The concept of McGregor's Motivation Theory  was developed by social psychologist Douglas McGregor. It describes two contrasting sets of assumptions that managers make about their people: Theory X – people dislike work, have little ambition, and are unwilling to take responsibility.Theory Y says that people want to be self-directed and will try to accomplish goals that they believe in.

The McGregor's Motivation Theory on the basis of management philosophy is discussed below :

Philosophy 01 : Labor is viewed as a technical factor of production . They are treated as a commodity and they can be bought and sold. They are considered as cogs in the machine. They can be hired and fired at will.

Assumption: Employee must be controlled and supervised by management to attain company goals. Employees have limited potentiality.

Philosophy 02 : Labor has been viewed as a human factor with a lot of positive potentialities. People are assets – not cost. Investment in people is very rewarding. Management must develop and utilize the talent of people to achieve common goals.

Assumption: Employee must be treated with respect and dignity because they are the sources of competitive advantages.