Theory X and Theory Y Examples & Use in Management Term Paper

Problem Statement

Thesis Statement

The purpose of this study is to explore conceptual framework of Theory X and Theory Y along with case study of different companies, such as, Apple, easyJet, Ford Motor, Google, and Facebook to strengthening the performance of the leaders to achieve organizational goals.

Research Questions

• To what extent Theory X and Theory Y applicable to lead the companies at the time of globalisation;
• To what extent, the theoretical framework of leadership style has encouraged and developed;
• What are the impacts of Theory X on different companies like Apple, easyJet and Ford Motor
• What are the consequence of Theory Y on the employees of global brands

Literature Review

Conceptual Framework of Theory X

According to the McGregor’s Theory X, it is a hard approach where manager’s role is to control their employees strictly and forcefully (Robbins and Judge 189; Iqbal, Sumaira, Madiha and Anam 12).

In addition, Iqbal, Sumaira, Madiha and Anam (12) stated that Theory X based on coercion, close supervision, implicit threats; on the other hand, Robbins and Judge (189) said that Theory X assumes that lower order needs dominate individuals of the Maslow’s framework, therefore, the managers under this approach never consider participative decision making.

However, mainly four factors influence the managers to use autocratic approach, such as –

• Workers naturally dislike work and endeavor to avoid it (Robbins and Judge 189);
• As they are not interested to perform, they must be controlled strictly with punishment to reach objectives (Iqbal, Sumaira, Madiha and Anam 12);
• In addition, the employees are self-centered and have no ambition, so, try to avoid responsibility (Robbins and Judge 189);
• They are also concentrating more on the security issue avoiding aims of the company (Robbins and Judge 189);

However, four leadership styles fall under Theory X and these are:

In the era of globalisation, most of the multinational companies avoid this approach considering the key characteristics of this style, for instance, the oldest and hardest Autocratic approach is power-centered, which ignoring preferences of the employees, though some times leaders provide rewards and penalties for the outstanding performance.

Under this approach, the leaders enjoy ultimate and unlimited power to take their decisions and the workforces have to pursue the direction of the managers strictly, though this approach is not effective in modern society because the business world experienced rapid changes where different organizations involved in high-level competition (Iqbal, Sumaira, Madiha and Anam 13; Kurfi 9)

Model of Theory X Approach

Problems and Challenges of Theory X in Context of Needs of the Businesses

According to this theory, the companies mostly concentrate on money and benefits to satisfy the employees, but the source of motivation is lost when their needs fulfilled in such way; at the same time, this hypothesis hinders the satisfaction of higher-level needs; therefore, this predicted negative relationship influence the workforce of the companies to seek additional payments.

The rationale to provide Theory Y was existing dilemma of this process, for instance, financial benefit is one of the effective systems to satisfy lower needs, but the employees need additional facilities leisure time to fulfill higher needs, as a result, the workforce again lose their interest on the job and evade responsibility, which makes Theory X a self-fulfilling prediction.

Companies That Use Theory X: Apple, easyJet, and Ford Motor

Branson (6) stated that Stelio – the former chief executive officer of easyjet was followed Theory X approach in some extent as it was sentential for the leader to control the employees implementing comparatively hard approach while it had a number of young and relatively inexperience employees.

Carolyn McCall is a new CEO for budget airline easyJet was former leader of Guardian Media Group (where she made some high-profile changes during her tenure); however, she has no experience of the airline industry, but she intends to restructure the company to meet the objectives in the post recessionary economy; thus, she will follow hard approach in some extent.

According to the view of theorists, Late Steve Jobs, former CEO of Apple was a great leader of Apple’s history who had followed no uniform leadership style to governed the company operations; however, Chaushuri stated that he was a role model for other leaders as he showed how to control the company and the employees to keep effort on innovation.

Chaushuri (1) stated that the CEO of Dell proudly claimed in 1997 that Dell’s value more than $28.10 billion while Apple’s value only US$3.1 billion, however, that scenario had changed within few years, and Apple is the most valuable company at present since its current value is about US$568.8 billion; it was the great contribution of Steve Job.

Moreover, here it is important to mention that Steve Job brought this excellent success using an autocratic leadership style, for example, he forced to the employees to manufacture products in accordance with his instruction otherwise he fired the staff; at the same time, renowned scholars stated that Jobs never considered democratic approach in digitalization process (Chaushuri 1).

Most importantly, Steve had some specific objectives and he was keen to reach these goals, consequently, he dominated Apple’s workers and directed them correctly with his authoritarian leadership approach; nevertheless, Steve’s departure meant a major transformation for the company in terms of coping up with new organizational styles.

On the other hand, current and former workforce of this company have admired Job’s leadership style because he had aptitude to direct people without any training; in spite of huge success of Jobs, Little (1) suggested that Tim Cook, the new CEO to be a democratic leader along with quite cohesive-leader and create an organisational-culture of shared-leadership.

Conceptual Framework of Theory Y Approach

As suggested by McGregor (67), the conceptual framework of Theory Y approach is based on the idea where the organization presumes that workers can be determined and self-motivated, and can apply self-restraint; moreover, it is believed that workers get pleasure from the tasks and possess the capability of innovative problem-solving, but their aptitudes remain unused in the majority of corporations

McGregor (47) also pointed out that according to the Theory Y concept, creating dedication towards goals is a task of rewards; in addition, it is presupposed that Theory Y-managers think that workers would gradually, get enthusiastic to search and admit duties and apply self-agenda in achieving goals, moreover, in exact circumstances, nearly everyone would feel like performing competently at workplace.

This kind of managers think that the contentment of carrying out good-work is a powerful-motivation; therefore, most researchers, infer Theory Y as optimistic viewpoints regarding workforce; however, Douglas McGregor urged managers to use a confident outlook towards employees and also discussed about its benefits; in addition, he expressed that such managers are more likely to develop trustworthy climate at workplace

According to Carson (9), Theory Y, also presents a HR improvement framework, which offers an essential element for corporations and comprises of frank communication with employees, diminishes distance between employee/ employer relations, and crafts comfortable environment so that employees can develop their capabilities, providing a climate for devolution of decision-making so that they could have an opinion in the decision-making

Model of Theory Y Approach

According to McGregor (67), in order to apply a Theory Y approach, firms, usually follow a number of models for restructuring the organization in a way that is suitable for adopting McGregor’s hypothesis:

1. Fragmentation of powers, along with devolution – When the corporations disintegrate organizational powers and empower worker as well as diminishing the amount of administrative ranks, it could be seen that every administrator would get additional workers and as a result would be required to carry out devolution and fragmentation of powers in order to lower individual workloads
2. Occupational amplification – In order to develop the self-esteem of the personnel, it is important to intensify the capacity of their occupation, and adjoin diversity into the particular professions, so that they could stay gratified with their careers; moreover, such a positive motivation could in turn increase the productivity of the personnel
3. Ensuring administrative partaking – This model of Theory Y includes discussing with human resources, with regard to the decision-making procedure in order to bring out the potentials of individual staff as well as utilizing the innovative aptitudes and affording authority to the staff to certain extent throughout the working-period
4. Assessment of individual working standards – Another simple model of the theory, states that it is imperative to fix aims for the personnel and then create a system through which their working standards could be measured
5. Democratic approach of leadership – It is highly essential for the top- level executives or the CEOs of the companies to assure democracy in the businesses by ensuring that every worker is getting a chance to express individual viewpoints; however, the following figure shows a simple model of the Theory Y approach:

The following table shows several suppositions, and other factors regarding the model of Theory Y approach:

Table 1: Factors Regarding Theory Y Approach Model

Theory Y Examples Company: Facebook and Google

Google follows a Theory Y approach for managing the operations; it is notable that Erik Schmidt, the CEO of the company, has adopted a strategy to assure democracy in the corporation by ensuring that every worker is getting a chance to express individual viewpoints, even though these viewpoints, in some cases, could conflict with a decision of the top-level managers.

Conversely, a group of friends created Facebook in a way so that each of them could have a say in the organizational process; however, it is important to note that this simple democracy at the early years of Facebook, still continues in order to include the opinion of the workers who are placed at lower- levels of the organizational chart

Advantages of Theory Y in Context of Needs of the Businesses

• Under this theory, the relationship between mangers and employees would be friendly, which will assist the managers to know about the problems of the employees so far they can try to find out possible solutions to improve the quality, such as, arrange training program and develop communication system, (Iqbal, Sumaira, Madiha and Anam 12),
• At the same time, Theory Y is a participative management’ style where the leaders of the company take decision considering the view of the employees (Russ 7);

Research Methodology

This report organized following Yin’s case study approach and descriptive research method considering the significance of this approach, such as –

• This is a rich and holistic approach, which will help to assess McGregor’s Theory X and Theory Y;
• However, this is a constructive technique when the topic needs to analyze in-context of a real life scenario;

This would not be considered any primary data because it would be formulated fully considering secondary data including Bank, journal publications, and online resources to evaluate the impact of McGregor’s Theory X/Y.

Discussion And Results

Possible Solutions and Alternatives for Apple, easyJet, Ford Motor

Table 2: Alternatives

Possible Solutions and Alternatives for Facebook and google

Table 3: Alternatives

Conclusion And Recommendations

Recommendations for Apple, easyJet and Ford Motor

• Steve Jobs followed Autocratic approach, but he took most appropriate strategy for the development of the company; therefore, autocratic leadership not necessarily mean that it would bring negative result for the company, but it can distress the employees and cause serious problems
• In addition, the former CEO of Apple had outstanding interpersonal skills to motivate the employees without any training and has inside power to inspire and support both staffs and the buyers, but present CEO has to face great challenge if he try to behave undemocratically; so, new CEO should take decision in accordance with the situation;
• On the other hand, Carolyn McCall should concentrate more on the participative management’ style to hold success of the company for a long-time;

Recommendations for Facebook and Google

After analyzing the possible solutions and alternatives, it could be said that it is necessary for the two companies (Facebook and Google) to carry on their present strategy of applying a Theory Y approach in the managerial level for sustaining continuous development and motivating their employees in this way so that their average performance standards could be increased.

Conclusion

From the above discussion, it can be argued that strong leadership plays vital role for development of the resource of the companies or a society to achieve its desired objectives; however, the previous CEO of Apple and Ford Motor had followed Theory X, but the companies experienced huge success all over the world.

On the other hand, most of the leaders of present era are not considering any specific approach, for instance, MNCs’ use more flexible approach, but managers of small and medium sized companies and retailers consider strict approach.

Works Cited

Carson, Charles. ‘A historical view of Douglas McGregor’s Theory Y’. Management Decision, 43(3): 450-460. 2005. Web.

Chaushuri, Arindam. Authoritarian leadership, the secret behind Steve Jobs success! 2012. Web.

Iqbal, Javed. Sumaira Inayat, Madiha Ijaz and Anam Zahid. Leadership Styles: Identifying Approaches and Dimensions of Leaders. 2012. Web.

Kurfi, Aminu Kado. Leadership Styles: The Managerial Challenges in Emerging Economies. 2012. Web.

Little, Nicky. New iPad launch shows Tim Cook knows how to retain Apple’s magic. 2012. Web.

McGregor, Douglas. The Human Side of Enterprise. New York: McGraw-Hill Book Co., 1960. Print.

Robbins, Stephen, and Judge, Timothy. Essentials of Organizational Behaviour, Pearson London: Prentice Hall, 2008. Print.