motivational theories - z theory . z theory by William Ouchi

2. Theory Z
 Theory Z is an approach to management based
upon a combination of American and Japanese
management philosophies .
 'Theory Z' focused on increasing employee
loyalty to the company by providing a job for life
with a strong focus on the well-being of the
employee, both on and off the job

4. • Full name - William G Bill Ouchi
• Born – year 1943
• He is an American professor and author in the field
of business management
• First book in 1981 – “Theory Z:How American
management can meet the Japanese challenge”.
• Second book - “The M Form Society: How American
Teamwork Can Recapture the Competitive Edge”.
• He also came up with his three approaches to control in
an organization's management:
1. Market control
2. Bureaucratic control
3. Clan control

5. HISTORY
During 1970s and 1980s , many US industries lost market
share to international competitors, particularly Japanese
companies
Ouchi compared American types of organizations that
were rooted in the US tradition of individualism with
Japanese organizations that drew upon the Japanese
heritage of collectivism
This comparison and his observations lead to the
formation of theory Z

6. Ouchi proposed that a Theory Z
management approach could lead to :
 Greater employee job satisfaction
 Lower rates of absenteeism and turnover
 Higher quality products
 Better overall financial performance of US
firms.

7. Difference between American and
Japanese management practices
American
organizations
Japanese organizations
Short term employment Lifetime employment
Individual decision making Collective decision making
Individual responsibility Collective responsibility
Rapid evaluation and promotion Slow evaluation and promotion
Specialized career paths Non Specialized career paths
Segmented concern for employee as an
employee
Holistic concern for employee as a
person

8. Features
 Long term employment
 Participative decision making
 Slow promotions
 Stable and cohesive work environment
 Holistic concern
 Integrated organization

9. Long term employment
Workers should be given a long term employment in the
organization . It will promote a strong bond between
the workers and the organization. The workers get to feel
a job security thus leading them to show loyalty towards
the organization

10. Participative decision making
Workers should be given greater opportunity of
participation in the decision making process ,
particularly in regard to matters which significantly
affect them. If final decisions are based on the
alternatives suggested by workers, they will develop a
sense of belonging to the organization and contribute
more enthusiastically to implement these decisions.

11. Slow promotions
There should be a limit to internal promotion of
employees . If it is done liberally , it could result in a
situation where a worker has reached the topmost
position and there is no higher position to post him into.
So instead of quick promotions to higher level positions
, workers should be transferred to similar level jobs at
different workplaces.

12. Stable and cohesive work environment
The work environment should be stable and cohesive
enough for the employees to satisfy their multiple socio-
psychological needs. Relationships marked by mutual
trust , openness and co operation will be induce workers
to feel committed to the organization .

13. Holistic concern
This is a type of concern for the employees that go
beyond the workplace .

14. Integrated Organization:
Under Theory Z, focus is on sharing of information and ‘
resources rather than on chart, divisions or any formal
structure. An integrated organization puts emphasis on
job rotation which improves understanding about
interdependence of tasks. Such understanding leads to
group spirit

15. Limitations
 Z theory is based on the Japanese management
practices which have evolved from that country’s
unique cultural setting . As such , it may not be
relevant to organizations in different cultural settings
 There is little by way of research findings to indicate
that the firms following the theory of motivation have
achieved greater productivity that others
 It does not provide guidelines as to at what point of
time it may be applied in any organization.