Douglas McGregor proposed two theories for employee motivation. His theories are Theory X and Theory Y.
Theory X assumes that the average person:
Dislikes work and attempts to avoid it
Has no ambition, wants no responsibility, and would rather follow than lead.
Is self-centered and does not care about organizational goals.
Is gullible and not particularly intelligent.
Essentially, Theory X assumes that people work only for money (has some link with Maslow's Hierarchy of needs)
Theory X - The Hard Approach and Soft Approach
Under Theory X, management approaches can range from a hard approach to a soft approach. It relies on coercion, implicit threats, close supervision, and tight controls, essentially an environment of command and control.
The soft appoach is permissive and seeks harmony so that in return employees will cooperate.
Both approaches may result in undesirable results.
The hard approach results in hostility, purposely low-output, and hard-line union demands.
The soft approach results in ever-increasing requests for more rewards in exchange for ever-decreasing work output.
The optimal management approach under Theory X probably would be a combination of these. However, McGregor asserts that neither approach is appropriate because the assumptions of Theory X are not correct.
The Problem with Theory X
McGregor links this to Maslow's hierarchy, argues that a satisfied need is not a motivator . Theory X approach means the firm relies on money and benefits to satisfy employees' needs, and once satisfied the source of motivation is lost.
Theory X management styles prevent the satisfaction of higher-level needs. Consequently, the only way that employees can attempt to satisfy is by higher rewards.
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 most developed countries those needs already are satisfied and so are no longer relevant. In this situation, one would expect employees to dislike their work, avoid responsibility, have no interest in organizational goals, resist change, etc., thus making Theory X a self-fulfilling prophecy. From this reasoning, McGregor proposed an alternative: Theory Y. - which is outlined below
The higher-level needs of esteem and self-actualization are continuing needs because people always seek to improve. This would mean, it is these higher-level needs through which employees can best be motivated.
Theory Y makes the following general assumptions:
Work can be as natural as play and rest.
People will be self-directed to meet their work objectives if they are committed to them.
People will be committed to their objectives if rewards are in place that address higher needs such as self-fulfillment.
Under these conditions, people will seek responsibility.
Most people can handle responsibility because creativity and ingenuity are common in the population.
Theory Y Management Implications
Decentralization and Delegation - moving responsibility to employees of lower level
Job Enlargement - Broadening the scope of an employee's job adds variety and opportunities for job satisfaction
Participative Management - Consulting employees in the decision making process increases innovation and creativity
Performance Appraisals - which is a participation between management and employee