McGregor’s

Theory ‘X’ and

Theory ‘Y’

McGregor’s Theory X and Theory Y: Management’s action of motivating human beings

in the organization, according to McGregor, involves certain assumptions, generalizations and hypothesis relating to human behavior and human nature.

Theory X: 1. The average man is by nature, lazy – he works as little as

possible.2. He lacks ambition, dislikes responsibility, prefers to be

led.3. He is inherently self-centered, indifferent to organizational

needs.4. He is, by nature resistant to change.5. He is not very bright.6. Management is responsible for organizing the elements

of productive enterprises – money, material, machine, men.

7. Process of directing their efforts, motivating them, controlling their actions, modifying their behavior to fit the needs of the organization.

8. People must be persuaded, rewarded, punished, controlled, and their activities must be directed. This is management’s task.

Theory Y: 1. Physical and mental effort in work is natural as play or

rest. 2. Average human being does not inherently dislike work.3. Man will exercise self-direction and self-control in the

service of objectives to which he is committed.4. Satisfaction of ego and self-actualization needs, can be a

direct product of effort directed towards organizational objectives.

5. Average human being learns under proper conditions not only to accept, but to seek responsibility.

6. Capacity to exercise a relatively high degree of imagination and creativity in the solution of organizational problems.

7. The intellectual potentialities of the average human beings are only partially utilized.

MCGREGOR’S THEORY X AND THEORY Y

Theory X

Human beings are distasteful towards work.

People do not have ambitions and try to avoid responsibilities in jobs.

People have little capacity for creativity

Motivating factors are lower needs.

People lack self-motivation and require to be externally controlled and closely supervised to get maximum output from them.

Emphasizes Scalar chain system and centralization of authority.

Emphasizes autocratic leadership

Theory Y

For Human beings work is as natural as play.

People have high ambitions and accept responsibilities in jobs.

Creativity is widely distributed in the population.

Higher order needs are more important.

People are self-directed and creative and prefer self-control.

Emphasizes decentralization and greater participation in the decision making. Process.

Emphasizes supportive leadership style.

Ouchi

Theory ‘Z’

Theory Z: • Theory Z describes the major postulates of

Japanese management practices and how these practices can be adopted to the environment of United States and other countries.

• Theory Z, has made a comparative study of American and Japanese management practices can be adopted in American context.

Ouchi suggested 5 broad features of Theory Z1. Trust2. Strong bond between organization and

employee3. Employee involvement4. No formal structure5. Role of managers to bring co-ordination in

human beings.

Trust:• Trust between employees, supervisors, work

groups, unions, management and government.

• When trust and openness exist, the chances of conflict are automatically reduced to the sminimum.

Strong Bond between Organizatin and Employees:• Life time employment• Provisions of highly conducive work environment and

challenges• Participation in decisions.• Accepting less profits or even moderate losses for a

short period of time during the situation of layout by share holders and owners.

• More emphasis on horizontal movement of employees which reduces stagnation.

• Career planning for employees should be prepared so that every employee is suitably placed.

• Slowing down of promotion and financial incentives.• Communicate the expectation of greater income in

the future without creating short-term incentives.

Employee Involvement:• Employee Involvement through meaningful

participation.• If any decision affecting employees in any

way should be taken jointly• If there is any decision which management

wants to take individually, the employees should be informed about this so that they do not feel ignored.

• The idea is not to slow down the decision-making process but to involve employees for their commitment and giving due recognition to them.

No formal Structure:• Instead of formal structure, it must be a

perfect teamwork with co-operation along with sharing of information, resources and plans.

• Emphasis on rotational aspect of employee placement which provides opportunities to him to understand how his work affects others or is affected by others.

• Enables him to develop group spirit which is the basic back bone of success.

Co-ordination of Human beings:• Developing people’s skills and also the

creation of new structures, incentives and a new philosophy of management.

• Leader must develop trust which consists of the understanding of fundamentally compatible goals of the desire for the more effective working relationship together.

• To develop trust, there should be a complete openness.

• Developing a common culture.