Management Theories of X, Y and Z, Lecture notes of Management Theory

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Management Theories

[X, Y & Z]

Submitted to: Vijay Kumar Course Code: MGT- Course Name: Human Resource Management Submitted by: Muhammad Qasim BM-

Contents

• Introduction:..........................................................................................................
• Theory X & Y..........................................................................................................
  • Theory X (Authoritarian Style)............................................................................
  • Theory Y (Participative Style).............................................................................
  • Comparing Theory X and Theory Y.....................................................................
    • Motivation.......................................................................................................
    • Management Style and Control.......................................................................
    • Work Organization...........................................................................................
    • Rewards and Appraisals..................................................................................
    • Application......................................................................................................
• Theory Z (Japanese Management Style)................................................................
  • Mutual Trust:.......................................................................................................
  • Strong Bond between Organization and Employees:..........................................
  • Employee Involvement:......................................................................................
  • Integrated Organization:.....................................................................................
  • Coordination:......................................................................................................
  • Informal Control System:....................................................................................
  • Human Resource Development:.........................................................................
• Theory Analysis, Comparisons & Contrasts:........................................................
  • Comparison & Contrast of Management Theorists...........................................
• Summary & Conclusions:.....................................................................................
• References...........................................................................................................

management and workers, in such areas as motivation, leadership, power, authority, and conflict, to name a few.

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: Muhammad Qasim (BM-26464) Page 4 of

 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.- 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. Muhammad Qasim (BM-26464) Page 5 of

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 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. Muhammad Qasim (BM-26464) Page 7 of

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: 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. Muhammad Qasim (BM-26464) Page 8 of

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.

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 Managem ent Concept Douglas McGregor (Theory X & Y) William Ouchi (Theory Z) Motivation Tends to categories people as one type or another: either being Believes that people are innately self-motivated to Muhammad Qasim (BM-26464) Page 10 of

unwilling or unmotivated to work, or being self-motivated towards work. Threats and disciplinary action are thought to be used more effectively in this situation, although monetary rewards can also be a prime motivator to make Theory X workers produce more. not only do their work, but also are loyal towards the company, and want to make the company succeed. Leadershi p Theory X leaders would be more authoritarian, while Theory Y leaders would be more participative. But in both cases it seems that the managers would still retain a great deal of control. Theory Z managers would have to have a great deal of trust that their workers could make sound decisions. Therefore, this type of leader is more likely to act as "coach", and let the workers make most of the decisions. Power & Authority As mentioned above, McGregor's managers, in both cases, would seem to keep most of the power and authority. In the case of Theory Y, the manager would take suggestions from workers, but would keep the power to implement the decision. The manager's ability to exercise power and authority comes from the worker's trusting management to take care of them, and allow them to do their jobs. The workers have a great deal of input and weight in the decision making process. Muhammad Qasim (BM-26464) Page 11 of

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 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 Muhammad Qasim (BM-26464) Page 13 of

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,
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. Muhammad Qasim (BM-26464) Page 14 of