Theory Y

Theory X and Theory Y are theories of human nature with their implications for organization and management theory. McGregor developed these theories as part of his work to ""substantiate the thesis that the human side of enterprise is 'all of a piece' -- that the theoretical assumptions management holds about controlling its human resources determine the whole character of the enterprise."" (McGregor, (1960), The Human Side of Enterprise, pp vi, vii).

Theory Y assumes: (1) that the expenditure of physical and mental effort in work is as natural as in play or rest-the typical human doesn't inherently dislike work; (2) external control and threat of punishment are not the only means for bringing about effort toward a company's ends; (3) commitment to objectives is a function of the rewards associated with their achievement-the most important of such rewards is the satisfaction of ego and can be the direct product of effort directed toward an organization's purposes; (4) the average human being learns, under the right conditions, not only to accept but to seek responsibility; and (5) the capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the solution of organizational problems is widely, not narrowly, distributed in the population. [Italics ours]"" (Peters and Waterman, 1982, p 95).