Theory Z - Meaning & Definition

Published by MBA Skool Team, Last Updated: November 04, 2016

What is Theory Z?

Theory Z is used in organizations for development of organizational communication, manage organizational behavior and for human resource management, and the theory focuses on team work & group decision making. This theory has been named and developed by scientists – Dr. William Ouchi, Abraham H. Maslow and W.J. Reddin in their own ways. The most used among these is Dr William Ouchi’s Z theory. This theory also focuses upon increasing productivity as Douglas McGregor’s Theory X and Theory Y but in a quite different way.

Willaim Ouchi’s Theory Z is based upon Japanese management system which focuses upon team work, group decision making, cohesive environment and American management system which focuses upon autonomy, no micro management and risk taking. It is based upon the fact that if employees are motivated and satisfied and they feel that the company provides job security, they will be highly productive.

Features of Theory Z:

Developing mutual trust: Development of mutual trust creates a feeling of belongingness among the employees. They align their individual goals to the goals of the company. Achieving company’s objective becomes a mutual efforts work.

Participative Management: This practice works for the empowerment of employees as well as it brings out more creative solutions on the table by involving employees in decision making. However, the managers have to keep their ego aside and have to be open to all kind of solutions by eradicating the fear of being ridiculed among the employees.

Self-Directed Work Team (SDWT): These are teams of employees with diverse talent who work towards a common goal without being supervised by a manager. The goal provides direction and mobilize behavior of the team members. Feedback about goal attainment sustains behavior.

Goal Commitment: To attain the company’s goals it is necessary that the employees have commitment towards the goals.

Hence, this concludes the definition of Theory Z along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

Browse the definition and meaning of more similar terms. The Management Dictionary covers over 2000 business concepts from 5 categories.

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