The American psychologist, Douglas McGregor, studied leadership styles. McGregor argued that managers operate from their personal view of how employees function. He separated managers into two groups based on Maslow's Hierarchy of Needs. He related Theory X managers to lower order needs in the hierarchy and Theory Y managers to higher order needs.
Theory X managers assume that people are intrinsically lazy, take no responsibility, are incapable of self-discipline and only want security. People must be controlled and threatened before they will work. The autocratic leadership style is the only one that works.
Theory Y managers assume that people like their work, are intrinsically motivated, have self-control and do seek responsibility. Employees can be consulted since individuals are emotionally mature, positively motivated towards their work; and see their own position in the management hierarchy. Managers will find that the participative approach to problem solving and decision making leads to far better results than authoritarian orders from above.
McGregor saw the two theories as separate entities. Theory Y is difficult to implement on the work floor of a large mass production operation, but can be used by managing professionals. He suggested that management could use either theories to motivate employees in most other cases, but would gain better results using Theory Y rather than Theory X, because X appeals to higher level needs.
However, Theory Y participatory leadership is not always the better leadership style. Schein used McGregor's work to call for a contingent approach to an effective leadership style, one that depends on the manager's preference for a style, their past experience, inner drivers, organisational context, the environment at large as well as the job at hand. A Theory X manager knows only the autocratic mode, but a Theory Y manager can chose to be autocratic, paternalistic, consultative or participatory.
McGregor' theories are useful for analysis as well as for the selection of an adequate intervention.