Theory X and Theory Y: Thinking About Human Nature

Theory X and Theory Y are two simplified versions of widespread attitudes about leadership and management. The notions were developed by Douglas McGregor back in the 1960s in a book he titled The Human Side of Enterprise. I like McGregor's arguments partly because they can be applied to all sorts of situations from the dawn of human history. McGregor himself was an industrial psychologist and a college president who observed hundreds of executives and managers in action and also applied his insights as a practitioner.

After conducting research on many managers and executives, McGregor concluded that all of them seemed to subscribe to one of two clearly distinct attitudes about normal average human beings. Theory X managers, who were a bit more prevalent 50 years ago when McGregor did most of his research, tended to believe that most people are self-centered, childish, lazy, not very intelligent, not creative, and not very willing to accept responsibility of any sort. Theory X managers believed that only a small fraction of the human population has what it takes to be leaders, and that this small fraction were basically born with the inherent traits needed to be leaders. Theory X attitudes tend to reflect the same kind of thinking inherent in aristocratic approaches to leadership based on the transmission of power within families through firstborn sons and maintained by tradition and physical force. Theory X proponents tend toward sexism and racism because of their connection to ancient and traditional notions about people in general. Theory X types can still be heard saying things like "there will always be chiefs and Indians," though that kind of talk is becoming less common. In general, Theory X managers don't have much faith in people (other than their own circle of associates and family members). Their leadership strategies and tactics all revolve around the need to control, coerce, and manipulate people (none of which are really full-fledged "leadership" strategies). They hog power and they blame mistakes on others a lot. McGregor's name for this kind of management is "management by control."

If we look over the whole landscape of human history, we can identify a Theory X orientation in quite a few historical, philosophical, cultural, and religious contexts. The Judeo-Christian notion of original sin is a Theory X notion in that it proposes that everyone is born sinful as a consequence of Adam and Eve's disobedience. The Calvinist and Puritan extensions of this notion translate directly into a management view that emphasizes the need to control, coerce, and manipulate average people who are essentially self-centered and irresponsible. All slave systems are essentially Theory X in that they fail to see anything in run-of-the-mill humanity other than a pack animal. One key to the Theory X mentality is that it interprets most other people as a means to one's own instrumental ends. Thus workers become interchangeable and disposable. At the same time, Theory X is easy to support with evidence over most of human history. Where most of the world's work is dirty, physical, and yukky, and where virtually everyone is thoroughly ignorant, people who were forced by other people to do all that dirty physical work probably behaved like pack animals or self-centered, lazy, irresponsible children. Even today, the dirtiest jobs are generally performed by the people with the least education, and it is hard to manage or motivate people in such situations without some measure of coercion, manipulation, and control.
McGregor also described a growing number of managers who practiced what he called Theory Y management. These managers tended to see the upside of human nature, the potential for creative work and responsible decision-making. Such managers believe that average people are reasonably intelligent, relatively creative, willing to work for goals which relate to their own welfare, and eager to accept responsibility for things that matter to them. Theory Y is not just a reverse image of Theory X. Where Theory X managers see a lack of intelligence, Theory Y managers do not simply see an abundance of intelligence; instead, they recognize that intelligence comes in various forms and that different people are smart in different ways. (This view is corroborated by contemporary research – we now believe that there are seven or eight different kinds of intelligence.) They also recognize that creativity comes in different packages. As for a work ethic and a sense of responsibility, Theory Y managers recognize that people should not be expected to work hard or to take responsibility for somebody else's benefit, which is what Theory X was always about. People will naturally seek responsibility for their own welfare and the welfare of people in their family and community. (Contemporary research also supports this contention.) Traditional Theory X work was typically performed by some people for the benefit of other people. Slaves obviously don't work for themselves; they work for slave masters. Thus the tendency of slaves to run away or find ways to avoid work should not be chalked up to laziness or irresponsibility but to sensible self-preservation and even legitimate creativity.

We can find hints, intimations, and allegations of Theory Y sprinkled throughout the human record, though Theory Y has traditionally been associated with radical idealism and unrealistic wimpiness. The Christian message to love each other and recognize our universal kinship is a Theory Y idea. Political and social democracy is a Theory Y idea – if we really think that people should govern themselves, then we must trust people to be intelligent, responsible, and even creative. Thus the best thinking has always 

been Theory Y, but we haven't been able to realize that until recently, after a lot of people reach a stage of relative prosperity and advanced education. The new industries which depend very heavily on education and creativity – e.g. the computer software industry and the education industry itself – require the encouragement of individual responsibility, creativity, and teamwork, all Theory Y behaviors. Forty years ago, McGregor proposed that this newer kind of management was gaining momentum rapidly, and we need it now more than ever. The popular stereotypes and the popular media, however, still tend to think in terms of business as a competitive jungle and management-labor relations as a war. The reality is much more complex than that. McGregor called this new form "management by objectives," and its essence lies in helping work teams develop clear goals and then supporting team members in their attempts to achieve goals. Control, coercion, and manipulation generally interfere with such behaviors.

The final insight which relates these two approaches is that they are both "self-fulfilling prophecies." In other words, they both become true precisely because one believes they are true. Just as the stock market rises when people believe it will rise (thus motivating them to buy stock, which actually causes stock prices to rise) and as the stock market falls when people believe it will fall (thus motivating them to sell their stock, which automatically depresses the price), people behave in Theory X and Theory Y ways depending on how we expect them to behave (and thus how we treat them). The classic research on this came about through an accident in a British school system. A teacher was mistakenly told that her elementary students were backward and came from broken homes; thus they were troubled and not good learners. The teacher tried to be a good teacher, but she treated the students as if this description were true. On subsequent test scores, the children did fare poorly. Then somebody realized the mistake and told the teacher that these kids were actually quite bright and that their families supported their learning. The teacher started treating the kids as if they were bright and eager and OOPS they all brightened up and got eager. On the next round of test scores, they scored quite well. Good parents, good teachers, and good managers know that people respond to the way they are treated. Keeping in mind the two extreme views of Theory X and Theory Y can help people get more out of other people in management and leadership situations. 

The moral of the story to remember is that we should learn to love each other as we love ourselves. If that seems too idealistic or goopy for you, then we should at least agree that we need to learn to trust each other as we trust ourselves. Theory X managers actually don't trust themselves as much as they think they do, but that is a story for another essay.