• Emily A. Georgiades, Esq.

Improving Profits by Defining Your Management Style.

The recent pandemic has not only given us a reason to stop and think about how we work but it provides an opportunity to define your company’s management style. Higher-level business courses teach business management. Part of this is Theory X versus Theory Y. Adopting the right business management style is crucial in propelling your business objectives and ultimately making higher profits.

Theory X subscribes to the notion that workers require a system of rewards and punishments in order to give them motivation to produce. Accordingly, it suggests that workers lack creativity and ambition and only offer management their labor.

Theory Y views worker differently. Workers are seen as being self-motivated and creative sources which management can tap into. In the 1980s, Theory Y evolved further into Theory Z in which everyone in a company is made a part of a consensual decision-making process. Under Theory Z, workers and management work together in quality circles and are involved in an ongoing struggle to improve themselves as well as all aspects of the company. Accordingly, when workers feel like partners in the company, they become more productive and committed to their jobs.

The reality of running a successful business means that taking a contingency approach in which management combines aspects of both Theory X and Theory Z according to their circumstances will most likely yield a more successful result in balancing the needs of the workers with the objectives of the company. A good example of combining Theory X and Theory Z is “ESOPs” (Employee Stock Ownership Plan). There are companies in which management provides employees with shares in the company as a reward for doing quality work. Although the shares are too small to give the employee effective control of the company, the employee does have some say in how the company is managed and also given an incentive to work harder.

Investing in your workers is an investment in the company that can yield higher returns and promotes higher quality work and loyalty to the company.

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