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Theory Z was developed by William Ouchi in 1981. It describes the major postulates of Japanese management practices and how these practices can be adopted to the environment of United States and other countries. It provides a complete transformation of motivational aspect of employees which other theories are not able to emphasize. It is not merely a motivational technique but involves the complete transformation of management actions including various management techniques.
Features of Theory Z
Ouchi has suggested five broad features of Theory Z.
According to Ouchi, trust means trust among employees, supervisors, work groups, unions, management, and the government. He states that trust, integrity, and openness are closely related. These are effective ingredients of effective organizations. When an organization relies on these principles, employees tend to co-operate to the maximum extent. When trust and openness exist, the chances of conflict are automatically reduced to the minimum.
2. Strong bond between organization and employees
Theory Z suggests that there is strong bond between organization and its employees. Ochi has suggested certain methods for this, including life time employment in the organization as being followed by Japanese organizations. This stability must be achieved through the provisions of highly conducive work environment and challenges and participation on decisions.
3. Employee involvement
Employee involvement is an important factor in Theory Z. The involvement comes through meaningful participation. However, it does not mean that employees participation is necessary in all decisions. In fact, there can be some decisions which are taken without consulting employees but they are informed later. There can be some decisions where employee’s suggestions are taken but the final decisions are made by management. In the case of remaining decisions, the process should be a joint one.
4. No Formal Structure
Theory Z provides no formal structure for the organization. Instead, it must be a perfect teamwork with cooperation along with the sharing of information, resources, and plans.
5. Coordination of Human beings
The leader’s role is to cooperate people and not technology to achieve productivity. This involves developing people’s skills and also the creation of new structures, incentives and new philosophy of management. The purpose is to achieve commitment of employees to the development of the less selfish more cooperative approach to work.
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