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 behaviour, organizational communication and organizational development. They describe two contrasting models of workforce motivation.

Theory X:

Theory X basically holds the belief that people do not like work and that some kind of direct pressure and control must be exerted to get them to work effectively. These people require a rigidly managed environment, usually requiring threats of disciplinary action as a primary source of motivation. It is also held that employees will only respond to monetary rewards as an incentive to perform above the level of that which is expected

From a management point of view, autocratic (Theory X) managers like to retain most of their authority. They make decisions on their own and inform the workers, assuming that they will carry out the instructions. Autocratic managers are often called "authoritative" for this reason; they act as "authorities". This type of manager is highly task oriented, placing a great deal of concern towards getting the job done, with little concern for the worker's attitudes towards the manager's decision.

Theory X can be related to Taylor’s Scientific Management Theory. According to Theory X and scientific management Theory what motivated people at work is money. Worker’s sole satisfaction will be maximizing his money. However in modern organizations, people required more than money and here comes Theory Y into the picture.

Theory Y:

A more popular view of the relationship found in the work place between managers and workers, is explained in the concepts of Theory Y. This theory assumes that people are creative and eager to work. Workers tend to desire more responsibility than Theory X workers, and have strong desires to participate in the decision making process. Theory Y workers are comfortable in a working environment which allows creativity and the opportunity to become personally involved in organizational planning.

According to another of the authors studied for this project, in which the "participative" (Theory Y) leadership style is discussed, a participative leader shares decisions with the group. Douglas McGregor thinks that Theory Y managers are more likely than Theory X managers to develop the climate of trust with employees; a critical requirement for human resource development. It's 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.

For McGregor, Theory X and Y are not different ends of the same continuum. Rather they are two different continua in themselves.

Theory Z:

Theory Z deals with the way in which workers are perceived by managers, as well as how managers are perceived by workers; is created and developed by William Ouchi. Theory Z offers the notion of a hybrid management style which is a combination of a strict American management style and a strict Japanese management style This theory speaks of Ringi System of Management. This decision-making system is the collective decision-making process and is highly decentralized. Only after the consensus is reached the decision is taken. If the decision is successful, then the one who has advocated it gets the credit but interesting part is that in the event of unsuccessful decision-making, top management takes the responsibility for the failure. Theory Z emphasizes things such as job rotation, broadening of skills, generalization versus specialization, and the need for continuous training of workers.

Theory Z assumes that workers tend to want to build co-operative and intimate working relationships with those that they work for and with, as well as the people that work for them. Also, Theory Z workers have a high need to be supported by the company, and highly value a working environment in which such things as family, cultures and traditions, and social institutions are regarded as equally important as the work itself. These types of workers have a very well developed sense of order, discipline, moral obligation to work hard, and a sense of cohesion with their fellow workers. Finally, Theory Z workers, it is assumed, can be trusted to do their jobs to their utmost ability, so long as management can be trusted to support them and look out for their well being.

Theory Z stresses the need for enabling the workers to become generalists, rather than specialists, and to increase their knowledge of the company and its processes through job rotations and continual training. In fact, promotions tend to be slower in this type of setting, as workers are given a much longer opportunity to receive training and more time to learn the intricacies of the company's operations. The desire, under this theory, is to develop a work force, which has more of a loyalty towards staying with the company for an entire career, and be more permanent than in other types of settings. It is expected that once an employee does rise to a position of high level management, they will know a great deal more about the company and how it operates, and will be able to use Theory Z management theories effectively on the newer employees.

Comparison & Contrast of Management Theories

Conclusion:

No theory is bad or good. If we take into consideration of Maslow’s hierarchy of needs, then it can be said that at the bottom of the pyramid, money is the main motivator for work. Theory X managers exploit this human behaviour characteristics to maximize organizational profit. It is predominately seen in labour intensive work like GAIL’s petrochemical plant. However as we go up in the pyramid, self actualization is the main motivator.Theory Y managers tries to maximize organizational growth to promote self esteem, confidence, achievement, respect of others, and respect by others.