Theory X, Theory Z
Theory Y assumes that employees are self-motivated, and flourish on responsibility. Enlightened managers use theory Y or 'participative management' style, which produces better performance and results, and allows people to grow and develop.
Theory Y employees are dedicated towards work, thus need minimum supervision. Theory Y Effort in work is as natural as work and play.
People will apply self-control and self-direction in the pursuit of organisational objectives, without external control or the threat of punishment. Commitment to objectives is a function of rewards associated with their achievement. People usually accept and often seek responsibility. Teamwork, quality circles, and brainstorming sessions are used in theory Y organizations in order to provide platforms for employees to share their ideas and opinions.
Managers are likely to give more responsibilities and empower Theory Y employees since they are committed to their work and are enthusiastic about performing well. Imposition of decisions on theory Y employees will lead to their dissatisfaction, and this will negatively affect organizational performance. The capacity to use a high degree of imagination, ingenuity and creativity in solving organisational problems is widely, not narrowly, distributed in the population. In industry the intellectual potential of the average person is only partly utilised.
Theory X and theory Y are referred to in the field of management and motivation and Mcgregor's XY Theory remains a valid basic principle from which to develop positive management style and techniques. McGregor's XY theory is based on the natural rules for managing people. McGregor maintained that there are two fundamental approaches to managing people. Many managers tend towards theory X, and generally get poor results.