Critically Evaluate McGregor's Theory X and Theory Y

    In the book “The human side of enterprise”, McGregor (2000) integrated previous work and articulated Theory X and Y, which have exerted a profound influence on contemporary management. It is presumed that managers with Theory X mind-set believe employees should be under direct control, while Theory Y managers, conversely, motivate them by cultivating their self-direct abilities. It is explicit in the book that McGregor has an inclination towards Theory Y based on Maslow’s motivation theory. Despite some criticisms questioning McGregor’s Theory in several criteria, including validity and theoretical scope, its merits in terms of heuristic value and practical value are prominent. Theory Y also shows increasing compatibility in modern Chinese organizations. This essay will successively evaluate its heuristic value, validity and implementation in specific context of China.

McGregor’s Theory is of tremendous heuristic value because it has not only yielded a wide range of subsequent research, but also influenced numerous later management theories. It can be observed from literature that there has been abundant research directly concerning McGregor’s Theory. These investigations are categorized by Jaskolka (2009) into three areas, namely organizational growth, demographic traits and psychological characteristics. The remarkable enlightenment of McGregor’s Theory can also be reflected by its impact on other management thought. It has been argued that Theory Y assumptions established by McGregor have contributed to the ideological trend of emphasizing human-oriented management, which to some extent facilitated Herzberg et al.’s Motivator-Hygiene Theory as well as Likert’s five systems (Carson, 2005). Kopelman et al. (2010) also discovered that “Theory Y’s humanistic and optimistic view of employees served as a foundation for many of the principles of organizational development.” All these facts consolidate McGregor’s Theory’s status as a milestone in the history of modern management.

Despite the significant influence of McGregor’s Theory, there have been many controversies around it in the field of management. Some scholars challenge it on the grounds that there are several defects in the hierarchy of needs established by Maslow. As Bobic and Davis (2003) point out, Maslow neglects the other principal motivators, including quest for power and group approval, and overestimates the attainability of self-actualization. In addition to theoretical deficiency, there are further criticisms of the practicability of McGregor’s theory in modern workplace. According to Walesh (1997, as cited in Bobic & Davis, 2003), the expectation for constantly changing jobs and decreased job loyalty hinder the process of integrating the goal of employees and companies.

Although these critics have cast doubt on McGregor’s Theory regarding the theoretical basis and modern work environment, it shows increasing practical value in contemporary business. While the degree of job security is declining, the complexity of jobs is increasing with technology penetrating in every business area. This development forces employees to acquire more sophisticated vocational skills and initiatives, which are more valued and cultivated by Theory Y management style. Additionally, resilience of an organization is vital for its survival in a rapidly changing external environment. This flexibility is more likely to be fostered by Theory Y managers whilst Theory X managers tend to centralize the power and thus react more tardily (Sorensen and Minahan, 2011). Moreover, the flaws in theoretical basis do not conceal Theory Y’s marked benefit in practical terms. One illustration of it is participative decision making, an applications consistent with Theory Y. According to Russ (2011) and Burke (2011), this method can raise employee’s satisfaction and productivity while decrease their absenteeism and resistance. Another example is the wide use of appreciative inquiry, which evokes a positive atmosphere that effectively motivates employees (Sorensen and Minahan, 2011). These are chief advantages of Theory Y in contemporary business.

Another notable criticism of McGregor’s theory is its scant applicability in non-western context, such as China. The first cause of this disapproval is cultural disparities between China and western countries. One phenomenon inconsistent with Maslow’s theory is that Chinese employees typically value social and self-esteem needs over self-fulfillment needs (Geren, 2011). Hofstede (2007) also argues that substantial Chinese, compared with westerners, hold an inherent belief that authority should concentrate the power rather than distribute it, which is congruent with Theory X management style. The second reason is associated with Chinese economy. As Alas (2008) states, due to the transforming economy and relatively low level of wage, physiological and security needs are predominant factors for most Chinese workers, which indicates that monetary incentives are still principal. A further cause is the Chinese fundamental reality that population quality is comparatively low, which may have not met the requirements of Theory Y management.

Notwithstanding some validity to this criticism, there is evidence that Theory Y is increasingly appropriate when implemented in modern Chinese organizations. According to the cultural dimensions formed by Hofstede (2001), some similarities can be observed between China and western countries. One of them is uncertainty avoidance, indicating that people in these countries have higher level of acceptance for ambiguity. This propensity is likely to impede the application of Theory X, where managers often direct subordinates with specific commands. There is also a trend of increasing sense of individualism accompanied by regional economic development, which mitigates the cultural discrepancy (Hofstede, 2007). In addition to cultural tendency, higher living standard of Chinese workers also enhances the compatibility of Theory Y. An illuminating illustration is the study of work life in Shanghai, an economically advanced city in China, by Chan and Wyatt (2007). They found that employees’ self-esteem needs and knowledge needs, as opposed to incomes, have become main predictors of life and job satisfaction. Multinational corporations also play an influential role in accelerating the adapting process. As Björkman (2002) has reported, the introduction of western management style will to some extent modify Chinese’s value. As more international enterprises step into China, this indirect effect is expected to expand, and hence facilitate Theory Y practices. Overall, the future of Theory Y management in China is seemingly promising.