Page 265 - Introduction to Business

CHAPTER 7 Motivating and Leading Employees 239

Theory X is based on management’s distrustful vision of human nature in gen- Theory X The theory that is based on the
eral and of employees in particular. According to Theory X, distrustful vision of human nature in
general and employees in particular
1. People dislike work and will try to avoid it if they can.
2. Because people dislike work, managers will need to use control, coercion,
threat, and other forceful techniques to obtain work from employees in order
to meet corporate objectives.
3. Since people are generally lethargic and seek security rather than
responsibility, they will need to be led or directed to get the job done.
From these assumptions it is apparent that under Theory X, employees should
be kept in a controlled environment, because they are subservient, reactive, and
prone only to follow management’s directives.
Theory Y is based on a positive view of human nature, with traits quite opposite Theory Y The theory that is based on the
to those perceived in Theory X. Employees are seen as self-driven and willing to positive view of employees
take an initiative to achieve corporate goals as long as it leads to appropriate
rewards. According to Theory Y,
1. People do not dislike work; in fact they enjoy it so much that they perceive
work to be part of their daily activity.
2. People can be motivated to work smart and achieve corporate objectives in
anticipation of receiving tangible rewards.
3. Most employees are creative and seek responsibility to do a better job, and it is
management that does not try to utilize the employees’ potential fully.
Managers who operate on Theory Y principles recognize that employees seek
growth in job and pay and can be more productive. Also, given the opportunity,
employees will play an important role in achieving corporate objectives as long as
they are given proper incentives to develop and utilize their skills to full potential.
McGregor stated that most managers operate on the Theory X assumption. Yet, he
believed that managers operating on the Theory Y assumption were more likely to
achieve corporate goals, especially since some Type X employees could be moti-
vated to perform well using Theory Y techniques, thereby increasing productivity
and output more.

Ouchi’s Theory Z
In 1981, at the height of Japan’s manufacturing and economic supremacy, William
Ouchi, a professor of management at the University of California, Los Angeles, con-
ducted studies on the management practices of U.S. and Japanese companies to
determine what factors influenced Japanese firms to do so well globally. Ouchi
4
found the management practices in the two countries to be very different, which to
a large extent reflected their cultural differences. The Japanese are a relatively
homogeneous society and they generally tend to be group-oriented, whereas
Americans are more individualistic.
Ouchi labeled Japanese firms Type J firms, which had several distinctive manage-
ment characteristics. Type J firms promoted lifetime employment, job rotation for
most professional employees so that everyone had an appreciation for the others’ jobs,
collective decision making with the group being held responsible for the final outcome
in terms of business performance, slow and steady salary raises for employees with
due consideration given to seniority, and a total concern for employee welfare.
On analyzing U.S. companies, Ouchi labeled them Type A firms, whose manage-
ment practices were radically different from the Type J firms. U.S. firms focused on
short-term employment, specialized career paths, individualistic decision making

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