Should You Manage With a Carrot or a Stick?

Why do people work?  

If you’re a manager, your answer to this question will determine your approach to motivating your team, and may even define the way your team thinks about their work.

Douglas McGregor, a social psychologist and a professor at MIT, studied manager/employee relationships and, in 1960, developed a concept he called the X Y Theory of Motivation. According to McGregor, business managers make one of two assumptions about their employees’ motivations—assumption X or assumption Y.  

If you’re an optimistic manager, you hold to the Y Theory of Motivation. You believe your employees care about their work and believe that, through their work, they can achieve something worthwhile, advance their careers, or take on new challenges. Your staff, you believe, sees work as an opportunity—not just a requirement. You see people as inherently active and creative, willing to do what it takes to get results.

If you’re a more pessimistic manager, you believe in the X Theory of Motivation. You assume that your employees have just one reason for working: they want to make the most money in the least amount of time. They work, you believe, simply to put a roof over their heads and food in their stomachs. People, you feel, are basically lazy and irresponsible—motivated to do as little as possible, and to take whatever they can get.

McGregor believed firmly that the Y theory was more likely to yield positive results for managers: motivated, happy employees who actively take responsibility for increasing productivity, managing problems, and creatively improving products and processes. According to McGregor, managers who trust their employees’ motivations and believe in their abilities are likely to build a more participatory, creative workplace. When that happens, employees are happier in their jobs—and, as a result, more willing to work hard and stay loyal to the business.

X theorists, McGregor felt, were likely to put into place the types of rules and systems that had made life unpleasant for employees since the turn of the 20^th century. Time clocks, penalties for failing to meet goals, and other “consequences,” he believed, created more problems than they solved.

McGregor’s theories were groundbreaking for his time, and today the Y theory is much more prevalent than ever before. From Microsoft to Zappos, managers are giving employees increasingly greater responsibility for their own projects and outcomes. 

What Do X and Y Management Styles Look Like?

How does a manager’s perspective on employees’ motivations change the way that employees work? If you hold the X theory of motivation, you’ll make certain assumptions about the best way to manage your employees.  For example:

• If you believe that employees work only for financial security, you may threaten layoffs in order to get employees to work harder.
• If you believe that employees prefer to do as little as possible, and will always resist change, you may choose not to make upgrades or improvement because “it would be too hard to get staff to accept the changes.”
• If you believe that employees are essentially uninterested in their jobs, you may not ask staff for ideas, offer them creative opportunities, or open doors to their suggestions.
• If you believe that employees would rather follow than lead, you may take a top-down approach to management. Instead of asking for input or building teams, managers may simply issue demands, and then dole out negative consequences to people who fail to meet those demands.

If you believe in the Y theory of motivation, you will have a very different approach to management. For example:

• If you believe that workers generally enjoy their work, you may be less anxious about issues such as absenteeism or punctuality.
• If you believe that employees will take responsibility for their own work objectives, you may give employees more latitude to choose their own objectives, and to use some discretion in finding the best way to achieve those objectives.
• If you believe that leadership qualities are common among most employees, you may provide more and better opportunities for employees to build their skills and practice them.

If all this sounds like an ad for the Y Theory of Motivation, it is—but that’s not the whole story. Yes, there’s a great deal to be said for being a Y Theory manager, but the real world is just a little different from the theoretical world, and real employees rarely fit neatly into any business management model.

A Little X, a Little Y

If you’re a typical 21^st century manager, you’ve heard a great deal about the merits of employee-driven teams, collaboration, and the creative workplace. You know that most people respond well to optimism, and you’ve learned a slew of techniques for improving morale, increasing employee engagement, and enhancing opportunities for employee development and growth.  

But before you automatically assume that you’re a Theory Y manager (or should be), take a step back from theory and consider the actual human beings you work with. How well would they do in a Y-only world? Chances are, some would do well, but others would have a very tough time.  

What’s Wrong With a Theory Y World?

To begin with, it’s important to consider the real people you’re managing—people who are very different from one another. Sure, some people really are motivated, engaged, and excited about their work. But there will always be employees who are stuck in jobs they hate, and are marking time till retirement. Yes, there are people who find creative opportunities to be stimulating and love the challenge of coming up with new ideas. But there are also individuals who are motivated by systems that reward punctuality and find it difficult or painful to innovate on demand.

What’s more, positive and optimistic workplaces may yield cheerful employees, but happiness is not always the most direct path to the best business outcome. For example, employees who are self-motivated and engaged may be more interested in their own career path than in the corporate bottom line. Employees who are encouraged to follow their creative muse may have a marvelous time doing so, but may have a difficult time putting their ideas into usable form in a timely manner.

According to the Economist, the great sociologist Abraham Maslow was highly impressed by the X Y Theory, “…so much so that he tried to introduce Theory Y into a Californian electronics business, but found that the idea in its extreme form did not work well. All individuals, he concluded, however independent and mature, need some form of structure around them and some direction from others. Maslow also criticized Theory Y for its 'inhumanity' to the weak, and to those not capable of a high level of self-motivation.”

The lesson to be drawn from Maslow’s experience—and from real-world management—is that there is both X and Y in each employee. As a result, there is—or probably should be—a little X and Y in each good manager.

When to Stress Theory Y

So when’s the right time to pull out the creative stops, encourage employee innovation, and increase employees’ opportunities for input and self-actualization? When you have a group of highly motivated, ambitious, creative employees who have joined your company not just to make a living but because of your company’s reputation for making… reputations. In other words, it makes sense to stress Theory Y when you are a high tech company with a big name and a worldwide reputation.

When to Mix in a Little Theory X

Yes, there are creative and ambitious people who will enthusiastically follow anyone offering a “carrot” in the form of career growth and personal fulfillment. But there will always be others for whom the job is just a job. Perhaps those people are finding their personal fulfillment in family, hobbies, or side interests. Perhaps they are struggling financially and are working two jobs. Maybe they are having a difficult time balancing home and work life, and need to hit the road at 5:00 PM to be available to young children.

When your team is made up entirely of workers who are motivated and engaged, it’s all about making the workplace exciting and the possibilities endless. But when your team—like most teams—also includes people for whom work is work, a few Theory X elements are key. Yes, opportunities for personal growth are important, but so too are those good old fashioned tools such as bonuses for productivity and incentive programs.  

And when accentuating the positive isn’t enough, you may need to pull out the stick—those much-hated but effective time clocks, employee evaluations, and other tools for keeping employees focused on their responsibilities at work. After all, not everyone will keep their nose to the grindstone just because they care about the quality of the knives.

Editorial Note: This content was originally published in 2014. We're sharing it again because our editors have determined that this information is still accurate and relevant.