Until the latter part of the twentieth century, there were two basic approaches to management. One of these held that employees were out to get as much from their employer as possible, that they would perform the absolute minimum amount of work necessary to still receive their pay, and that there existed by nature an adversarial relationship between workers and management. This came to be called Theory X. A direct response to this approach was the idea that workers sought to meet more than their basic needs through the work environment, and that if they were given responsibility and authority, workers would respond with creative ways to maximize their productivity. This approach considered employees to be experts in how best to perform their tasks, and focused on the individual rather than on the group. This approach was typed Theory Y.
In the early 1980s, William Ouchi published yet a third approach to management which he based on research done largely at Japanese organizations. This was Theory Z, which synthesized some of Theory X and some of Theory Y, but which also introduced new elements.
Ouchi based his theory on observations of Japanese companies and also on work he did with Fortune 500 companies. A professor at UCLA's graduate school of management, Ouchi also worked closely with companies to implement Theory Z management, often in conjunction with quality control programs. In fact, learning Theory Z from the Japanese brings a certain amount of symmetry to the process since much of what the Japanese put into practice was taken to them by an American, W. Edwards Deming.
Ouchi argues that highly successful American firms may benefit from six major components frequently associated with Japanese companies. He has termed the implementation of these six factors Theory Z, and contends that under this view, an organization is likely to be more successful than with other approaches to organizational behavior.
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