Introduced by Douglas McGregor, Theory X and Theory Y talk about the diverging views that exist about how organizations function. The two theories are sets of propositions and beliefs about human nature. McGregor assigned certain traits to each theory. His work showed that thoughts and beliefs might influence behavior. Theory X and Theory Y are descriptions of two extreme managerial styles.
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Leadership styles are determined by the ways in which a leader perceives those under him and the assumptions he holds about human behavior. There are two categories of leadership – the classical organization theory (existed till 1950) and non classical organization theory (used at present, formed as a result of criticism of classical organization theory).
According to the classical organization theory, people don’t find work appealing, they prefer to work as little as possible. They dislike responsibility and therefore like to be directed. These self-centered workers require to be controlled and coerced into achieving the organization’s goals. They lack ambition and physiological and safety factors motivate them. The worker is assumed to be immature and viewed as being very gullible.This a negative view of the nature of workers.
Based on these assumptions, organizational structures were changed in order to ensure that organizational goals were effectively met. Intervention was considered to be important to deal with passive, resistant workers. Decision making became centralized and control was established through a chain of command where workers were told what to do and how to do it without being provided an opportunity to contribute to the decision making process. There was no confidence in the worker and the organization wielded absolute power and employees were not given a chance to think.
McGregor termed these assumptions as Theory X assumptions of human nature. He believed that the workers were not to be blamed for how they were being perceived; rather the organization or past work experience was the reason. He believed that workers who were continuously being treated as robots with no thinking ability, at one point eventually start behaving like robots.
McGregor proposed Theory Y assumptions about human nature as an alternative to Theory X. According to Theory Y, when conditions are favorable, the individual finds work appealing and is highly motivated at need levels (Maslow’s hierarchy of needs). Workers are committed and can work independently without direction to achieve the goals of the organization by using creative ways to solve problems. When properly motivated through rewards they are self- controlled and seek responsibility. The worker here is considered to be mature. This a positive view of the nature of workers.
Theory Y helped to change the focus onto helping workers grow within the organization by reorganizing the leadership structure and finding ways to motivate them. These new non classical organizations concentrated on satisfying the assumptions of Theory Y by responding to the needs of the workers who focused on meeting the organizational goals. Workers require attention and relish the feeling of achievement. Opportunities should be provided to realize one’ potential and talents have to be nurtured. Managers here provided more responsibilities and offered challenges as rewards. Theory Y showed that by adapting leadership styles, the needs of various individuals could be met. An individual who was self- motivated was best left alone in a laissez-faire style of leadership, while those who needed control could have an autocratic leader to guide them and those who require support would benefit best from a democratic leadership style. Theory Y put forward the idea that management by objectives and involving workers in the decision-making process would lead to the creation of a satisfied and more productive workforce.
In actual practice, most managers today practice a combination of Theory X and Theory Y styles of management. Very few practice either being autocratic or democratic completely.