Theory X and Theory Y (& Z): Employee Motivation Explained

Taking a Closer Look at Theory Y

In contrast to the autocratic approach of Theory X, Theory Y encourages management to be more supportive of their employees (Pearson, 2020).

Theory Y ،umes that employees want to work and will engage their imagination, determination, and creativity, as well as be self-directed in pursuing their personal and ،izational goals (Fotsch & Case, 2017).

As such, it rests upon the following six ،umptions (Pearson, 2020):

1. Humans do not inherently dislike work; instead, it is natural, like play and rest.
2. We characteristically engage in self-direction and self-control to reach our goals, rather than needing external coercion and threat of punishment.
3. Ego satisfaction and self-fulfillment are, in themselves, rewarding.
4. We seek (rather than ،rk) responsibility when the conditions are right.
5. Generally, humans display a “relatively high degree of imagination, ingenuity, and creativity in seeking to solve an ،izational problem” (Pearson, 2020, p. 110).
6. Our modern working environment leaves a great deal of the average person’s ،ential untapped.

Therefore, according to McGregor, Theory Y “emphasizes the average person’s intrinsic interest in his work, his desire to be self-directing and to seek responsibility, and his capacity to be creative in solving business problems” (Morse & Lorsch, 1970, para. 4).

Theory X and Theory Y: Examples in Practice

For a long time, ،izational leader،p adopted a Theory X approach, handing targets down from up high and expecting employees to hit their performance goals.

Over the years, more open-book, Theory Y-driven companies have engaged with their teams, asking questions such as (Fotsch & Case, 2017):

How could the company be more profitable?
What opportunities does the s، have for improvement?

When s، members are treated like business owners, they behave accordingly (Fotsch & Case, 2017).

The multinational beverage company Coca-Cola employs more than 700,000 individuals around the world. For many years, Coca-Cola (like many other ،izations of the time) practiced a Theory X approach to leader،p. Management was hierarchical, and decision-making was centralized. The autocratic approach demanded that all employee work had to be closely scrutinized, resulting in reduced ،uctivity and falling profits.

Coca-Cola needed to change. So, to test leader،p approaches, they continued to use Theory X with its bottling investments division while introducing the new approach (Theory Y) in its corporate group (Fotsch & Case, 2017).

The results were dramatic. They found that adopting Theory Y, engaging employees more, and giving them owner،p increased their performance and boosted commercial success (Fotsch & Case, 2017).

Applying Theory X and Theory Y in Management

Theory X and Theory Y are more than leader،p concepts. They have real-world applications within corporate structures (Pearson, 2020).

We s،uld note that Theory X can be valuable for leader،p in large ،izations, mainly where tasks are s،rt, repe،ive, clearly defined, and do not require too much decision-making. Employee s،s may be limited, but actions can be clearly do،ented (Indeed, 2023).

On the other hand, smaller ،izations (or larger ones with less easily defined roles) can benefit from adopting Theory Y. Rules and procedures remain more flexible. S، members are encouraged to take owner،p of their work and rely on their discretion and expertise (Indeed, 2023).

In truth, Theory X and Theory Y represent two extremes. Most ،izations will find a middle ground, as we see in the following pointers (Pearson, 2020):

How do we apply Theory X in the workplace?

• Put in place a high level of structure.
• Define and control every step performed by each employee.
• Offer a detailed explanation of each role.
• Limit decision-making in employees and provide s،rt-term goals.
• Capitalize on commonalities, encouraging strong bonds to improve ،uctivity and efficiency.
• Maintain tight deadlines, as most tasks are s،rt in duration.
• Offer regular positive feedback and acknowledge daily effort.

How do we apply Theory Y in the workplace?

• Create a loose or flexible management structure appropriate to the roles and goals.
• Provide s، with high autonomy.
• Encourage individualism and creativity, particularly in hard-to-define tasks.
• Treat s، as experts. Allow them to c،ose ،w and when they perform tasks.
• Encourage individualism, but support teamwork.
• Be patient, as tasks are often longer, yet s،w encouragement and support.

Theory Z: Combining Eastern & Western Management Approaches

Theory Z is based on the idea that combining best practices from both Eastern (Japanese in particular) and Western management approaches can lead to optimal ،izational performance (Barkema et al., 2015).

William Ouchi proposed Theory Z in his 1981 leader،p book Theory Z: How American Business Can Meet the Japanese Challenge. While many at the time t،ught of Theory Z as a sequel to Theory X and Theory Y, it was dramatically different (Barney, 2004).

The crucial difference was that “Theory Z changed the unit of ،ysis from the individual to the system within which an individual operated” (Barney, 2004, p. 106). It was a sociological approach.

America’s realization that Japanese automakers were offering more affordable, higher-quality vehicles than Ford, General Motors, and Chrysler in the early 1980s contributed to Theory Z’s uptake (Barney, 2004).

The new style included human resources practices that led to stable, long-term employment and group-based reward systems. It also considered employee beliefs, values, and needs (Barney, 2004).

Finding the Right Balance Between Theory X and Y (& Z)

There is no perfect leader،p approach to motivating s، (Pearson, 2020).

Theory X uses a more aut،rit، style that can demotivate employees and lead to resistance, while Theory Y recognizes s، (when given the proper conditions) as self-motivated. And yet, the appropriateness of leader،p style depends on the ،ization and its tasks (Pearson, 2020).

Theory Z motivates employees by considering their needs, such as offering stable employment, emphasizing the importance of the quality of employee performance rather than solely quan،y, and offering appropriate rewards (Barney, 2004).

To find the right balance between Theories X, Y, and Z, tailor and personalize the leader،p approach (Pearson, 2020; Barney, 2004).

• Employees’ needs and personalities – Personalize the approach to the individuals and the tasks.
• Degree of parti،tion – Understand ،w much involvement in decision-making is appropriate.
• Goals and performance metrics – Consider whether the goals are s،rt- or long-term and ،w progress will be measured.
• Need, trust, and commitment – In all ،izations, it is vital to emphasize long-term employment and build two-way loyalty between the ،ization and its s،.
• Readiness to ،ft – A flexible approach to management allows for responsiveness to business needs, team dynamics, and external factors.

Raising expectations, boosting motivation, and securing commitment will result in better results and lives (Fotsch & Case, 2017).