The X Y and Z of Management Theory



Achieving a clear understanding of human nature is an important aspect of management in the work place. In order for managers and workers to work together as an effective and productive unit, the workers must know how they fit into the overall scheme of things, and the managers must have a clear understanding of how they can maximise productivity by supporting their employees through the appropriate leadership style. It is also extremely important for managers to realistically evaluate the working environment, as well as the characteristics of the task, in order to decide how he or she deals with and directs employees.

Aside from knowing how human nature dictates a worker's actions, the manager must also be aware of the specific working environment, personalities, and motivational forces, which drive employees. This can then be used to decide which actions are necessary to motivate the work force, and to obtain maximum productivity.

The purpose of this paper is to discuss two theorists, Douglas McGregor and William Ouchi, and the theories, which made them well known in the organisational development and management arenas. McGregor, with his "Theory X" and "Theory Y", and Ouchi, with the notion of a "Theory Z", both look at the attitudes of managers and workers with very similar, as well as contrasting views of how workers are perceived by management, and how workers perceive their role in the company. In these theories, the various authors discuss how each plays an important part in the understanding of workers by management. A comparison and contrast of these two theorists will be presented, which will show how each might view various aspects of the relationship which exists between management and workers, in such areas as motivation, leadership, power, authority, and conflict, to name a few.

Douglas McGregor - Theory X & Theory Y:

In 1960 Douglas McGregor defined contrasting assumptions about the nature of humans in the work place. These assumptions are the basis of Theory X and Theory Y teachings. Generally speaking, Theory X assumes that people are lazy and will avoid work whenever possible. Theory Y, on the other hand, assumes that people are creative and enjoy work (Goldman).

Although "X" and "Y" are the standard names given to McGregor's theories, it is also appropriate to mention here that other names for these management theories have been used as well, and are sometimes interchanged with "X" and "Y". For instance, one author refers to Theory X as "Autocratic Style", and Theory Y as "Participative Style" (DuBrin). Yet another author writes that Theory X and Theory Y are sometimes termed as "hard" and "soft" management, although careful to point out that these terms can be used incorrectly (Benson). This information is presented in order to illustrate the different terminologies, which have been used to describe McGregor's theories, and will be used in this paper as well.

Theory X:

Theory X basically holds the belief that people do not like work and that some kind of direct pressure and control must be exerted to get them to work effectively. These people require a rigidly managed environment, usually requiring threats of disciplinary action as a primary source of motivation. It is also held that employees will only respond to monetary rewards as an incentive to perform above the level of that which is expected (Bittel).

From a management point of view, autocratic (Theory X) managers like to retain most of their authority. They make decisions on their own and inform the workers, assuming that they will carry out the instructions. Autocratic managers are often called "authoritative" for this reason; they act as "authorities". This type of manager is highly task oriented, placing a great deal of concern towards getting the job done, with little concern for the worker's attitudes towards the manager's decision. This shows that autocratic managers lose ground in the work place, making way for leaders who share more authority and decision making with other members of the group (DuBrin).

Theory Y:
A more popular view of the relationship found in the work place between managers and workers, is explained in the concepts of Theory Y. This theory assumes that people are creative and eager to work. Workers tend to desire more responsibility than Theory X workers, and have strong desires to participate in the decision making process. Theory Y workers are comfortable in a working environment which allows creativity and the opportunity to become personally involved in organisational planning (Bittel).

Some assumptions about Theory Y workers are emphasised in one of the texts, namely that this type of worker is far more prevalent in the work place than are Theory X workers. For instance, it is pointed out that ingenuity, creativity, and imagination are increasingly present throughout the ranks of the working population. These people not only accept responsibility, but actively seek increased authority (Lee).

According to another of the authors studied for this project, in which the "participative" (Theory Y) leadership style is discussed, a participative leader shares decisions with the group. Also mentioned, are subtypes to this type of leader, namely the "Democratic" leader who allows the members of the working group to vote on decisions, and the "Consensual" leader who encourages group discussions and decisions which reflect the "consensus" of the group (DuBrin).

William Ouchi - Theory Z:
Another theory which has emerged, and deals with the way in which workers are perceived by managers, as well as how managers are perceived by workers, is William Ouchi's "Theory Z". Often referred to as the "Japanese" management style, Theory Z offers the notion of a hybrid management style which is a combination of a strict American management style (Theory A) and a strict Japanese management style (Theory J). This theory speaks of an organisational culture which mirrors the Japanese culture in which workers are more participative, and capable of performing many and varied tasks. Theory Z emphasises things such as job rotation, broadening of skills, generalisation versus specialisation, and the need for continuous training of workers (Luthans).

Much like McGregor's theories, Ouchi's Theory Z makes certain assumptions about workers. Some of the assumptions about workers under this theory include the notion that workers tend to want to build co-operative and intimate working relationships with those that they work for and with, as well as the people that work for them. Also, Theory Z workers have a high need to be supported by the company, and highly value a working environment in which such things as family, cultures and traditions, and social institutions are regarded as equally important as the work itself. These types of workers have a very well developed sense of order, discipline, moral obligation to work hard, and a sense of cohesion with their fellow workers. Finally, Theory Z workers, it is assumed, can be trusted to do their jobs to their utmost ability, so long as management can be trusted to support them and look out for their well being (Massie & Douglas).

One of the most important tenets of this theory is that management must have a high degree of confidence in its workers in order for this type of participative management to work. While this theory assumes that workers will be participating in the decisions of the company to a great degree, one author is careful to point out that the employees must be very knowledgeable about the various issues of the company, as well as possessing the competence to make those decisions. This author is also careful to point out, however, that management sometimes has a tendency to underestimate the ability of the workers to effectively contribute to the decision making process (Bittel). But for this reason, Theory Z stresses the need for enabling the workers to become generalists, rather than specialists, and to increase their knowledge of the company and its processes through job rotations and continual training. In fact, promotions tend to be slower in this type of setting, as workers are given a much longer opportunity to receive training and more time to learn the intricacies of the company's operations. The desire, under this theory, is to develop a work force, which has more of a loyalty towards staying with the company for an entire career, and be more permanent than in other types of settings. It is expected that once an employee does rise to a position of high level management, they will know a great deal more about the company and how it operates, and will be able to use Theory Z management theories effectively on the newer employees (Luthans).

Theory Analysis, Comparisons & Contrasts:

While several similarities and differences surround the ideas of these two theorists, the most obvious comparison is that they both deal with perceptions and assumptions about people. These perceptions tend to take the form of how management views employees, while Ouchi's Theory Z takes this notion of perceptions a bit farther and talks about how the workers might perceive management. Table 1 below shows a quick "snapshot" comparison and contrast of the two theorists, and how they might apply the concepts shown to their particular management theories.

Comparison & Contrast of Management Theorists

Table 1


Douglas McGregor
(Theory X & Y)

William Ouchi
(Theory Z)


Tends to categorise people as one type or another: either being unwilling or unmotivated to work, or being self motivated towards work. Threats and disciplinary action are thought to be used more effectively in this situation, although monetary rewards can also be a prime motivator to make Theory X workers produce more.

Believes that people are innately self motivated to not only do their work, but also are loyal towards the company, and want to make the company succeed.


Theory X leaders would be more authoritarian, while Theory Y leaders would be more participative. But in both cases it seems that the managers would still retain a great deal of control.

Theory Z managers would have to have a great deal of trust that their workers could make sound decisions. Therefore, this type of leader is more likely to act as "coach", and let the workers make most of the decisions.

Power & Authority

As mentioned above, McGregor's managers, in both cases, would seem to keep most of the power and authority. In the case of Theory Y, the manager would take suggestions from workers, but would keep the power to implement the decision.

The manager's ability to exercise power and authority comes from the worker's trusting management to take care of them, and allow them to do their jobs. The workers have a great deal of input and weight in the decision making process.


This type of manager might be more likely to exercise a great deal of "Power" based conflict resolution style, especially with the Theory X workers. Theory Y workers might be given the opportunity to exert "Negotiating" strategies to solve their own differences.

Conflict in the Theory Z arena would involve a great deal of discussion, collaboration, and negotiation. The workers would be the ones solving the conflicts, while the managers would play more of a "third party arbitrator" role.

Performance Appraisals

Appraisals occur on a regular basis. Promotions also occur on a regular basis.

Theory Z emphasises more frequent performance appraisals, but slower promotions.

With respect to overall management style, McGregor's Theory X and Theory Y managers seem to have a much more formal leadership style than do Ouchi's Theory Z managers. McGregor's managers seem to both have different views of the workers, while their views of the tasks remains the same in both cases: that is, one of specialisation, and doing a particular task. Albeit that Theory Y suggests that the workers would become very good at their particular tasks, because they are free to improve the processes and make suggestions. Theory Z workers, on the other hand, tend to rotate their jobs frequently, and become more generalists, but at the same time become more knowledgeable about the overall scheme of things within the company. Several parallels indeed exist between these two theorists. Namely McGregor's Theory Y, and Ouchi's Theory Z both see the relationship between managers and workers in a very similar light. For instance, they both see managers as "coaches", helping the workers to be more participative in their endeavour to be more productive. They both are more group oriented than the Theory X assumptions, which seem to be more individual oriented. One of the most notable similarities between McGregor's Theory Y and Ouchi's Theory Z appears in the form of the type of motivation that makes the workers perform in a way that enables them to be more productive. While the Theory X worker is said to require coercion, threats, and possibly even disciplinary action, Theory Y and Theory Z workers are, again, self motivated. This allows them to focus on the task, and also their role within the company. Their desire is to be more productive and enable the company to succeed. Theory X workers, on the other hand, seem to have just enough self motivation to show up at work, punch the time clock, as it were, and do only that which is necessary to get the job done to minimum standards.

Summary & Conclusions:

Many assumptions are made in the work place, based on observations of the workers, and their relationship with management. The types of tasks being performed, as well as the types of employees which make up a particular organisation can set the stage for the types of leadership roles which will be assumed by managers. Theory X, which shows that workers are assumed to be lazy and do not want to work, seems to be giving way to theories, which suggest that workers tend to be more participative and creative. Creativity and motivation naturally lend themselves to a more effective organisation. While McGregor's Theory Y seems to address the more motivated type of employee, Ouchi's Theory Z seems to take that notion a step farther by implying that not only are assumptions about workers made, but assumptions about managers as well. That is to say that under Ouchi's theory, managers must be more supportive and trusting of their employees, in order to receive the benefit of increased participation in the decisions of the company. As is clearly seen by comparing and contrasting these two theorists, assumptions about people can be more clearly understood in order for managers and workers to make for a more productive environment in the work place.


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  3. DuBrin, Andrew J. Essentials of Management. Cincinnati: South-Western, 1990. Return
  4. Goldman, Jeri J. "The Supervisor's Beliefs About People and the Supervisory Plan: McGregor's 'Theory X' and 'Theory Y' in the Schools." The Clearing House March 1983: 306(4). Return
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  7. Massie, Joseph L. and John Douglas. Managing: A Contemporary Introduction. Englewood Cliffs: Simon & Schuster Company, 1992. Return

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