Management Theories [X, Y & Z]

Submitted to: Vijay Kumar

Course Code: MGT-501
Course Name: Human Resource Management
Submitted by: Muhammad Qasim
BM-26464
Contents
Introduction: ........................................................................................................................................... 3
Theory X & Y ............................................................................................................................................ 4
Theory X (Authoritarian Style) ............................................................................................................ 4
Theory Y (Participative Style) .............................................................................................................. 5
Comparing Theory X and Theory Y...................................................................................................... 5
Motivation....................................................................................................................................... 6
Management Style and Control ...................................................................................................... 6
Work Organization .......................................................................................................................... 6
Rewards and Appraisals .................................................................................................................. 6
Application ...................................................................................................................................... 6
Theory Z (Japanese Management Style) ................................................................................................. 7
Mutual Trust: ...................................................................................................................................... 7
Strong Bond between Organization and Employees: ......................................................................... 7
Employee Involvement: ...................................................................................................................... 8
Integrated Organization: ..................................................................................................................... 8
Coordination: ...................................................................................................................................... 8
Informal Control System: .................................................................................................................... 9
Human Resource Development: ......................................................................................................... 9
Theory Analysis, Comparisons & Contrasts: ......................................................................................... 10
Comparison & Contrast of Management Theorists .......................................................................... 10
Summary & Conclusions: ...................................................................................................................... 12
References ............................................................................................................................................ 13

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Management Theories [X, Y & Z]
Introduction:
Realizing unblemished understanding of human nature is an essential facet of management
in the work place. In order for managers and workers to work together as an effective and
productive unit, the workers must recognize how they fit into the overall arrangement of
things, and the managers must have an unblemished understanding of how they can
maximize productivity by supporting their employees through a fitting leadership style. It is
also tremendously significant for managers to convincingly appraise the working
environment, as well as the characteristics of the task, in order to adopt how he or she deals
with and guides employees.

Notwithstanding from knowing how human nature dictates a worker's actions, the manager
must essentially 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 organizational 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.

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Management Theories [X, Y & Z]
Theory X & Y
Theory X & Y were created by Douglas McGregor. Social psychologist Douglas McGregor of
MIT expounded two contrasting theories on human motivation and management in the
1960s: The X Theory and the Y Theory. McGregor promoted Theory Y as the basis of good
management practice, pioneering the argument that workers are not merely cogs in the
company machinery, as Theory X-Type organizations seemed to believe.

The theories look at how a manager's perceptions of what motivates his or her team
members affects the way he or she behaves. By understanding how your assumptions about
employees' motivation can influence your management style, you can adapt your approach
appropriately, and so manage people more effectively.

Your management style is strongly influenced by your beliefs and assumptions about what
motivates members of your team: If you believe that team members dislike work, you will
tend towards an authoritarian style of management. On the other hand, if you assume that
employees take pride in doing a good job, you will tend to adopt a more participative style.

Theory X (Authoritarian Style)

This assumes that employees are naturally unmotivated and dislike working, and this
encourages an authoritarian style of management. According to this view, management
must actively intervene to get things done. This style of management assumes that workers:

 Dislike working.
 Avoid responsibility and need to be directed.
 Have to be controlled, forced, and threatened to deliver what's needed.
 Need to be supervised at every step, with controls put in place.
 Need to be enticed to produce results; otherwise they have no ambition or incentive
to work.-

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Management Theories [X, Y & Z]
X-Type organizations tend to be top heavy, with managers and supervisors required at every
step to control workers. There is little delegation of authority and control remains firmly
centralized.

McGregor recognized that X-Type workers are in fact usually the minority, and yet in mass
organizations, such as large scale production environment, X Theory management may be
required and can be unavoidable.

Theory Y (Participative Style)

This expounds a participative style of management that is de-centralized. It assumes that

employees are happy to work, are self-motivated and creative, and enjoy working with
greater responsibility. It assumes that workers:

 Take responsibility and are motivated to fulfill the goals they are given.
 Seek and accept responsibility and do not need much direction.
 Consider work as a natural part of life and solve work problems imaginatively.

This more participative management style tends to be more widely applicable. In Y-Type
organizations, people at lower levels of the organization are involved in decision making and
have more responsibility.

Comparing Theory X and Theory Y

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Management Theories [X, Y & Z]
 Motivation

Theory X assumes that people dislike work; they want to avoid it and do not want to
take responsibility. Theory Y assumes that people are self-motivated, and thrive on
responsibility.

Management Style and Control

In a Theory X organization, management is authoritarian, and centralized control is

retained, whilst in Theory Y, the management style is participative: Management
involves employees in decision making, but retains power to implement decisions.

Work Organization

Theory X employees tend to have specialized and often repetitive work. In Theory Y,
the work tends to be organized around wider areas of skill or knowledge,
and employees are encouraged to develop their expertise and make suggestions and
improvements.

Rewards and Appraisals

Theory X organizations work on a ‘carrot and stick’ basis, and performance appraisal
is part of the overall mechanisms of control and remuneration. In Theory Y
organizations, appraisal is also regular and important, but is usually a separate
mechanism from organizational controls. Theory Y organizations also give employees
frequent opportunities for promotion.

Application

Although the Theory X management style is widely accepted as inferior to others, it

has its place in large-scale production operation and unskilled production line work.
Many of the principles of Theory Y are widely adopted by types of organization that
value and encourage participation. Theory Y-style management is suited to

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Management Theories [X, Y & Z]
 knowledge work and professional services. Professional service organizations
naturally evolve Theory Y-type practices by the nature of their work; even highly
structured knowledge work, such as call center operations, can benefit from its
principles to encourage knowledge sharing and continuous improvement.

Theory Z (Japanese Management Style)

Theory Z was created by William Ouchi. William Ouchi developed Theory Z after making a
comparative study of Japanese and American management practices. Theory Z is an
integrated model of motivation. Theory Z suggests that large complex organizations are
human systems and their effectiveness depends on the quality of humanism used. A type Z
organization has three major features—trust, subtlety and intimacy.

Mutual trust between members of an organization reduces conflict and leads to team work.
Subtlety requires sensitivity towards others and yields higher productivity. Intimacy implies
concern, support and disciplined unselfishness.

The distinguishing features of Theory Z are as follows:

Mutual Trust:

According of Ouchi, trust, integrity and openness are essential ingredients of an effective
organization. When trust and openness exist between employees, work groups, union and
management, conflict is reduced to the minimum and employees cooperate fully to achieve
the organization’s objectives.

Strong Bond between Organization and Employees:

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Management Theories [X, Y & Z]
Several methods can be used to establish a strong bond between the enterprise and its
employees. Employees may be granted lifetime employment which leads to loyalty towards
the enterprise. During adverse business conditions shareholders may forgo dividends to
avoid retrenchment of workers. Promotions may be slowed down.

As against vertical movement of employees greater emphasis should be placed on

horizontal movement which reduces stagnation. A career planning for employees should be
done so that every employee is properly placed. This would result in a more stable and
conducive work environment.

Employee Involvement:

Theory Z suggests that involvement of employees in related matters improves their

commitment and performance. Involvement implies meaningful participation of employees
in the decision-making process, particularly in matters directly affecting them. Such
participation generates a sense of responsibility and increases enthusiasm in the
implementation of decisions, Top managers serve as facilitators rather than decision-
makers.

Integrated Organization:

Under Theory Z, focus is on sharing of information and resources rather than on chart,
divisions or any formal structure. An integrated organization puts emphasis on job rotation
which improves understanding about interdependence of tasks. Such understanding leads
to group spirit.

Coordination:

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Management Theories [X, Y & Z]
The leader’s role should be to coordinate the efforts of human beings. In order to develop
common culture and class feeling in the organization, the leader must use the processes of
communication, debate and analysis.

Informal Control System:

Organizational control system should be made informal. For this purpose emphasis should
be on mutual trust and cooperation rather than on superior-subordinate relationships.

Human Resource Development:

Managers should develop new skills among employees. Under Theory’ Z, potential of every
person is recognized and attempts are made to develop and utilise it through job
enlargement, career planning, training, etc.

Thus, Theory Z is a hybrid system which incorporates the strengths of American

management (individual freedom, risk taking, quick decision-making, etc.) and Japanese
management (job security, group decision-making, social cohesion, holistic concern for
employees, etc.) systems.

Japanese companies operating in the United State have successfully used Theory Z. After
collaboration between Japanese and Indian companies, some experts have suggested
application of this theory in India, in Maruti Suzuki brand, which has collaboration with
Suzuki motors of Japan an attempt has been made to apply Theory Z.

The workplace has been designed on the Japanese pattern, which involves open offices. The
same uniform has been introduced for all employees irrespective of their designation.
Similarly, there is a common canteen for all. These practices are expected to avoid status
differentials and class feeling among employees and thereby facilitate teamwork in the
company.

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Management Theories [X, Y & Z]
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 A 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 A

Management Douglas McGregor William Ouchi

Concept (Theory X & Y) (Theory Z)

Tends to categories people as one type

or another: either being unwilling or
unmotivated to work, or being self- Believes that people are innately
motivated towards work. Threats and self-motivated to not only do
Motivation disciplinary action are thought to be used their work, but also are loyal
more effectively in this situation, towards the company, and want
although monetary rewards can also be a to make the company succeed.
prime motivator to make Theory X
workers produce more.

Theory X leaders would be more Theory Z managers would have to

Leadership authoritarian, while Theory Y leaders have a great deal of trust that
would be more participative. But in both their workers could make sound

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Management Theories [X, Y & Z]
 cases it seems that the managers would decisions. Therefore, this type of
still retain a great deal of control. leader is more likely to act as
"coach", and let the workers
make most of the decisions.

The manager's ability to exercise

As mentioned above, McGregor's
power and authority comes from
managers, in both cases, would seem to
the worker's trusting
keep most of the power and authority. In
Power & management to take care of
the case of Theory Y, the manager would
Authority them, and allow them to do their
take suggestions from workers, but
jobs. The workers have a great
would keep the power to implement the
deal of input and weight in the
decision.
decision making process.

Conflict in the Theory Z arena

This type of manager might be more
would involve a great deal of
likely to exercise a great deal of "Power"
discussion, collaboration, and
based conflict resolution style, especially
negotiation. The workers would
Conflict with the Theory X workers. Theory Y
be the ones solving the conflicts,
workers might be given the opportunity
while the managers would play
to exert "Negotiating" strategies to solve
more of a "third party arbitrator"
their own differences.
role.

Theory Z emphasizes more

Performance Appraisals occur on a regular basis.
frequent performance appraisals,
Appraisals Promotions also occur on a regular basis.
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.

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Management Theories [X, Y & Z]
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 specialization, 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 endeavor 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 organization 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

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Management Theories [X, Y & Z]
naturally lend themselves to a more effective organization. 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.

References

1. Benson, Gary L. "How Employee Assumptions Influence Managerial Behaviour." Supervisory

Management March 1983: 2(7).
2. Bittel, Lester R. The McGraw-Hill 36-Hour Management Course. New York: McGraw-Hill,
1989.
3. DuBrin, Andrew J. Essentials of Management. Cincinnati: South-Western, 1990.
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).
5. Lee, James A. The Gold and the Garbage in Management Theories and Prescriptions. Athens:
Ohio University Press, 1982.
6. Luthans, Fred. Organisational Behaviour. New York: McGraw-Hill, 1989.
7. Massie, Joseph L. and John Douglas. Managing: A Contemporary Introduction. Englewood
Cliffs: Simon & Schuster Company, 1992.

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Management Theories [X, Y & Z]