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Douglas McGregor suggested that there are two different ways in which we can look at workers attitudes toward work. Each of these views, which McGregor called Theory X and Theory Y, has implications for management.

Theory X (‘authoritarian management’ style)

  • People do not really like to work and will avoid it if at all possible so they must be coerced, controlled, directed, threatened with punishment to get them to work.
  • The average worker avoids responsibility, is unambitious and wants security more than anything else.
  • Management based on Theory X is paternalistic at best and, at very least, authoritarian.
  • Rewards and punishment are assumed in this theory to be the key to employee productivity.

Theory X managers believe that workers are only motivated by one thing – money. They are selfish, lazy and hate work. They need to be closely controlled and directed.

Theory Y (‘participative management’ style)

The theory Y is to some extent the opposite image of X

  • Effort in work is as natural as rest and play.
  • People will apply self-control and self-direction in the pursuit of organizational objectives, and the external control or the threat of punishment is not the only means of getting them to work.
  • Commitment to objectives is a function of rewards associated with their achievement. The most important reward: satisfaction of their own ego needs.
  • People usually accept and often seek responsibility.
  • Creativity, ingenuity, and imagination are widely distributed among the population. People are capable of using these abilities to solve an organizational problem.
  • In modern industry the intellectual potential of the average person is only partly utilized.

Theory Y managers believe that Workers are motivated by many different factors apart from money. They enjoy their work and they will happily take on responsibility and make decisions for the business.

Theory z – William Ouchi

Theory Z makes certain assumptions about workers: People tend to want to build cooperative and intimate working relationships with those that they work for and with, as well as the people that work for them. They 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. They have a very well developed sense of order, discipline, moral obligation to work hard, and a sense of cohesion with their fellow workers. Finally, Theory Z workers 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.

One of the best aspects of theory Z is the long-term employment which would appeal to Americans because they want job security. The collective decision making will create a good work environment and increase productivity. Something that Americans won’t like is the slow evaluation and promotion. Americans don’t like to wait years before they can get a promotion and they would rather get a new job instead. Another great benefit is that the company will have holistic concern for you and your family.

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 organization’s perspective.

Comparison & Contrast

Douglas McGregor tends to categorize people as one type or another: either being unwilling or unmotivated to work, or being self-motivated towards work. Threats and disciplinary action are thought to be used more effectively in this situation, although monetary rewards can also be a prime motivator to make Theory X workers produce more. William Ouchi believes that people are innately self-motivated to not only do their work, but are loyal towards the company, and want to make the company succeed.

Theory X leaders would be more authoritarian, while Theory Y leaders would be more participative. But in both cases it seems that the managers would still retain a great deal of control.

Theory Z managers would have to have a great deal of trust that their workers could make sound decisions. Therefore, this type of leader is more likely to act as “coach”, and let the workers make most of the decisions.

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

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

Theory Z emphasizes more frequent performance appraisals, but slower promotions, while according to Theory X, appraisals occur on a regular basis. Promotions also occur on a regular basis.

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