A few weeks ago I was writing about Bob Townsend of Avis, one of the first people to make the Theory Y style of management popular.
‘Hang on,’ some people said, ‘What’s all this Theory X and Theory Y stuff?’
Fair point. Here goes with a quick explanation – and with a nod to Theory Z as well.
X and Y were first described by Duncan McGregor, an American social psychologist writing in the early sixties. Theory X is the old-style, dictatorial manager who has three core beliefs:
1. Most people dislike work and they’ll avoid it if they can
2. Therefore it’s the stick, not the carrot, that makes them work toward the company’s targets
3. And the average person is relatively unambitious and doesn’t want responsibility – but does want security and direction
Along came bosses like Bob Townsend, and McGregor was able to describe Theory Y – as you might guess, the direct opposite of Theory X:
1. People are happy to work towards the company’s objectives, and they’ll use initiative and self-direction to do it
2. They like – and seek out – responsibility
3. The vast majority of people are capable of using imagination, ingenuity and creativity at work
4. And companies often fail to get the best out of people
Twenty years after McGregor, William Ouchi, a professor of management at UCLA, developed Theory Z, largely based on the success of Japanese companies. I won’t dwell too much on Mr Ouchi – Theory Z is essentially Theory Y but with more emphasis placed on workers’ loyalty to the company. The cynical side of me wonders if Mr Ouchi’s publishers had any influence on the title – but next time you need to sound impressive, drop Theory Z into the conversation…
So much for management theory – what does it mean for the day to day practicalities of running your business and improving your bottom line?
You’ll know by now that I’m a committed advocate of Theory Y. Here’s how I think the principles identified by McGregor apply today, bearing in mind what you’re trying to achieve as a TAB member:
1. I’ve always been passionate about communication. In the same way that you share your aims and objectives with fellow Board members, I think it’s crucial that they’re shared with the people who work for you. People want to reach a goal and they are happy to work hard to achieve it – if they believe in it and if it has been communicated effectively.
2. Similarly, people want responsibility – and this goes right to the heart of what TAB is all about. You’re trying to ‘enjoy your life and your job.’ You can’t do that if you’re worrying about the business 24 hours a day and trying to do everything yourself. You need to delegate and the good news is that the people who are working for you want you to delegate. They’re happy to accept responsibility: besides, you want to retire one day, don’t you? The more responsibility you delegate, the more likely selling to your employees becomes.
3. Finally, I’ve taken the third and fourth points together. Getting the best out of people, encouraging your employees to use initiative and imagination is what business is all about. Improving your bottom line is great – but nothing in business used to give me the same satisfaction as seeing someone in the organisation really develop and blossom, and knowing that I’d played a significant part in that. Without fail, making your employees better makes your business better.
That’s my simple take on a management theory that has now been around for over half a century. In the most basic terms:
• Know what you want to achieve
• Communicate it
• Give the people who work for you the power to help you reach your goals
• Help them improve as people
• And trust them
I know business is slightly more complex than that – but those five principles in 31 words are not a bad place to start.