Final answer:
McGregor developed Theory X and Theory Y based on the realization that managers should have different approaches to managing their employees.
Step-by-step explanation:
Theory X and Theory Y were developed by McGregor based on the realization that managers should have different approaches to managing their employees. Theory X assumes that employees dislike work, avoid responsibility, and need to be controlled and punished. In contrast, Theory Y assumes that employees enjoy work, seek responsibility, and can be self-directed. Managers should adopt a Theory Y approach to improve organizational output and the wellbeing of individuals.