Management theories X and Y.

Theory X and Theory Y represent two sets of assumptions about human nature and human behavior that are relevant to the practice of management.

Theory X represents a negative view of human nature. The first of these assumptions is that individuals do not like to work and will avoid it if possible. A further assumption is that human beings do not want responsibility and desire explicit direction. Additionally, individuals are assumed to put their individual concerns above that of the organization for which they work and to resist change, valuing security more than other considerations at work. Finally, human beings are assumed to be easily manipulated and controlled. This theory was considered as classical theory for effective management. Accordingly, the scientific management pioneers such as Frederick Taylor and Henri Fayol had focused on principles of management, scientific selection and training, and worker compensation, whereas Hawthorne advocated the human relations approach emphasising on importance of behavioral issues such as job satisfaction, group norms, and supervisory style.

In the 1950s, Douglas McGregor (1906-1964), a psychologist criticized both the classical and human relations schools as inadequate for the realities of the workplace. He introduced "The Human Side of Enterprise" and the 1960 book of the same name, in which he introduced what came to be called the new humanism.
Theory Y denotes a positive view of human nature and assumes individuals are generally industrious, creative, and able to assume responsibility and exercise self-control in their jobs. McGregor put forth Theory Y for more effective management of people in the organization. Theory Y has at its core the assumption that the physical and mental effort involved in work is natural and that individuals actively seek to engage in work. It also assumes that close supervision and the threat of punishment are not the only means or even the best means for inducing employees to exert productive effort. Instead, if given the opportunity, employees will display self-motivation to put forth the effort necessary to achieve the organization's goals. Thus, avoiding responsibility is not an inherent quality of human nature; individuals will actually seek it out under the proper conditions.
The major propositions of Theory Y include the following: Management is responsible for organizing the elements of productive enterprise-money, materials, equipment, and people in the interests of economic ends.

People are not by nature passive or resistant to organizational needs. They have become so as a result of experience in organizations.

The motivation, potential for development, capacity for assuming responsibility, and readiness to direct behavior toward organizational goals are all present in people-management does not put them there. It is a responsibility of management to make it possible for people to recognize and develop these human characteristics for themselves.

The essential task of management is to arrange organizational conditions and methods of operation so that people can achieve their own goals by directing their efforts toward organizational objectives.



Theory Y also assumes that the ability to be innovative and creative exists among a large, rather than a small segment of the population. Finally, it assumes that rather than valuing security above all other rewards associated with work, individuals desire rewards that satisfy their self-esteem and self-actualization needs.
McGregor that management can be made more effective by decentralization of decision-making authority, delegation, job enlargement, and participative management.