McGregor’s Theory X vs Theory Y: How To Increase Performance In Your Team

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Social psychologist Douglas McGregor put forward his Theory X and Theory Y in his 1960 book, The Human Side of Enterprise. These theories explained two contrasting management styles, based on what managers believe motivates their employees.

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What are McGregor’s Theory X and Theory Y?

Theory X describes an authoritarian management style, while Theory Y is participative. What does that mean?

Theory X – authoritarian

If a manager assumes an employee doesn’t like their work and isn’t naturally motivated, they’re likely to think that prompts, rewards and punishments are the only way the employee will focus.

They use their authority to get the job done.

What do Theory X managers assume about their workers?


  • Don’t like the work
  • Shirk responsibility
  • Need to be told what to do and have constant supervision
  • Have no ambition or desire to work hard
  • Are only motivated by rewards

A Theory X manager might incentivise their employee by offering a bonus if they hit a particular sales target and keep track of their progress via appraisals to ensure delivery.

This control-focused style is not common anymore because it is a pessimistic view and – unsurprisingly – most people do not want to be micromanaged.

However, some large organisations might not have a choice but to adopt Theory X techniques simply due to their scale.

Theory Y – participative

Theory Y managers trust that their employees can handle more responsibility and so encourage them to learn and develop as they work.

They will encourage their employees to participate in collaborative projects, trusting them to deliver on their objectives.

What do Theory Y managers assume about their workers?


  • Find their work satisfying and challenging
  • Want to help make decisions
  • Motivate themselves
  • Take responsibility for their work
  • Need very little direction
  • Can think outside the box to solve problems

A Theory Y manager could encourage an employee to learn how to optimise their audience targeting to hit a sales target, which will result in new skills, more responsibility and even a promotion in the future.

Appraisals might still be part of the process, but more as an open discussion rather than to keep control of progress.

Theory Y is a much more positive management style than Theory X, which could explain its popularity. It allows the employee to have some freedom and responsibility – and the manager to feel less like they need to pressure their staff.

It can lead to a more meaningful career, where staff are encouraged to care about more than just their wage – and what’s not to like about that?

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How can managers apply McGregor’s Theory X and Theory Y to motivate employees and increase performance?

Managers in high-pressure, high-output organisations will tend towards Theory X in order to achieve company goals as efficiently as possible.

For example, a manager – let’s call them ‘X’ – needs to reach a certain level of output for their department per month. Anything above this base level output will gain X a bonus.

X now has to encourage their team to produce a set amount of product a day for their department to get the required monthly output.

They have a lot of staff to manage, so to motivate them the company promises that they’ll get a bonus for achieving more than their target but a mark on their record for underachieving.

There is no room for learning, and unfortunately X’s employees have no time to suggest how to better streamline the workflow.

The strict rules and punishment/reward structure makes clear to the employees what their role is. The targets are met so X and their employees are rewarded with their respective bonuses.

This is great for employees motivated by money and a consistent role, but not so good for those who want to develop their thinking or progress in their career.


Mo is a production manager in a factory.

He is responsible for getting 400 parts off his production line per week. His boss tells him that if he can up the ante and produce 100 more parts per week (and pass the quality checks), his employees will get an extra £50 in their pay that month.

If they don’t meet the new target, they will be required to have a HR review.

Mo’s staff are largely motivated by rewards, so most of his team are successful, meet the requirement and win a bonus.

However, two members of staff failed to meet the targets.

One was a new member of staff, who needed more training. The other is after career progression and Mo suspects they are looking for a new job.

The new target, which delivered a short-term reward, demotivated that employee who wanted a more meaningful, long-term reward.

This is where Theory Y comes in.

Say a manager – (you can probably guess where this is heading) let’s call them ‘Y’ – is leading a project to develop a new product which could result in their promotion.

Y explains the project to their team and together they make a plan of action and share ideas. Y has a large team, and due to the flexibility of their workplace their staff are motivated by different rewards.

Some are keen to learn new skills, some are eager to earn a bonus while others are simply motivated to just see the product succeed. Y trusts their team, so each employee is free to choose how their skills can be best utilised.

By working together, learning and improving as they go and having flexible methods, Y’s team develops a promising new product.

Y has the opportunity to use their experience to gain a promotion, which leaves their place open for one of their team to progress in their career too.

The team members are satisfied with the success of their project, and are more motivated as they see their effort is rewarded in a way that suits them.

Just like Theory X, Theory Y has good and bad points – for example, some employees will be motivated by the freedom, but others might take advantage of Y’s trust and not contribute to the project equally.


Kalani is a nursery manager in a childminding setting.

One of her playworkers has noticed the children are starting to explore their sense of self, pointing out their features and comparing them with those of their playmates, ‘my hair is brown, and your hair is blonde.’

Kalani encourages the playworker to help the children follow their instincts, ideas and interests, and think carefully about diversity. She remains flexible about how that goal could be achieved.

The playworker creates a diversity board. It contains self-portraits, drawn by the children, and the children’s parents have contributed photographs of the different destinations they have visited around the world, and the friends and family they have visited.

The children gather to discuss the photos and share experiences once a week.

The playworker’s efforts are rewarded. They’ve thought outside the box to make self-motivated decisions, positively contributing to the learning week.

Advantages and Disadvantages of McGregor’s Theory X and Theory Y

Advantages of Theory X

  • Some employees thrive on an authoritative management style
  • Focus on achieving the company goals
  • No room for ambiguity, which makes roles and responsibilities clear

Disadvantages of Theory X

  • Some employees do not work well under such strict enforcement
  • Not everyone is motivated by financial gain, so they might not make much of an effort to achieve more
  • Can be detrimental to employee learning and development

Advantages of Theory Y

  • Much more appealing management style
  • Gives employees freedom and responsibility, which allows them to perform better
  • Encourages teamwork, development and creative problem solving

Disadvantages of Theory Y

  • Not everyone will be comfortable with undefined working boundaries
  • It would be easy to abuse the freedom and trust
  • Can be harder to measure success, as there is less focus on quantifiable metrics

The main disadvantage with both theories is that not all employees will neatly fit into either category – the workplace is not a “two sizes fit all” environment.

Luckily there are other management theories that can be used alongside McGregor’s Theory X and Theory Y, such as:

Is Theory X and Theory Y good for employee wellbeing?

McGregor’s Theory X and Theory Y is about judging the needs and character of your people.

Read them well and, normally, they’ll feel confident taking direction under the parameters of X and Y. They’ll understand your expectations and feel motivated – those two things promote happiness at work and contribute to wellbeing.

Regardless of if you’re an X or Y manager, read the room regularly. Observe individual behaviour and performance and question whether your style motivates them in the right way.

If you make good choices on their behalf by pursuing Theory X or Y, you’re advocating for their interests. For example, “I prefer management style Y, but this employee always meets their targets under Theory X. I will move, so they will move.”

It’s a self-reflective management approach that will challenge your biases, and promote conversations, leading you to achieve better results.

However, the application of either Theory X and Y is driven by your workplace and its projects. You can acknowledge it your shortcomings, if a worker is shoehorned into a way of working: “I understand it’s frustrating working on the same tasks when you’re ready for more responsibility. Let’s looks for opportunities to develop your skills.”


Picture of Matthew Channell
Matthew Channell
Matthew is TSW Training’s Commercial Director. He writes about performance focussed learning, leadership, and management approaches that have real-world, sustainable impact.
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