Theory Z

Ouchi’s Theory Z of Motivation

William Ouchi developed Theory Z after making a comparative study at Japanese and American management practices. Theory Z is an integrated model of motivation, and it suggests that large complex organizations are human systems and their effectiveness depends on the quality of humanism used.

A type Z organization has three major features- trust, subtlety, and intimacy. Mutual trust between members of an organization reduces conflict and leads to teamwork Projectfreetv. Delicacy requires sensitivity towards others and yields higher productivity. Intimacy implies concern, support, and disciplined unselfishness.

The features of Theory Z are as follows:

Mutual trust:  

According to Ouchi, trust, integrity, and openness are essential ingredients of an active organization. When faith and transparency exist between employees, workgroups, union, and management, conflict is reduced to the minimum and employees cooperate fully to achieve the organization’s objectives.

A strong bond between organization and employees: Several methods can be used to establish a strong relationship between the enterprise and its employees. Employees may be granted lifetime employment which leads to loyalty towards the enterprise.

Employee Involvement: 

Theory Z suggests that the involvement of employees in related matters improve their communication and performance. Commitment implies meaningful participation of employees in the decision-making process, particularly in cases directly affecting them. Such participation generates a sense of responsibility and increases enthusiasm in the implementation of the decision. Top managers serve as facilitators rather than decision-makers.

Integrated Organization: 

Under theory Z, the focus is on the sharing of information and resources rather than on chart, divisions or any formal structure. An integrated organization emphasizes job rotation which improves understanding about the interdependence of tasks.


The leader’s role should be to coordinate the efforts of human beings. To develop a common culture and class feeling in the organization, the leader must use the processes of communication, debate, and analysis.

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Informal Control System:       

The organizational control system should be made friendly. For this purpose, emphasis should be on mutual trust and cooperation rather than on superior-subordinate relationships.

Thus, Theory Z is a hybrid system that incorporates the strengths of American management (individual freedom, risk-taking, quick decision-making, etc.) and Japanese management (job security, group decision-making, social cohesion, holistic concern for employees, etc.) systems.

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