Idea 44 - Theories X & Y (and Theory Z)
Management's ideas about motivating employees have changed a bit since scientific management first considered how to make workers more efficient. Today, most managers would at least pay lip service to the idea that employees are human beings, with human needs and aspirations, and that you need to recognize this to get the best from them. This may seem obvious today, but as a management precept it owes much to Douglas McGregor and his Theory X and Theory Y.
Theory X and Theory Yare a double act - a Mr Nasty and Mr Nice of human resource management - that leave you in no doubt as to which McGregor prefers, even though he insists that the optimal management style should draw from both. McGregor believed that the way a company was managed reflected its managers' view of human nature. His theories look at how satisfying the needs of employees can be used to motivate them, though each makes very dif(erent assumptions about what those needs may be. Both draw on an earlier theory of human psychology put forward in 1943 by American psychologist Abraham Maslow, known as Maslow's hierarchy of needs.
According to this theory, there is an ascending pecking order of needs, . each of which - Maslow says - must be fulfilled before we can attend to the one above it. They start with physical needs and reach a peak in what he called 'self-actualization'. Starting at the bottom, they are as follows. Physiological- what we need simply to stay alive (air, water, food and sleep). Safety- once survival is assured, we need to be free from harm (to live in a safe place, have a secure job and have enough money). Social- with life and safety boxes ticked, social needs start to become important (we need friends, a sense of belonging, to give and receive love and to have sex). Esteem - having satisfied the need to belong, we want to feel important and respected. Maslow split esteem needs into two types: internal (self-esteem or a sense of achievement) and external (social status, the attention of others or reputation). In later versions of his model, Maslow added a level between esteem needs and self- actualization, acknowledging a need for knowledge and beauty - cognitive and aesthetic needs. Self-actualization - the apex of the pyramid and one which, unlike lower-level needs, is never satisfied. This is the instinctive need to reach your full potential - to see meaning and truth in the world - to experience harmony.
Enter Douglas McGregor. His 1960 book, The Human Side of Enterprise, set out two contrasting theories on employee motivation. He named them simply Theory X and Theory Y.
Theory X This assumes that people:
dislike work and will avoid it if they can;
have to be controlled and threatened before they will work hard;
don't want responsibility and prefer to be directed;
want to feel secure at work.
People in Theory X work only to satisfy physiological and safety needs - for money and security. The manager's role is to structure the work and incentivize the employee with pay and benefits. McGregor pointed out that Theory X was flawed because, once those needs are satisfied, they no longer motivate. And because employees have to seek to satisfy their higher-level needs outside work, their only source of continued job satisfaction will be to keep asking for more money. None the less, McGregor thought that Theory X was more practicable in large-scale production operations than Theory Y.
Theory Y This treats workers rather more like adults, and assumes that they:
actually want to work;
can be self-directing in line with the firm's aims, if they are committed;
will be committed if motivated by rewards addressing their higher needs;
can accept responsibility and may even actively seek it;
are imaginative and creative and can use their ingenuity to solve problems at work.
According to Theory Y, the company has many more options to energize its employees. It can decentralize and delegate, spreading decision-making power among more staff. Job specifications can be broadened -like delegation, this will feed esteem needs. Employees can be consulted and included in the decision-making process, harnessing their creativity as well as giving them some control over their working lives. The resulting motivation should be considerably more galvanizing than Theory X, because it allows employees to satisfy their higher-level needs while at work.
McGregor felt that Theory Y was best suited to professional services and knowledge workers, and was particularly conducive to participative problem solving. Its ideas are sometimes collectively referred to as 'soft' management, leaving Theory X as the 'hard' variety. Others have called the styles 'participative' vs 'authoritarian'. Experimentation has revealed Theory Y to be inflexible, but much of its spirit has been absorbed by later management concepts, such as 'empowerment'. While McGregor's experience was with American companies, a British and European audience had little difficulty in seeing their own corporate structures reflected in his work. But there was a third managerial model, as the West became uncomfortably aware during the 1980s - the Japanese model.
The apparently unstoppable rise of Japanese industry and finance drew envious attention to their corporate structures and practices - very different to those in the West. Japanese companies offered lifetime employment, collective decision-making, implicit rather than explicit control mechanisms and an all-round concern for the employee's well-being. While this clearly resulted in a committed and highly motivated workforce, it was all so un-Western that imitation seemed out of the question.
Theory Z In 1980, however, Hawaiian-born William Ouchi published his Theory Z: How American Management Can Meet the Japanese Challenge. He proposed a model that combined the best of American and Japanese practices - providing lifetime employment and holistic care for employees and families, but with individual responsibilities and a mixture of explicit and implicit control mechanisms. The result, according to Dr. Ouchi, should be stable employment, high productivity, and high morale.
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