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Pros and Cons of Theory Z

Theory Z is also referred to as the Japanese theory of management was established during the Asian economic boom. The theory emphasizes the transformation of management actions and the use of various management techniques to ensure employee satisfaction and motivation in the organization.

It is a mix of both the American and the Japanese management philosophies which are aimed at improvement of organizational performance and ensuring job security.



1. Increased productivity: The Japanese theory focus on the empowerment of employees through training and other motivational avenues and this leads to increased productivity of the employee.

2. Loyalty: The theory promotes loyalty among the employees. It focuses on providing job security to the employee who in turn become loyal to the company.

3. Employee satisfaction: The main goal is to ensure the employees are satisfied to work in the company. This helps boost their confidence and improve their creativity within the company.

4. Promotes trust and openness: Theory Z focuses on ensuring there is trust among the employees, managers, and other groups. Trust in the organization ensures there is openness and integrity among all individuals in the company.

5. Strong bond between employees and organization: Provision of a conducive working environment and participation in management promotes a sense of pride and belonging within the organization and this results in a strong bond between employees and the organization.

6. Employee involvement: Contribution of employees towards the decision of the firm act as a motivational strategy and employees will contribute to the success of the organization through their involvement.

7. Promotes teamwork: Theory Z ensures employees are able to work together as a team. There is no formal structure and the employees coordinate, share information, and resources with each other.

8. Commitment of employees: The Japanese management theory focuses on the development of employees’ skills and the creation of incentives that ensure there is coordination and commitment of employees in their daily responsibilities.

9. Promotes generalists: According to William Ouch, employees should be knowledgeable about various aspects of the company in order to participate in management decisions. The management should also have confidence in them.

10. Control system: This management style ensures there is an informal organizational structure that is aimed at boosting mutual trust among different groups of people in the organization.



1. Participative management not welcomed: Managers do not fully support employee participation in decision-making because of fear of the unknown.

2. Reluctant to initiate: Employees may be reluctant to participate in decision-making due to the fear of being criticized.

3. Employee retention: It is difficult to retain highly ambitious employees in the company. Even if you establish a great relationship and loyalty, the employees will leave to look for more job security.

4. Structured organization: According to Ouch, an organization should not be structured and this may lead to a lot of problems. Unstructured organization leads to a lack of responsibility.

5. Common culture: It is difficult to come up with a common culture supported by all employees. Each employee comes from a different culture and having a general culture for all is difficult.

6. Reduced performance: If there are no more rewards for a job well done, this results in a decrease in performance and some conflicts.

7. Not applicable to different cultures: The theory is based on Japanese management practices which have a unique culture thus, it may not be applied in other cultures.

8. No complete solution: This theory of management doesn’t offer a complete solution to various motivation problems of the organizations which operate in different environments

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