Theory X, Y and Z

Back when I was in college in the 1970s, business schools were enamored with the Theory X, Y and Z philosophy of how to manage companies.    It’s a useful starting point for talking about business, government and life in general.

A company that uses Theory “X” believes that people are inherently evil (original sin), lazy and will cheat the company if you let them and only work if you constantly threaten them.  Your human resources need a firm set of rules to tell them exactly how to do every aspect their job.   People are interchangeable resources, like the parts of a Model T rolling down Henry Ford’s assembly line.   People thinking about what they are doing are a problem.    As I was one told on a job – “You’re not being paid to think”.   In a theory X company, the boss views one of his most important tasks each day to stand at the door at 4:58 PM and see if anyone leaves early.  Labor Unions thrive in Theory X organizations.   Governments are by definition usually Theory X believers.

Theory “Y” is pretty much the opposite.   If you treat people with respect and trust, they will find better ways to do things and innovate.  Decision making is done very low in the company, not a top down hierarachy.   The productivity of a person is judged based on what they produce, not how many hours a day they sit at a desk in a cubicle.   Theory “Y” companies embrace things like telecommuting, job sharing, sabatticals to take time away from the job to learn new skills and think about new ways to do things or new products the company might offer.   People are rewarded for their work based on how much it helped the company, not based on the number of minutes they were at work.

One of the problems with Theory “Y” is that if the company stops performing well, the Theory “X” type people will build the case that the way to “fix” things is to get rid of all this freedom and trusting people crap – and things would just be good if everyone came in from 8-5 and stopped thinking so much and just followed orders.  [See Cumulus Broadcasting taking over Citadel]

Theory “Z” was just a way of saying “The Japanese Management Style” without making it sound “foreign”.   Theory Z is holistic – that people are not just employees, but part of a larger community.   Decisions are made by consensus of the group, not by individuals either at the top or the bottom.  Loyalty to the company is rewarded by guarantees of job security.   Your company is your family, not a place you spend 8 hours a day.

For an interesting thought project, run down through the “Founding Fathers” and consider the philosophy of what type of country each wanted – what were their assumptions or beliefs about the nature of man?…

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