McGregor's XY Model is not a Model For Action
The real Theory Z is that people don't understand that this XY model is not a model for action. It has been developed to analyze and provide a rationale for why there is conflict in organisations and to oversimplify the problems, not as a basis for planning and action.
To use it as a model for action is a mistake.
The other element of Theory Z is that workers and unions believe that all management operate and believe in theory X. Unionists tend to espouse Theory Y but practice Theory X anyway, while accusing others of the same behaviour. McGregor is pointing out that while people hold different world views (different theories) they will tend to see the confirming evidence
from whatever data they are using (Confirmation Bias