REVIEW OF LITERATURE
Theory X and Theory Y
McGregor approached the function of leadership as one of modifying the organization to provide an opportunity for the employee to fulfil his or her own expectations while contributing to the attainment of organizational goals (Tortoriello et al., 1978). His ideas were derived from Maslow's need satisfaction model of motivation (McGregor, 1960, paragraph 6). Butler held the view that
"Without McGregor, the management world would never have heard of Maslow. But Maslow gave McGregor intellectual credibility and, in management circles, McGregor gave Maslow fame."
Pepper (1995) mentioned that behind every managerial decision or action lies the assumptions of the person and these can demonstrate what type of management style he is adopting. Theory X was the dominant set of assumptions, focusing on the scalar chain of command and Theory Y is the emerging one, focusing instead on integration, or downward communication. This shift towards Theory Y is just beginning - and the change has occurred out of necessity rather than out of what was right for employee relations (Slutzky, 1989).
These assumptions, based on social science research, demonstrates the potential in man which managers should recognize in order to be more effective (McGregor, 1960, paragraph 7). As explained by Pate (1987), McGregor takes on a situational approach, wherein the significant situational characteristic is the perception of the object of one's behavior. An organization whose management operates on one theory should expect workers to respond by operating the same way.
Theory X, which comes from the view of people as machines who require a lot of external control, posits that:
1. Work is distasteful, and people will avoid it if they can.
2. Because of their dislike for work, in order to get people to perform adequately, they must somehow be controlled, through force, threat, direction or other control measures.
3. People lack ambition and prefer to be directed, because they do not want responsibility.
The following additional beliefs put it more bluntly:
1. On the average, people are by nature indolent - they work as little as possible.
2. They lack ambition, dislike responsibility, prefer to be led.
3. They are inherently self-centered, indifferent to organizational needs.
4. They are by nature resistant to change.
5. They are gullible, not very bright, the ready dupe of the charlatan and the demagogue.
There are also certain managerial assumptions which guide this theory:
1. Management carries the responsibility of organizing all aspects of work, including equipment, money, and people, toward the goal of profitability.
2. The behavior of people is to be directed and controlled toward the ends of the company.
3. Since people would naturally avoid working, they must be persuaded or otherwise controlled so that the necessary work is accomplished.
In other words, leaders following these assumptions might think of employees as tools of production, motivated by fear of punishment or by a desire for money and security (Pace & Faules, 1989). They would watch their workers closely, make and enforce strict rules, and use punishment as a motivator. Such managers also believe that the objective is to get as much from the employees for as little as possible. This would result in a Theory X response from workers - to get as much as possible for as little as possible.
The leadership style used here would be largely autocratic, viewing employees' needs as secondary. Here, managers would employ the "carrot-and-stick" method of management. The "carrot" is a term for the soft approaches used, like rewards and promises. Conversely, the "stick" is the hard approach of coercive language and harsh management. The results would be a wage-work bargain, an exchange.
However, McGregor (1960) pointed out that this theory does not work at all once employees have reached an adequate subsistence level and is motivated primarily by higher needs. Management can create conditions such that employees are encouraged and enabled to seek such satisfactions for himself, or can thwart him by failing to create those conditions.
To explain this, for many wage earners, work is thus perceived as a form of punishment which is the price to be paid for various kinds of satisfaction away from the job. People would be deprived unless there are opportunities at work to satisfy the higher level needs of social and egoistic needs. In such a case, the mere provision of rewards would be ineffective and the reliance on punishment as a threat inevitable.
People will then make insistent demand for more money, it being a priority to buy the material goods and services that can only provide a thwarted need of satisfaction. On the other hand, man needs more than financial rewards at work, he also needs some deeper higher order motivation - the opportunity to fulfil himself. This is where the more positive assumptions of Theory Y comes in, viewing people as biological organisms who can grow, develop and exercise self-control. This theory posits that:
1. Work is natural and may serve as a source of satisfaction.
2. Workers will be committed to goals they help set, with the greatest amount of commitment directed at objectives that if met, will fulfil ego and self-actualization needs.
3. If trained to seek and allowed to accept responsibility, workers will. Greater intellectual and creative potential exists than is currently being tapped.
There are also certain managerial assumptions behind this theory:
1. Management carries the responsibility of organizing all aspects of work, including materials, money, and people, toward the goal of profitability.
2. Because their input has not been sought, people have been trained to be passive at work.
3. Management does not motivate the worker. The worker is already motivated, for the motivation lies within him. The manager's job is then to help the worker develop his potential. Management should provide the environment that allows the worker to accomplish his goals while working in the organization.
McGregor had personally argued that Theory Y assumptions are more favorable (Robbins, 1990). What the above is trying to say is that leaders who follow such assumptions see their employees as having a number of needs.
Although personal and organizational goals may be contradictory, they still believe in working with employees to set goals together, encouraging them in the decision-making process and setting high standards for them. Thus, as noted by Eisenberg & Goodall (1993), McGregor believed that "the essential task of management is to arrange things so people achieve their own goals by accomplishing those of the organization."
There should be a degree of integration in which employees can best achieve their goals by directing efforts towards the organization. This alternative should be more attractive than the many others available to them. They would then be encouraged to continuously develop and use voluntarily their capacities, knowledge and skills to contribute to the organization.
This democratic form of leadership follows that staff would contribute more to the organization if they are treated as responsible and valuable employees. Where possible, managers should then explain matters fully, letting employees exert self-direction and control to do better work. In this way, they would have grasped the rationale behind management decisions and thus be more committed to the objectives.
The managers see the employer-employee relationship as one of a mutual benefit. For a reasonable expense, the employer gets someone who will contribute to his or her venture. Likewise, for a reasonable income, the employee gets an opportunity to contribute to a venture he or she becomes a part of.
Such assumptions under this category demonstrate more respect for workers and would probably result in more positive organizational climates than Theory X ones (Kreps, 1990). Friendly communication climates from the result of Theory Y management would encourage organization members to communicate in an open, relaxed and friendly manner with fellow members. Communication climates have been linked with job satisfaction.
This theory assumes that people will exercise self-discretion and self-control in the achievement of organizational objectives to the extent that they themselves are committed to these same objectives. If commitment is small, a large degree of external influence would be necessary. This is where authority comes in, wherever appropriate. If commitment is large, external controls could be relatively uncalled for and even self-defeating. Above all, the assumptions of Theory Y point up the fact that the limits on human collaboration in organizations are not because of the limits of human nature but of management's ingenuity in discovering the potential in its people. It places responsibility on management methods of organization and control if employees were to be lazy and unproductive.
Yet, there are still many managers who doubt the superiority of Theory X over Theory Y. Though quality and Theory Y management are inextricable linked, most people are resistant to change. Some would argue that Theory Y is just based on the same inadequate assumptions about human nature as Theory X. The fundamental theory of management is still very much present in the supposedly "newer" set of assumptions. Further, there has been no proven correlation between employee satisfaction and productivity.
Theory Y might also appear unrealistic as it follows the central principal of integration and self-control, colliding head-on with pervasive attitudes associated with management by direction and control.
It might then follow that the scalar principle of direction and control used in Theory X is not so bad after all as requirements of the organization and its economic success must have priority over the needs of the individual. Individuals seeking their own goals would be unlikely to want to further those of the organization's.
Yet, managers who advocate Theory Y management would argue that working together means adjusting to the requirements of the organization as management perceives them. Following this theory can also open up a range of possibilities for new managerial policies and practices as managers then recognize the existence of potentialities and can devote time, money and effort in realizing them. They would even be challenged to innovate, to discover new ways of organizing and directing human effort.
McGregor's Theory X and Y were the influences of many management theories.
Theory Z - William G. Ouchi
Before theory Z was thus known, it was known as Theory J. Theory J was simply the Japanese form of management; theory Z is the adaptation of the American organizations to the Japanese form, according to Zilbert (1991).
Ouchi's Theory Z is different from McGregor's Theories X and Y that only emphasize on how management views employees. Theory Z takes this notion a bit farther by discussing how workers might perceive management (Flinn, 1995, paragraph 3).
Like McGregor's theories, Ouchi's Theory Z operates on certain assumptions about workers. This includes the notion that workers desire to form co-operative and intimate working relationships with their employers and colleagues, as well as people working for them. Also, Theory Z workers have a strong need to be supported by the company. They value a working environment in which perceptions of the family, cultures and traditions, and social institutions, etc, are regarded as equally important as the work itself. Theory Z workers are characterized as highly disciplined individuals, who work hard, and have a well-developed sense of order as well as a sense of cohesion with their fellow workers. They can be trusted to perform with their utmost ability as long as the management shows support and look out for their welfare (Flinn, 1995, paragraph 12).
Ouchi adapted the ideas developed by W. Edwards Deming in the U.S. back in 1950, where he lectured the Union of Japanese Scientists and Engineers on how to achieve quality (Zilbert, 1991). He took it to Japan, where lifetime employment was very conducive to the concepts of group reward, quality assurance, and employee loyalty to the organization (Pierce, 1991).
The Peter Principle
It is on the basis of lifetime employment that brings the discussion to The Peter Principle. In Japan, it is not uncommon to see an individual work in the same company for 10 years or more from the point of graduation. The promotion of individuals within an organizational structure is made based on performance in his current position (Pierce, 1991). However, the Peter Principle states that ultimately, individuals will be promoted to their level of incompetence and this is when the problems (or potential problems) comes into focus (Pierce, 1991). This is a phenomenon that our group terms as "over-promotion".
When "over-promotion" occurs, the less successful employees no longer enjoy what they are trying to achieve and are often frustrated by their lack of accomplishment, which may lead to bitterness and resentment. The successful ones may find themselves distanced from the less successful group, and relationships may take a downturn. Also, they are generally knowledgeable in their jobs, and are competent in the respective fields. Promotion to a higher position may introduce foreign aspects into their jobs which they find unacceptable and thus lose their enthusiasm and enjoyment towards work (Pierce, 1991).
Theory A - A New Philosophy
The solution may be found in a new management philosophy, Theory A. This theory introduces the new concept of implementation and use of honorable demotion (Pierce, 1991).
Current attitudes towards demotion and even lateral transfers are negative. This limits movement within an organization to promotion, retirement or termination. Theory A recognizes the positive effects of maximizing potential and talent; where consideration would be given to returning employees to their prior positions, where they showed excellence in their performances (Pierce, 1991).
The main thrust of Theory A requires the reevaluation of "the historical relationship between ownership, management and labor within and organization", where adversary was postulated. Theory A mandates that only with team effort can success be achieved in the world economic market. Gains by a group should no longer be viewed as losses to another; they belong to the same team (Pierce, 1991).
Theory T and T+
Hofstede (1987) made the interesting observation that McGregor's Theories X and Y were based on assumptions that applied mainly to the U.S. culture. He said that since the USA is an individualist and masculine society, the same assumptions might not fit a conservative culture in Southeast Asia. Some of the U.S. assumptions which are common to both theory X and theory Y are:
· Work is good for people.
· People's potentialities should be maximally utilized.
· There are "organizational objectives" which exist separately from people.
· People in organizations behave as unattached individuals.
These assumptions, however, do not apply in Southeast Asian cultures. They were replaced by the following:
· Work is a necessity but not a goal in itself.
· People should find their rightful place, in peace and harmony with their environment. (This is especially so in the Japanese culture)
· People behave as members of a family and/or group. Those who do not are rejected by society (i.e. collectivism and conservatism).
Hofstede (1987) also felt that an ideal model for an Asian culture will be one that is for opposites to complement each other, and to fit harmoniously together. In his article, he proposed alternative theories, Theory T and T+ to fit McGregor's work into a Southeast Asian setting.
Theory T (as an alternative to Theory X)
He further posited that, in Southeast Asian management, Theory T could be:
1. There is an order of inequality in this world in which everyone has his or her rightful place.
2. Children have to learn to fulfil their duties at the place where they belong by birth. They can improve their place by studying with a good teacher, working with a good patron, and/or marrying a good partner.
3. Tradition is a source of wisdom. Therefore, the average human being has an inherent dislike for change and will avoid it if possible.
Theory T+ (as an alternative to Theory Y)
Without contradicting Theory T, Hofstede (1987) wrote that Theory T+ could encompass the following:
1. In spite of the wisdom in traditions, the experience of change in life is natural, as natural as work, play or rest.
2. Commitment to change is a function of the quality of the leaders who lead the change, the rewards associated with the change, and the negative consequences of resisting change.
3. The capacity to lead people to a new situation is widely, not narrowly distributed among leaders in the population.
4. The learning capacities of the average family are more than sufficient for modernization.
These new theories appear to be highly conservative with very traditional elements. With the progress of modernization since his article, they may not be as suitable in the Asian context as before.
With the evolution of so many theories from McGregor's Theory X and Y, it is difficult to judge which is the most suitable for today. James C. Conant (Zilbert, 1991) of California State University, USA, proposes yet another alternative theory, Theory E (E for eclectic), as an ideal approach to management in the 1990s.
Theory E
The following are the salient points extracted from Conant's Theory E:
1. Human beings are complex. We cannot isolate people into Theory X and Theory Y types. These characteristics are present in all human beings at one time or another. Conant recommends that sensitivity training for executives be revived to better equip them to give constructive criticism or how to appraise and evaluate the job performance of subordinates.
2. Drive fear out of the workplace. Train managers to substitute the words "wishes and dreams" for the phrase "goals and objectives". This will restore reality to managerial expectations - hopes would not become demands.
3. Adopt a long-range view of profits for the survival of the firm. Current practices are extremely short-run orientated.
4. In order to compete, costs must be controlled.
5. Research and development will become more important for both the introduction of new products and in the techniques of production and marketing.
6. There must be greater involvement of workers in decisions involving production, quality and product design. Employees must be, and will be, more involved in all aspects of decision making in the productive process. Co-operation rather than exclusion will be the norm for all members of the productive process. The whole must become greater than its parts in order to survive.
Conant (Zilbert, 1991) stressed that there is no theoretical substitute for the accurate identification of problems. Just as problems are unique, so are the solutions. As each organization is made up of different individuals, management approaches have to be tailored to fit the different needs each organization.

BIBLIOGRAPHY

Bryans, P., & Cronin, T.P. (1983). Organization theory: The study of human relations within the business organization. Great Britain: Mitchell Beazley.

Bryans and Cronin discuss what motivates employees in the workplace to raise their performance to a level beyond the ordinary. They talk about four theorists and their ideas that address the issue of motivation - Maslow and his Hierarchy of Needs, McClelland and his Achievement Motivation, McGregor and his X and Y views on man, and Herzberg and his Two Factor theory.

Department of Organization Studies, Boston College. (No date). Notes on the consulting project. In Introduction to Organizational Behavior [Online]. Available: http://www.analytictech.com/mb021/notesonproject.htm [1997, Dec 18].

The organizational structure of a class of students who assumed the role of consultants is examined in terms of culture, power, communication, and applications of McGregor's Theory X and Theory Y assumptions. The conclusion is that the project leaders in the class belonged mainly to the Theoy X school.

Eisenberg, E.M., & Goodall, H.L. (1993) Organizational communication: Balancing creativity and constraint. New York: St Martin's.

An introduction to Maslow and McGregor, explaining the aspects of the human resource perspective of organization communication. Likert and his different approaches to management are also discussed.

Flinn, W.P. (1995). The X Y and Z of management theory. Available: http://www.dakota.net/~wflinn/xyz.htm [No date].

Flinn discusses the theories of McGregor and Ouchi with respect to understanding human nature. Both authors' theories are comprehensively analyzed and are compared and contrasted in a table. He concludes by saying that Ouchi's Theory Z focuses also on managerial assumptions and not just on employee assumptions as proposed by McGregor.

Gabris, G.T., & Giles, W.A. (1983). Perceptions of management style and employee performance: Resurrecting a diminishing debate. Public Personnel Management, 12(2), 167-180.

The authors debate on whether emphases on particular management styles and techniques actually increase employee performance. They also discussed a study they conducted, where 86 managers from all levels of administration participated in interviews consisting of 103 fixed response, ordinally scaled items and subsequent open-ended questions. Results showed that organizations that were in transition toward the Theory Y ideal did not necessarily have highly-motivated and especially productive employees.

Hall, J., & Donnell, S.M. (1979). Managerial achievement: The personal side of behavioural theory. Human Relations, 32(1), 77-101.

In this article, five separate studies involving 12, 000 managers from 500 organizations were conducted to explore the relationship between personal applications of behavioral science principles and managerial achievement. The managers were asked to respond to several standardized survey instruments based on the theories of Argyris, Herzberg, Maslow and McGregor. Results showed that in three of the studies conducted, high levels of managerial achievement were associated with adherence to Theory Y suppositions.

Hodge, B.J., & Anthony, W.P. (1991). Organization theory: A strategic approach. (4th ed.). Massachusetts: Allyn & Bacon.

The Classical, Behavioral, Systems and Contingency schools of organization theory are discussed, and McGregor is mentioned in the section on the Behavioral school. The authors credit McGregor's theory X and Y as being a fresh approach to the study of motivation and interpersonal relationships in organizations.

Hofstede, G. (1987). The applicability of McGregor's theories in Southeast Asia. The Journal of Management Development, 6(3), 16-18.

This excerpt discusses Theories X and Y and the assumptions behind them. The author points out that these assumptions are U.S. based, and are not likely to fit into the Southeast Asian culture. He proposes two alternatives, Theories T and T+, which encompass assumptions that will befit the more conservative and traditional culture of Asia.

Kreps, G.L. (1992). Organizational communication. (2nd ed.). New York: Longman.

The assumptions behind Theory X and Theory Y are talked about, relating them to the human resource theory of management. It also brings in the Likert model of relationship and its components, and how it was derived from the two theories.

McGregor, D.A. (1960). Theory X and theory Z, In D.S. Pugh (Ed.), Organization theory (pp. 358- 374). England: Penguin Group.

In detail, Theory X and Y are both discussed. Some assumptions about motivation is included, including discussions on Maslow and how different needs can affect assumptions behind both theories. There is also a section on integration which is derived from Theory Y, as well as the various managerial implications in the application of either theory.

McGregor, D.A. (1960). Organizational developments - human relations. In Management Zone: Organizational Development Resources to Improve Productivity and Job Security [Online]. Available: http://westrek.hypermart.net/mngmnt_artcls/mcgregor_av.htm [1998, Aug 10].

This article outlines the assumptions behind Theory X and Theory Y, and the author's comments on them. While he generally agrees with McGregor's Theory Y assumptions, he also points out their limitations.

McGregor, D.A. (1960). Theory X and Y. In Business Open Learning Archive [Online]. Available: http://sol.brunel.ac.uk/~jarvis/bola/motivation/mcgregor.html [1998, Apr 29].

Another article detailing McGregor's theories on human motivation. It describes McGregor's ideas as being informed by Maslow's need satisfaction model. The "hard" and "soft" managerial approaches in Theory X are also mentioned.

Pace, R.W., & Faules, D.F. (1989). Organizational communication. (2nd ed.). New Jersey: Prentice-Hall.

Theory X and Y are discussed under a section on assumptions about people underlying styles of leadership. This is further elaborated with sections on managerial and leadership styles, like the managerial grid and contingency theory.

Pate, L.E. (1987). Understanding human behaviour. Management Decision, 25(6), 60.

This article briefly mentions Theory X as the basis for autocratic leadership and Theory Y as one for democratic leadership. Key attributes of both styles are also given.

Pepper, G.L. (1995). Communicating in organizations: A cultural approach. USA: McGraw- Hill.

A discussion on the different human resource perspectives, touching on McGregor, the Hawthorne studies and Maslow's hierarchy of needs. Theory X and Y assumptions are also briefly summarised by Pepper.

Pierce, G.A. (1991). Management philosophies: What comes after theory Z? Journal of Systems Management, 42(6), 9-12.

McGregor's Theory X and Theory Y are discussed. Theory Z is elaborated in relation to its origins, Theory J and the Zaibastsu system in Japan. The author also brings in the Peter Principle which he sees as a crucial element in the discussion of management philosophy. He proposes a new philosophy, Theory A, as a complement to the application of the Peter Principle.

Robbins, S.P. (1990). Organization theory: Structure, design, and applications. (3rd ed.). New Jersey: Prentice-Hall.

Robbins has included a chapter based solely on McGregor and his theory X and Y. The
assumptions lying behind them and behind motivation and integration in general are discussed. The implications and managerial applications of each are also illustrated fully.

Shafritz, J.M., & Ott, J.S. (1996). Classics of organization theory. (4th ed.). California: Wadsworth.

The authors have included a chapter detailing some important aspects of McGregor's The human side of enterprise, including why Maslow's theory that motivation comes from the satisfaction of man's hierarchy of needs is not accurate enough. Theory X and theory Y are discussed in detail, and some issues that have arisen from the application of Theory Y are mentioned, like employee empowerment, job enlargement, and participative and consultative management.

Slutzky, K.B. (1989). Why not try theory Y? Security Management, 33(4), 110, 112.

A security management article that posits the virtues of Theory Y. Goes into the subject of Theory X still being very much in use nowadays and why Theory Y should result in better quality of work and a better organization, with pertinence to the management of security guards in particular.

Tortoriello, T.R., Blatt, S.J., & Dewine, S. (1978). Communication in the organization: An applied approach. US: McGraw-Hill.

In addition to the basic assumptions about Theory X and Y, this chapter also brushes on the several additional beliefs underlying the theories. The managerial implications are discussed together with the various leadership styles found in both theories, touching on Theory X being an autocratic "carrot-and-stick" approach and Theory Y as the democratic approach.

Zilbert, E.R. (1991). Management in the 1990s? The Journal of Management Development, 10(2), 10-14.

This excerpt from the article introduces the concepts of Theory X and Theory Y. The author also brings in Theory J (based on the Japanese management style) and Theory Z. He proposes an alternative Theory E, which he saw as the ideal management approach for the 1990s.