Theory X and Theory Y

In The Human Side of Enterprise, Douglas McGregor outlined two opposing theories of work and motivation. What he calls Theory X is the rather pessimistic approach to workers and working which assumes that people are lazy and will avoid work and responsibility if they can. Consequently, workers have to be closely supervised and controlled, and told what to do. They have to be both threatened, for example with losing their job, and rewarded with incentives, probably monetary ones such as a pay rise or bonuses. Theory X assumes that most people are incapable of taking responsibility for themselves and have to be looked after. It has traditionally been applied, for example, by managers of factory workers in large-scale manufacturing.

Theory Y, on the contrary, assumes that most people have a psychological need to work, and given the right conditions – job security, financial rewards – they will be creative, ambitious and self-motivated by the satisfaction of doing a good job. Theory Y is probably more applicable to skilled professionals and what Peter Drucker called “knowledge workers” – managers, specialists, programmers, scientists, engineers – than people in unskilled jobs.

McGregor’s two theories are based on Abraham Maslow’s famous “hierarchy of needs”. Theory X relates to the basic, “lower order” needs at the bottom of the hierarchy, such as financial security, while Theory Y relates to “higher order” needs such as esteem (achievement, status and responsibility) and self-actualization (personal growth and fulfillment) that can be pursued if basic needs are satisfied.

McGregor is widely considered to have laid the foundations for the modern people-centered view of management. However, Maslow spent a year studying a Californian company that used theory Y, and concluded that there are many people who are not looking for responsibility and achievement at work. There will always be people with little self-discipline, who need security and certainty protection against the burden of responsibility, so it is impossible to simply replace the “authoritarian” Theory X with the “progressive” Theory Y.

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