Idea 31: McGregor's Theory X and Theory Y

In The Human Side of Enterprise (1960), McGregor demonstrated that the way in which managers manage depends on the assumptions they make about human behaviour. He famously grouped these assumptions into Theory X and Theory Y.

Theory X: The traditional view of direction and control

• The average human being has an inherent dislike of work and will avoid it if possible.
• Because of this dislike of work, most people must be coerced, controlled, directed, and threatened with punishment to get them to give adequate effort toward the achievement of organizational objectives.
• The average human being prefers to be directed, wishes to avoid responsibility, has relatively little ambition and wants security above everything.

Theory Y: The integration of individual and organizational goals

• The expenditure of physical and mental effort in work is as natural as play or rest.
• External control and the threat of punishment are not the only means for bringing about effort toward organizational objectives. People will exercise self-direction and self-control in the service of objectives to which they are committed.
• Commitment to objectives is a function of the rewards associated with their achievement.
• The average human being learns, under proper conditions, not only to accept, but to seek responsibility.
• The capacity to exercise a relatively high degree of imagination, ingenuity and creativity in the solution of organizational problems is widely, not narrowly, distributed in the population.
• Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partially utilized.

McGregor drew on Maslow's work for much of Theory Y and put forward the cluster of features as an unproven hypothesis. Further research was needed to seek to prove it correct, which was conducted by Herzberg (see Idea 32).

In terms of management practice, Theory Y does reveal that in any individual within an organization there are untapped resources of goodwill, energy, creativity and intelligence.