Final answer:
The theory that suggests specific and difficult goals increase employee performance is known as Goal-setting theory (C). It differs from Theory X and Theory Y by focusing on the impact of goals in driving employee motivation and performance.
Step-by-step explanation:
The theory where employees are given specific and difficult goals, rather than no goals, easy goals, or "do your best" goals, is known as C) Goal-setting theory. This theory suggests that clear and challenging goals can lead to higher performance as they help focus efforts, stimulate persistence and encourage the development of strategies to achieve them. In contrast to Theory X which assumes people dislike work and Theory Y which is more optimistic about worker motivations, Goal-setting theory emphasizes the importance of goals in influencing employee behavior.
For example, telecommuting employees who have the ability to set their own hours are influenced by this theory as they tend to set specific goals to segment their day for work and personal life, thereby improving their work-family balance. It's a middle ground between a transactional leadership style, with its emphasis on rewards and punishments, and a transformational leadership style, which seeks to inspire and intellectually stimulate employees. Goal-setting theory aligns with making work both challenging and realistic, driving employees to be actively engaged and productive.