McGregor’s theory X and theory Y: Douglas McGregor (1960) summarized two possible views of management in worker motivation. Theory X is the traditional view of direction and control. It states that the worker dislikes work and tries to avoid it. The function of management, therefore, is to force the employee to work, through coercion and threats of punishment. The worker prefers in most cases to be directed and wants to avoid responsibility. The main motivator for the worker, therefore, is money.

Theory Y is the humanistic/self-actualization approach to human motivation. Sometimes called the human resources model, it states that work is natural and can be a source of satisfaction, and that when it is; the worker can be highly committed and motivated. Workers often seek responsibility and need to be more fully involved with management to become motivated. Theory Y is most likely to be used when management utilizes worker participation in organizational decisions. In their book In search of Excellence, Peters and Waterman (1982) stated that one of the chief differences between American and Japanese management is that American managers tend to use Theory X and Japanese managers tend to use Theory Y. This difference may be lessening, as evidenced by the practices of the management of the General Motors Saturn plants.

In his book Theory Z, William Ouchi (1981) described the characteristics of the Japanese companies that produce high employee commitment, motivation, and productivity. Many Japanese employees are guaranteed a position for life, increasing their loyalty to the company. Careful evaluation occurs over a period of time, and the responsibility for success or failure is shared among employees and management. Most employees do not specialize in one skill area, but work at several different tasks, learning more about the company as they develop. And Japanese companies are often concerned about all aspects of their employee’s lives, on and off the job. According to Ouchi, Type Z organizations tend to have stable employment, high productivity, and high employee morale and satisfaction.