Literature Review of McGregors Theories of Management

In 1960 American MIT lecturer, Douglas McGregor, became one of the forefathers of contemporary management thinking when he published his book, The Human Side of Enterprise. In his book McGregor put forward his two sets of assumptions relating to how management had to use these assumptions to effectively and efficiently manage, as well as motivate those that worked underneath them (Kermally). These two assumptions became known as McGregor’s Theory X and Theory Y.

In this essay both of McGregor’s theories on management, Theory X and Theory Y, will have their evolution explained with the differences between the two assumptions described and defined, as well as the relevance that both Theory X and Theory Y have upon management in organizations in the 21st Century.

Evolution of Theory X and Theory Y

In 1960 when McGregor wrote, The Human Side of Enterprise, he essentially challenged the practice and thinking of management, as he questioned some of assumptions about behaviour in the workplace (Koppelman, Prottas and Davis). Koppelman et al, argue that through questioning these assumptions Mc Gregor came up with a new role for management; that instead of forcing and controlling the employees working underneath them managers should, in fact, ‘help them’ to reach their potential; McGregor seeing this as a way to help an organization achieve their set goals.

The Evolution of Theory X and Theory Y was based on McGregor’s perspective of management; which he considered to be more than simply enforcing orders and coercing employees to work. McGregor’s perspective was that there had to be an equal balance between the needs of an employee and those of an organisation (Bobic and Davis). Trying to meet this balance between individual and enterprise, McGregor applied psychologist Abraham Maslow’s hierarchy of needs to his theories on management.

Maslow’s hierarchy of needs theory was an arrangement of the five basic needs: self-actualisation, esteem, belonging, safety and physiological needs, that according to Maslow motivate behaviour (Waddell, Jones and George). When McGregor formed the basis of his Theory X and Theory Y assumptions, he grouped Maslow’s five basic needs into ‘high’ and ‘low’ order needs, the ‘high order needs’ encompassing the Belonging, Esteem and Self-Actualisation needs while the ‘low’ incorporated the Physiological and the Security needs (Kermally). By doing this McGregor was able to come to the realisation that motivation was the key to managing others and interpreted it into his Theory X and Theory Y.

The Main Assumptions of Theory X and Theory Y

Theory X and Theory Y are based on two different assumptions regarding human behaviour within an organisation. Theory X takes on the view that managers are responsible for the organizing of employees, materials, and the machines that the organisation uses to achieve their organisations goals or to get desirable outcomes (Halepota).

According to Halepota, who supports McGregor’s view on the Theory X management approach, under Theory X managers should assume that all workers are lazy, lack aspiration, that they will not take on any position of responsibility, will place their personal needs before those of the organisation, oppose change and will do whatever they can to get out of work.

Essentially Theory X is seen as a ‘carrot and stick’ approach, as employees are rewarded for extra efforts and punished for their wrong doing. However, Theory X is based on an invalid and wrong assumption, which is why McGregor created Theory Y (Bobic and Davis).

Theory Y is similar to Theory X in that it holds management for the employees, materials and machinery that the organization needs to achieve their goals. However it is different in that it is based on totally different assumptions than Theory X.

Contrasting to Theory X, Theory Y proposes that workers are not lazy and that they can be motivated to achieve maximum output to benefit the organization, given that they have the freedom to achieve their goals (Halepota).Halepota also argues that under the Theory Y approach that management should show confidence in allowing their employees freedom for it allows them to achieve the goals of the organization.

Relevance and Value of Theory X and Theory Y in the 21st Century

McGregor had created his Theory X and Theory Y assumptions, he had foreseen the changes that would occur, decades later, for management. The advancement of technology and the rise of internet companies have seen a return of McGregor’s ideas, as some of the changes that he had foreseen: people working from home and requiring greater flexibility and understanding from managers to create in order to produce quality products occurred (Bobic and Davis).

With such a change, it seems that many more organisations have taken the Theory Y management approach over the Theory X approach. One such industry is the software and internet companies which stress creativity to solve various, business, academic, and information control problems (Bobic and Davis). However, Bobic and Davis also argue that with this Theory Y management approach there is a problem in that: workers who work in such an environment tend to complain that there is no clear management direction.

All though based on assumptions that were and invalid and not as well-used as Theory Y management, Theory X still has a place in management today (Bobic and Davis). The assumptions that Theory X supports such industries where there is a level of high risk involved. One such example is the nuclear power industry where, according to Bobic and Davis, they found the Theory Y decreased efficiency and increased danger to the general public, and that control and enforcement by the managers was needed. Though limited, Theory X management still exists as some workers see this approach to fit more closely to their style of work (Bobic and Davis).

Conclusion

When McGregor wrote The Human Side of Enterprise and using the background work of Abraham Maslow’s hierarchy of needs, he defined Theory X as a more forceful approach of management compared to Theory Y, believing that workers were lazy and would do anything to get out of working, with both theories still relevant to business organisations today.

In my opinion, the choice of whether an organization should take Theory X or a Theory Y style of management is dependent on what field an organization is in and whether this style of management will allow them to successfully achieve the organizations set goals.