History of Management

The History of Management

McGREGOR: THEORY X, THEORY Y

As a young man Douglas McGregor often worked at his grandfather's institute for transient laborers in Detroit. After graduating from Harvard (1935) he joined the psychology faculty of MIT and founded MIT's Industrial Relations section. He became President of Antioch College in 1948 but after six years returned to MIT where he remained until his death in 1964.

His book The Human Side of Enterprise (1960) is a seminal work in management as it introduces a humanistic approach to the business perspective. McGregor's view was a critic on what we perceived as erroneous assumptions of the "human relations" approach that was popular after the Hawthorne experiments. He wrote:

I believed, for example, that a leader -could operate successfully as a kind of adviser to his organization. I though I could avoid being a "boss." Consequently, I suspect, I hoped to duck the unpleasant necessity of making difficult decisions, of taking the responsibility of one course of action, among many uncertain alternatives, of making mistakes and taking the consequences. I thought that maybe I could operate so that everyone would like me -- that "good human relations" would eliminate all discord and disagreement.

I couldn't have been more wrong. ... I finally began to realize that a leader cannot avoid the exercise of authority any more than he can avoid responsibility for what happens to his organization."("On Leadership", Antioch Notes (May 1954, pp. 2-3)).

The issue was not that social groups and organizational values do not have any affect on workers, they do - but that these social controls or "human relations" could not replace effective management of people. The problem with the human relations approach was its assumptions about people. The way managers viewed human behavior affected their way of managing people.

It was also clear to McGregor that prevalent management practices of "bossing" workers through control and direction were also wrong and counter productive.

There are two ways to view humans, he argued. The tendency of some managers following prevailing practices was to view people as needing control and direction. This McGregor termed "Theory X" and the perspective assumed:

The average human being has an inherent dislike of work and will avoid it if he can...
Because of this human characteristic of dislike of work, most people must be coerced, controlled, directed, threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives...
The average human being prefers to be directed, wishes to avoid responsibility, has relatively little ambition, wants security above all.

Reminiscent of Follett, McGregor argued for a shift of perspective towards one that emphasized the
"integration of individual and organizational goals." This view of humans he termed "Theory Y":

The expenditure of ...effort in work is as natural as play or rest. The human being does not inherently dislike work...
External control and the threat of punishment are not the means for bringing about effort... . Man will exercise self-direction and self-control in the service of objectives to which he is committed.
Commitment to objectives is a function of the rewards associated with their achievement. The most significant of such rewards, e.g., the satisfaction of ego and self-actualization... .
The average human being learns, under proper conditions, not only to accept but to seek responsibility. ...
The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the solution of organizational problems is widely ...distributed... .
(T)he intellectual potentialities of the average human being are only partially utilized.

While textbook authors tend to make the case that McGregor is advancing a participative leadership style, likely he was asking managers to question their own assumptions about the people that work for them and see where a different set of assumptions might take them in better achieving worker commitment and effort: people will contribute more to the organization if they are treated as responsible and valued employees. In this he lays the foundation for future theory about work itself being a motivator and a new direction for managers as active leaders, rather than "bosses.".

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