Theory X of McGregor: 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.
The problem with Theory X: McGregor argues that a satisfied need no longer motivates. Under theory X the firm relies on money and benefits to satisfy the employees lower needs, and once need are satisfied the source of motivation is lost. In fact it hinders the satisfaction of higher level needs. So it is predictable that they will focus on monetary rewards, while money may not be the most effective way to self-fulfillment, but in theory X it is may be the only way. McGregor makes the point that a command and control environment is not effective because it relies on lower needs as levers of motivation, but in modern society those needs already satisfied and thus no longer are available. From this reasoning McGregor gave us another alternative, Theory Y.
1. Work can be natural like playing, eating, taking rest.
2. People will be self directed to meet their work objectives if they are committed to them.
3. People will be committed to their objectives if rewards are in place that address higher needs such as self-fulfillment.
4. Under these condition people will people will seek responsibility.
5. Most people love taking responsibility because creativity is common in population.
Under these assumptions, there is a chance to align personal goals with organizational goals by using employees own quest for success.
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 Xassumptions 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.
Theory X and Theory Y relate to Maslows 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.