Why Theory Y is now more important than ever before

Rising unemployment, increasing questions being raised on the role of big companies, real wages coming down day after day, and massive mechanization are some realities we have to live with. This is actually a big time for more progressive HR practices. One of which is called the Theory Y approach. This article discusses this in detail.


On the one hand, we have the Government of India itself teaching the easiest way to reduce labor costs, which are actually less than 3% of sales turnover of most companies. Yet, this is one item of expenditure that catches the eyes of any industrialist and every so-called "Management Consultant'. While it is nobody's case that irresponsible workmen with social vices and negative attitudes, absenting themselves for months on end, should be shown the door, shutting the door on regular and permanent employment has actually only increased the employment of hapless poorly paid staff, who call unwilling customers at any time of the day or night, pleading with them to opt for "personal loans" or debit cards, or credit cards or whatever of so many banks. Yes, the banks have come to the streets as the credit portfolio is shrinking. They can't give loans to the contract and casual employees who are on roll, and also form the bulk of new employees. This is the crux of the atrocious and obnoxious NEEM scheme, where workmen are not even given PF or ESI.

That, in short, is what we have already come to. Given this reality of life, is it not pertinent to examine what can be done to existing manpower? Those with an applied psychology background would be knowing a very famous Douglas McGregor's Theory X and Theory Y. This behavioral scientist who taught at the Sloan School of Management sought to highlight what needs to be done by any modern Management. This message is now relevant than ever before.

This article is an attempt to explain the reasons. Here, the focus is on a) The workmen always look up for recognition and achievement b) Money does make a difference but not the only difference c) The modern workplace has enough scope for Theory Y d) Involving the families is important too and e) Theory Y banks on progressive mindsets of employers.

The workmen always look up for recognition and achievement

The workmen in any modern organization, on regular rolls, since the 1990s are a different bunch of people. They themselves understand the power of smartphones and the internet. These also understand the ATMs and the net banking facilities and the value of time. The precise reason why a growing tribe of workmen supports their wives who run small businesses, immediately after they rush home. That is if the workplace is without any challenge and Managers bark at them. This is the typical Theory X approach, where the Managers believe that workmen are very lazy and need to be "disciplined".

A huge number of progressive HR practices have effectively demolished such assumptions. There is absolutely no way that the theory is relevant now. Let us take a very true and live example. The concerned workman still works for the company. Though he is just a tenth standard pass person, Selvam, a workman on the shop floor of a leading auto-component organization, in its Foundry Division, is a perfect example of what it takes to engage with workmen in modern times. At the age of 48, he does have worries. This author knows him personally for over 18 years. Though this author is not with the organization at the moment ( since he is retired now), he was in the forefront of driving many initiatives, one of which was the introduction of the concept of Total Productive Maintenance. (TPM).

Selvam grabbed the opportunity. He implemented advanced maintenance concepts as part of TPM. Each concept would require an article and is not described here. Selvam would automatically clean the equipment he is supposed to work on. Since he took a personal interest in helping others, the regular and contract workmen who were (and are) older to him, would look up to him for advice on practical aspects of TPM. Selvam would selflessly give suggestions. He would then enter it on written records and submit the same to this author, enabling his peer to get Rs50 immediately for the suggestion, that would be implemented. The bosses knew this. But Selvam would always point out the zero breakdown record, the attitude of everyone to stay at least one hour beyond office time and work without overtime and so on. The Management packed him off to a new plant at Oman. That made Selvam even more motivated and he did what he did in his parent plant, there too. Back in the same plant after 24 months, Selvam is back at work, doing the same as he did before. Every manager would sing pecans of praise for Selvam, in so many meetings. He ensured that every single team member knew how to get things done, even in his absence. This is exactly what can happen if workmen are productively and creatively engaged on the shop floor.

Yes, Selvam does worry a bit about his daughter 's marriage. The Management has even assured him of service far beyond his retirement age. He has the option of setting up a small unit and contributing as a sub-contractor. Many have already done so. The Foundry is the best in India, in Asia and among the best seven in the world in terms of every parameter of business excellence. In Selvam 's own words, he is motivated "to switch off" his mind when he enters the factory.

The small steps? Frequent meetings where Selvam and others are praised. The Suggestion awards. Quality circles. The Kaizen initiatives where the group photos are also displayed on the shop floor. The list goes on and on. Yes, this company religiously follows Theory Y. Treat the individual as a " resource and he will respond. Comminate and engage with him. Costs will automatically come down. Productivity will simply go up. This company is not alone. Most units of L&T and Aditya Birla Group have these practices as a routine. How can we engage with all workmen, so that they "switch off" the moment they enter the factory? This is one question that needs to engage the minds of every senior HR Manager and his Management. Every day.

Money does make a difference but not the only difference

Money still has its value. Selvam and millions like him worry so much about the drastic fall in real wages too. The Management would do well to run co-operative establishments with the active participation of workmen so that they will be able to get soft loans and also save money through recurring deposits. They should also be able to buy groceries at slightly subsidized prices. In the future, public and private sector collaboration might extend to hospitals too.

Yes, money is important. But workmen also see the dramatic advancement of IT and it's an application. They do understand the need for change. They do understand that when Management takes several initiatives to increase productivity, they better fall in line and extend their voluntary co-operation. It is just basic common sense that when we give respect, we get that in return. Theory Y rests on this principle, basically. Period.

The modern workplace has enough scope for Theory Y

Yes, it does. One might bring in robots. But even such machines are bound to have problems. The man on the shop floor, the workmen need training too. They happily respond when trained well. For instance, even casual labor with just the school final pass qualification, are so excited about data inputs related to production, on the SAP platform. The skill-sets may not be sophisticated. But attitudes are.

These attitudes get formed and set, when they are involved, consulted and respected. These are three pillars of Theory Y. It must be noted that only when there are industrial peace and mutual trust and respect between Management and workmen, Theory Y can work. The converse is also true. Only when there is involvement, consultation and respect for workmen, will there be industrial peace.

Involving the families are important too

Even illiterate women can be trained to do technical work. If they are sort of made partners in progress, the business enterprise also benefits a great deal.

Proof of the pudding is in the eating. The very same organization that Selvam works for, has a subsidiary unit where wives are employed in producing small spare parts. They are paid more than minimum wages and PF too. Subsidized food and transport are also provided. The women take an active part in counseling their husbands to work hard. Someone from the promoter family often visits them and Enquirer about their welfare. Such small caring goes a long way in increasing productivity. This is exactly one of the ways of engaging families too. There are other organizations that have now encouraged so many hundreds of self-help groups and have provided appropriate training to ladies. This is a big plus in ensuring industrial peace.

It is not rocket science at all. The individual workmen need far more security and savings. If his wife is productively employed without watching the most horrible television serials, he would be more than happy. Learning from successful examples will be a good step in this direction.

Theory Y banks on progressive mindsets of employers

Theory Y has to necessarily work, only with the initiative coming from the Management. The ridiculous NEEM scheme is never an answer. For example, even if any Management starts with salaries of Rs10,000 for every diploma holder, hikes it to Rs11,000 in the second year, provides ESI and PF from day one, the results will be dramatic. Let the diploma holder be confirmed in regular service with a take-home salary of Rs17,000/. Let the employer ditch NEEM and say sorry. The alternative suggested would work far better. Similar schemes should be put in place for workmen too.

If the Management thinks they can adopt short cuts, they will be in for a huge shock. Industrial unrest will come back. The basic framework for Theory Y to work will just not be there. Let no employer be so foolish and live in a fool's paradise. Let them wake up to modern realities.


Modern Management does also dictate adopting the most modern HR practices. It is stupid to imagine that Theory X can still work. The basic assumptions are wrong. The world has changed. Some dimensions of the changed industrial environment have been discussed above.

The time is very much ripe for Theory Y to work in a very big way. Right now.


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