X, Y, Z Theories of Management

MADE BY:MEGHA
KOMAL
BHUVAN
TARUN
ABHISHEK
SHIVAM
MANJEET
MAYANK
Theory X and
Theory Y
were created
by Douglas
McGregor.
 Douglas McGregor, an American social
psychologist, proposed his famous X-Y
theory in his 1960 book 'The Human Side
Of Enterprise'. Theory x and theory y are
still referred to commonly in the field of
management and motivation, and whilst
more recent studies have questioned the
rigidity of the model, Mcgregor's X-Y
Theory remains a valid basic principle
from which to develop positive
management style and techniques.
What is the X Theory of
Management?
 Theory X is a management
approach that assumes workers
are lazy, have little ambition, and
are motivated by coercion and
threats.
 In other words, the manager
uses fear and strict discipline to
make sure his/her employees
get done what needs to be
done.
 Theory X may cause stress to
the employees because the
manager may be using harsh
threats and unpleasant tones
in order to achieve the overall
goal.
 It also may not give the
employees a chance to take
any initiative because the
manager is always telling
them what to do before
they have a chance to
figure it out on their own.
It may make the work place
very dependent on the
manager.
 Theory X Assumptions
The average human being has an inherent dislike of work
and will avoid it if he can.
Because of their dislike for work, most people must be
controlled and threatened before they will work hard
enough.
The average human prefers to be directed, dislikes
responsibility, is unambiguous, and desires security above
everything.
These assumptions lie behind most organizational principles
today, and give rise both to "tough" management with
punishments and tight controls, and "soft" management
which aims at harmony at work.
Both these are "wrong" because man needs more than
financial rewards at work, he also needs some deeper
higher order motivation - the opportunity to fulfill himself.
Theory X managers do not give their staff this opportunity
so that the employees behave in the expected fashion.
Five Important Limitations about Theory X & Theory Y:

1. Theory X style of management fosters a very hostile and distrustful

atmosphere- An authoritarian organization requires many managers just
because they need to constantly control every single employee, and the
method of control usually involves a fair amount of threat and coercion.
At times, an employer that is overly threatening will lead to dissatisfaction
among employees, or they might even attempt to blame each other in order
to save themselves from the threats.
Conversely, Coercion might work better with the prospects of bigger rewards
for more, but employees might purposely try to cheat or attempt to hide the
truth itself. Also, employees might try to sabotage the efforts of each other
in order to make it easier for them to achieve the rewards.

2. Theory Y style of management is tough to uphold in reality- The core

belief of Theory Y, is that with the right support and the right environment,
self-directed employees will be able to perform their jobs well. However,
because every individual is different from one another, creating an
environment which fits all does not sound very practical in the current era of
organizations.
3. Theory X and Theory Y is very hard to be used with each other- Just because we
think that utilizing different theories in order to accommodate different types of
employees does not mean that it would be beneficial to the companies. In the end, the
human labor of the company might be improved, but at the cost of creating monetary
loses as well as inefficient allocation of resources.
For example, a company decides to use both theories together. So, in order to
accommodate the need of employees who are managed based on Theory X, more
employers will need to be hired and paid. The company also needs to pay and to create
a comfortable environment for employees that are self-motivated based on a theory Y
concept. It costs a small fortune for the company to cater to the different tastes of so
many employees. It is estimated that the company spending would be high enough
based on these factors alone.
Therefore, it might just be more beneficial for the company to utilize a single theory
and hire employees that can be consistently managed with that theory alone.

4. Theory X and Theory Y makes employment harder- Previously, Ive said that
companies should only use a single theory at once. The theory that should be used is the
one that can effectively manage all employees within the organization.
However, this in turn causes a problem during the employment process, because it is
likely that a company will reject an applicant solely because he/she is not consistent
with the theory that the company uses.
Therefore, if companies actually follow these theories closely, it will be harder for
potential candidates to get a job just because the company cannot handle their
characteristics within the workplace and may give candidates that the company
discriminates heavily upon its applicants.

5. Theory X and Theory Y work on assumptions- I think organizations should be

careful, and not rely too heavily on Theory X and Theory Y because there are a lot of
assumptions.
The workforce is changing nowadays, and the workplace is a dynamic mix of
employees from different backgrounds, races and genders. Also, employees might
have completely different motivations and goals for choosing to work within an
organization.
Nowadays, an employee from Generation X might come into the workforce from
his/her previous retirement, and Generation Y employees might be wrongly perceived
as slackers for relying more on technology to manage their meetings and make their
jobs easier .
There are so many other factors that influence the employee behaviour within an
organization in this current era, so Theory X and Theory Y may even be slightly
obsolete.
What is the Y Theory of
Management?
 Theory Y is a management
approach that assumes workers
are motivated by an internal
need to excel and actively
pursue responsibility.
In other words, Theory Y managers
trust their employees to get what
needs to be done, and they dont
always tell them what to do.
Theory Y managers may have
a harder time keeping
employees in line.
Theory Y can promote a more
informal work environment,
which can blur the line
between a manager and an
employee.
 Theory Y Assumptions

The expenditure of physical and mental effort in work is as

natural as play or rest.
Control and punishment are not the only ways to make people
work, man will direct himself if he is committed to the aims of
the organization.
If a job is satisfying, then the result will be commitment to the
organization.
The average man learns, under proper conditions, not only to
accept but to seek responsibility.
Imagination, creativity, and ingenuity can be used to solve
work problems by a large number of employees.
Under the conditions of modern industrial life, the intellectual
potentialities of the average man are only partially utilized.
Theory Z was
created by
William
Ouchi.
What is the Z Theory of
Management?
 Theory Z is an approach to
management that advocates
matching the organizations
culture to that of the larger
society and assumes that
involved workers are the key to
increased productivity.
 In other words, the values of certain
cultures affect the way the employees
work, and therefore, those values
should be taken into consideration
when managing employees of a
certain business.
 Another part of this theory is
that Theory Z workers can be
trusted to do their jobs to their
utmost ability, so long as
management can be trusted to
support them.
If a manager doesnt trust his
employees or the employees
dont trust the manager, this
theory becomes nonexistent..
The distinguishing features of Theory Z are as follows:
1. Mutual Trust:
According of Ouchi, trust, integrity and openness are essential ingredients of an
effective organisation. When trust and openness exist between employees, work
groups, union and management, conflict is reduced to the minimum and employees
cooperate fully to achieve the organisations objectives.

2. Strong Bond between Organisation and Employees:

Several methods can be used to establish a strong bond between the enterprise and
its employees. Employees may be granted lifetime employment which leads to
loyalty towards the enterprise. During adverse business conditions shareholders may
forgo dividends to avoid retrenchment of workers. Promotions may be slowed down.
As against vertical movement of employees greater emphasis should be placed on
horizontal movement which reduces stagnation. A career planning for employees
should be done so that every employee is properly placed. This would result in a
more stable and conducive work environment.

3. Employee Involvement:
Theory Z suggests that involvement of employees in related matters improves their
commitment and performance. Involvement implies meaningful participation of
employees in the decision-making process, particularly in matters directly affecting
them. Such participation generates a sense of responsibility and increases
enthusiasm in the implementation of decisions, Top managers serve as facilitators
rather than decision-makers.
4. Integrated Organisation:
Under Theory Z, focus is on sharing of information and resources rather than on
chart, divisions or any formal structure. An integrated organisation puts emphasis on
job rotation which improves understanding about interdependence of tasks. Such
understanding leads to group spirit.

5. Coordination:
The leaders role should be to coordinate the efforts of human beings. In order to
develop common culture and class feeling in the organisation, the leader must use the
processes of communication, debate and analysis.

6. Informal Control System:

Organisational control system should be made informal. For this purpose emphasis
should be on mutual trust and cooperation rather than on superior-subordinate
relationships.

7. Human Resource Development:

Managers should develop new skills among employees. Under Theory Z, potential of
every person is recognized and attempts are made to develop and utilise it through job
enlargement, career planning, training, etc.
Limitations of Theory Z:

Theory Z suffers from the following limitations:

(i) Provision of lifetime employment to employees to develop a

strong bond between organisation and employees may fail to
motivate employees with higher level needs. It merely provides
job security and may fail to develop loyalty among employees.

(ii) Participation of employees in the decision-making process is

very difficult. Managers may dislike participation as it may hurt
their ego and freedom. Employees may be reluctant to
participate due to fear of criticism and lack of motivation. Even if
they sit along with management they may contribute little unless
they understand the issues and take initiative. Involvement of all
employees may also slow down the decision-making process.

(iii) Theory Z suggests organisation without any structure. But

without structure there may be chaos in the organisation as
nobody will know who is responsible to whom.

(iv) It may not be possible to develop a common culture in the

organisation because people differ in their attitudes, habits,
languages, religions, customs, etc.
 Comparison & Contrast of
Management Theorists
Management Douglas McGregor
Concept (Theory X & Y)
Motivation Tends to categorise people as one type or
another: either being unwilling or
unmotivated to work, or being self
motivated towards work. Threats and
disciplinary action are thought to be used
more effectively in this situation, although
monetary rewards can also be a prime
motivator to make Theory X workers
produce more.
Leadership Theory X leaders would be more
authoritarian, while Theory Y leaders
would be more participative. But in both
cases it seems that the managers would
still retain a great deal of control.
William Ouchi
(Theory Z)
Believes that people are innately self
motivated to not only do their work, but
also are loyal towards the company, and
want to make the company succeed.
Theory Z managers would have to have a
great deal of trust that their workers
could make sound decisions. Therefore,
this type of leader is more likely to act as
"coach", and let the workers make most
of the decisions.
Management Douglas McGregor
Concept (Theory X & Y)
Power & As mentioned above, McGregor's
Authority managers, in both cases, would seem to
keep most of the power and authority. In
the case of Theory Y, the manager would
take suggestions from workers, but would
keep the power to implement the
decision.
Conflict This type of manager might be more likely
to exercise a great deal of "Power" based
conflict resolution style, especially with
the Theory X workers. Theory Y workers
might be given the opportunity to exert
"Negotiating" strategies to solve their
own differences.
William Ouchi
(Theory Z)
The manager's ability to exercise power
and authority comes from the worker's
trusting management to take care of
them, and allow them to do their jobs.
The workers have a great deal of input
and weight in the decision making
process.
Conflict in the Theory Z arena would
involve a great deal of discussion,
collaboration, and negotiation. The
workers would be the ones solving the
conflicts, while the managers would
play more of a "third party arbitrator"
role.
 Summary & Conclusions:
Many assumptions are made in the work place, based on observations of the
workers, and their relationship with management. The types of tasks being
performed, as well as the types of employees which make up a particular
organisation can set the stage for the types of leadership roles which will be
assumed by managers. Theory X, which shows that workers are assumed to be
lazy and do not want to work, seems to be giving way to theories, which suggest
that workers tend to be more participative and creative. Creativity and motivation
naturally lend themselves to a more effective organisation. While McGregor's
Theory Y seems to address the more motivated type of employee, Ouchi's Theory
Z seems to take that notion a step farther by implying that not only are
assumptions about workers made, but assumptions about managers as well. That
is to say that under Ouchi's theory, managers must be more supportive and
trusting of their employees, in order to receive the benefit of increased
participation in the decisions of the company. As is clearly seen by comparing and
contrasting these two theorists, assumptions about people can be more clearly
understood in order for managers and workers to make for a more productive
environment in the work place.
 THANK YOU

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