Ouchi's Theory Z

This theory is essentially a combination of all that is best about McGregor’s Theory Y and modern Japanese management. It places a large amount of freedom and trust in “people to be in harmony with their leaders.” It also assumes that they possess strong loyalty and interest in teamwork and in the organization.

Theory Z places a great deal of reliance on the attitudes and responsibilities of workers, whereas McGregor’s XY theory is mainly focused on management and motivation from the manager’s and organization’s perspective.

Now, what conclusions can you come to from the earlier questions related to the Home Depot case and the review of classic motivational theories? There is sufficient evidence to draw two immediate conclusions:

First, it is possible for both autocratic and participative managerial styles to produce positive results, depending on the level of morale among the participating employees, and the leadership skill of the manager. Second, even in a somewhat autocratic, quasi-militaristic work climate, where there is a defined mission, a set of clear and measurable objectives (even when dictated by the CEO), understandable communications, and clearly stated expectations, this style can flourish.

Consequently, as pointed out in Chapter 6 on leadership: “If you rely on only one leadership style, you suffer the consequences of being rigid and will likely experience difficulty operating in situations where a single style simply doesn’t work.”

What follows is a set of conditions common to whichever style you adopt:

Hold fast to the definitive object of all business, which according to the late management scholar, Peter Drucker, is to create a customer.

Remove obstacles that deprive people of the ability to gain pride in quality of service and delivering innovative products.

Break down inhibiting barriers among diverse staff and create collaborative cross-functional teams.

Introduce a work environment in which the emphasis is on managers leading, not merely supervising.

Commit to long-term goals, such as attaining market leadership, developing leading-edge products, or maintaining superior service and product quality.

Reduce the use of fear as a motivator.

Encourage employees to express ideas; then listen to them and respond.

Promote self-improvement as an ongoing imperative. Institute continuing employee training and education to advance their skills, personal growth, and chances for career advancement.

He whose ranks are united in purpose will be victorious.

Sun Tzu

Another conclusion that can be drawn is that morale creates cohesion or being “united in purpose.” Cohesion allows you to tap more readily into the inner strengths of individuals, thus eliciting the resolve and determination to act decisively under competitive pressures. As important, it prevents them from faltering when stress increases due to a tough market situation.

When ignorant that the army should not advance, to order an advance or ignorant that it should not retire, to order a retirement: This is described as hobbling the army.

Sun Tzu

There is another reality you have to face about morale: Some managers never seem to worry about morale. No obstacles seem to bother them. Here’s what I want you to do; now do it is a familiar command. Most often, however, they experience incredible disorder in the follow-on moves, which could cause a “hobbling” effect. They are the great leaders for a day, until the moment that some negative outcome overwhelms them.

The greater and more reliable reality is that marketplace conflicts rely on positive outcomes through individual fortitude, triggered by the potent force of morale. And that takes ongoing training, excellent leadership, and intimate concern for employees’ well-being. These are the factors discussed in this and the previous chapter.

Heart is that by which the general masters. Now order and confusion, bravery and cowardice, are qualities dominated by the heart.

Therefore the expert at controlling his enemy frustrates him and then moves against him. He aggravates him to confuse him and harasses him to make him fearful. Thus he robs his enemy of his heart and of his ability to plan.

Sun Tzu

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