The Core

X (a.k.a. "put it in the paycheck") is well-understood and fairly cheap to manage. Long-term costs are questionable with x BUT managers can also become fairly adept at factoring in turnover in their hiring/firing plan.  It's particularly cheap/effective if the job skills aren't hard to come by in the marketplace OR the job market is tight.

Y implementation requires the manager to be more involved and, IMHO, more gifted -more socially aware- ...this is a fairly rare skill relative to managing by the numbers.  And once you do have a company policy complete with a HR manager who is capable of y-mode, then manager burnout is a problem. Y requires so much 'immersion' in the lives of the staff.

Another trouble is that no organization, even small ones, are homogeneous in need. Your mailroom crackhead may require heavy doses of negative stimulus. Your accounts receivable manager needs y.  You can't swing from one mode to the other very easily and you very well might be charged with some sort of discrimination if you do.

Even the same individual changes. So you have a gifted 20-something, single guy in your art department who will walk in a heartbeat if you put the hammer on him. Saddle him with 2 kids, health care problems, and a mortgage and theory x works amazingly well with him now.