Theory Z

Theory Z

Summary of Theory Z

A concept articulated by Professor William Ouchi to identify a Japanese-style, worker- participating corporation. Theory Z is an expansion upon terminology developed by the late Douglas MacGregor, which identified a Theory X, in which workers are viewed as basically lazy and begrudgingly productive, and a Theory Y, which holds workers to be animated and zealous. Theory Z typifies a firm that identifies long-range goals (rather than near-term income performance only), maintains worker loyalty through incentives during profitable times and avoidance of layoffs during harder times, and seeks to generate a consensus among all levels of staff.

Professor Ouchi sees this structure most aptly displayed in Japanese firms, where lifetime employment is assumed, and salary cuts are shared at all levels during periods of reduced earnings.

(Main Author: William J. Miller)


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