McGregor's Theory X, Theory Y, and Ouchi's Theory Z

One of the best-known and most fundamental process models of motivation was developed by Douglas McGregor and in it he put forward two theories of motivation that he asserts managers can choose between, what he called Theory X and Theory Y. 

Chandler was without a doubt a Theory X manager. The way he chose to manage people like me and my colleagues was very much according to what Douglas McGregor would have described as Theory X management. A Theory X manager assumes that people only work because they have to. We don't want to work; we'd rather be doing our own things, and therefore, we could be a little work-shy. The only reason we come to work is to earn money, and therefore, we'll do as little as we can in order to retain our jobs and earn the money we need. Consequently, if you want to motivate us, you have to give us a good reason to do things, and therefore, Chandler's approach was very much what you might describe as the carrot and the stick. He would impel us to do things either by offering us promises, sometimes extravagant promises, of reward, or if that didn't seem to be working, threats of punishment and sanction. Richard was not a pleasant person to work for, I have to say, and his style of management felt very old-fashioned.

On the other hand, Ross exemplified what is very much the Theory Y approach to management. Douglas McGregor suggested that Theory Y managers made a completely different set of assumptions about how people could be motivated, and these were very much the assumptions that Ross seemed to make. He seemed to assume that while we might have preferred not to come to work, since we did have to come to work, we wanted to do our very best. In fact, for many of us, coming to work was a pleasure. We enjoyed the work we did, and we wanted to do well. We wanted to bring our creativity, our enthusiasm, our passion to the jobs we did. And therefore, the best way to motivate us was to give us the best possible opportunity to do just that, to be creative, to take the initiative. He would give responsibilities and give trust. As a Theory Y style of manager, Ross, I have to say, was a pleasure to work for.

Theory X and Theory Y are two sets of assumptions that managers make about the staff who work for them. And while no individual staff member is going to conform entirely to Theory X or entirely to Theory Y at all times, what he suggested was that within a prevailing culture, one theory of management and motivation was likely to be more effective than the other. But McGregor went further because he was very much a man of the humanistic approach to management. He suggested that Theory X was old-fashioned, out-of-date, a thing of the 19th and early 20th century, an artifact of pre-industrial management and early industrial management that has last knockings with the scientific management approach. For the mid and late 20th century, McGregor saw that Theory Y was going to be the way to go. And we certainly find that in today's modern world of knowledge workers bringing their intelligence, bringing their enthusiasm to work, Theory Y is likely to be your best bet.

Now, it's certainly true that there are other styles of management that are available. In fact, towards the end of his life, McGregor was working on a Theory Z approach which William Ouchi picked up later and described very much in terms of what he was observing of the then Japanese management styles, which were paternalistic in some ways. They were very much offering a framework and a structure for staff to work in like Theory X but gave huge amounts of respect to those staff like Theory Y, and other theories have evolved. But what the Theory X and Theory Y mean for us as modern-day managers, I think they remind us that there are two extremes of a spectrum of management styles and of motivational styles that we can apply. And while no one model is going to work for every individual, you will be successful if you choose a style that is appropriate to each individual and to the culture within which you work and you vary that style along the spectrum according to circumstances.

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