McGregor then put forward the idea that in the main, it was managers that created the two types of worker, and if this were so, managers had the ability to, over time, change the psychology of their employees.
He called the two types of managers -Theory X and Theory Y

The Theory X Manager
The first of these management styles, is founded upon the "assumption of the mediocrity of the masses". The Theory X type of manager makes several assumptions about his employees, (none of them good):
 Workers must be supervised, or quality and quantity of output will fall
 Workers only respect the type of boss that tells them what to do, and does so with complete authority
 Money is the only motivator
 Workers do not want to be involved in the decision making process
 Workers wish to remain faceless and unknown to management
 Workers have little ambition, they wish to remain 'one of the boys'

The Theory Y Manager
The Theory Y manager of course believes that the reverse is true. He starts with several positive assumptions about his employees.
 Workers cannot be motivated by money alone, they seek more than financial satisfaction from their jobs.
 Workers are ambitious, willing to train, and contribute to improve their chances of promotion.
 Workers will be more efficient if they are left to their own devices. Trust breeds responsibility.
 Workers want to contribute to improving efficiency. They want to be seen, noticed, rewarded and appreciated when they work well.

The impact of Theory X and Theory Y managers on Businesses.
If managers behave in the ways indicated above, there must be many company wide implications for all hierarchically structured businesses (i.e. all medium to large businesses).
The main areas of impact will be in:
 The use of job enrichment and enlargement
 Empowerment
 Delegation and methods of communication
 Hierarchical structure
To use a quote from McGregor
"The theoretical assumptions management hold about controlling its human resources, determine the whole character of the enterprise."

Consequences of Theory Y Managers
The above quote indicates that Theory Y managers are likely to create an open structure, with both formal and informal paths of communication, and delegated powers. Workers will be given responsibilities, and a wider range of tasks.
In the case of Theory Y managers, managers are facilitators. It is likely that managers will adopt a Democratic Style - this is based on encouraging participation in decision making. In the case of Theory Y managers the consequences for the firm will be:
 Requirement for training
 Use of cell working - restructuring of production and service methods
 Setting up of formal communication channels, with both vertical and lateral communication.
 Promotion structures
 Flexible working practices

Consequences of Theory X Managers
But on the other hand, if managers are employed who believe that workers have little or no ambition, wish to be left alone, must not be involved in the wider business environment and must be supervised if they are to maintain quality and quantity of work, then a reverse set of consequences arise. In this case these Theory X managers are likely to be Autocratic managers who are objective and task setters, controlling and dictating operations.
The consequences to the firm include:
 Strict control of formal methods of communication
 Tasks must be designed so they are broken down into their simplest units
 Responsibilities must be clear and unambiguous
 Supervisors must maintain quality.
 High level of dependence on decision making of senior management

Conclusions
The essence of this theory is that the managers will, over a period of time, dictate how workers behave. So if we have a Theory Y manager positioned in a business where workers have previously behaved within the Theory X pattern, it is quite possible for the existing workers to be transformed from being uncooperative, de-motivated, and unconcerned with the success of the business to become contributors, motivated to improve quality, output and ambitious for personal and company success. It also follows from this, that lack of motivation amongst workers and poor quality of output, is a management created problem. It is the role of management to create methods of production and management of Human Resources that will allow these resources to realise their full potential.
It is of course quite possible that some organisations might benefit from the Theory X manager, after all it is sometimes necessary to gain control, especially when previous management have let organisations become unwieldy or uncoordinated.
It can therefore be seen that for most businesses especially those wishing to use the latest production and motivational methods, the Theory Y manager is appropriate. But there can be cases where a dose of Theory X is exactly what a business needs.

Exam Themes
Is there any justification to the views expressed by Theory X managers?
Can workers who were previously treated as Theory X type workers, be motivated to contribute fully to a business?
What structures need to be in place within a business, to allow Theory Y managers to get the best out of their workers?
