theory ‘X’ (traditional assumption about employee)

Theory X portraits an average person as:
• Abhors work and tries to shirk it when ever possible.
• Has no objective, takes no responsibility, and would rather feel comfortable being a
follower than a leader.
• Is only concerned about his own self and does not participate in the over all
organizational goals and objectives.
• Tries to avoid any change in the environment.
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• Is credulous, too ready to believe and particularly not intelligent.

• In essence, Theory X believes that people work for only monetary, security and
personal gains.

4.1. Theory ‘X’ management implications

Theory X manager assumes the following:
• Employees are only motivated by monetary gains.
• Workers would not perform as desired out of them, without close
supervision.
• Workers will only respect a bossy, tough, decisive and self-confident
manager.
• Employees have no ability and desire to make effective decisions.

4.2. Theory X - The Hard Approach and Soft Approach

‘Management approaches can range from a hard approach to a soft approach. The hard
approach relies on coercion, implicit threats, close supervision, and tight controls,
essentially an environment of command and control. The soft approach is to be
permissive and seek harmony with the hope that in return employees will cooperate when
asked to do so. However, neither of these extremes is optimal. The hard approach results
in hostility, purposely low-output, and hard-line union demands. The soft approach
results in ever-increasing requests for more rewards in exchange for ever-decreasing
work output’ (Jon Warner, 2008). Therefore, the best management style under the light
of theory X would probably be in the middle of the two extremes. However, he later
argues that neither of the approach is suitable for managers in future coming time and
that the assumptions of Theory X are not correct all the way.

4.3. The Problem with Theory X

Based on Maslow’s ‘Hierarchy Theory’, McGregor argues that if human needs are
fulfilled, motivation dies down. According to Theory X, the managers rely on money and
basic benefits and when these needs are satisfied, the motivation is lost. Therefore, in
order to satisfy their higher level needs, employees tend to extract more compensation out
of work and that can only be done through money. Although money is not the only option
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to human self- fulfillment, under Theory X, it might be the only way. Under Theory X,
people tend to satisfy their lower level needs with work and their higher level needs in the
spare time. This practice makes them more productive in their normal lives than in work.
McGregor believes that people with satisfied lower level needs are not at all motivated
with in a command and controlled environment. Meaning thereby, in this situation,
employees would carry no interest in the overall organizational goals, its success; resist
any change for good, etc. thus making Theory X a self-satisfying divination. Because of
these arguments, McGregor alternatively proposed another theory, Theory Y.

Theory ‘Y’ (modern assumption about employee)

The higher level needs as described by ‘Maslow’ as of ego and self-esteem are ever
increasing human needs combined with motives and are never completely satisfied. For
these reasons, higher level needs are the ones by which employees can be best motivated.
Theory Y makes the following general assumptions:
• Working environments can be created, which are much closer to natural work and
play.
• Employees will be automatically governed to under take their work objectives, if they
are naturally committed to them.
• Workers will be more sincere to their work, if reward in return promises to fulfill
their higher level needs, such as self-esteem etc.
• People will show more responsibility under these conditions.
• Most people can under take responsibility because ingenuity and creativity is quite
common in the general population around the world.
In light of these assumptions, McGregor believes that employees personal life objectives
can be synchronized with the organizational objectives. However, Theory Y does not
encompass hard approach. The only draw back in this regard is the level of maturity of
the employee, which can be dealt, with the passage of time and experience.

Theory ‘Y’ management implications

The Theory Y manager assumes the following:
• Employees seek job satisfaction as much as the managers do.
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• If workers are placed with an appropriate amount of trust, they would behave quite
responsibly than usual.
• Lack of performance is due to dull working environments and poor management.
• Workers should have, full liberty to take part in the decision making of the
organization.

5.2. Benefits of Theory ‘Y’

Provided Theory Y is correct, the firm is likely to carryout many other activities, which
can generate right amount of motivational energy amongst the employees:
• Decentralization of command and authority – If the organization reduces the level of
management, then each manager will have number of employees under his command.
This would force him to delegate some of his responsibilities and powers to the work
force below.
• Job Enlargement – It means widening the scope of the job by creating more
opportunities and variety for the workers. This in return would satisfy their ego needs.
• Participative Management – This style of management means that the whole
organization will work as a team from top to bottom. It would increase the creative
out put of the workers and they would have control over their working environment.
• Performance Appraisals – Setting objectives for the employees and make them
participate in the process of evaluating that how efficiently they were met.
If properly implemented, such an environment would result in a high level of motivation
as employees work to satisfy their higher-level personal needs through their jobs.

Critical appraisal of McGregor’s theories

First of all, both theories X and Y are based upon McGregor’s own intuitive deductions
and may or may not work for an organization. According to his theory X:
• The average human being has an inherent dislike of work and will avoid it, if he can.
• If only threatened with punishment, that he would put adequate efforts towards the
achievement of organizational objectives.
• Human nature is to avoid responsibility and shirk work.
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• Employees can only be supervised by means of “the carrot and stick”—rewards and
punishment.
Theory X actually, does not bring out the true nature of human beings in practice.
On the contrary, his theory Y suggests that:
• Workers are not lazy, do not dislike work and will do what ever in their capacity for
the success of an organization.
• Managers need not to exercise control over their worker’s behavior to make them
perform at a high level because workers exercise self control themselves.
If we critically analyze both Theory X and Theory Y, it is evident that both are
important tools made to understand human behavior and motivates employees in one
case or the other. But neither of the two is fully applicable in all situations.
• Theory X is only applicable to unskilled/uneducated, deprived workers and in the
kind of organizations which are low profit/non-profit in nature or very less at stake
i.e. mainly services rather than businesses. Theory X also depends on the kind of
society in which the organization is operating. That is why it is still exercised in most
of the Government funded/bureaucratically managed organizations around the world.
• Theory Y is mainly applicable to the skilled, educated and mature employees in a
society or an organization. The managers, whose organizations have high profit
margins, much at stake and with high career/job prospects can greatly benefit from
this theory in practice.

Conclusion
Theory X and Y, undoubtedly is the work of art from McGregor in the field of human
psychology. Regardless of the fact, that these theories may not entirely encompass the
broad range of the subject but still they do form the basis of ‘Management behavior’ even
today. Both theories are justified in one way or the other but they do remain the focus of
debate. Human population by and large comprises of one set of people but they differ in
ideology and motives due to their environments and cultures. However, the basic human
needs remain the same for everyone. Gone are the days when the entire workforce could
be managed through a single stick yard. Today, managers are supposed to be more
flexible and variable in their approach towards employees. They should take more
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interest in the personal lives of their employees, which would help them understand their
subordinates individually. An organization is like machinery, where each part has its own
characteristics and limitations. Therefore, till the time a manager is not fully aware of all
the entities working under is command, he would never be able to become a good
manager.

References

Seligman, M.E.P. (1990). Learned Optimism. New York, NY: Pocket Books.

A.V. Vedpuriswar (2005) ‘A-Z strategy’ Glossary for MBA students. Pp.68-69.

http://www.vedpuriswar.org [accessed 09 October 10]

Jon Warner (2008) Management style 360 report. WCOD: Training House & DPG.

http://www.profiles-r-us.com [accessed 10 October 10]

http://www.businessdictionary.com/definition/motivation [accessed 08 October 10]

Remez Sasson(2005) Visualize and achieve. Israel: Haatzmaut.

http://www.successconsciousness.com [accessed 09 October 2010]

Yvonne A. Jones (2006) ‘7 Tips to Maintain Motivation in Your Online Business -

An Overview of the Report’ http://www.ezinearticles.com [accessed 08 Oct]