Theory Z

Merging Eastern and Western Management Styles

This theory can help you boost team performance.

© iStockphoto/hometowncd

Back in the '70s and '80s, Japanese organizations were arguably the most productive and efficient in the world, and they were making significant inroads into North American and European markets.

The secret to their success wasn't necessarily what they were producing.

Rather, some argued, it was how they were managing their people – Japanese employees were engaged, empowered, and highly productive.

Management professor William Ouchi argued that Western organizations could learn from their Japanese counterparts. He created Theory Z – a model that, he said, blended the best of Eastern and Western management practices.

In this article, we'll explore this model and discuss if it's still relevant today. We'll also look at how you can apply its principles in your own organization.

About Theory Z

Ouchi first wrote about Theory Z in his 1981 book, "Theory Z: How American Management Can Meet the Japanese Challenge." He created the theory after conducting research designed to help American companies compete with Japanese businesses. It takes the best of the Japanese management philosophy, and the best of traditional US management philosophy, and combines the two.

According to Ouchi, the benefits of using Theory Z include reducing employee turnover, increasing commitment, improving morale and job satisfaction, and drastically increasing productivity.

To realize these benefits, he argued that an organization should have the following:

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