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 that most people dislikes work and will avoid it to the extent possible, therefore they must be continually coerced, controlled, and threatened with punishment to get the work done, and that they have little or no ambition, prefer to avoid responsibility, and choose security above everything else.
Theory Y assumptions are physical and mental effort are natural and most people (depending on the work environment) find work to be a source of satisfaction, they generally, on their own motivation, exercise self-control, self-direction, creativity, and ingenuity in pursuit of individual and collective (company) goals. They either seek responsibility or learn to accept it willingly, and that 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 pervasive controls. Theory-Y believers create trust based firms with empowered employees. These concepts were introduced by the US college-administrator and professor Douglas McGregor (1906-64) in his 1960 book 'The Human Side Of Eenterprise.'
William Ouchi’s Theory Z
This is a Japanese consensus management style based on the assumptions that employees want to build cooperative relationships with their employees, peers, and other employees in the firm. They require high degree of support in the form of secure employment and facilities for development of multiple skills through training and job rotation. They value family life, culture and traditions, and social institutions as much as material success. They have well-developed sense of dedication, moral obligations, and self-discipline and also can make collective decisions through consensus. Introduced by the author William Ouchi (born 1943) in his book 'Theory Z.' The primary features of Theory Z are summarized as follows :- LONG-TERM EMPLOYMENT
CONSENSUAL DECISION MAKING
SLOW EVALUATION AND PROMOTION
INFORMAL CONTROL WITH FORMALIZED MEASURES
MODERATELY SPECIALIZED CAREER PATH
Theories X, Y and Z in Management Today
Theory Z was first identified as a unique management approach by William Ouchi. Ouchi contrasted American types of organizations (Type A) that were rooted in the United States' tradition of individualism with Japanese organizations (Type J) that drew upon the Japanese heritage of collectivism. He argued that an emerging management philosophy, which came to be called Theory Z, would allow organizations to enjoy many of the advantages of both systems. According to Professor Ouchi, Theory Z organizations exhibit a strong, homogeneous set of cultural values that are similar to clan cultures. The clan culture is characterized by homogeneity of values, beliefs, and objectives. Clan cultures emphasize complete socialization of members to achieve congruence of individual and group goals. Although Theory Z organizations exhibit characteristics of clan cultures, they retain some elements of bureaucratic hierarchies, such as formal authority relationships, performance evaluation, and some work specialization. Proponents of Theory Z suggest that the common cultural values should promote greater organizational commitment among employees. McGregor, a psychologist and college president, identified a negative set of assumptions about human nature, which he called Theory X. He asserted that these assumptions limited the potential for growth of many employees. McGregor presented an alternative set of assumptions that he called Theory Y and were more positive about human nature as it relates to employees. In McGregor's view,...