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Thursday, January 19, 2012

"Theory X" Management: Ethical and Applicable for Today?

By Aaron S. Robertson

The following is a paper submitted by the author on November 9, 2011 for a class assignment. The author is currently pursuing a master of science in management degree from Cardinal Stritch University in Milwaukee.


In the 21st century United States, it is seemingly rare to see a business adhering to the philosophy of management known as “Theory X”. A significant number of companies now embrace its polar opposite, “Theory Y”.

In the following paper, this student will explain the guiding principles behind both theories; analyze a modern-day company called Electronic Banking System Inc. (Jones & George, 2011, pp. 69-70), which embraces “Theory X”; and close with this student’s thoughts on the questions of whether or not this company’s management style is appropriate and ethical by today’s generally accepted standards for a workplace environment.

The Principles of “Theory X”

Developed by Dr. Douglas McGregor (1906-64), “Theory X” assumes that the average employee is lazy, that s/he dislikes work, and looks to avoid responsibility at all costs. Because of this assumption, employees require close, constant supervision, and a system of rewards and punishments needs to be implemented in order to rein them in (Jones & George, 2011, pp. 58-59, citing McGregor).

A Look at “Theory Y”

Also conceptualized by McGregor, “Theory Y” is the opposite of “Theory X”. According to this philosophy, employees are not inherently lazy, nor do they inherently dislike work. They will work for the good of the organization, if merely afforded the chance to do so (Jones & George, 2011, pp. 58-59, citing McGregor).

The Case of Electronic Banking System Inc.

Electronic Banking System Inc., herein referred to as EBS, is in the financial services industry, working as an outsourced contractor that, “…processes donations to groups such as Mothers Against Drunk Driving, the Doris Day Animal League, Greenpeace, and the National Organization for Women” (Jones & George, 2011, p. 69).

Employees of EBS, the vast majority of them women, cannot have beverages, such as coffee mugs, at their desks, and pictures and other ornamental items that one would normally find on a desk in an office environment are forbidden, as well. Windows are covered, and talking is not allowed. Employees typically earn between $4.25 and $6.00 per hour, and the company’s owner, Ron Eden, often monitors the facility’s many cameras from his office. Supervisors and managers are strategically placed around the main room where the bulk of employee tasks are performed (Jones & George, 2011, p. 69). There are no breaks in addition to a lunch break, and only hard candy is allowed at desks (Jones & George, 2011, p. 70).

In addition to these work conditions, strict quotas are also in place. Depending on assigned job tasks, some employees are expected to process three envelopes per minute, while others must keyboard at least 8,500 strokes per hour (Jones & George, 2011, p. 69).

At one point, a series of complaints against EBS was filed by the National Labor Relations Board, alleging that the company, “…threatened, interrogated, and spied on workers” (Jones & George, 2011, p. 69).


It is clear, based on the definitions assigned by Dr. McGregor, that EBS adheres to “Theory X” management. Employees are automatically presumed to be lazy and dislike their jobs. Therefore, they need constant supervision in order to achieve their assigned tasks.

Admittedly, this student struggles in this particular instance over the question of whether or not “Theory X” style is the right avenue for management to take. While this student is undoubtedly a strong advocate of “Theory Y” managing style, believing it to be the best solution to boost morale and make use of other skill sets and talents employees may possess for the good of the organization, he is not certain that “Theory X” is necessarily inappropriate here.

Clouding this student’s judgment is that the kind of job tasks performed at this business, along with the operating structure, appear to be rare, left-over remnants of an era gone by, at least here in the United States, when companies were looking for any available “warm bodies” they could find in order to crank out tightly-defined, mundane physical tasks around the clock that required little to no skills, along with the same amount of communicating with fellow employees. The chances that many of these employees inherently disliked their work were high.

In today’s economy, however, thanks to advances in areas like technology and communications, so many more companies, albeit entire industries and sectors, rely on creative and critical thinking rather than the performing of repetitive physical tasks in order to achieve desired outcomes. Conferring with fellow employees, for all practical purposes, is a must. This is where “Theory Y” best shines as a philosophy of management. Furthermore, because of the heavy reliance on reasoning for many of today’s jobs, the education, skills, training, and professional licenses required for them naturally filter out applicants in ways that clearly demonstrate their desire to want to be there, essentially ruling as moot the assertion in “Theory X” that employees naturally dislike their work.

Returning to the particular case of Electronic Banking System Inc., on one hand, if the company’s managers are genuinely convinced that their employees are inherently lazy and naturally dislike work, this student would submit that the hiring process is inherently flawed for failing to identify these traits in the first place. Human Resources has advanced enough through the years to arguably make it possible for an employer to easily and effectively screen out a candidate fitting these unsavory characteristics.

On the other hand, however, the company’s employees are free to leave at anytime if they do not like how they are being treated and prematurely judged. With so many job opportunities available in the modern economy, it is difficult to show these employees much sympathy for their plight.

Even so, though the job requires clearly-defined and repetitive physical tasks with little to no need for communication with co-workers in order to achieve targeted outcomes, as opposed to mental stimulation and the necessity to confer with fellow employees, this student submits that the implementation of traditionally-held “Theory Y” beliefs and attitudes in small increments may be able to boost efficiency and morale.

Though it is understandable to have a reasonable amount of monitoring in place due to the sensitive nature of the work involved, such as handling personal information and money, management, in this student’s opinion, is overreaching. Either some of the cameras can be done away with, or some of the current supervisors and managers strategically stationed around the facility in order to closely police employees can be allocated elsewhere to perform other duties - preferably the latter. These supervisors and managers can be used in more productive ways, such as marketing the company to other businesses in an effort to gain more clients, or brainstorming in teams on a regular basis to identify opportunities where greater efficiencies and savings can be realized. They can also be utilized to assist employees, stepping in from time to time to help with tasks. Again, this student argues that the company’s hiring process is inherently flawed if the company feels it must distrust employees to such extremes.

Though it is also understandable that food and beverages should not be at desks because of the amount of paperwork that is involved, perhaps small, designated snack and beverage stations can be set up around the facility, where employees can go every so often to refresh and reenergize themselves and take a quick break from their computer screens. Such a simple step can go a long way in keeping employees motivated, energized, and focused.

As human beings are social creatures by nature, light talking should be allowed, as long as employees remain productive and do not halt their work in order to carry on conversation. This should not be much of a problem, however, as this student theorizes that the focus required for the job will naturally hold employees in check and therefore prevent abuse of this right to talk.

Finally, building a stronger relationship with employees on the part of management can go a long way in improving both morale and efficiency. Seeking the regular input of employees and instilling in them a pride of ownership can reveal more productive ways of carrying out tasks, along with talents and skills that management previously did not know about that can be used for the greater good of the organization.


In the preceding paper, definitions of “Theory X” and “Theory Y” management philosophies were given.

“Theory X” assumes that employees are lazy, dislike their work, and seek to avoid responsibility. As a result, employees require constant supervision, and a system of rewards and punishments must be carried out in order to rein employees in (Jones & George, 2011, pp. 58-59, citing McGregor).

“Theory Y” argues that employees are not inherently lazy and that they do not naturally dislike work. They will work for the betterment of the organization, if given the opportunity to do so (Jones & George, 2011, pp. 58-59, citing McGregor).

A synopsis of a modern-day company called Electronic Banking System Inc. was given. It was revealed that EBS subscribes to “Theory X” beliefs and principles, which is seemingly rare for a business in the 21st century United States. This student offered an analysis of EBS’s situation and offered suggestions on how the implementation in small increments of some “Theory Y” principles can increase efficiency while also boosting morale.


Jones, Gareth R., & George, Jennifer M. (2011). Contemporary management (7th ed.). New York: McGraw-Hill/Irwin.


  1. There are many professions in the western world today where theory X is quite valid. Call centers, cashiers, and data entry. These are generally not "thought" jobs, but those in which a person just cranks out widgets. Most of the jobs like this that are not customer facing are shipped off to countries in Asia, so we don't see them, but in some cases human labor is so much cheaper than building machinery, the ways we disregard in the Western world are abandoned.

    1. Thanks for your thoughts and observations concerning Theory X management, greatly appreciated. As you can see in my paper, I struggled in this particular instance over the question of whether or not Theory X management style is justified here.

      Thanks again for your contribution. Hope you find some good material throughout our blog.

      --Aaron Robertson