McGregor’s XY Theory of Management

Why do people come to work everyday? What motivates your people?

Your belief about why people work will determine how you choose to lead them.

Douglas McGregor's X-Y theory features in his book The Human Side Of Enterprise. McGregor's XY Theory remains central to organisational development and improving organisational culture. It provides a simple reminder of the natural rules for managing people, which day-to-day can easily be forgotten.

His theory suggests there are two fundamental approaches to managing people. Theory X and Theory Y. 

In his research, he found that Y theory yielded greater performance and results than X theory.

Theory X - 'Authoritarian Management' Style

This theory assumes employees dislike work and will avoid it where they can. This means leaders gravitate towards punishment to get their team working towards goals and objectives. It believe people prefer direction and aim to avoid responsibility in the workplace. 

Characteristics of a theory X leader 

• Results-driven/deadline-driven
• Issues deadlines and ultimatums
• Distant and detached
• Demands
• Does not participate or team-build
• One-way communicator
• Poor listener
• Does not thank or praise
• Does not invite or welcome suggestions
• Gives orders rather than delegating responsibility

Theory Y - 'Participative Management' Style

This theory assumes effort is natural with the team. They actively work towards achieving objectives without pressure to do so. They are committed to their jobs and accept responsibility when it is given. 

From McGregor's theory, William Ouchi in his book Theory Z: How American Business can meet the Japanese Challenge created Theory Z. 

Characteristics of a theory Y leader 

• Believes people want to do a good job
• Effort in work is as natural as work and play.
• Values workplace relationships
• Effectively delegates and gives responsibility
• Empowers their team to deliver
• Develops trust and leads with trust
• Recognises hard work and gives praise
• People will apply self-control and self-direction in the pursuit of organisational objectives, without external control or the threat of punishment.
• People usually accept and often seek responsibility.
• The capacity to use  imagination, innovation and decision making is given to others

Theory Z - going beyond theory Y

So beyond X and Y, Z has emerged. Management professor William Ouchi argued that Western organizations could learn from their Japanese peers. Ouchi’s theory first appeared in his 1981 book, Theory Z: How American Management Can Meet the Japanese Challenge. Z leaders assume teams want to build strong workplace relationships. It focuses on more than leader to subordinate, but wider. It focuses on culture.

• A strong company philosophy and culture: Leaders believe that culture is key and they must embed it so it is understood and upheld by employees.
• Long-term staff development and employment: Leaders believe in the continual development of employees, rotating staff, building expertise and general skills for future success planning. This leads to loyalty.
• Consensus in decisions: Leaders encourage others to make decisions and co-create solutions. When people weigh in, they buy in.
• Generalist employees: Leaders develop their people to be able to critically decide on the best course of action, so invest in being open and transparent about business performance and encourage employees to move around the business or get involved in other functions.
• Concern for the happiness and well-being of workers: Leaders believe that they should care about the health and wellbeing of their employees. They focus on engagement, and creating environments where people feel psychologically safe.
• Informal control with formalized measures: Leaders believe in getting out of their employees way so they can decide how to deliver results. They measure and monitor performance, but not in a micromanaging way.
• Individual responsibility: Leaders focus on teamwork, yet value the individual contributions of team members.

So are a Z leader, you want your people to supported, engaged, loyal and enjoy life. You know that by creating balance, people want to work harder, for the right reasons and help their manager providing they are trusted to do their job.