The happier people are to be at work and the more free time they have to think about work vs. mundane details of life like commuting to lunch or fitting in the gym after work, the more productive people will be. Theory Y leaders believe that once the basic needs of the worker are met to obtain a certain basic standard of living, then workers must be motivated by more intrinsic factors. Even lower-level employees can be motivated by feeling that they have made a contribution to the organization. The Theory X/Theory Y philosophy is based upon an older theory of motivation: Maslow's Hierarchy of Needs. Maslow conceptualized worker needs as existing on a hierarchy: first, an employee's most basic physiological needs must be fulfilled, such as the need for food, shelter and clothing. Safety needs (such as working in a non-hazardous work area and a certain level of job security) form the next level of needs. Once basic needs are satisfied, then workers can begin to worry about higher-level needs such as social needs, esteem-based needs, and the highest level need of all -- self-actualization, or the sense that one has made a meaningful contribution to the world. In contrast to Theory X/Theory Y Maslow believed that it was vital that the lower, more transactional needs were satisfied for the worker to care about higher-level needs. A Wal-Mart worker, in other words, who is being paid poorly and treated badly by management, will not be motivated by elevated corporate mission...

Internally-driven motivational schemes are more and more popular, to the point where many organizations emphasize them above all else. Participatory management is perhaps the most radical internally-driven motivational concept, in which workers are assumed to be driven by the desire to participate in the workplace effort, rather than financial terms. Even non-managerial workers may be given training and incentives to encourage them to make them feel as though their contribution to the organization matters (Bartle 2007). Particularly given the limited financial resources at many organizations today, combined with the need to draw upon knowledge as a source of corporate advantage (including the knowledge 'on the floor' that a salesperson might have about serving customers), internal motivational strategies are likely to become even more popular in the long-term future of industry.
References

Bartle, P. (2013). Participatory management. Retrieved:

http://cec.vcn.bc.ca/cmp/modules/pm-pm.htm

Theory X and Theory Y (2013). Mind Tools. Retrieved:

http://www.mindtools.com/pages/article/newLDR_74.htm