April 29, 2015

Z Reminds me of Theory Z

This is the last post of A to Z April Blogging Challenge. This year I blogged on management subject on all the 26 days. It helped me to revise management theory. I intend to do it next years also, may be with industrial engineering as the subject of focus.

To begin writing this post I first studied my earliest post on the topic: Theory Z - Type Z Organizations and made some changes to it. I also plan to add more content in the coming days.

William Ouchi proposed the concept of theory Z organizations. The concept was developed in his efforts to understand the best practices of Japanese management which can be used in companies of USA. He identified the differences between American and Japanese organizations in some aspects.

American Organizations                      Japanese Organizations
Short-term employment                      Lifetime employment
Individual decision making             Collective decision making
Individual responsibility                     Collective responsibility
Rapid evaluation & promotion     Slow evaluation & promotion
Explicit control mechanisms             Implicit control mechanisms
Specialized career paths                     Nonspecialized career paths
Segmented concern for employee as an employee   Holistic concern for employee as a person

Practice of Theory Z in American Companies

Then he went around interviewing managers of various companies asking them to identify American Companies which are practicing the characteristics identified by Ouchi as Japanese organization practices. But Ouchi had not told the managers that they were Japanese practices. Many managers identified some American companies as following those practices. The companies identified were IBM, Procter and Gamble, Hewlett Packard, Eastman Kodak, and the US Military. These companies are named Theory Z companies by Ouchi. They are companies in USA but follow practices similar to Japanese companies.

Like Japanese companies, type Z companies tend to encourage long-term employment. They rotate employees around functions. Even though they have modern information and accounting systems, they do not dominate decision making. Explicit and implicit information and issues seem to exist in a state of equilibrium. There is a central set of objectives to which all employees have agreed. The corporation’s philosophy or central set of values preserves the freedom of employees to pursue projects they felt would be fruitful. Organizational life is treated as a life of interdependence. It is team work and individual performance measure in a period has some ambiguity.

The decision making is collective but the responsibility for decision still resides in the individual. In type Z companies, superiors show broad concern for the welfare of subordinates. At peer level also, there is concern for co-workers. Egalitarianism is a central feature of type Z organizations. In egalitarianism in organizational contexts means that it is believed that each person can apply discretion and can work autonomously without close supervision. The belief is that every person can be trusted.

Ouchi proposes that American companies adopt type Z company practices. In stead of trying to imitate Japanese companies which are very far in a different culture, American companies can learn from some other American companies only, to follow some of the Japanese best practices.
 Strategies to Transform the Organization

Ouchi proposed 12 strategies or steps to transform a typical American company, named as type A company to type Z company.

Theory Z of Maslow

Maslow is a well known psychologist. He is known for his hierarchy of needs model.
Maslow's Theory Z , presented in Maslow on Management, presupposes that people, once having reached a level of economic security, strive for a life steeped in values, a work life where the person would be able to create and produce. Maslow's Theory Z and Ouchi's Theory Z are different.

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