Theory X-Y in project management

Revision as of 10:26, 28 February 2021

Written by Christine Fryland

Abstract

Douglas McGregor described the theory X and theory Y assumptions in 1960 that set the ground for a new way of management- and organizational thinking. McGregor was inspired by the findings in behavioral science in his time, where Maslow’s hierarchy of needs played a big role ^[1]. The theories X and Y evolves around people and the assumptions on how management sees employees and their approach to motivation towards their goal for the organization.

Understanding the organizational culture and thereby how different organizations motivate their employees is a factor to consider in two fundamental parts of project management: Project Resource Management and Project Stakeholder Management ^[2]. Furthermore, it is a part of a project managers job to engage with people and study their behavior and motivation both for individuals and for teams: “As a leader, the project manager is also responsible for proactively developing team skills and competencies while retaining and improving team satisfaction and motivation.” ^[3]

This article will explore how Theory X and Theory Y are relevant in project management by the following structure:

• Big Idea: This section will explain Theory X and Theory Y written by McGregor in 1960, and how the theory is still relevant today many years later and in a more globalized world.
• Application: This section will describe how project managers can use the theory in their daily work and how it can provide a better understanding of the people involved in the project. It will also describe in which phases of the project the theory becomes especially important.
• Limitations: This section will mention the limitations of the theory and what to be aware of when using this theory to categorize people and employees in boxes. This section will also cover the theory in relation to the project management standards.
• Annotated Bibliography: This section will contain a brief overview of the key references used in this article.

The Big Idea

Douglas McGregor wrote ‘The Human Side of Enterprise’ in 1960 where he presented the two theories, Theory X and Theory Y, as two sets of assumptions on how behavior and attitude towards work influence the way managers think and act in an organization. How management sees the behavior of their employees reflects on to the organizational culture, organizational structure, managerial policies and practices, and processes in the organization.

Theory X

McGregor explains Theory X as the conventional understating of how managers see their tasks. Theory X states that managers behave from the believes that human energy should be harnessed for the requirements and needs of the organization. To elaborate on the belief, McGregor wrote the following assumptions on what managers think of as their tasks: ^[4]

1. The manager is responsible for organizing elements in the interest of economic benefit.
2. Managers should control peoples’ actions and modify their behavior to the needs of the organization.
3. If management would not intervene employees would be passive or reluctant to work. The employees require motivation in form of persuasion, rewards, punishment, and control.

   To further understand the conventional view on how managers perceive their tasks, one needs to understand how managers see peoples’ behavior:

4. The average person works as little as possible.
5. People have low ambitions and do not like responsibility.
6. People only care about themselves and do not care about the organizational needs.
7. People are by nature resistant to change.

These assumptions result in a strict management style where the manager supervises closely and control their behavior. They believe that the employees will have to be forced to do what is necessary for the good of the company by developing rules, standard operating procedures, and creating reward/punishment system. ^[5]

Theory Y

McGregor was inspired by Maslow's hierarchy of needs and believed that people, that have their basic needs covered are not motivated by strict rules and control. The need of these people were now social and egoistic needs that had the opportunity to be filled at work. McGregor, therefore, wanted to challenge the conventional way of looking at human behaviour and created a different set of assumptions for how managers should perceive their tasks as a manager and the people in the organization. The new set of assumptions are called Theory Y:^[6]

1. A manager is responsible for organizing elements in the interest of economic benefit.
2. People are not passive or resistant towards the need of the organization. If they are resistant this is as a result of past experience.
3. It is the responsibility of the management to create the opportunity for people to realize their own motivation and development opportunities in working towards organizational goals.
4. An essential task of a manager is to match the individual goals of their employees with optimal conditions and methods of operations in the organization so that the employees can fulfill their own goals by directing their effort towards the organization.

The manager that believes in these assumptions will design an organization that decentralizes authority and give more control to the employees as individual and in groups. The managers need to help the employees reach the organizational goal by providing them with support and enough resources. Theory X and Theory Y still affect organizations today. Whether the management style follows Theory X or Theory Y it is a part of the organizational culture. The organizational culture can differentiate according to e.g. sector, country, and even in different functions of a company, and the mangers view on employees can differentiate accordingly. Projects today are executed across different functions of a company and even across borders, which results in projects where many different organizational cultures are represented. In project management organizational culture is an important factor to consider in all aspects of project management but is especially important in Project Resource Management, Project Stakeholder Management, and Project Communication.

Applications

This build on the “The human side of Enterprise” by Douglas Mcgregor ^[7]and the Project Management standard: “Guide to the Project Management Body of knowledge” ^[8]

Project Resource Management

When conducting projects project team members are taken out of their daily work and daily organizations and put into a new project organization. The project team members will be assigned different roles in the project that will require different competencies. In Project Resource Management the processes include the development and management of teams to enhance the performance of the project. ^[9]. When developing a team, the project manager should create an environment for the team where both individuals and the team as a group will be motivated and empowered. In order to motivate and manage a team, the project manager needs to understand, what kind of organizational culture the individual project members come from.

If the project members are used to a management style resembling Theory X, they are used to a centralized organization where rules and standard processes are dominating. These project members will then on short term function best with a similar project organization with a higher level of control. If the project team members come from an organization that has experience with Lean management and Kaizen it could be an advantage to use this tool, as it is known for the individuals but still is a format that mimics collaboration and to some extend innovation.

The trend in Project Resource Management moves towards a more agile and decentralized style. If the project members are used to a management style resembling Theory Y, they will function well in a project organization where self-organizing teams are dominant, and responsibility is delegated.

Another part of Project Resource Management is to define and assign roles and responsibilities to the project members. For individuals used to a very centralized authority from a Theory X like culture, having responsibility can be challenging and add stress, which can possibly work against their effort in the project organization. In the opposite situation: if individuals from organizations or functions in an organization are more used to having responsibility, they will thrive in a project organization where responsibility is delegated.

The project manager that defines and manages teams can be leaning towards the belief of human behavior as described in Theory Y and can by default expect a certain behavior of the project members. In McGregor’s theory, the behavior of the employees is shaped by the view of the manager, and this behavior is created based on experience. This means that individuals have adapted to a certain behavior, that can not change overnight or in an instant with a change of manager. The transition of how employees look upon themselves will take time, and therefore project managers need to consider whether the resource planning should be executed on the basis of the project members current view of themselves or if it is possible for the project team members to evolve throughout the project towards being more comfortable in a decentralized authority environment. Depending on the timespan of the project it could be more or less beneficial for the project to invest time in guiding the project members in the team towards becoming a self-organizing team. If the project is scheduled with a short timespan it may be most beneficial to plan resources based on the project members current culture, as it would take too long to create the necessary competencies to enter a new project culture. If the project is scheduled with a long timespan there could be time to develop competencies to the need of the project’s organization.

Furthermore, whether the project manager should consider guiding the project members towards the desired project culture can be dependent on the project members' allocation to the project. If the project member has only 30% of his time allocated to the project, it is much energy to put into changing the project member's perception of himself, when it additionally could create a conflict, when he returns to daily operations.

All of the above mentioned should be taken into consideration when doing the Project Resource Planning. In practice when creating and managing the team, the project manager should for each individual in the team consider what organizational culture they are originating from, what level of responsibility are they ready for, and how much time and effort should go into changing their perspective and motivate and delegate accordingly.

Project stakeholder management and Project Communication Management

Besides considering the organizational culture of the project team members, the project manager should also consider the organizational culture of all other stakeholders. A big part of stakeholder management is to identify stakeholders and classify the stakeholders in terms of influence and interest and evaluate the stakeholder engagement. Together all of these considerations play a big role in Project Communication Management.

Organizational culture plays a role in stakeholder classification as stakeholders are assessed according to interest and influence and direction of influence. If the project is conducted in an organization with a management style resembling Theory X, there will be a clear line of authority, which will result in fewer people having the influence to really affect the project. This could also mean that the project manager will have less degree of freedom and less actual power when conducting the project.

When a project is in a culture with a management style resembling Theory Y, the decentralization of authority will automatically result in more stakeholders with a higher influence to affect the project, but will also give the project manager more freedom to conduct the project as collaboration within the project team. A part of stakeholder management is to manage the engagement of stakeholders by making sure that stakeholders have the necessary information to satisfy their needs and that they have a clear understanding of the project and its goals, objectives, and benefits. ^[10].

To ensure stakeholder engagement it is important to understand how to communicate with different individuals of an organization and in different organizational cultures to avoid misunderstandings. When a project’s stakeholders come from a Theory X like culture, they need the information to be precise and informative. They will be used to getting direct orders and can accept as such also from a project organization. As long as it is precise communication, they can accept written assignments.

On the other hand, when project stakeholders come from a Theory Y like culture they are used to a much higher level of involvement. To ensure engagement there is a bigger need for communication in form of meetings to create a broader understanding of the project as a whole and the tasks in detail. I practice the project manager should consider when making the communication plan, based on what type of organizational culture the stakeholders originate from and thereby what type of communication will satisfy their needs. Furthermore, the project manager should be aware of the different stakeholder’s levels of influence according to what organizational culture they operate in.

Limitations

When McGregor wrote Theory X and Theory Y in 1960 the world looked very different from the world we see today. McGregor wrote Theory Y as a reaction to what he believed was a very old-fashioned way of perceiving employees’ behavior, and that wrote it as a way of new thinking contradicting the conventional way. When applying his theory in practice it is necessary to be aware that it is not as black and white, and that it can depend on the contexts the individual finds themselves in. As McGregor also stated in “The Human Side of Enterprise” a transition takes time, and some might be described as being somewhere in between the two opposites.

When looking at McGregor’s theory in relation to the Project Management Standards it is highly relevant but not that well described. In both the PMBOK and in Prince2 ^[11] they state how organizational culture is a factor to take into consideration in most aspects of project management, but they do not cover how that organizational culture could look like and how to relate to the respective culture. In the PMBOK they shortly touch upon that projects with self-organizing teams they usually consist of generalists that are used to changing environments. ^[12] Besides culture, the standards also state how the role of the project manager includes motivating and empower their project team. How to motivate different people in different organizational cultures they leave out open to interpretation.

Annotated Bibliography

McGregor, Douglas M, (1960) The Human Side of Enterprise, in reprint from “Leadership and Motivation by Douglas McGregor by permission of the M.I.T. press Cambridge, Massachusetts (1966).: This chapter of the book is a reprint of the original work of Douglas McGregor. It describes his theory of the conventional view of human behavior and its limitations in contexts of motivation theory. It furthermore describes his take on how managers could set a new perspective on human behavior in his Theory Y.

Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide). 6th Edition. Newtown Square: Independent Publishers Group. This book provides a standard for projects that describe best practices in different areas of knowledge related to projects. Chapter 9, 10, and 13 covers how knowledge of organizational culture can be relevant in different parts of a project.

Sorensen, Peter F., Yaeger, Therese F., (2017), “Palgrave Handbook of Organizational Change Thinkers”, Springer International Publishing, p. 847-862. This chapter of the book called "The Human Side of Douglas McGregor" explains how McGregor's childhood and the behavioral science of his time influenced his work. It also covers how McGregor influenced the field of Organizational Development and Management in general.

References

1. ↑ Sorensen, Peter F., Yaeger, Therese F., (2017), “Palgrave Handbook of Organizational Change Thinkers”, Springer International Publishing, p. 849. http://production.datastore.cvt.dk/filestore?oid=5ad87e195010df6dbf74e7fd&targetid=5978ac515010df7329868bb8
2. ↑ "Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition). Project Management Institute, Inc. (PMI)." Retrieved from https://app.knovel.com/hotlink/toc/id:kpGPMBKP02/guide-project-management/guide-project-management
3. ↑ "Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition). Project Management Institute, Inc. (PMI)., p. 309" Retrieved from https://app.knovel.com/hotlink/toc/id:kpGPMBKP02/guide-project-management/guide-project-management
4. ↑ McGregor, Douglas M, (1960) The Human Side of Enterprise, in reprint from “Leadership and Motivation by Douglas McGregor by permission of the M.I.T. press Cambridge, Massachusetts (1966)”. Retrieved from http://web.mit.edu/curhan/www/docs/Articles/15341_Readings/Motivation/McGregor_The_Human_Side_of_Enterprise.pdf?fbclid=IwAR3ijR87aunhGGLfRNowtOpJ99YV-g5NsOP0OBQONAR-v-RsyC-NQkQdeAo
5. ↑ Jones, G.R., George, J.M., (2017), Essentials of Contemporary Management (7th Edition), McGraw-Hill Education, p. 40
6. ↑ McGregor, Douglas M, (1960) The Human Side of Enterprise, in reprint from “Leadership and Motivation by Douglas McGregor by permission of the M.I.T. press Cambridge, Massachusetts (1966)”. Retrieved from http://web.mit.edu/curhan/www/docs/Articles/15341_Readings/Motivation/McGregor_The_Human_Side_of_Enterprise.pdf?fbclid=IwAR3ijR87aunhGGLfRNowtOpJ99YV-g5NsOP0OBQONAR-v-RsyC-NQkQdeAo
7. ↑ McGregor, Douglas M, (1960) The Human Side of Enterprise, in reprint from “Leadership and Motivation by Douglas McGregor by permission of the M.I.T. press Cambridge, Massachusetts (1966)”. Retrieved from http://web.mit.edu/curhan/www/docs/Articles/15341_Readings/Motivation/McGregor_The_Human_Side_of_Enterprise.pdf?fbclid=IwAR3ijR87aunhGGLfRNowtOpJ99YV-g5NsOP0OBQONAR-v-RsyC-NQkQdeAo
8. ↑ "Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition). Project Management Institute, Inc. (PMI)." Retrieved from https://app.knovel.com/hotlink/toc/id:kpGPMBKP02/guide-project-management/guide-project-management
9. ↑ "Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition). Project Management Institute, Inc. (PMI). p. 307" Retrieved from https://app.knovel.com/hotlink/toc/id:kpGPMBKP02/guide-project-management/guide-project-management
10. ↑ "Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition). Project Management Institute, Inc. (PMI)., p 524" Retrieved from https://app.knovel.com/hotlink/toc/id:kpGPMBKP02/guide-project-management/guide-project-management
11. ↑ A. (2017). Managing successful projects with prince2 2017 edition. ProQuest Ebook Central https://ebookcentral-proquest-com.proxy.findit.dtu.dk
12. ↑ "Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition). Project Management Institute, Inc. (PMI), p 310" Retrieved from https://app.knovel.com/hotlink/toc/id:kpGPMBKP02/guide-project-management/guide-project-management