Theory X and Theory Y
Theory X and Theory Y are theories of human motivation created and developed by Douglas McGregor at the MIT Sloan School of Management in the 1960s that have been used in human resource management, organizational behavior, organizational communication and organizational development. They describe two contrasting models of workforce motivation.
Theory X and Theory Y have to do with the perceptions managers hold on their employees, not the way they generally behave. It is attitude not attributes.
In this theory, management assumes employees are inherently lazy and will avoid work if they can and that they inherently dislike work. As a result of this, management believes that workers need to be closely supervised and comprehensive systems of controls developed. A hierarchical structure is needed with narrow span of control at each and every level. According to this theory, employees will show little ambition without an enticing incentive program and will avoid responsibility whenever they can. According to Michael J. Papa, if the organizational goals are to be met, theory X managers rely heavily on threat and coercion to gain their employees' compliance. Beliefs of this theory lead to mistrust, highly restrictive supervision, and a punitive atmosphere. The Theory X manager tends to believe that everything must end in blaming someone. He or she thinks all prospective employees are only out for themselves. Usually these managers feel the sole purpose of the employee's interest in the job is money. They will blame the person first in most situations, without questioning whether it may be the system, policy, or lack of training that deserves the blame. A Theory X manager believes that his or her employees do not really want to work, that they would rather avoid responsibility and that it is the manager's job to structure the work and energize the employee. One major flaw of this management style is it is much more likely to cause diseconomies of scale in large business.
In this theory, management assumes employees may be ambitious and self-motivated and exercise self-control. It is believed that employees enjoy their mental and physical work duties. According to them work is as natural as play. They possess the ability for creative problem solving, but their talents are underused in most organizations. Given the proper conditions, theory Y managers believe that employees will learn to seek out and accept responsibility and to exercise self-control and self-direction in accomplishing objectives to which they are committed. A Theory Y manager believes that, given the right conditions, most people will want to do well at work. They believe that the satisfaction of doing a good job is a strong motivation. Many people interpret Theory Y as a positive set of beliefs about workers. A close reading of The Human Side of Enterprise reveals that McGregor simply argues for managers to be opened to a more positive view of workers and the possibilities that this creates. He thinks that Theory Y managers are more likely than Theory X managers to develop the climate of trust with employees that is required for employee development. It's employee development that is a crucial aspect of any organization. This would include managers communicating openly with subordinates, minimizing the difference between superior-subordinate relationships, creating a comfortable environment in which subordinates can develop and use their abilities. This climate would be sharing of decision making so that subordinates have say in decisions that influence them.
Theory X and Theory Y combined
For McGregor, Theory X and Y are not different ends of the same continuum. Rather they are two different continua in themselves.
McGregor had identified theory X and theory Y differently for the basic characteristics stated previously in the above sections of what these theories represent. Theory X assumptions are that individuals dislike their careers. Theory X people have to be supervised. As for Theory Y assumptions are that individuals like their careers and are willing to take part in responsibility. Theory Y people don't need supervision and can be expected to turn good productive value in their jobs.'
LMX theory of Sahin
Based on employees we take a closer look at the relationship between supervisors and "subordinates," as some may call them, or workers (Sahin, 2012, p159). The quality of the relationship between the two can be described by Sahin as a term called leader-member exchange (LMX) theory. What LMX theory basically points out against McGregor theory is that "leaders develop unique relationships with different subordinates and that the quality of these relationships is a determinant of how each subordinate will be treated" (Sahin, 2012, p159).
With these two theories combined Sahin studies have shown that affective commitment can help the individual and the organization at the same time. In addition, workers (subordinates) develop feelings of affective commitment if they receive the importance from supervisors not just by overlooking them all the time but by also giving them importance (Sahin, 2012, pp162-163). In addition look at external link for image, that explains the function of the theory. McGregor identified individuals based on two theories they can possibly have, theory X, or theory Y. But Sahin shows a different approach through his study of the LMX theory. He shows how different styles used upon by management can vary from both theories.
- When managers apply Theory Y principles, workers receive independence and responsibility for work; they receive opportunities to recognize problems and their job will be to find solutions to them. This results in high-quality relationships (Sahin, 2012, p163)
- In contrast, theory X managers highlight the close supervision of workers and the chain of command and motivate subordinates using extrinsic rewards. Therefore, workers that are overseen by theory X managers tend not to have the most beneficial relationship with their supervisor. They maintain a distance and impersonal and low-quality exchange relationships (Sahin, 2012, p163). 
McGregor and Maslow's hierarchy
Theory X and Theory Y relate to Maslow's hierarchy of needs in how human behavior and motivation are main priorities in the workplace in order to maximize output. In relation to Theory Y, the organization is trying to create the most symbiotic relationship between the managers and workers, which relates to Maslow's needs for self-actualization and Esteem. For self-actualization, the manager promotes the optimum workplace through morality, creativity, spontaneity, problem solving, lack (or minimization) of the effects of prejudice, and acceptance of facts. We must accept that prejudice exists in others, even as we try to minimize it in ourselves. These issues relate to Esteem when the manager is trying to promote each team member's self-esteem, confidence, achievement,happiness, respect of others, and respect by others.
- Theory Z, a later work/organizational motivation theory which is likely a derivative of Theory Y
- Scientific management, another management theory
- Sahin, F. (2012). The mediating effect of leader-member exchange on the relationship between theory X and Y management styles and affective commitment: A multilevel analysis. Journal of Management and Organization, 18(2), 159-174.
- McGregor, D. (1960). The Human Side of Enterprise, New York, McGrawHill.