Theory Z

Created by Dr. William G. Ouchi

What's the purpose of Theory Z?

Dr. William G Ouchi created theory Z to reduce the employee turnover, increase the commitment, improve morale and job satisfaction, and to drastically increase productivity.

What are the Pro's and Con's of Theory Z?

Pro's: From Theory Z the employees feel more respected and important because they know feel they can do their own part in the company and know they will be rewarded. This creates a competitve work environment, which ends up increasing the productivity of the employees.

Con's: Once the rewards stop flowing, the level of performance from the employees will start to drop. Although a competitive work environment, it could also cause conflict.

What are the perspectives of the Employee's and the Manager's?

Employee's Perspective: The employees are generally happy with Theory Z. It tends to give employees a more stable employment. This theory also assumes that the workers will be participating in the decisions of the company to a great degree which makes the employees happy because they have a say towards what they are doing.

Manager's Perspective: With the Theory Z management method, they are usually content with their employees. It improves organization performance for it's employees, therefore increasing productivity overall for the business.


Since Theory Z is decentralized it is the process by which decisions are made by managers at various levels within the organization.

Example's of Theory Z

Google, Starbucks, Virgin Mobile, Disney,