Theory X vs Theory Y in organizational strategy

In organizational strategy, there are two leading theories, Theory X and Theory Y. These two theories describe the style of the approach to leadership from management. The two theories could not be more different.

TSW Training states that social psychologist Douglas McGregor put forward his Theory X and Theory Y in his 1960 book, The Human Side of Enterprise. These theories explain two contrasting management styles based on what managers believe motivates their employees.

Theory X focuses on very strict business management with a high tendency to micro-manage employees. Theory Y gives employees more freedom and allows them to work on their own to meet deadlines without micromanaging.

Focusing on Theory X, this article will go into detail about what it is, the pros and cons of implementing it, and the leading ways to employ theory X within an organization. 

What is Theory X?

Theory X focuses on the concept that no employee likes to work or take responsibility. This theory has fallen to the wayside in recent years but is still employed, especially in larger companies, due to the volume of employees.

According to MindTools.com, organizations with a Theory X approach tend to have several tiers of managers and supervisors to oversee and direct workers. Authority is rarely delegated, and control remains firmly centralized. This hierarchy is the most typical approach to implementing Theory X.

This level of managing employees down to every detail can help companies meet their deadlines with less stress but affects the employees who do not feel trusted by their employer. It could be likened to having someone stand over your shoulder for every task you have been assigned to complete.

The leading idea behind this theory being implemented is that in larger organizations, it is harder to control aspects, so the company may focus on what they are able to control, which is employees at each level. In doing so, the company creates a hierarchy of management levels, each watching the level directly below them, dividing the work of supervising the employees.

Theory X also places value on the manager’s personal motivations over the employees. The manager could be the one that is looking for a promotion if everything is completed on time or perhaps a bonus. This places a lower value on the employees within the organization under that manager, as the managers are looking out for themselves and not their employees.

Pros of Theory X

There will always be employees who need more supervision and work better with direct and constant instructions. These types of employees thrive but do not go above and beyond. However, all work is completed on time and in full.

The hierarchy approach also allows each manager to lead only a handful of employees at once, making it easier to shadow employees and focus on their outputs. While this approach would mean more managers, it also means more completed work.

Implementing Theory X can also lead to high efficiency for the organization. High outputs can increase profit which could offset the cost of the high turnover. Depending on the type of organization, this would lead to improved satisfaction from customers.

Cons of Theory X

Many employees will struggle against the constant supervision in Theory X. This can lead to a high turnover of employees and end up costing the organization more in hiring and training.

Theory X can also lead to a toxic work environment where management thrives on power over their direct employees. This can create a culture of threats instead of rewards which many would view as a toxic work environment.

With high turnover, the organization would also lack willing employees who want to go above and beyond for their organization. This would limit innovation within the organization as well as ambition. The organization would have fewer people that want to stay and work their way up the levels, desiring promotions.

A constant turnover of employees can, in addition to costing the organization more, lead to fewer candidates. The candidates may see comments on job boards or hear from other current employees about the environment and not apply. This would limit the talent available to the company to grow or expand.

Lastly, unhappy employees can create unhappy customers. Their dislike for their job could leak through and impact the customer, especially in a customer service business. This can cost the company customers, leaving them without the means to make a profit.

Implementation of Theory X

There are several approaches to using Theory X in an organization. Most important is finding a way to balance the high level of supervision against effective management and happy employees. Below will outline three of the most common approaches to Theory X within organizations:

• Coercion
• Hand-on
• Hierarchy

Coercion approach

The most common implementation is a punishment versus reward coercion-based structure. Creating a work environment where if all goals are met, the employee receives a reward, and if the goals are not met, the employee is punished. Different levels of rewards and punishments exist, and it need not always be a risk of termination for the employee.

The punishment in these cases could simply be losing out on the reward. This would make the organization less toxic for the employees and show that better work equals better rewards. However, as that is not always the case, the other opportunity is to provide an actual punishment for the employee. This could mean a less desirable shift or termination. Either way, employees motivated by the reward may excel, and others may be motivated by the risk of the punishment.

Using punishments as anything other than not getting the reward does not come without risk to the organization which should not be taken lightly. As outlined above in the cons, this can cost the company money, customers, and employees. This risk is highest in the punishment culture but is not completely removed from the reward structure.

Hands-on approach

Another way to implement Theory X within the organization is with very hands-on managers. This comes back to micro-managing, which can mean looking over an employee’s shoulder as they complete their tasks or just constantly asking for updates. 

While this can be an effective way to stay on top of everything that needs to be done by the employees, it is important to ensure that requesting updates, or the manager immersing themselves into the task by watching, does not interrupt the day. The goal is to make sure that everything is completed correctly and efficiently. If a daily meeting to get updates takes too much time away from the employee’s tasks, it can hinder, rather than improve, productivity.

This also takes time and turns a manager into a supervisor. Rather than leading the team, they are watching over it, which can annoy employees. Not to say this style isn’t effective. It is often used in large organizations with many levels of employees.

Hierarchy

Establishing a hierarchy of employees is the third way to implement Theory X. The hierarchy places value on the employee’s level within the company and clearly shows where everyone stands. It can be motivating to employees who want to reach the next level.

In the hierarchy, there are typically several layers of managers, each responsible for a team of employees reporting directly to them. This puts pressure from the top down for each team to perform at its best, as each level has the same self-motivation to perform.

This level of motivation is similar to the coercion one in that there is risk and reward, but the hierarchy is not necessary for coercion. This hierarchy just provides layers of expectations and supervision to ensure the organization runs smoothly.

Overall, the goal is to improve or maintain a steady output from the employees that improves the organization. This can mean in warehouses, production lines, or even corporate roles. Theory X provides the organization with peace of mind that the work will be completed even if the employee does not want to work. It can ease the burden of high-level managers from worrying about those several levels down and focus only on the people directly below them.

Doing so may increase middle managers’ outputs as they would not have to be so heavily involved in the day-to-day operations. In this case, that would allow room for improvements that would impact higher-level managers or the organization. In some cases, this would impact operations-level employees but not always.

An online DBA Degree can help people work to understand the different theories and styles available for their organizations. It may also help them to understand why their organization is working or is not doing as well. A Doctor of Business Administration degree will usually use applied research to understand the best methods to solve organizational problems. A complete understanding of these theories and the research attached to them allows for a better employer and can improve turnover rates.

Application

In order to accomplish organisational objectives as effectively as feasible, managers in high-pressure, high-output environments will incline toward Theory X. For instance, a manager, let’s call them “X,” needs to meet a monthly output goal for their department. Anything produced above this baseline level will receive a bonus from X.

In order for their department to meet the desired monthly production, X must now motivate their staff to generate a specific volume of goods each day. Since they have a large workforce to oversee, the corporation pledges to reward employees for exceeding targets while penalising them for falling short of them.

Unfortunately, X’s employees don’t have the time to offer suggestions for how to improve the workflow because there is no place for learning. The staff can clearly understand their roles thanks to the stringent rules and reward/punishment system. The goals are accomplished, thus X and its staff members receive their corresponding incentives.

This is fantastic for workers who are driven by money and a stable job, but it’s not so ideal for those who want to advance intellectually or professionally.

A Theory Y management might advise a worker to develop new abilities, take on greater responsibility, or perhaps get promoted in the future by learning how to optimise audience targeting to meet a sales target.

It’s possible that appraisals will still be used, but more as a forum for open discourse than as a way to monitor development.

Theory Y is a significantly more optimistic management approach than Theory X, which would account for its appeal. It gives the worker some autonomy and responsibility, and it relieves the manager’s need to exert pressure on the team.

What’s not to appreciate about that? It may lead to a more fulfilling profession where employees are encouraged to care about things other than just their pay?

Conclusion

Theory X can be a useful tool for many organizations, especially large ones with many employees. As with all management theories, there is a balancing act that must be employed by the managers to know the limits of this theory.

Many organizations employ this management style without knowing it or recognizing it. Doing so can create chaos in that managers may become too forceful with the methods and alienate employees. By understanding the methods and motivations behind Theory X, organizations can make healthy decisions for the employees and themselves.

Equally, the more knowledgeable the employee is about management styles or theories the more competitive they will be in the job market. They will also be able to adapt more easily to new cultures by understanding the needs that must be met and how to approach them. They would further be able to meld theories and styles to build rapport with customers and employees.

No matter the theory you choose to use in your management style, having the knowledge to make that choice will help determine if you succeed. Working towards a Doctor of Business Administration online is one of the most chosen paths as it is flexible and allows the student to work in their own time to complete assignments.