Key learning outcomes:

  • Understand what drives and motivates your employees or team members to perform effectively.
  • Learn that according to Theory X, employees work only to satisfy their basic needs.
  • Learn that according to Theory Y, employees work to satisfy their higher needs.
  • Acknowledge that, with regard to motivation, not every employee will fit neatly into the Theory X or Theory Y box.


Learning how to motivate others is one of the keys to successful leadership and business. Without doubt, the more that you understand what motivates employees, the more likely you can provide what they need to perform at their best. Motivation has been proven to have such an impact on how businesses perform that academics, management experts and psychologists have studied it since the early 1900s in an effort to better understand what drives people to get up, go to work and to perform at their best. In this section of the website we explore a number of motivational theories and give you an insight into how you can improve your levels of employee engagement and in turn improve your business’s productivity and profitability.

This article explores a theory of human resource management put forward by psychologist Douglas McGregor in 1960. It contains two contrasting theories of employee motivation, which McGregor called “Theory X” and “Theory Y”. McGregor believed that the way a business is managed is a reflection of how a manager believes that employees are motivated. McGregor firmly believed that, overall, Theory Y managers would get the best out of people; however, he suggests that the most effective management style will draw from both X and Y. It is worth noting that McGregor draws on another theory of motivation, “Maslow’s Hierarchy of Needs”. Read our article on this hierarchy for another useful frame of reference.[wlm_ismember]

Theory X

Theory X assumes that, generally, employees:

Businesses that use a Theory X style of management tend to be structured in a hierarchical manner. Managers and supervisors control workflow and are on hand to make any decisions. Authority is not delegated and there is little scope for employees to have input into their job roles or the business.

McGregor suggests that this theory is flawed due to the fact that once the basic needs are satisfied; they no longer provide any motivation for the employee to come to work and perform. Employees will then seek satisfaction for higher needs such as esteem and belonging outside of work, leaving money as the only source of motivation in the working environment. He further suggests that very few workers are true Theory X types, and this is problematic for businesses that operate using a Theory X management style. In saying this he did feel that there was a place for Theory X in large-scale production businesses and in some circumstances such as in times of crisis.

Theory Y

Theory Y assumes that, generally, employees:

A business operating with Theory Y has more options to motivate its employees than one operating with Theory X. It is able to empower employees through delegation of responsibility and by spreading decision-making powers. Through allowing more input from employees on the direction of the business and including them in the decision-making process, businesses using Theory Y are able to motivate employees through the ability for them to satisfy higher level needs.

The theories in practice

McGregor’s theory is based on what management believes will motivate employees. It is widely agreed that Theory Y is particularly more effective when working in service and knowledge-based organisations. Theory X is considered a hard or authoritarian style of management that is unlikely to be tolerated well among modern employees who tend to strive for high levels of engagement in their job roles. Modern businesses move towards the Theory Y style of management; however, it might not necessarily suit every employee or industry.

Take the time to think about the different people in your business and to get to know them. You may find that by delving into what motivates each person will allow you to vary your management style accordingly. For example, even though you might want your business to operate under the Theory Y model, and this suits the majority of your team, you might find that some job roles attract a certain type of person that is more motivated along the Theory X lines.

The most important thing to remember is that motivation theories are not prescriptive and that not everyone fits neatly into the Theory X or Y box. It is important as a leader to understand that every employee and every situation is different and that you need to adapt you management style accordingly. For example, you might have an employee who comes into work every day, performs their job to a high standard, but they do not seem to have any desire to participate in team bonding events or training. This person may not seem to fit in if you are operating as a Theory Y business that is always looking for opportunities to offer employees to satisfy their high-level needs of belonging and esteem. It would be a mistake to keep trying to motivate this person with rewards they are not interested in, as they would rather be managed in a Theory X manner where they are simply paid for the job that they do.

Great leadership is about being able to help those around you to perform at their best. Use this these theories in conjunction with our other leadership articles to improve your skills and in turn improve your business’s performance.[/wlm_ismember]

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