Theory Z
In the 1970s and 1980s, many United States industries found themselves losing
business to international competitors, especially Japanese companies. Concerns
about the competitiveness of U.S. companies caused some researchers to examine
Japanese management practices.
Theory Z was first written about by William Ouchi. Ouchi. He compared American
types of organizations (Type A) that were rooted in the United States' tradition of
individualism with Japanese organizations (Type J) that drew upon the Japanese
heritage of collectivism. He argued that an emerging management philosophy, which
came to be called Theory Z, would allow organizations to enjoy many of the
advantages of both systems.
Professor Ouchi advocated a modified American approach to management that
would combine the best characteristics of Japanese organizations while retaining
aspects of management that are deeply rooted in U.S. traditions of individualism.
Ouchi cited several companies as examples of Type Z organizations and proposed
that a Theory Z management approach could lead to greater employee job
satisfaction, lower rates of absenteeism and turnover, higher quality products, and
better overall financial performance for U.S. firms adapting Theory Z management
practices.
THEORY Z AS AN APPROACH TO MANAGEMENT
5
10
15
20
Theory Z is a humanistic approach to management. Although it is based on
Japanese management principles, it is not a pure form of Japanese management.
Instead, Theory Z combines Japanese management philosophies with U.S. culture.
Theory Z breaks away from McGregor's Theory Y. Theory Y is a largely
psychological perspective focusing on the employer-employee relationships while
Theory Z analyses the entire organization.
25
According to Professor Ouchi, Theory Z organizations exhibit a strong, homogeneous
set of cultural values that are similar to clan or tribal cultures. The tribal culture is
characterized by similar values, beliefs, and objectives.
Although Theory Z organizations exhibit characteristics of clan cultures, they retain
some elements of bureaucratic hierarchies, such as formal authority relationships,
performance evaluation, and some work specialization. Proponents of Theory Z
suggest that the common cultural values should promote greater organizational
commitment among employees.
30
LONG-TERM EMPLOYMENT
35
Traditional U.S. organizations often treat employees simply as replaceable cogs in
the profit-making machinery. In the United States the employer or the employee can
terminate the employment relationship at any time. On the other hand, Type
Japanese organizations generally make life-long commitments to their employees
and expect loyalty in return. This promotes stability in the organization and job
security among employees.
CONSENSUAL DECISION MAKING
40
The Type Z organization emphasizes communication, collaboration, and consensus
in decision making. This marks a contrast from the traditional Type A organization
that emphasizes individual decision-making.
45
INDIVIDUAL RESPONSIBILITY
Type A organizations emphasize individual accountability and performance appraisal.
Traditionally, performance measures in Type J companies are group orientated.
Thus, Type Z organizations retain the emphasis on individual contributions that are
characteristic of most American firms by recognizing individual achievements, but
within the context of the wider group.
50
SLOW EVALUATION AND PROMOTION
The Type A organization has generally been characterized by short-term evaluations
of performance and rapid promotion of high achievers. The Type J organization,
conversely, adopts the Japanese model of slow evaluation and promotion.
1. Where did the researchers who examined Japanese companies in the 70s and
80s come from? (lines 1-5)
a. Japan
b. We don't know
c. America
d. Japan and other countries
(3 points)
2. How do you think William Ouchi would call German style organizations? (lines 611)
____________________________________ (3 points)
3. William Ouchi thought that Theory Z would make people come to work less often.
(lines 12-18)
TRUE/FALSE
(2 points)
Which word or phrase helped you answer the question?(lines 12-18)
_____________________________________________ (2 points)
4. According to lines 24-33, what is the main difference between theory Y and theory
Z?
While theory Y mainly examines __________, theory Z examines the whole
__________. (4 points)
55
5. In lines 36-41 we learn that Japanese managers prefer not to ____ their workers.
a. pay
b. employ
c. sack
d. motivate
(3 points)
6. Complete the table according to William Ouchi's analysis :
Issue
American
Japanese
Management Style Management Style
General
Philosophy
Focus
Humanism
employer-employee
relationship
Treatment of
Employees by
Employers
Evaluation and
Promotion
(8 points)
Employers make life-long
commitments to their
employees.
Short-term evaluations of
performance and rapid
promotion of high achievers