Management theory books and disaster films have something in common. Both confront the prospect of the near-total destruction of life as we know it. In the movies, the hero invariably realizes what must be done and saves the world just before the credits roll. In management books, the chosen manager masters the correct theory just in time to avert business catastrophe. On screen, happy endings are unremarkable — it’s just entertainment, after all. But in the real world, real companies make real decisions based on the theories authors propose in their management books. Why should one assume that things always end well?
This question about happy endings comes to mind on the 50th anniversary of one of the most storied contributions to the management literature, Douglas McGregor’s famous distinction between Theory X and Theory Y. In his hugely influential 1960 book, The Human Side of Enterprise (McGraw-Hill), McGregor made the simple yet powerful observation that managerial practice often expresses some very deep assumptions about the nature of human beings: Two competing theories about human nature, he claimed, dominate the managerial thought–world.
Theory X says that the average human being is lazy and self-centered, lacks ambition, dislikes change, and longs to be told what to do. The corresponding managerial approach emphasizes total control. Employee motivation, it says, is all about the fear and the pain. Theory Y maintains that human beings are active rather than passive shapers of themselves and of their environment. They long to grow and assume responsibility. The best way to manage them, then, is to manage as little as possible. Give them water and let them bloom, say the Y-types.
McGregor named his theories after letters of the alphabet in order to avoid prejudicing the discussion in favor of one or the other, and he further insisted that both theories have value in the appropriate contexts. Fortunately, not many of his readers heeded that part of his message. The X-managers, as everyone could see, are basically Stalinists. And although quite a few employees are eager to liken their bosses to autocratic mass murderers, not very many managers are willing to identify with that ugly self-image, and no management theorist to date has been interested in promoting it. By contrast, the Y-vision — in which freedom and self-realization beget massive leaps in productivity — looks gorgeous.
In McGregor’s wake, one management guru after another rediscovered Theory Y, packaged it in new language, and claimed it as his or her invention. Tom Peters, Rosabeth Moss Kanter, and Charles Handy, to name three, launched their highly successful careers on the basis of McGregor’s wisdom. Peter Drucker — a special case — could be called a Y-man avant la lettre, since he began to promote a version of the theory before McGregor gave it its name.
There can be little doubt that Theory Y is a good thing, and that McGregor did an even better thing in bringing it to the attention of managers. The huge and impersonal bureaucratic machines of the modern economy are often very hard on the soul, as was apparent even in McGregor’s day (see, for example, Sloan Wilson’s novel and the subsequent film The Man in the Gray Flannel Suit). We need the gurus to remind us that business is all about people; that if you trust in people, they’ll trust you back — and that if you don’t, your most precious assets won’t show up tomorrow morning. Many managers and many firms took McGregor’s message to heart and learned how to help themselves by helping their people flourish. The glittering pot of gold at the end of the Theory Y rainbow is the fact, now a commonplace, that many of the most successful companies in the world are routinely rated the best places to work.