Theory Z is a name applied to
three distinctly different psychological theories. One was developed by Abraham
H. Maslow in his paper Theory Z and the other is Dr. William Ouchi's so-called
"Japanese Management" style popularized during the Asian economic
boom of the 1980s. The third was developed by W. J. Reddin in Managerial
Effectiveness (19 Situation guides) man:
- Reason motivates him.
- Interdependence is man's primary mode of discourse.
- Interaction is man's social unit of importance.
- "Objective" best and succinctly describes man's concept of man.
McGregor's Theory Y in contrast
to Theory X, which stated that workers inherently dislike and avoid work and
must be driven to it, and Theory Y, which stated that work is natural and can
be a source of satisfaction when aimed at higher order human psychological
needs.
For Ouchi, 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.
According to Ouchi, Theory Z management tends to promote stable employment,
high productivity, and high employee morale and satisfaction.
Ironically, "Japanese
Management" and Theory Z itself were based on Dr. W. Edwards Deming's
famous "14 points". Deming, an American scholar whose management and
motivation theories were rejected in the United States, went on to help lay the
foundation of Japanese organizational development during their expansion in the
world economy in the 1980s. Deming's theories are summarized in his two books,
Out of the Crisis and The New Economics, in which he spells out his
"System of Profound Knowledge". He was a frequent advisor to Japanese
business and government leaders, and eventually became a revered counselor.
Deming was awarded the Second Order of the Sacred Treasures by the former
Emperor Hirohito, and American businesses ultimately tried unsuccessfully to
use his "Japanese" approach to improve their competitive position.
Pre Theory Z
Abraham Maslow, a psychologist
and the first theorist to develop a theory of motivation based upon human needs
produced a theory that had three assumptions. First, human needs are never
completely satisfied. Second, human behavior is purposeful and is motivated by
need for satisfaction. Third, these needs can be classified according to a
hierarchical structure of importance from the lowest to highest (Maslow, 1970).
1. Physiological need
2. Safety needs
3. Belongingness and love needs
4. The esteem needs – self-confidence
5. The need for self-actualization – the need to reach your
full potential
Maslow's hierarchy of needs
theory helps the manager to understand what motivates an employee. By
understanding what needs must be met in order for an employee to achieve the
highest-level of motivation, managers are then able to get the most out of
production. Theory X, Y and Z all play a role in how a company should manage
successfully. Theory X and Theory Y were both written by Douglas McGregor, a
social psychologist who is believed to be a key element in the area of
management theory. In McGregor's book The Human Side of Enterprise (1960),
McGregor describes Theory X and Theory Y based upon Maslow's hierarchy of
needs, where McGregor grouped the hierarchy into a lower order (Theory X) needs
and a higher order (Theory Y) needs. McGregor suggested that management could
use either set of needs to motivate employees, but better results could be gained
by the use of Theory Y, rather than Theory X (Heil, Bennis, & Stephens,
2000).
History of Theory Z
Professor Ouchi spent years
researching Japanese companies and examining American companies using the
Theory Z management styles. By the 1980s, Japan was known for the highest
productivity anywhere in the world, while America had fallen drastically. The
word "Wa" in Japanese can be applied to Theory Z because they both
deal with promoting partnerships and group work. The word "Wa" means
a perfect circle or harmony, which influences Japanese society to always be in
teams and to come to a solution together. Promoting Theory Z and the Japanese
word "Wa" is how the Japanese economy became so powerful. And also
because the Japanese show a high level enthusiasm to work,some of the
researchers claim that 'Z' in the theory Z stands for 'Zeal'.
Ouchi wrote a book called Theory
Z How American Business Can Meet the Japanese Challenge (1981), in this book;
Ouchi shows how American corporations can meet the Japanese challenges with a
highly effective management style that promises to transform business in the
1980s. The secret to Japanese success, according to Ouchi, is not technology,
but a special way of managing people. "This is a managing style that
focuses on a strong company philosophy, a distinct corporate culture,
long-range staff development, and consensus decision-making"(Ouchi, 1981).
Ouchi shows that the results show lower turn-over, increased job commitment,
and dramatically higher productivity.
William Ouchi doesn't say that
the Japanese culture for business is necessarily the best strategy for the
American companies but he takes Japanese business techniques and adapts them to
the American corporate environment. Much like McGregor's theories, Ouchi's
Theory Z makes certain assumptions about workers. Some of the assumptions about
workers under this theory include the idea that workers tend to want to build
happy and intimate working relationships with those that they work for and
with, as well as the people that work for them. Also, Theory Z workers have a
high need to be supported by the company, and highly value a working
environment in which such things as family, cultures and traditions, and social
institutions are regarded as equally important as the work itself. These types
of workers have a very well developed sense of order, discipline, a moral
obligation to work hard, and a sense of cohesion with their fellow workers.
Finally, Theory Z workers, it is assumed, can be trusted to do their jobs to
their utmost ability, so long as management can be trusted to support them and
look out for their well being (Massie & Douglas, 1992).
One of the most important pieces
of this theory is that management must have a high degree of confidence in its
workers in order for this type of participative management to work. This theory
assumes that workers will be participating in the decisions of the company to a
great degree. Ouchi explains that the employees must be very knowledgeable
about the various issues of the company, as well as possessing the competence
to make those decisions. He also points out; however, that management sometimes
has a tendency to underestimate the ability of the workers to effectively
contribute to the decision making process (Bittel, 1989). But for this reason,
Theory Z stresses the need for the workers to become generalists, rather than
specialists, and to increase their knowledge of the company and its processes
through job rotations and constant training. Actually, promotions tend to be
slower in this type of setting, as workers are given a much longer opportunity
to receive training and more time to learn the ins and outs of the company's
operations. The desire, under this theory, is to develop a work force, which
has more of a loyalty towards staying with the company for an entire career,
and be more permanent than in other types of settings. It is expected that once
an employee does rise to a position of high level management, they will know a
great deal more about the company and how it operates, and will be able to use
Theory Z management theories effectively on the newer employees (Luthans, 1989,
p. 36).
Comparison & Contrast of
Management Theorists
|
Management
Concept
|
Douglas
McGregor
(Theory X
& Y)
|
William
Ouchi
(Theory Z)
|
|
Motivation
|
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.
|
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.
|
|
Leadership
|
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 control.
|
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 workers
make most of the decisions.
|
|
Power
& Authority
|
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.
|
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.
|
|
Conflict
|
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.
|
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.
|
|
Performance
Appraisals
|
Appraisals occur on a regular basis. Promotions
also occur on a regular basis.
|
Theory Z emphasises more frequent performance
appraisals, but slower promotions.
|
Implications of these types of theories for leaders in modern
organizations
As theorist through the past many
years worked towards the Human Relations Movement, many other fields of
expertise joined in to create a stronger force of knowledge and growth. From
Psychology that helps to explain changes in human behavior, to Sociology, where
we actually study people in their relationships with other human beings. Social
Psychology was created when the two concepts were blended so that we can focus
on actual influences of people on one another to Anthropology and Political
Science. All of these pieces are a part of the growth and success of human
development in not only the success of work development but in human
relationships in general.
With Theories X, Y, and Z implications
for the modern organization include new challenges and opportunities. As we
learn from these theories and work to implement the ideas in them we must be
aware of the modern issues of working with people from different cultures and
overseeing movements of jobs to countries with low-cost labor. Also, we must
embrace diversity as the U.S. demographics change and understand that our new
managers must recognize and respond to the different culture changes that will
surely ensue with their growing diverse working population.
These theories have proven with
many fortune 500 companies and others that when applied, do improve quality and
productivity and also help to strengthen company labor issues. In addition to
the changing work demographic, new problems and issues have risen since the X,
Y and Z theories were formed. Some issues include fewer skilled laborers, early
retirements, and older workers. Other opportunities that have been implied
while companies use Theory Y and Z include, an improvement of people skills,
empowering their employees, stimulating change, helping employees balance work
with life conflicts, and improving ethical behavior.
Modern implications for companies
using these theories have shown improvements in turnover rates, productivity,
effectiveness, efficiency, organizational behavior, and job satisfaction.
Conclusion
Many assumptions are made in the
work place, based on observations of the workers, and their relationship with
management. "The types of tasks being performed, as well as the types of
employees which make up a particular organization can set the stage for the
types of leadership roles which will be assumed by managers" (McGregor,
1960). Douglas McGregor's Theory X and Y, and William Ouchi's Theory Z have all
proven to be useful in the management field. Many companies have successfully
integrated similar economic and human principles in a management style from
theories Y and Z. Theories Y and Z have both shown to be quite successful
framework for multinational companies. Theory X is not obsolete. Actually,
Theory X is still very prominent in the business world. Most managers however
do not see themselves as using this type of management style until given the
opportunity to see how their employees actually feel about the management style
that is being used. Then an effort will be made to look further into a
different, possibly more successful style of managing.
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