Theory X and Theory Y describe two perspectives on human motivation in organizations. Theory X assumes that people dislike work and must be coerced through threats, while Theory Y assumes that people can exercise self-direction and seek responsibility if committed to organizational objectives. The Scanlon Plan is an example of Theory Y in practice, with cost-sharing and participation mechanisms to encourage employee involvement and commitment. An effective organization balances concerns for both relationships and production through trust-based accountability and a commitment to people as well as tasks.

1. Theory X and Theory Y:
Douglas McGregor
By,
Karthik Bharadwaj

2. Theory X :
Theory X - Classical Theory
Three Assumptions
 The average human being has an inherent dislike of work and will avoid
it.
 Most people must be coerced, controlled, directed, and threatened with
punishment
 The average human being prefers to be directed, wishes to avoid
responsibility, has relatively little ambition, wants security.
 Neither explains nor describes human nature

3. Theory Y Prototype: The Scanlon Plan
• Theory Y - Human Relations Theory
• Participative Management
• Two Central Features
▫ Cost-reduction sharing for organizational members - sharing the economic gains
from improvements in organizational performance
▫ Effective participation - a formal means of providing opportunities to every member
of the organization to contribute ideas for improving organizational effectiveness.
• Must be implemented appropriately
• Wastes time and undermines managerial power?
• Magic formula for every organizational problem?
• CONCERN for RELATIONSHIPS in the organization.
• As the need to increase commitment grows, so does the need to develop strong,
communication-based relationships among organizational members, particularly between
supervisor and subordinate.

4. Concern for PEOPLE
Degree of personal commitment to one’s job
Trust-based accountability (vs. obedience-based accountability)
Self-esteem for the individual
Interpersonal relationships with co-workers
Concern for PRODUCTION
Use of people and technology to accomplish organizational tasks
Concern for is not about quantity or quality
Assessment instrument does not represent personality traits of the
manager -- instead, indicate a specific orientation to production and
people