How does Ouchi’s Theory Z combine U.S. and Japanese management practices?

"Theory Z William Ouchi (pronounced O Chee), a management scholar at the University of California, Los Angeles, has proposed a theory that combines U.S. and Japanese business practices. He calls it Theory Z . Table 9.1 compares the traditional U.S. and Japanese management styles with the Theory Z approach. Theory Z emphasizes long-term employment, slow career development, moderate specialization, group decision- making, individual responsibility, relatively informal control over the employee, and concern for workers. Theory Z has many Japanese elements. But it reflects U.S. cultural values. In the past decade, admiration for Japanese management philosophy that centers on creating long-term relationships has declined. The cultural beliefs of groupthink, not taking risks, and employees not thinking for themselves are passé. Such conformity has limited Japanese competitiveness in the global marketplace. Today there is a realization that Japanese firms need to be more proactive and nimble in order to prosper. It was that realization that led Japanese icon Sony to name a foreigner as the CEO of Japan’s most famous company. Over the years, Sony’s performance has declined, until in April 2005, the company posted its biggest loss ever. Nobuki Idei, the former CEO who inherited Sony’s massive debts and stagnant product lines, realized his strategy wasn’t working, so he became determined to appoint a successor who would be able to transform Sony from the lumbering giant it had become back into the forward-thinking company it had been. Idei tapped Sir Howard Stringer, a Welsh-born American who had been running Sony’s U.S. operations. In doing so, Idei hoped to shock company insiders and industry analysts alike. “It’s funny, 100 percent of the people around here agree we need to change, but 90 percent of them don’t really want to change themselves,” he says. “So I finally concluded that we needed our top management to quite literally speak another language.” After seven years as CEO, Stringer assumed the position of Chairman and appointed Kazuro Hirai as President and Chief Executive Officer. 4 Differences in Management Approaches Factor Traditional U.S. Management Japanese Management Theory Z (Combination of U.S. and Japanese Management) Length of employment Relatively short-term; workers subject to layoffs if business is bad Lifetime; layoffs never used to reduce costs Long-term but not necessarily lifetime; layoffs “inappropriate”; stable, loyal workforce; improved business conditions don’t require new hiring and training Rate of evaluation and promotion Relatively rapid Relatively slow Slow by design; managers thoroughly trained and evaluated Specialization in a functional area Considerable; worker acquires expertise in single functional area Minimal; worker acquires expertise in organization instead of functional areas Moderate; all experience various functions of the organization and have a sense of what’s good for the firm rather than for a single area Decision- making On individual basis Input from all concerned parties Group decision-making for better decisions and easier implementation Responsibility for success or failure Assigned to individual Shared by group Assigned to individual Control by manager Very explicit and formal More implicit and informal Relatively informal but with explicit performance measures Table 9.1 Sources: Comparison of traditional U.S. and Japanese management styles with the Theory Z approach. Based on information from Jerry D. Johnson, Austin College. Dr. Johnson was a research assistant for William Ouchi. William Ouchi, Theory Z , Avon, 1982. 344 Chapter 9 Motivating Employees This OpenStax book is available for free at http://cnx.org/content/col25734/1.7"