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, and organizational development. They describe two very different attitudes toward workforce motivation. McGregor felt that companies followed either one or the other approach.

Theory X
In this theory management assumes employees are inherently lazy and will avoid work if they can. Because of this workers need to be closely supervised and comprehensive systems of controls developed. A hierarchical structure is needed with narrow span of control at each level. According to this theory employees will show little ambition without an enticing incentive program and will avoid responsibility whenever they can.

Many managers (in the 1960s) tended to subscribe to Theory X, in that they take a rather pessimistic view of their employees. 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. The result of this line of thought is that Theory X managers naturally adopt a more authoritarian style based on the threat of punishment.

One major flaw of this management style is it is much more likely to cause Diseconomies of Scale in large businesses. Theory Y allows a business to expand while making more profit because factory-floor workers have their own responsibility.

Theory Y
In this theory management assumes employees are ambitious, self-motivated, anxious to accept greater responsibility, and exercise self-control and self-direction. It is believed that employees enjoy their mental and physical work duties. It is also believed that if given the chance employees have the desire to be creative and forward thinking in the workplace. There is a chance for greater productivity by giving employees the freedom to perform at the best of their abilities without being bogged down by rules.

A Theory Y manager believes that, given the right conditions, most people will want to do well at work and that there is a pool of unused creativity in the workforce. They believe that the satisfaction of doing a good job is a strong motivation in and of itself. A Theory Y manager will try to remove the barriers that prevent workers from fully actualizing themselves.

McGregor and Maslow's hierarchy
McGregor's work was based on Maslow's hierarchy of needs. He grouped Maslow's hierarchy into "lower order" (Theory X) needs and "higher order" (Theory Y) needs. He suggested that management could use either set of needs to motivate employees.

Criticisms
Today the theories are seldom used explicitly, largely because the insights they provided have influenced and been incorporated by further generations of management theorists and practitioners. More commonly, workplaces are described as "hard" versus "soft." Taken too literally any such dichotomy including Theory X and Y seem to represent unrealistic extremes. Most employees (and managers) fall somewhere in between these poles. Naturally, McGregor was well aware of the heuristic as opposed to literal way in which such distinctions are useful. Theory X and Theory Y are still important terms in the field of management and motivation. Recent studies have questioned the rigidity of the model, but McGregor's X-Y Theory remains a guiding principle of positive approaches to management, to organizational development, and to improving organizational culture.