What is X-Y Theory of Management?

Douglas McGregor, an American social psychologist, proposed his famous X-Y theory in his 1960 book 'The Human Side Of Enterprise'. Theory X and Theory Y are still referred to commonly in the field of management and motivation, and whilst more recent studies have questioned the rigidity of the model, Mcgregor's X-Y Theory remains a valid basic principle from which to develop positive management style and techniques. McGregor's XY Theory remains central to organisational development, and to improving organisational culture.

McGregor's X-Y theory is a salutary and simple reminder of the natural rules for managing people, which under the pressure of day-to-day business are all too easily forgotten.

His ideas suggest that there are two fundamental approaches to managing people:

Many managers tend toward Theory X and generally get poor results. 

Enlightened managers use Theory Y, which produces better performance and results, and allows people to grow and develop.

McGregor's ideas significantly relate to the modern understanding of the Psychological Contract, which provides many ways to appreciate the unhelpful nature of X-Theory leadership and the useful constructive beneficial nature of Y-Theory leadership.