WILLIAM OUCHI

THEORY Z

BACKGROUND

HISTORY OF THEORY Z

THEORY Z
A management concept that looks at motivating workers.
An approach to management based upon a combination of
american and japanese management philosophies

Characterized by: long-term job security, consensual decision

making, slow evaluation and promotion procedures, and
individual responsibility within a group context.

Leads to improvements in organizational performance

CHARACTERISTICS OF MANAGEMENT THEORY

i. A strong company philosophy and culture
ii. Long-term employment
iii. Consensus decision making
iv. Generalist employees
v. Concern for the happiness and well-being of workers
vi. Informal control with formalized measures
vii. Individual responsibility

THE APPLICATION OF MANAGEMENT THEORY

Management
Concept

William Ouchi (Theory Z)

Douglas McGregor
(Theory X & Y)

Motivation

Believes that people are

innately self-motivated to not
only do their work, but also are
loyal towards the company, and
want to make the company
succeed.

Tends to categorise people as

one type or another: either being
unwilling or unmotivated to work,
or being self-motivated towards
work. Threats and disciplinary
action are thought to be used
more effectively in this situation,
although monetary rewards can
also be a prime motivator to
make Theory X workers produce
more.

Leadership

Theory Z managers would have

to have a great deal of trust
that their workers could make
sound decisions. Therefore, this
type of leader is more likely to
act as "coach", and let the

Theory X leaders would be more

authoritarian, while Theory Y
leaders would be more
participative. But in both cases it
seems that the managers would
still retain a great deal of

Power and Authority

The manager's ability to exercise

power and authority comes from
the worker's trusting
management to take care of
them, and allow them to do their
jobs. The workers have a great
deal of input and weight in the
decision making process.

As mentioned above,
McGregor's managers, in both
cases, would seem to keep
most of the power and
authority. In the case of Theory
Y, the manager would take
suggestions from workers, but
would keep the power to
implement the decision.

Conflict

Conflict in the Theory Z arena

would involve a great deal of
discussion, collaboration, and
negotiation. The workers would
be the ones solving the conflicts,
while the managers would play
more of a "third party arbitrator"
role.

This type of manager might be

more likely to exercise a great
deal of "Power" based conflict
resolution style, especially with
the Theory X workers. Theory Y
workers might be given the
opportunity to exert
"Negotiating" strategies to
solve their own differences.

Performance
Appraisals

Theory Z emphasises more

frequent performance appraisals,
but slower promotions.

Appraisals occur on a regular

basis. Promotions also occur on
a regular basis

CONTRIBUTION OF MANAGEMENT THEORY

I)

lower turnover

the company need to stabilise employment by challenging every

employee

giving them a variation of jobs to be performed

not laying off employees when it is doing badly, but rather reduce
their hours.

II) Increased job commitment

Self-motivated to do their work

loyal towards the company

want to make the company succeed.
III)Dramatically higher productivity
managers would have to have a great deal of trust that their workers
could make sound decisions

CRITICISM OF MANAGEMENT THEORY

Failure to maintain employee loyalty

Employee leave the organisation when get better offer from other company.
Employers also do not like to retain inefficient employees permanently.

Decision-making process is very difficult.

Employees may be reluctant to participate due to fear of criticism and lack of

motivation.

Theory z emphasises on common culture and class within the

organisation.

It impossible to develop a common culture in the organisation because people

differ in their attitudes, habits, languages, and religions.

Based on japanese management practices.

These practices have been evolved from japans unique culture.

The theory may not be applicable in different cultures.

CONCLUSION
In these theory, discussing how each plays an important
part in the understanding of workers by management and
how each might view various aspects of the relationship
which exists between management and workers, in such
areas as motivation, leadership, power, authority, and
conflict.

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