According to concepts the US college-administrator and professor Douglas McGregor (1906-64) in his 1960 book ‘The Human Side Of Eenterprise’ these are two distinct sets of assumptions that managers, in general, have about their employees and which often turn out to be self-fulfilling prophesies.
Theory-X assumptions are:
(1) most people dislike work and will avoid it to the extent possible, therefore
(2) they must be continually coerced, controlled, and threatened with punishment to get the work done, and that
(3) they have little or no ambition, prefer to avoid responsibility, and choose security above everything else.
Theory-Y assumptions are: (1) physical and mental effort are natural and most people (depending on the work environment) find work to be a source of satisfaction,
(2) they generally, on their own motivation, exercise self-control, self-direction, creativity, and ingenuity in pursuit of individual and collective (company) goals,
(3) they either seek responsibility or learn to accept it willingly, and that
(4) their full potential is not tapped in most organizations.
These assumptions serve as powerful behavioral models reflected in the way an organization is structured.
Management that believes in theory-X assumptions, creates stick-and-carrot approach based firms with restrictive discipline and pervasivecontrols. Theory-Y believers create trust based firms with empowered employees.
What about theory Z;
Japanese consensus management style based on the assumptions that
(1) employeeswant to build cooperativerelationships with their employers, peers, and other employees in the firm; for this they
(2) require high degree of support in the form of secure employment and facilities for development of multiple skills through training and job rotation,
(3) they value family life, culture and traditions, and social institutions as much as materialsuccess,
(4) they have well-developed sense of dedication, moral obligations, and self-discipline, and
(5) they can make collective decisions through consensus.
This was Introduced by the author William Ouchi (born 1943) in his book ‘Theory Z.’