Douglas MacGregor defined Theory X and Theory Y, which are differing assumptions about human behavior in the workplace. Theory X asserts that people dislike work and require discipline and control to be coerced into working. Managers who follow this theory are autocratic in style and enforce rigid working procedures. They are apt to retain all the authority for themselves and not share it with subordinates, and they are very focused on completing tasks.
In contrast, Theory Y states that people enjoy the creativity of their jobs and the potential to contribute to the decision-making process in their workplace. Leaders who follow this theory allow their subordinates to contribute to the planning and decision-making process and enjoy allowing others to contribute to the innovation of the workplace. Managers who follow this style of leadership allow for democratic votes on decisions and encourage discussions so that people can reach a consensus.
William Ouchi developed Theory Z, also called the "Japanese management style," that features a combination of the other styles. In this style of management, workers are highly cooperative and often participate in job rotation and possess a high degree of loyalty to their organization. Managers following this style trust in the loyalty and capability of their workers and act as coaches to encourage their workers to make good decisions. Workers participate in collaborative discussions that managers oversee, while entrusting their workers to arrive at sound decisions.
Theory X and Theory Y were developed to better understand the concept of management as it relates to human/employee motivation. Assumptions forwarded by the theories suggest the managerial style that fits the different theories.
Theory X suggests that the average employee lacks self-drive and avoids work and responsibility. The worker also lacks creativity. In this regard, Theory X suggests that the worker needs close supervision and reinforcement in order to perform. Workers defined by Theory X prefer a centralized system, which suggests they lack the ability to make their own decisions.
Theory Y suggests that the average employee is self-motivated and takes work as a natural activity. The worker is also creative. In this regard, Theory Y suggests that the worker does not need direct supervision to perform. The decentralized nature of Theory Y also suggests that the average worker is capable of making their own decisions.
Theory Z, advanced by Ouchi, suggests that the average worker prefers to maintain cooperation with an organization that is focused on the well-being of the worker. Thus, the worker’s concern is not only performance in the work environment, but also the support provided in the social environment. Teamwork is a key driver for the individual worker, and a feeling of belonging goes hand in hand with performance and productivity. Consequently, management is a collaborative effort in this case.
The concept of theory X and theory Y was first proposed by Douglas McGregor in his book Human Side of Enterprise as a alternative sets assumptions about behavior and nature of people at work. McGregor stated that way many managers deal with their subordinates suggests a set of underlying assumptions. He labeled these assumptions, which he believed to be incorrect assumptions as "Theory X'. IN place of these assumptions he proposes an alternate correct set of assumptions which he called 'Theory Y'.
Using the terminology of McGregor, William Ouchi suggested another set of assumptions called 'Theory Z' which he believed to be more appropriate for applying Japanese style of management.
The assumptions of these theories are described below.
- Humans inherently dislike working and try to avoid work.
- Because people dislike work, they have to be made to work by putting pressure and controlling their activities closely.
- Average people prefers to be directed by others.
- Average people avoid taking responsibility.
- Average people are unambitious and prefer security at work
- Work is an activity as natural to people as play and rest.
- When suitably motivated people are self directed to achieve organizational objectives.
- Commitment of employees can be obtained by ensuring job satisfaction for them
- People learn to accept responsibility and under suitable conditions actively seek responsibility.
- People are imaginative and creative.
- Employees want to build cooperative relationships with their employees, superiors, colleagues and juniors
- People require support in form job security and facilities for developing multiple skills essential for improving performance.
- People value their family life, culture,traditions and institutions as much as they value their material gains.
- People have well developed sense of dedication, moral obligation and self discipline.
- They can make good collective decisions through consensus.
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