Theory X and Y

• In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of human behavior at work, or in other words, two different views of individuals (employees): one of which is negative, called as Theory X and the other is positive, so called as Theory Y. According to McGregor, the perception of managers on the nature of individuals is based on various assumptions.
• Theory X Assumptions

  • An average employee intrinsically does not like work and tries to escape it whenever possible
  • Since the employee does not want to work, he must be persuaded, compelled, or warned with punishment so as to achieve organizational goals
  • A close supervision is required on part of managers
  • Managers adopt a more dictatorial style
  • Many employees rank job security on top, and they have little or no aspiration/ ambition
  • Employees generally dislike responsibilities
  • Employees resist change
  • An average employee needs formal direction
• Assumptions of Theory Y

  • Employees can perceive their job as relaxing and normal
  • Employees exercise their physical and mental efforts in an inherent manner in their jobs
  • Employees may not require only threat, external control and coercion to work, but they can use self-direction and self-control if they are dedicated and sincere to achieve the organizational objectives
  • If the job is rewarding and satisfying, then it will result in employees' loyalty and commitment to organization
  • An average employee can learn to admit and recognize the responsibility, and can even learn to obtain responsibility
  • Employees have skills and capabilities, their logical capabilities should be fully utilized, the creativity, resourcefulness and innovative potentiality of the employees can be utilized to solve organizational problems
• Thus, we can say that Theory X presents a pessimistic view of employees’ nature and behavior at work, while Theory Y presents an optimistic view of the employees’ nature and behavior at work. If correlate it with Maslow’s theory, we can say that Theory X is based on the assumption that the employees emphasize on the physiological needs and the safety needs; while Theory Y is based on the assumption that the social needs, esteem needs and the self-actualization needs dominate the employees.
• McGregor views Theory Y to be more valid and reasonable than Theory X. Thus, he encouraged cordial team relations, responsible and stimulating jobs, and participation of all in decision-making process.
• Decentralization and delegation


  1. Firms decentralize control and reduce the number of levels of management

  2. Managers have more subordinates and consequently need to delegate some responsibility and decision making to them
• Job enlargement


  • Broadening the scope of an employee's job adds variety and opportunities to satisfy ego needs
• Participative management


  • Consulting employees in the decision-making process taps their creative capacity and provides them with some control over their work environment
• Performance appraisals


  • Having the employee set objectives and participate in the process of self-evaluation increases engagement and dedication
• Theory X


  Encourages use of tight control and supervision, implies employees are reluctant to organizational changes, does not encourage innovation
• Theory Y


  Managers should create and encourage a work environment which provides opportunities to employees to take initiative and self-direction, employees should be given opportunities to contribute to organizational well-being, encourages decentralization of authority, teamwork and participative decision making, searches and discovers the ways in which an employee can make significant contributions, harmonizes and matches employees' needs and aspirations with organizational needs and aspirations
• Many organizations are using Theory Y techniques
• Quite a few organizations use Theory X today
• Decentralization and delegation: If firms decentralize control and reduce the number of levels of management, managers will have more subordinates and consequently need to delegate some responsibility and decision making to them.
• Job enlargement: Broadening the scope of an employee’s job adds variety and opportunities to satisfy ego needs.
• Participative management: Consulting employees in the decision-making process taps their creative capacity and provides them with some control over their work environment.
•   Performance appraisals: Having the employee set objectives and participate in the process of self-evaluation increases engagement and dedication.

   
• Autocratic leadership, also known as authoritarian leadership, is a leadership style characterized by individual control over all decisions and little input from group members.