Mcgregor XY Theory of Management

Douglas McGregor first proposed his famous XY Theory in 1960 to help people develop a more positive management style

Mcgregor XY Theory of Management

Douglas McGregor's XY Theory, managing an X Theory boss, and William Ouchi's Theory Z [edit]

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. McGregor's XY Theory remains central to organizational development, and to improving organizational culture.

McGregor's X-Y theory is a salutary and simple reminder of the natural rules for managing people, which under the pressure of day-to-day business are all too easily forgotten.

McGregor's ideas suggest that there are two fundamental approaches to managing people. Many managers tend towards theory x, and generally get poor results. Enlightened managers use theory y, which produces better performance and results, and allows people to grow and develop.

McGregor's ideas significantly relate to modern understanding of the Psychological Contract, which provides many ways to appreciate the unhelpful nature of X-Theory leadership, and the useful constructive beneficial nature of Y-Theory leadership.

Theory X ('authoritarian management' style)

  • The average person dislikes work and will avoid it if he/she can.
  • Therefore most people must be forced with the threat of punishment to work towards organisational objectives.
  • The average person prefers to be directed; to avoid responsibility; is relatively unambitious, and wants security above all else.

Theory Y ('participative management' style)

  • Effort in work is as natural as work and play.
  • People will apply self-control and self-direction in the pursuit of organisational objectives, without external control or the threat of punishment.
  • Commitment to objectives is a function of rewards associated with their achievement.
  • People usually accept and often seek responsibility.
  • The capacity to use a high degree of imagination, ingenuity and creativity in solving organisational problems is widely, not narrowly, distributed in the population.
  • In industry the intellectual potential of the average person is only partly utilised.

Theory Z - William Ouchi

First things first - Theory Z is not a Mcgregor idea and as such is not Mcgregor's extension of his XY theory.

Theory Z was developed by William Ouchi, in his book 1981 'Theory Z: How American management can Meet the Japanese Challenge'. William Ouchi is professor of management at UCLA, Los Angeles, and a board member of several large US organisations.

Theory Z is often referred to as the 'Japanese' management style, which is essentially what it is. It's interesting that Ouchi chose to name his model 'Theory Z', which apart from anything else tends to give the impression that it's a Mcgregor idea. One wonders if the idea was not considered strong enough to stand alone with a completely new name... Nevertheless, Theory Z essentially advocates a combination of all that's best about theory Y and modern Japanese management, which places a large amount of freedom and trust with workers, and assumes that workers have a strong loyalty and interest in team-working and the organisation.

Theory Z also places more reliance on the attitude and responsibilities of the workers, whereas Mcgregor's XY theory is mainly focused on management and motivation from the manager's and organisation's perspective.