Theory X and Theory Y were first explained by McGregor in his book, "The Human Side of Enterprise," and they refer to two styles of management – authoritarian (Theory X) and participative (Theory Y). ... Managers who use this approach trust their people to take ownership of their work and do it effectively by themselves.

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.