McGregor's Theory X and Theory Y in management and motivation

Theory Y Theory X

Theory X / Theory Y

Theory X / Theory Y reflects Douglas McGregor's suggestion in The Human Side of Enterprise that managers tend to fall into two categories, in terms of how they see human nature. Theory X managers take a 'carrot and stick' approach when motivating subordinates. They assume that workers are inherently resistant to labor and will do all they can to avoid doing work so as to gain the maximum amount of profit for the least amount of effort. They may assume responsibility, but will do so for personal profit alone. Theory Y managers assume that workers are internally motivated, rather than externally motivated.

The essential problem with Theory X approaches, McGregor contended, is that once basic needs are satisfied, they are no longer motivational. Once a worker has enough money for life expenses and reaches a certain salary level, continually using money to motivate him or her is of little use. This paper will suggest that Theory Y notions of internal motivation are supported by the current success of Google, one of the most innovative companies thus far of the 21st century. Google's approach is unique in that it assumes employees want to work, and allows them to use the workplace to create their own projects and initiatives. Even its more externally-motivated employee rewards reinforce organizational principles of making work fun and rewarding employee initiatives.

Theory X

One of the reasons McGregor was intent upon challenging Theory X was because it had a long-standing place (even though it was not labeled as such) in the history of management. Taylorism or the idea of scientific management that viewed individual actions of workers with hostility was at the core of Theory X In scientific management, actions by workers were broken down to ensure that employees moved in the most efficient way possible. Leisure was discouraged, and any type of personal relationship between workers or management was seen as potentially seditious. Taylor feared unionization, and also believed that workers did not want to work quickly, do a good job, and take pride in their work. His theory was founded upon the idea that "employees take great care never to work at a good pace for fear that this faster pace would become the new standard. If employees are paid by the quantity they produce, they fear that management will decrease their per-unit pay if the quantity increases" (Frederick Taylor, 2011, Net MBA). Taylor believed that management should conduct scientific studies to determine the best ways to produce goods and services for consumers and tell workers that they needed to obey such dictates.

Example: Google

The principles of Theory Y are clearly at play at the Google organization, which views its workers as a source of creativity and inspiration. As an information technology company, the workers effectively 'are' the company -- it is their efforts that make it profitable and cutting-edge. This concept is completely the reverse of Theory X or Taylorism which viewed the corporate owners as the only innovators, and managers as the lion-tamers of lazy, hostile employees. Engineers at Google are even given free range to pursue and construct their own personal projects: "We offer our engineers "20-percent time" so that they're free to work on what they're really passionate about. Google Suggest, AdSense for Content, and Orkut are among the many products of this perk" (Engineer's life, 2011, Google).

Google encourages a lack of hierarchy and creativity amongst all employees: "At Google, we know that every employee has something important to say, and that every employee is integral to our success. We provide individually-tailored compensation packages that can be comprised of competitive salary, bonus, and equity components, along with the opportunity to earn further financial bonuses and rewards" (Life at Google, 2011, Google). There are certain 'Theory Y' elements to Google, of course, in the sense that it offers many apparent perks, such as free fitness classes, food, and on-site medical clinics and dry-cleaning. But the motivation is not merely an exchange relationship. It is also designed to enable employees to focus on higher aspects of work fulfillment -- the higher points of Maslow's pyramid -- by taking care of lower-level needs.

A more recent theory of motivational needs known as ERG theory also seems to explain Google's rationale behind its motivational structure. ERG stands for: Existence, or "physiological and safety needs," Relatedness, or "social and external esteem needs," and Growth: "self-actualization and internal esteem needs" (ERG, 2011, Net MBA). This theory suggests that all human beings have different types of needs but unlike Maslow, believes that needs can be satisfied simultaneously -- some people may be satisfied if their 'relatedness' needs are taken care of even though some of their physiological needs are incompletely addressed. An example of this might be someone who is a starving artist, sacrificing his or her biological needs to achieve self-actualization through work. Google also seems to embody this concept, by striving to fulfill employee's needs simultaneously. It offers competitive wages and benefit packages, combined with many additional perks. The presence of free food at the Google cafeteria meets a physiological need, but also communicates the value the company places on its employees. Yet it also serves a highly practical value for the company, effectively keeping employees 'in house' rather than venturing outward and possibly loosing focus from their work. Even Google benefits such as free massages and yoga classes help to keep employees healthy in body and mind and better workers.

Arguably one of the reasons the incentive structure at Google is so effective, however, is because it is uniquely attuned to the type of workers attracted to Google, workers who are highly motivated and extremely excited by the intellectual challenges their work provides. The reason the workplace is so successful and able to embody Theory Y principles of management is because workers are receptive to being motivated by challenges, and do not seek to avoid work. However, advocates of Theory Y would state that treating workers poorly becomes a self-fulfilling prophesy and one reason why the workers in Taylor's scientific management studies seemed so unmotivated was because they were working under particularly negative conditions, in early 20th century industrialized society.

ERG theory does have an important footnote for Theory Y concepts, namely that "ERG theory allows the order of the needs be different for different people" (ERG, 2011, Net MBA). Individuals attracted to investment banking, for example, are more likely to be motivated by money alone than engineers. However, a counterpoint to that notion is that after a certain point, in some industries money takes on a significance that transcends its material significance. Money comes to symbolize success and power, and becomes a source of personal esteem. Theory Y suggests that treating all employees with respect and listening to their ideas increases their sense of motivation and desire to invest their time and effort into the organization. At Google, even the lowest-level employees eat shoulder-to-shoulder with high level staffers in the cafeteria, a potent symbol of how, within the organizational framework of the company, everyone is viewed as the same.

Conclusion

Not every company may be able to embody Theory Y ideals in its culture to the same degree as Google. However, in the information age, as what employees know becomes more important than simply fulfilling rote processes, it will be increasingly essential for all companies to embrace the Theory Y ethos, like Google.