Theory X and Theory Y Leadership: Why It Still Matters in the Modern Workplace
By Elle O'Keeffe on 05/29/2025
Only 2 out of 10 employees agree that they are managed in a way that encourages them to do excellent work, according to a recent Gallop poll.1
Despite the abundance of books, articles and podcasts about leadership styles and best practices, it is still challenging, to this day, for most leaders to bring out the best in their employees. But we've known that employee motivation is closely linked to the management skills of their leaders for a while now.
Over sixty years ago, Douglas McGregor introduced Theory X and Theory Y leadership, eventually seeing it popularized in the Harvard Business Review in 1970.2
This framework focuses on the core beliefs leaders hold about their workers. This theory, along with other management theories can help you look at leadership and management differently. It can help you understand how and why you might manage people a certain way. And ultimately, it can help you be more intentional with how you motivate employees.
What is the Theory X and Theory Y framework?
Theory X and Theory Y groups management styles into two categories based on the core beliefs leaders hold about workers and whether workers require constant supervision or less supervision, but more support.
Theory X leaders believe employees need external pressure to perform
Theory X leaders believe that workers need to be watched and directed constantly. Leaders like this have an unfortunate view that people are basically lazy and aren't self motivated to work hard.
Theory X leaders, according to McGregor, assume that employees need to be supervised, threatened with punishment, and refocused on tasks regularly. The X leadership style, therefore, often involves strict rules and managers who employ an autocratic or authoritarian management style. For a peek into what that looks like, check out What is Autocratic Leadership?
If you've ever worked under a Theory X leader, you are probably familiar with needing to constantly prove that you are working hard, and meeting with distrust and bad faith assumptions every step of the way.
Theory Y leaders believe employees intrinsically want to do great work
Theory Y leaders see workers very differently. From their point of view, people generally want to do well. Theory Y managers believe their workers are intrinsically motivated to work hard, be productive, and achieve organizational goals as long as they are offered relevant support.
As far as motivation theory goes, this would include the belief that people are self-motivated by professional and personal growth as well as the satisfaction of a job well done.
As you might imagine, McGregor's theory espouses that Y leadership style is more effective to create a positive work environment and even to meet organizational objectives. If you've ever worked under a Theory Y manager, you probably enjoyed a level of trust in your decision making and time management skills, as well as a supportive work environment where you could ask for what you needed.
Is Theory X and Theory Y leadership still a relevant model?
It would be easy to dismiss McGregor’s theory as irrelevant for modern leaders and contemporary workplaces, given it was introduced back in the 1960’s--but this would be a mistake.
If you look a little closer at today's workplace, you will see a huge range of generational diversity, remote/hybrid/in-office workplaces and plenty of theorizing around how different generations of workers tend to perform best. We are all still wondering why managers tend to fall into behaviors that are widely known to be ineffective, and we are all still wondering how to get the most out of our workforces.
McGregor’s theory still serves the goal of explaining leader behavior, equipping leaders to build trust, and improving worker productivity. Theory Y leaders trust that people want to do their best simply because it is the right thing to do and because excellent work is its own reward. Theory Y leaders see their role as supporting direct reports while Theory X leaders see themselves as the authoritarian leader needed to prevent lazy workers from taking advantage of the organization.
An example of Theory X and Theory Y principles
Let's say David is the manager of a small, high-end retail clothing store.
At the start of every shift, he holds a meeting with retail sales associates and reminds them of the strict sales quotas as well as the consequences of not meeting the quotas – reduced hours and even termination.
During the day, David patrols the sales floor listening to employee conversations and redirecting any associate he hears deviating from the script he provided. He reprimands one associate after hearing her give a customer directions to a nearby coffee shop. He wrote up another employee for clocking out 3 minutes after the end of her shift even though she was helping a coworker clean up a display of ties that fell over.
Not one member of the sales team can recall receiving positive feedback from "Mr. Taylor" (as he requires the team to call him.) David believes if he does not constantly surveille and discipline his employees, they will put forth as little effort as possible and sales will drop.
Let's say we can look across the street from David's store to a high-end stationery shop. Here, the manager, Mia, holds a meeting at the start of the day and praises three employees for their improved sales and the way they support each other.
Mia tells her team that sales are down, and they are entering a typically slow season. She asks her team for suggestions about improving sales. A collaborative environment immediately sweeps the room, and an employee named Leah suggests changing the layout of the shop to put higher cost items at eye level and at the front of the store.
Mia praises Leah’s creative and strategic thinking and asks her to choose two team members to help plan and implement the new layout. Then another employee, Scott, suggests creating a children’s area in the shop to showcase the art and school supplies that are mixed in with products targeted at adults. Mia thanks Scott for being customer-centric and asks him to create the area and move the relevant products.
Throughout the day, Mia checks in with Leah and Scott a couple of times to ask if they need anything from her. She also notes the progress they’ve made and congratulates them on adding value to the shop. Everyone notices the impact this has on the sales associates’ body language, facial expressions and voices. Mia views her leadership skills as sufficient and primarily about supporting and encouraging innovation.
She knows she has hired adults who have their own reasons for working in sales, especially in a niche area like stationery. The last thing they need is micromanagement.
What if effective management boils down to your assumptions?
We can talk all day about leadership skills like communication, big-picture thinking or strategic decision-making. We can dig into every management style and tease out some of the common threads. But Theory X and Theory Y principles remain part of the conversation because they focus on our assumptions about human motivation.
Mia assumes her team is capable of and motivated to do excellent work. She will encourage collaboration when problems need solving because she believes they also want the shop to thrive. As a Theory Y leader, she starts from the foundation that her employees are similar to her. They want to succeed. This leads to a workplace where employees ask for her help when they need it, volunteer ideas and take ownership of getting their ideas into action.
David’s assumptions are the opposite. He assumes employees cannot be trusted and must be motivated externally with threats to their livelihood. He doesn't even consider that his people could have valuable insights into his shop's problems or successes, and he certainly doesn't invite feedback.
Unsurprisingly, this leads to low employee morale and employees trying to avoid responsibility that they would most likely only be penalized for taking on. This can then further support his belief that his employees are inherently lazy, when they are really just responding to his authoritarian style.
In David’s mind, employees do not like their job specifically and do not like work in general. In Mia’s mind, people would rather do a good job than a bad one so they can experience pride in their work and reap financial benefits as well. The way each of these managers leads their team demonstrates the key differences between X and Y Theory leaders.
Theory X and Theory Y principles in generational divides
Theory X, which assumes employees need close supervision and clear direction, can resonate with older generations who may prefer structured environments and traditional leadership styles. Older generations may have experienced a whole lifetime of managers and bosses who distrusted their workforce and acted accordingly.
These workers may value clear hierarchies and task-specific guidance, particularly in roles where experience and routine play a key part. They might also interpret collaborative efforts as disrespect of the hierarchy, the boss or the company.
Conversely, Theory Y tends to align with the preferences of younger generations, such as Millennials and Gen Z, who often value autonomy, collaboration and purpose-driven work. They thrive under participative leadership that fosters creativity and innovation while trusting employees to take initiative.
Leaders in multigenerational teams must skillfully balance both approaches, adapting their leadership style to meet individual needs while fostering a cohesive team environment. By integrating Theory X and Y, managers can bridge generational gaps, enhance engagement, and maximize the potential of their diverse workforce.
Theory X and Theory Y leaders in remote work environments
Theory X and Y leadership is relevant in contemporary workplaces in part because of the normalization of remote and hybrid work arrangements.
Managing a team that is spread out across cities, states and time zones requires trust in those direct reports in terms of their ability to work without supervision. If you manage teams of people who are not physically under your supervision, you need to trust their willingness to meet deadlines, achieve project goals and support one another without being face-to-face with a manager or teammates.
Theory Y leaders are able to accept that flexibility and excellent work aren’t mutually exclusive, and that productivity isn’t necessarily tied to location or visibility.
For Theory Y managers, remote and hybrid work arrangements tend to be viewed in a positive light. It gives them different ways to support their teams while also providing the flexibility that employees want. This combination creates a loyal workforce of fully-engaged employees who are willing to be creative and strategic in support of the team and the organization.
Trust and support from the leader builds morale and unifies the team around the leader and common goals.
Theory X managers cannot reconcile employees being effective, efficient and honest about their time and effort if they cannot be supervised on-site. For these managers, remote and hybrid arrangements invite laziness, decreased productivity and lower quality work.
If they can't insist on a return to office mandate, Theory X managers will invest in tools they can use for remote surveillance and will spend lots of time, effort and funds in an attempt to monitor their employees.
Can a Theory X leader embrace Theory Y?
Core assumptions like those common among Theory X managers are hard to change. If you really believe, deep down, that people will do whatever they can to shirk responsibility or pull one over on the boss, reading a book about management styles is unlikely to make much of a difference in how you treat them.
And to some extent, that view might be self-serving. Afterall, if employees can do great work without constant supervision, then Theory X leaders wonder what the purpose of the manager is and if they have job security. There's insecurity built into the foundation of a Theory X leader's demand for control.
If you can see Theory X core beliefs in your own views about the workplace and you want to adopt Theory Y, it might require some self-reflection. Why do you assume people have a poor work ethic? Do you have a poor work ethic?
While Theory X leaders rely on control and oversight, Theory Y leaders build trust, value autonomy and rely on intrinsic motivation. This approach aligns well with modern work environments--especially remote and hybrid models.
Becoming a great manager or leader in the workplace
As you can see from Theory X and Theory Y, leadership and management can't be separated from the people who step into those roles. The more you learn about management and leadership, the more you will be asked to consider your beliefs about human nature, team dynamics, motivation and more.
If you are interested in these things, maybe advancing in your management education would be time well spent. Check out What Can You Do with a Business Management Degree? Understanding Your Options.
1Transform Performance Management, Gallup Workplace, https://www.gallup.com/workplace/215927/performance-management.aspx
2John J. Morse and Jay W. Lorsch, Beyond Theory Y (1970) Harvard Business Review, https://hbr.org/1970/05/beyond-theory-y
