Theory Z

Developed by William G. Ouchi

Theory Z is a blend of Japanese and American management styles in which there is large amounts of trust between managers and employees. The main ideas of this theory are to reduce employee turnover, increasing commitment, improving morale and job satisfaction, and drastically increasing productivity. This theory is generally considered decentralized.

Benefits of Theory Z

Employees feel more respected and important because they can do their part in the company and they know they will be rewarded for it. This creates a competitive work environment, which will increase the work that the employees produce and better the business overall

Possible Drawbacks of Theory Z

Once the rewards stop flowing to the employees the level of performance will drop. Although a competitive environment produces more work output, it can also create conflict in the workplace.

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The KPMG accounting firm is a real life example of a company that uses the management philosophy of theory Z because its workers are given simpler assignments such as checking off boxes on an audit form created by experienced accountants. With this experience, these accountants will be treated with more trust and responsibility in their particular job to make the company function better as a whole.