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Theory Z is a name for various theories of human motivation built on Douglas McGregor's Theory X and Theory Y. Theories X, Y and various versions of Z have been used in human resource management, organizational behavior, organizational communication and organizational development.
McGregor's Theory X states that workers inherently dislike and avoid work and must be driven to it, in contrast to Theory Y which states that work is natural and can be a source of satisfaction when aimed at higher order human psychological needs.
The second one is the 3D Theory which was developed by W. J. Reddin in his book Managerial Effectiveness (1970).
And the other is William Ouchi's so-called "Japanese Management" style which was explained in his book Theory Z: How American Business Can Meet the Japanese Challenge (1981); such style was popularized during the Asian economic boom of the 1980s.
For Ouchi, Theory Z focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job. According to Ouchi, Theory Z management tends to promote stable employment, high productivity, and high employee morale and satisfaction.
Abraham Maslow, a psychologist and the first theorist to develop a theory of motivation based upon human needs produced a theory that had three assumptions. First, human needs are never completely satisfied. Second, human behavior is purposeful and is motivated by need for satisfaction. Third, these needs can be classified according to a hierarchical structure of importance from the lowest to highest (Maslow, 1970).
- Physiological need
- Safety needs
- Belongingness and love needs
- The esteem needs – self-confidence
- The need for self-actualization – the need to reach your full potential
Maslow's hierarchy of needs theory helps the manager to understand what motivates an employee. By understanding what needs must be met in order for an employee to achieve the highest-level of motivation, managers are then able to get the most out of production. Theory X, Y and Z all play a role in how a company should manage successfully. Theory X and Theory Y were both written by Douglas McGregor, a social psychologist who is believed to be a key element in the area of management theory. In McGregor's book The Human Side of Enterprise (1960), McGregor describes Theory X and Theory Y based upon Maslow's hierarchy of needs, where McGregor grouped the hierarchy into a lower order (Theory X) needs and a higher order (Theory Y) needs. McGregor suggested that management could use either set of needs to motivate employees, but better results could be gained by the use of Theory Y, rather than Theory X (Heil, Bennis, & Stephens, 2000).
- Theory Z – Abraham Maslow
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