Theory X & Theory Y: Sixty years ago, social psychologist Douglas McGregor developed two contrasting theories - Theory X and Theory Y – about how managers perceive employees. Theory X Managers are authoritarian, believe employees dislike work, are lazy, need constant direction/supervision, and have to be forced/threatened before they will work, while Theory Y Managers are participatory, believe employees find work to be fulfilling, are self-motivated, seek and accept responsibility, and need little control. Most organizations adopt one of these theories and select managers who exhibit this approach.

The manager’s preconceptions about employees influences the employee’s beliefs about themselves, resulting in a self-fulfilling prophecy: Theory Y Managers’ high expectations increase engagement (the Pygmalion effect), while Theory X Managers’ low expectations decrease engagement (the Golem effect).

Theory X Continues to Remain Dominant: Because of the positive publicity around the concept of people-centric management (https://purpose.businessroundtable.org/), most leaders are reluctant to admit their organization hasn’t made the transition from a Command & Control organization, run by Theory X Managers, to a people-centric Knowledge Economy organization, run by Theory Y Managers.

But COVID-19 has forcefully reminded us that the Command & Control Mindset about work (Knowledge Workers are treated as if they’re working on an Industrial Age assembly line) and the Theory X Managers’ authoritarian style of management remain dominant in many organizations. 

Evidence of this dominance in the Knowledge Economy workplace is highlighted by: 

  1. The Continuing Lack of Employee Engagement: For the last 20 years organizations have recognized the need to increase employee engagement.  Why? Because increasing employee engagement is the magic elixir to increasing performance, productivity, profitability, growth, retention, creativity and innovation. (https://engageforsuccess.org/employee-engagement-drives-profit) https://www.gallup.com/workplace/236927/employee-engagement-drives-growth.aspx.

And yet Gallup’s 2019 annual engagement survey found only 35% of employees were "engaged" - highly involved in/committed to their work/workplace, while 65% were either "actively disengaged" toxic employees or “not engaged”, only doing enough to not get fired.

While Gallup celebrates this level of engagement, I find it disturbing that, when every organization’s future is clearly dependent on increasing employee engagement, only one-third of the workforce is engaged. https://www.gallup.com/workplace/284180/factors-driving-record-high-employee engagement.aspx#:~:text=Gallup%20found%20that%20in%202019,tracking%20the%20metric%20in%202000. But more disturbing is leaders know the organization’s managers are the primary cause why 65% of their workforce not engaged. https://www.gallup.com/workplace/231593/why-great-managers-rare.aspx#:~:text=Managers%20account%20for%20at%20least,severely%20low%20worldwide%20employee%20engagement.

Yet, even though leaders are aware the manager-employee relationship is the most important driver of employee engagement, they continue to allow Theory X Managers to negatively impact employee engagement in the Knowledge Economy workplace.  

  1. At Least 50% of Managers Exhibit a Theory X Mindset: While Working From Home (WFH) does not solve all employee issues, research conclusively prove employees who work from home are more engaged, perform better, take less sick time, have a higher level of job satisfaction and an overwhelming majority want to WFH at least part of the time. In addition, there are enough financial advantages for most organizations to encourage WFH as a permanent part of the work environment for most employees  https://blog.hubstaff.com/remote-workers-more-productive/; https://globalworkplaceanalytics.com/global-work-from-home-experience-survey.

Yet 51% of managers oppose WFH!  Why? Because they don’t trust the employees they manage to be able to perform their jobs outside the office environment (https://hbr.org/2020/07/remote-managers-are-having-trust-issues)! This lack of trust is a classic Theory X trait.

Since these are the same employees the Theory X Manager managed when they were in the office, it is safe to assume the same level of mistrust exists whether the employees are in the office or WFH.

And since employees decide if they want to engage, this lack of trust means little employee engagement https://hbr.org/2017/01/the-neuroscience-of-trust.

 

The question is will Command and Control and Theory X management survive post-COVID-19?:  Pre-COVID- 19, many offices were a bad imitation of the Industrial Age assembly line: Knowledge Workers were in confined office space so Theory X Managers could watch them work, try to control every aspect of how the work was done and micromanage employees based on time spent on a work task rather than quality outcomes. At the same time Theory X Managers were telling Knowledge Workers to be creative, innovative and respond rapidly to marketplace changes.

 

But COVID-19 and WFH has made organizations’ leaders and Knowledge Workers both more aware of the flaws in this Industrial Age approach.  And there are more appropriate ways to engage Knowledge Workers that cannot include Command and Control Mindset and its accompanying Theory X managerial style, if organizations truly want Knowledge Workers to produce better results that will only come from increased engagement.

 

How to move from Theory X to Theory Y management: Since I am a performance coach, I begin my coaching engagement with an organization by recommending leadership follow these seven steps if they want to achieve the increased engagement that leads to increased performance: 

  1. Terminate employees who should have been terminated yesterday: The Bad Hires (cultural or competency misfits), and The Working Dead (toxic employees) at all levels of the organization.
  2. Conduct Employee Surveys, 360 Degree Evaluations and Focus Groups to ascertain the employees’ perspective about the organization’s managerial mindset (Command and Control, People-Centric, someplace in between?)  and individual Team Leader’s managerial style (Theory X, Theory Y, someplace in between?).
  3. Create a communication program that, actively and frequently, disavows Command and Control and Theory X and explains and supports the People-Centric and Theory Y mindsets.
  4. Make Team Leaders aware of the negative consequences of the Theory X management style and the positive consequences of the Theory Y management style.
  5. Coaching is established to help Team Leaders identified as Theory X Managers transition to Theory Y Managers.  
  6. A Theory Y Manager Accountability Buddy is assigned to help a Theory X Manager transition to Theory Y management.
  7. Make 10% of the Executive Team and Team Leaders’ compensation dependent on a 10% increase in employee engagement over a twelve-month period. 

Post-Pandemic, increased employee engagement will be more important than ever to an organization’s ability to grow. This means organizations can no longer afford to ignore the detrimental impact Command and Control and Theory X management has on employee engagement and must proactively eliminate those detrimental managerial mindsets.