Carmela Jane M.

Moskito August 20, 2009

BSIE 3-1 Engr. Romeo Ilagan

THEORY X & Y AND THEORY Z

Achieving a clear understanding of human nature is an important aspect of management in the

work place. In order for managers and workers to work together as an effective and productive unit, the
workers must know how they fit into the overall scheme of things, and the managers must have a clear
understanding of how they can maximize productivity by supporting their employees through the
appropriate leadership style. It is also extremely important for managers to realistically evaluate the
working environment, as well as the characteristics of the task, in order to decide how he or she deals
with and directs employees.
The purpose of this paper is to discuss two theorists, Douglas McGregor and William Ouchi, and
the theories, which made them well known in the organizational development and management arenas.
McGregor, with his "Theory X" and "Theory Y", and Ouchi, with the notion of a "Theory Z", both look
at the attitudes of managers and workers with very similar, as well as contrasting views of how workers
are perceived by management, and how workers perceive their role in the company. In these theories,
the various authors discuss how each plays an important part in the understanding of workers by
management. The characteristics and assumptions of managers under theory X & Y, typical features of
theory Z and comparison & contrast of these two theorists will also be presented.

THEORY X & Y

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.
Theory X basically holds the belief that people do not like work and that some kind of direct pressure
and control must be exerted to get them to work effectively. These people require a rigidly managed
environment, usually requiring threats of disciplinary action as a primary source of motivation. It is also
held that employees will only respond to monetary rewards as an incentive to perform above the level of
that which is expected.

Engineering Management
Carmela Jane M. Moskito August 20, 2009
BSIE 3-1 Engr. Romeo Ilagan

Theory X

Theory X basically holds the belief that people do not like work and that some kind of direct
pressure and control must be exerted to get them to work effectively. These people require a rigidly
managed environment, usually requiring threats of disciplinary action as a primary source of motivation.
It is also held that employees will only respond to monetary rewards as an incentive to perform above
the level of that which is expected.
From a management point of view, autocratic (Theory X) managers like to retain most of their authority.
They make decisions on their own and inform the workers, assuming that they will carry out the
instructions. Autocratic managers are often called "authoritative" for this reason; they act as
"authorities". This type of manager is highly tasked oriented, placing a great deal of concern towards
getting the job done, with little concern for the worker's attitudes towards the manager's decision. This
shows that autocratic managers lose ground in the work place, making way for leaders who share more
authority and decision making with other members of the group.

Theory Y:

A more popular view of the relationship found in the work place between managers and workers,
is explained in the concepts of Theory Y. This theory assumes that people are creative and eager to
work. Workers tend to desire more responsibility than Theory X workers, and have strong desires to
participate in the decision making process. Theory Y workers are comfortable in a working environment
which allows creativity and the opportunity to become personally involved in organizational planning.
Some assumptions about Theory Y workers are emphasized in one of the texts, namely that this
type of worker is far more prevalent in the work place than are Theory X workers. For instance, it is
pointed out that ingenuity, creativity, and imagination are increasingly present throughout the ranks of
the working population. These people not only accept responsibility, but actively seek increased
authority.
According to another of the authors studied for this project, in which the "participative" (Theory
Y) leadership style is discussed, a participative leader shares decisions with the group. Also mentioned,
are subtypes to this type of leader, namely the "Democratic" leader who allows the members of the
working group to vote on decisions, and the "Consensual" leader who encourages group discussions and
decisions which reflect the "consensus" of the group.

Engineering Management
Carmela Jane M. Moskito August 20, 2009
BSIE 3-1 Engr. Romeo Ilagan

ASSUMPTIONS OF MANAGERS

Theory X
 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.

Theory Y
 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.

Engineering Management
Carmela Jane M. Moskito August 20, 2009
BSIE 3-1 Engr. Romeo Ilagan

Theory X ('authoritarian management' style)

 The average person dislikes work and will avoid it he/she can.
 Therefore most people must be forced with the threat of punishment to work towards
organizational objectives.
 The average person prefers to be directed; to avoid responsibility; is relatively not ambitious, 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 organizational 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
organizational problems is widely, not narrowly, distributed in the population.
 In industry the intellectual potential of the average person is only partly utilized.

CHARACTERISTICS OF MANAGERS

Theory X
 results-driven and deadline-driven, to the  issues instructions, directions, edicts
exclusion of everything else  issues threats to make people follow
 intolerant instructions
 issues deadlines and ultimatums  demands, never asks
 distant and detached  does not participate
 aloof and arrogant  does not team-build
 elitist  unconcerned about staff welfare, or
 short temper morale

 shouts  proud, sometimes to the point of self-

destruction
Engineering Management
Carmela Jane M. Moskito August 20, 2009
BSIE 3-1 Engr. Romeo Ilagan
 one-way communicator  seeks to apportion blame instead of
 poor listener focusing on learning from the experience
and preventing recurrence
 fundamentally insecure and possibly
neurotic  does not invite or welcome suggestions

 anti-social  takes criticism badly and likely to

 vengeful and recriminatory
 does not thank or praise
 withholds rewards, and suppresses pay
and remunerations levels
 scrutinizes expenditure to the point of
false economy
 seeks culprits for failures or shortfalls
retaliate if from below or peer group
 poor at proper delegating - but believes
they delegate well
 thinks giving orders is delegating
 holds on to responsibility but shifts
accountability to subordinates
 relatively unconcerned with investing in
anything to gain future improvements
 unhappy

Theory Y
 shares decisions with the group
 allows the members of the working group to vote on decisions
 encourages group discussions and decisions
 participates
 develops a climate of trust with employees
 communicates openly with subordinates
 minimizes the difference between superior-subordinate relationships
 creates a comfortable environment in which subordinates can develop and use their abilities
 good at proper delegating
 good listener
 knows how to thank and praise subordinates

Engineering Management
Carmela Jane M. Moskito August 20, 2009
BSIE 3-1 Engr. Romeo Ilagan
THEORY Z

Another theory which has emerged, and deals with the way in which workers are perceived by
managers, as well as how managers are perceived by workers, is William Ouchi's Theory Z. Often
referred to as the Japanese management style, Theory Z offers the notion of a hybrid management style
which is a combination of a strict American management style (Theory A) and a strict Japanese
management style This theory speaks of an organizational culture which mirrors the Japanese culture in
which workers are more participative, and capable of performing many and varied tasks. Theory Z
emphasizes things such as job rotation, broadening of skills, generalization versus specialization, and the
need for continuous training of workers.
Much like McGregor's theories, Ouchi's Theory Z makes certain assumptions about workers.
Some of the assumptions about workers under this theory include the notion that workers tend to want to
build co-operative and intimate working relationships with those that they work for and with, as well as
the people that work for them. Also, Theory Z workers have a high need to be supported by the
company, and highly value a working environment in which such things as family, cultures and
traditions, and social institutions are regarded as equally important as the work itself. These types of
workers have a very well developed sense of order, discipline, and moral obligation to work hard, and a
sense of cohesion with their fellow workers. Finally, Theory Z workers, it is assumed, can be trusted to
do their jobs to their utmost ability, so long as management can be trusted to support them and look out
for their well being .
According to Professor Ouchi, Theory Z organizations exhibit a strong, homogeneous set of
cultural values that are similar to clan cultures. The clan culture is characterized by homogeneity of
values, beliefs, and objectives. Clan cultures emphasize complete socialization of members to achieve
congruence of individual and group goals. Although Theory Z organizations exhibit characteristics of
clan cultures, they retain some elements of bureaucratic hierarchies, such as formal authority
relationships, performance evaluation, and some work specialization. Proponents of Theory Z suggest
that the common cultural values should promote greater organizational commitment among employees.

THE PRIMARY FEATURES OF THEORY Z

1. Collective decision-making is a core tenet of Ouchi management theory.
2. Long-term employment and job security also mark William Ouchi theory.
3. Job rotation, generalization and overall understanding of company operations, replace job
specialization as a key component of the model.
4. Slow advancement/promotion is another feature of William Ouchi's theory.
5. Emphasis on training and continual improvement of product and performance are
common to the model.
6. Holistic concern for the worker and his or her family further personalize management in
Ouchi's theory.
7. Explicit, formalized measures, despite implicit, informal control, ensure efficiency of
operations.
8. Individual responsibility for shared accomplishments rounds out the theory.

Engineering Management
Carmela Jane M. Moskito August 20, 2009
BSIE 3-1 Engr. Romeo Ilagan

Comparison & Contrast of Management Theorists

Management Douglas McGregor William Ouchi

Concept (Theory X & Y) (Theory Z)

Tends to categorize people as one type or another: either

being unwilling or unmotivated to work, or being self
Believes that people are innately self motivated to not
motivated towards work. Threats and disciplinary action
Motivation only do their work, but also are loyal towards the
are thought to be used more effectively in this situation,
company, and want to make the company succeed.
although monetary rewards can also be a prime motivator
to make Theory X workers produce more.

Theory X leaders would be more authoritarian, while Theory Z managers would have to have a great deal of
Theory Y leaders would be more participative. But in trust that their workers could make sound decisions.
Leadership
both cases it seems that the managers would still retain a Therefore, this type of leader is more likely to act as
great deal of control. "coach", and let the workers make most of the decisions.

As mentioned above, McGregor's managers, in both The manager's ability to exercise power and authority
cases, would seem to keep most of the power and comes from the worker's trusting management to take
Power &
authority. In the case of Theory Y, the manager would care of them, and allow them to do their jobs. The
Authority
take suggestions from workers, but would keep the power workers have a great deal of input and weight in the
to implement the decision. decision making process.

This type of manager might be more likely to exercise a Conflict in the Theory Z arena would involve a great deal
great deal of "Power" based conflict resolution style, of discussion, collaboration, and negotiation. The
Conflict especially with the Theory X workers. Theory Y workers workers would be the ones solving the conflicts, while
might be given the opportunity to exert "Negotiating" the managers would play more of a "third party
strategies to solve their own differences. arbitrator" role.

Performance Appraisals occur on a regular basis. Promotions also Theory Z emphasizes more frequent performance
Appraisals occur on a regular basis. appraisals, but slower promotions.

REFERENCES:

http:// www.petervenn.tripod.com
http:// www.accel-team.com
http:// www.work.com
http:// www.bookrags.com
http:// www.businessballs.com

Engineering Management