CASE STUDY IV Theory X and Theory Y, System 1 and System 4
Objective: To develop a clear understanding of Theory X and Theory Y managers and
System 1 and System 4 Organizations
In our lesson, a variety of approaches to the management of interpersonal
relations are described, two of the approaches are McGregor’s Theory x and Theory y
and Likert’s system 1 and system 4. Each of these represents a different perspective
on the management of organizations and the relationship between managers and
employees.
Probably all of us have observed, worked for, or been acquainted with managers
or other leaders who fall into the theory x and theory y categories, as well as
organizations that were similar to the system 1 and system 4 characterizations. We
have seen firsthand the effects and performance implications of the various styles and
management systems. This exercise is designed to give you the chance to describe
these leaders and organizations and to comment on them.
The descriptions of theory x and theory y leaders and system 1 and system 3
organizations are provided below. Read each description carefully and then identify a
theory x leader. A theory y leader, a system 1 organizations and a system 4
organization with which you are familiar. (you may wish to use fictitious names in some
cases) The leader may be someone who you have been associated with personally or
have read about – as long as you are fairly knowledgeable concerning the person’s
approach to interpersonal relations. These leaders might be managers, coaches,
teachers, politicians, or military, social or religious figures. Also you. On the leader
description worksheet, write a brief essay on each leader and each organizations,
describing exactly the reasons that you put that person into a particular category.
After doing so, respond to the questions that follow.
Theory X managers assume that people
 Lack ambition
 Prefer to be led
 Dislike responsibility
 Must be punished to achieve organizational goals
 Will resist change
 Lack creativity
 Want security above all
Theory X managers believe that management:
 Is responsible for organizing, planning and decision making
 Must direct and motivate people
 Cannot trust employees with important decisions
Theory Y managers assume that people
 Are ambitious and work is natural
 Seek responsibility and self-control is achieving goals
 Recognize and accept organization goals
 Are dynamic and flexible
 Are intelligent and posses creative potential
Theory Y managers believe that:
 Management can delegate important decisions to lower levels
 Employees won’t be passive or resistant
 Employees have the ability to be high performance, to develop, to assume
responsibility, and are self-motivated
 Management can trust employees
Likert’s System 1 and System 4 Organizations
System 1 (Traditional)
System 4 (Participative)
Leadership is not based on confidence and Leadership is based on confidence and
trust. Subordinates don’t feel free to trust in subordinates. Subordinates
discuss ideas with managers and the discuss the ideas with managers and their
manager don’t use their opinions in ideas and opinions are used in decision
decision making
making.
Motivation is based on fear, threat, Motivation is through economic rewards
punishment,
and
some
rewards. and involvement in setting goals. People at
Responsibility
for
achieving
goals all levels feel a responsibility for reaching
decreases down the hierarchy.
goals.
Communications flow down from the top of Communications flow freely throughout
the hierarchy and are viewed with the organization. Feedback is accurate
suspicion. There is little feedback.
Interaction
between
managers
and Interaction
between
managers
and
employee is minimal and is viewed with employees is extensive, friendly, and
fear and distrust. Little teamwork.
based on a high degree of confidence and
trust. A great deal of teamwork
Decision Making is primarily at the top of Decision Making is dispersed but linked
the hierarchy with little subordinate through teamwork. Subordinate are fully
involvement. Acceptance of the decision is involved in decisions relating to their work.
usually not considered.
Goals are set the top of the organization. Goals are set through participation at the
Goals are resisted. Performance goals are level they will be achieved where goals are
relatively low.
accepted. Performance goals are high.
Controls
are
concentrated
in top Controls are widespread and are used for
management and are used in a punitive self-guidance and for coordinated problem
way.
solving.
Leader Description Worksheet
I
Theory X leader
 Describe the leader’s style
 How doe the leader’s style affect employee performance?
 What are the advantages of the Theory X approach?
 What are the problems associated with the Theory X approach?
 Would you do anything different in this leader’s situation?
II Theory Y leader
 Describe the leader’s style
 How does the leader’s style affect employee performance?
 What are the advantages of the Theory Y approach?
 What are the problems associated with the Theory Y approach?
 Would you do anything different in this leader’s situation?
III
System 1 organization
 Describe the important characteristics of the organization
 How do the characteristics of the organization affect performance?
 What are the advantages of the System 1 organization?
 What are the problems associated with the System 1 organization?
 How would you change this organization?
IV System 4 Organization
 Describe the important characteristics of the organization
 How do the characteristics of the organization affect performance?
 What are the advantages of the System 4 organization?
 What are the problems associated with the System 4 organization?
 How would you change this organization?