Chapter 23: Maslow: Holistic-Dynamic Psychology

Part 3: Eupsychian Management and Theory Z

It is not merely a coincidence that Maslow is well-known in the field of business.  He spent 3 years as the plant manager for the Maslow Cooperage Corporation, and later he spent a summer studying at an electronics firm in California (Non-Linear Systems, Inc.) after receiving an invitation from the company’s president.  He became very interested in industrial and managerial psychology, and the journal he kept in California was published as Eupsychian Management (Maslow, 1965).  Eupsychia refers to real possibility and improvability, and a movement toward psychological health, as opposed to the vague fantasies of proposed Utopian societies.  More precisely, though, this is something of a fantasy itself. Maslow described Eupsychia as the culture that would arise if 1,000 self-actualizing people were allowed to live their own lives on a sheltered island somewhere.  Maslow applied his psychological theories, including both the hierarchy of needs and self-actualization, to a management style that takes advantage of this knowledge to maximize the potential of the employees in a company (also see the collection of Maslow’s unpublished papers by Hoffman, 1996).

This is a color, aerial photograph of people sitting at tables in a glass atrium. The tables and chairs are spread out around the floor, and people are sitting in small groups. The people are dressed in business attire.
Image Source: Free-Photos. Retrieved from Pixabay at Licensed under CCO.

Maslow introduced a variety of terms related to his theories on management, one of the most interesting being synergy.  Having borrowed the term from Ruth Benedict, synergy refers to a situation in which a person pursuing their own, selfish goals is automatically helping others, and a person unselfishly helping others is, at the same time, helping themselves.  According to Maslow, when selfishness and unselfishness are mutually exclusive, it is a sign of mild psychopathology. Self-actualizing individuals are above the distinction between selfishness and unselfishness; they enjoy seeing others experience pleasure.  Maslow offered the personal example of feeding strawberries to his little daughter. As the child smacked her lips and thoroughly loved the strawberries, an experience that thrilled Maslow, what was he actually giving up by letting her eat the strawberries instead of eating them himself?  In his experience with the Blackfoot tribe, a member named Teddy was able to buy a car. He was the only one who had one, but tradition allowed anyone in the tribe to borrow it. Teddy used his car no more often than anyone else, but he had to pay the bills, including the gas bill. And yet, everyone in the tribe was so proud of him that he was greatly admired and they elected him chief.  So, he benefited in other ways by following tradition and letting everyone use his car (Maslow, 1965). In the business field, when managers encourage cooperation and communication, everyone benefits from the healthy growth and continuous improvement of the company. And this leads us to Theory Z (which is Eupsychian management).

Douglas McGregor, a professor of industrial relations at the Massachusetts Institute of Technology, was greatly impressed with Maslow’s work, and McGregor had used Motivation and Personality as a textbook in his business classes.  Based on Maslow’s theories, McGregor published a book in 1960 in which he outlined two managerial models, Theory X and Theory Y (Gabor, 2000; Hoffman, 1996).  Maslow described the two theories as follows:

…To put it succinctly, Theory Y assumes that if you give people responsibilities and freedom, then they will like to work and will do a better job.  Theory Y also assumes that workers basically like excellence, efficiency, perfection, and the like.

Theory X, which still dominates most of the world’s workplace, has a contrasting view.  It assumes that people are basically stupid, lazy, hurtful, and untrustworthy and, therefore, that you have got to check everything constantly because workers will steal you blind if you don’t. (pg. 187; Maslow, 1996a)

The Theory X/Theory Y strategy was intentionally put into practice at Non-Linear Systems, hence Maslow’s invitation to study there.  Maslow concluded, however, that even Theory Y did not go far enough in maximizing people’s potential. People have meta-needs (the need for B-values), needs that go beyond simply offering higher salaries.  When employees have their basic needs met, but recognize inefficiency and mismanagement in the company, they will still complain, but these higher level complaints can now be described as meta-grumbles (as opposed to the lower level grumbles about lower level needs).  Theory Z attempts to transcend Theory Y and actively facilitate the growth of a company’s employees toward self-actualization (Hoffman, 1996; Maslow, 1971; Maslow 1996b).

How’s your job (or any job you have had)?  Would you describe your supervisor or boss as someone who uses Eupsychian or Theory Z management?  Does the workplace foster synergy amongst the employees? If not, can you imagine how the job would be different if they did?

Supplemental Materials

Douglas McGregor’s Theory X and Theory Y

This video [7:37] describes McGregor’s Theory X and Theory Y, both of which were influenced by the work of Abraham Maslow.



Text:  Kelland, M. (2017). Personality Theory. OER Commons. Retrieved October 28, 2019, from  Licensed under CC-BY-4.0.

Organizational Communication Channel.  (2016, September 9). Douglas McGregor’s theory x and theory y.  [Video File]. Retrieved from Standard YouTube License.


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PSY321 Course Text: Theories of Personality Copyright © by The American Women's College Psychology Department and Michelle McGrath is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.