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Management Guide: Understanding Theory X and Theory Y

Mohamad Danial bin Ab. Khalil
by Mohamad Danial bin Ab. Khalil
Nov 24, 2020 at 1:08 AM

What is X-Y Theory of Management?

Douglas McGregor proposed the X-Y theory in his book 'The Human Side Of Enterprise'. Mcgregor's X-Y Theory is a basic principle to develop positive management style and techniques. The X-Y theory is a reminder of the natural rules for managing employees.

There are two fundamental approaches to managing people:

  • Many managers tend toward Theory X and generally get poor results. 
  • Well-informed managers use Theory Y, which produces better performance and results, and allows people to grow and develop.


Theory Y: The Nice Boss

Theory Y managers have an optimistic, positive opinion of their employees, and they use a decentralised and participative management style. This style encourages a more collaborative and trust-based relationship between supervisors and their team members.

Employees have greater responsibility, and the managers help them to develop their skills and propose improvements. Appraisals are natural but, different than Theory X organisations, they are used to encourage open communication instead of controlling staff.

This style of management assumes that workers are:

  • Happy to work on their own initiative.

  • More involved in the decision-making process.

  • Self-motivated to perform their tasks.

  • Enjoy taking ownership of their work.

  • Seek and accept responsibility, and does not need a lot of direction.

  • View work as satisfying and challenging.

  • Solve problems creatively.


The characteristics of a Theory Y Manager

  • Participative when making decisions;

  • Value both results and relationships;

  • Delegate and empower their people;

  • Coaches employees;

  • Develops positive work environments;

  • Expressing regular recognition and appreciation;

  • Believe in their employees


Theory X Managers are usually authoritarians.

Theory X: The Authoritarian Boss

Theory X managers have a pessimistic view of their employees and assume that they are naturally unmotivated and hate work. As a result, they think that employees need to be prompted, rewarded or punished regularly to make sure that they perform their tasks.

Work in organizations that are managed like this can be repetitive, and people are often motivated with a "carrot and stick" approach. Performance appraisals are usually based on results and are used to control and monitor staff.

This style of management assumes that workers:

  • Hate their work.

  • Avoid responsibility and need constant direction.

  • Need to be controlled, forced and threatened to deliver work.

  • Need to be supervised at every step.

  • No incentive to work, and therefore need to be attracted by rewards to achieve goals.


The Characteristics of a Theory X Manager

The most notable aspects of  XY Theory are found in the behaviours of autocratic managers and organisations which use autocratic management styles, such as:

  • Results-driven and deadline-driven, to the exclusion of everything else

  • Issues deadlines and ultimatums

  • Issues instructions, directions, edicts

  • Demands, never ask

  • Does not team-build

  • One-way communicator

  • Does not welcome suggestions

  • Relatively unconcerned with investing in anything to gain future improvement


Theory Z?

Theory Z is usually referred to as the 'Japanese' management style. Theory Z promotes a combination of all that's best about Theory Y and modern Japanese management, which places a huge amount of freedom and trust with employees, and believes that employees have a strong loyalty and interest in team-working and the organisation.

Theory Z also places more faith in the attitude and responsibilities of the employees, whereas Mcgregor's XY Theory is essentially focused on management and motivation from the manager's and the organisation's perspective.


Theories X, Y and Z are important in identifying the right management style for your organisation . We simplified these theories so it will make it easier for everyone to understand the traits and characteristics of these managers and management style. 

Source: Business Balls

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