Theory Z

In 1981, William Ouchi came up with a method that would combine American and Japanese managing practice together to form Theory Z. In order for him to accomplish this, he had to learn about the Japanese culture. He had to find out why the Japanese quality and productivity were much higher than the American. The people in the US are usually characterize as being soft, lazy people, who feel they are in title to a good life, without earning it. In the 80's US company's quality was so bad, that when a Japanese company ordered in American made car, they had a reassembly plant. Here the company would disassemble those cars and rebuilt them to meet Japanese standards. People in America see business management as a career. The US as a nation has people taking classes to earn a degree in management.(Reich,27)

Japanese have always had a different style of managing than the US. One thing that the Japanese believe in, is lifetime employment. They feel that the company has no right in firing you, unless you do a criminal offense. The only way you are release by the company is when you reach 55, because this is the age were people in Japan are force to retire. When the economy starts doing bad in Japan companies do not start firing people, but rather cut employees hours. In the US though, companies usually tend to use short term employment rather than live time. This explains why people in the US feel so unsecured with their jobs. When a company in the US begins to struggle, they waste no time in laying off people.

Besides job security Japanese company's believe in trust. The Japanese feel you should never give people reason to distrust you. They believe you should always be loyal to everyone in the company and to the people who supply your companies with supply. Unlike US companies who are known to distrust one another. If they feel their supplier is not giving them a good deal, US companies tend to look for somebody who will.

People in Japan feel that a person should not be evaluate or promoted until he has served ten years with the company. During those ten years, they will be taught everything in the company. They believe that if you work for the company, you should know every aspect involved to run it. In Japan it is not strange to see managers working side by side with their employees. This explains why manager in Japan are able to understand their employees problems. Whereas American dislike this method because they believe in rapid feedback and fast promotion. When they feel they are not being treated fair, workers have a tendency of leaving from job to job. Another problem with American manager is that they are not aware of everything in the company.

Another thing that Japan does is that they believe in outsider should not get promoted, that the promotion should come within the company. US companies, though are known to give promotion to people who are inside or even outside the company.

Japanese corporation believe that you should not give your employees a set target. They feel that the employee should know what his objective is, and know what the customer wants. Without having management telling them what to do, the employee begin to rely on each other. Americans on the other hand, believe that in order to operate a business, you must give them what they think is their set objective. Americans feel that in order for them to get motivate, management has to set in objective for them to meet. In Japan they fell that a person should not be given in objective, because they feel the employee should know what his objective should be.

An interesting thing about the Japanese companies is the way they make decisions. When the company has to make any decision, they feel the whole company should be involved. By involving the whole company in the decision you make all the employees feel involved. When the company does come up with a solution, the whole company whether they like it or not will support it. Since this process is so long, it takes management a longer time to come up with a solution. In America, though, the only people who are aloud to make decision concerning the company are top management executives, and not employees. Unlike Japan, who believe you should take your time in making a decision, American's view is the faster the better.

In Japan workers do not like the idea that one individual should be rewarded for their performance. They believe it is not right for them to compete with each other. A person who is sixteen should not be making the same as a person who is twenty. What I mean is even if the sixteen year old is doing a lot more than the twenty year old, it is not right for the younger person to make more than the older one. Americans on the other hand live for praises, and believe if you work harder than somebody else you should make more.

As you can see American and Japanese are no way alike in the way they manage. In the model you are about to see you are going to see the difference between both nations.

Organization Type A American	Organization Type J Japanese
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 path	Nonspecialized career path
Segmented concern for employee as an employee	Holistic concern for employee as a person

Ouchi realized the difference between both country and decided to make up Type Z. This type Z is going to be comprise of Type A and Type J. The Type Z is a way Ouchi would like to see American companies ran, but to do this you are going to have to do 12 strategy to make it work. This is the steps companies should take to improve their quality and performance. One is try to understand Type Z and your role. In order for Theory Z to work, you must have skeptics. These people who think this would not work, should not be discourage. When a person is discourage or pushed away, they have a tendency of thinking this will never work. People are going to have to realize that most companies skeptics out number true believer. By involving these skeptics companies begin to form a space of trust. Trust will occur when both parties understands each others view, and know that both are doing it for the good of the company. When a person feels something is not right, by involving them it shows them that neither side is out to hurt the other. Everyone has to realize that with trust comes openness to say what you feel. Another thing people should have is integrity. You should be able to treat people the way you would like to be treated.

The second strategy, the company should be able to audit its philosophy. Here the company will try to figure out a way that suggest how the company should behave to its employee and vice virsa. Companies are going to have to find out were the company "is", not were it should be. First the company is going to have to understand its culture by studying decisions made in the past. They will than have to organize a big meeting were they will asked themselves, what they think worked, failed, and what they thought was inconsistence. When you answer these questions the company begins their philosophy. Management can never be inconsistence in what they feel is desirable. They can not say one thing one day and not in force it the next.

The third strategy is management must be able to define desired philosophy and be able to involve company leaders. Here management can not be intimidated by company leaders and the company leader must be willing to hear everything the manager has to say. Company leaders should not discourage his manager from speaking, because when he is intimidated the manager tends to hold back more information. Company leaders must be willing to go into a discussion with an open mind and be able to trust his managers. When both begin to trust each other they are going to make easy decisions because both will be sharing wanted information.

The fourth strategy is the company will have to create both a structure and incentive in the company. In this, one strategy, he believes in no organization but wants people to recognize a his simple structure, teamwork. You as management want to create a place that whenever somebody is struggling, they can feel assure that his team will pick him up. When the company faces a person who is hogging up the credit you begin to have a lot of unhappy people working together. To stop all this unhappiness management will have to do something they do not want to do, and that is get involved. Companies believe that manager should be honest to its employee and be able to admit their mistakes, and vice virsa.

The fifth strategy is the company will have to develop some interpersonal skills. Here management is going to want everyone to improve on their communication skills. They want to encourage manager to listen more and know when to interrupt. First people are going to have to recognize patterns of interactions when making a decision and solving problems. When somebody try's a quick solution, or drifts off, you should be trained to spot it and stop it. Once you get everyone back on track, management should design in answer that everyone should support. To reach in agreement everyone must be willing to share information, and plans.

The sixth strategy is the company must be able to test themselves and the system. While implementing Theory Z management is going to begin to question their ability to manage. So what managers are going to have to do is to just have confidence in their ability to manage.

The seventh strategy is companies are going to have to stabilize employment. To stabilize employment companies are going to have to challenge every employee, and be able to give him variation of job to do within the company. Here, when a company is doing bad they do not encourage management to lay off people, but rather reduce their hours. This in return gives companies a low turnover rate. Making them waste less time and money in training new people.

The eighth strategy is how to design a system of slow evaluation and promotion. Many young employees are very impatient. If they feel they have no chance for a quick promotion, most employees quit. To end this problem what companies have to do is give them an incentive to stay. So what the companies does is promote these young impatient people before somebody else does. You have to make them think that they are really wanted. This gives them time to learn the business and work with people as a team.

The ninth strategy is how are the companies going to broaden the peoples career paths. Companies are very aware that people who move from job to job are usually harder workers than their top managers. The only problem with this is that when they feel they are going nowhere, they quit. So what the company try's to do is give these employees a variation of jobs within the company. In order to entertain your employee within the organization, you are going to have to let them experience every aspect and every department in the company. When everyone knows what every department is doing, it make it much easier for the company to pass important information within departments.

The tenth strategy is how to get this theory Z working into the lower level. In order for you to implement Theory Z at the lower level you have to start from the top. The change must occur with top management and professional employee, before you try to change lower level employees. People who are lower level employee are not going to follow a method that top management does not follow. With lower level employees you are

going to have to be very patient with them, because they have installed in their heads that management should never be trusted. Employees in the company feel that the companies foreman are sell outs, who work more with management and do not care about employees. Like management, the foreman is going to have to gain its employees trust the same way management did.

The eleventh strategy you have to do is find an area where you can implement employees participation. The way you gain lower level trust is through participation in companies decision, and being able to give them rewards for their accomplishments. The most important thing is give your employees a sense of job security. You also want to encourage your employees to speak. Let them know that the company wants the employees to work as a team and not as an individual.

The final thing is to create a sense of family between everyone. Once you succeed with Theory Z, the way you know if it works is by studying your employees. If your employees are willing to go out with each other, without the companies involvement, than you know that you have succeeded.

With the Theory Z, William Ouchi was able to create a new method for American companies to manage. He was able to emphasize American flavor (e.g. individual responsibility), but with a Japanese emphasize of collective decision making.(Ivancevich,60-61)

Organization Type A American	Organization Type J Japanese	Organization Type Z Modified American
Short-term employment	Lifetime employment	Long-term employment
Individual decision making	Collective decision making	Collective decision making
Individual responsibility	Collective responsibility	Individual responsibility
Rapid evaluation & promotion	Slow evaluation & promotion	Slow evaluation & promotion
Explicit control mechanisms	Implicit control mechanisms	Implicit, informal control with explicit, formalized measures
Specialized career path	Nonspecialized career path	Moderately specialized career paths
Segmented concern for employee as an employee	Holistic concern for employee as a person	Holistic concern, including family