From the book Adair On Leadership
"In 1960 in his book ‘The Human Side of Enterprise’, McGregor demonstrated that the way in which managers manage depends on the assumptions made about human behaviour. He grouped these assumptions into Theory X and Theory Y.
Theory X – the traditional view of direction and control
i) The average human being has an inherent dislike of work and will avoid it if possible.
ii) Because of this dislike of work, most people must be coerced, controlled, directed, threatened with punishment to get them to give adequate effort toward the achievement of organisational objectives; and
iii) The average human being prefers to be directed, wishes to avoid responsibility, has relatively little ambition and wants security above all.
Theory Y – the integration of individual and organisational goals
i) The expenditure of physical and mental effort in work is as natural as play or rest;
ii) External control and threat of punishment are not the only means for bringing about effort toward organisational objectives. People will exercise self-direction and self-control in the service of objectives to which they are committed.
iii) Commitment to objectives is a function of the rewards associated with their achievement;
iv) The average human being learns, under proper conditions, not only to accept, but to seek responsibility;
v) The capacity to exercise a relatively high degree of imagination, ingenuity and creativity in the solution of organisational problems is widely, not narrowly, distributed in the population.
vi) Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partially utilized.
In terms of management in practise Theory Y does reveal that in any individual within an organisation there are untapped resource of goodwill, energy, creativity and intelligence."
More on this? There's a funny clip over in Hub TV called 'When The Boss Is Not In The Office' that illustrates Theory X. Click on Hub TV on The Home Page or on the Hub TV icon in the right-hand column of your 'My Page' to find it.
Footnote: McGregor reconciled the two theories with Theory Z, which basically says there is truth in both the theories and you need to vary the environment (so it's stimulating) and regime people work under, your recruitment (so you recruit people who are internally motivated) and your leadership (as that is the most demotivating factor of all - People leave bad bosses, not bad jobs).