HRMN 495-Mini Case Study 3

Need‐Based Theories

We will look at four main theories about how human needs are satisfied:

Maslow’s hierarchy of needs, Alderfer’s ERG theory, Herzberg’s two‐

factor theory, and McClelland’s acquired‐needs theory.

Maslow’s Hierarchy of Needs

Human motivation can be defined as the fulfillment of various needs.

These needs can encompass a range of human desires, from basic,

tangible needs of survival to complex emotional needs surrounding an

individual’s psychological well‐being.

Abraham Maslow, a social psychologist, was interested in a broad

spectrum of human psychological needs, rather than individual

psychological problems. He is best known for his hierarchy‐of‐needs

theory. Depicted in the pyramid below, the theory organizes the different

levels of human psychological and physical needs in order of importance.

Learning Resource

Need-Based Theories

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UMGC (n.d.). Need-based Theories. Retrieved from https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource- list/need-based-theories.html#

Maslow’s Hierarchy of Needs

Managers can apply Maslow’s hierarchy to better understand employees’

needs and motivation, and address them in ways that lead to high

productivity and job satisfaction.

Physiological and Safety Needs

At the bottom of the pyramid are the physiological, or basic human

survival needs: food, shelter, water, sleep, etc. Once physiological needs

are satisfied, individual safety takes precedence. Safety and security

needs include personal security, financial security, and health and well‐

being.

After they have basic nutrition, shelter, and safety, people seek to fulfill

higher‐level needs.

Connection: The Third Level of Need

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The third level of needs—love and belonging—are the desire to share and

connect with others. Neglect, shunning, or ostracism can impact a

person’s ability to form and maintain emotionally significant relationships.

Humans need to feel a sense of belonging and acceptance, whether from

a large social group or a small network of family and friends. Without

these attachments, they may be vulnerable to loneliness, social anxiety,

and depression.

Higher‐Level Needs

The fourth level is esteem—the normal human desire to be valued and

validated by others—as well as self‐esteem. People with low self‐esteem

may find that external validation by others—through fame, glory,

accolades, etc.—only partially or temporarily fulfills their needs at this

level.

Finally, at the top of the pyramid is self‐actualization. At this stage,

people feel that they have reached their full potential. Self‐actualization

may occur after reaching an important goal or overcoming a particular

challenge, and it may be marked by a new sense of self‐confidence or

contentment. But it is rarely a permanent state. Rather, self‐actualization

is an ongoing need for personal growth and discovery that people have

throughout their lives.

Hierarchy of Needs and Organizational Theory

Maslow’s hierarchy of needs is relevant to organizational theory because

both are concerned with human motivation. Understanding what people

need—and how their needs differ—is an important part of effective

management. For example, some people work primarily for money (and

fulfill their other needs elsewhere), but others like to go to work because

they enjoy their coworkers or feel respected by others and appreciated

for their good work.

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In the workplace, Maslow’s hierarchy of needs suggests that if a lower

need is not met, then the higher ones will be ignored. For example, if

employees lack job security, they will be far more concerned about their

financial well‐being and paying their bills than about friendships and

respect at work. However, if employees receive adequate financial

compensation (and have job security), meaningful group relationships and

praise for good work may be more important motivators.

Consequences of Unmet Needs

When their needs aren’t met, employees can become very frustrated. For

example, if someone works hard for a promotion and doesn’t get the

recognition it represents, that employee may lose motivation and put in

less effort. Also, after a need is met, it will no longer serve as a motivator;

the next level up in the needs hierarchy will become more important.

Therefore, keeping employees motivated can seem like a moving target.

People seldom fit neatly into pyramids or diagrams, though; their needs

are complicated and often change over time.

Assessing Needs Accurately

Here's an example: Maria is a long‐time employee who is punctual, does

high‐quality work, and is well liked by her coworkers. However, her

supervisor begins to notice that she is coming in late and seems

distracted. He concludes that Maria is bored with her job and wants to

leave. But when he raises these issues in her semiannual performance

appraisal, he learns that Maria’s husband lost his job six months ago and,

unable to keep up with mortgage payments, the couple has been living in

a hotel. Maria has moved down the needs pyramid and, if the supervisor

wants to be an effective manager, he must adapt the motivational

approaches he uses. In short, a manager’s best strategy is to recognize

this complexity and try to remain attuned to what employees say they

need.

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Alderfer’s ERG Theory

Clayton Paul Alderfer, an American psychologist, used Maslow’s hierarchy

of needs in developing the his ERG theory, which refers to core needs in

three areas:

• existence

• relatedness

• growth

These three areas align, respectively, with Maslow’s levels of

physiological, social, and self‐actualization needs.

Alderfer proposed that when needs in one category are not met, people

will redouble their efforts to fulfill needs in a lower category. For

example, if their self‐esteem (an area of need in the growth category) is

suffering, people will invest more effort in the relatedness category of

needs.

Herzberg’s Two‐Factor Theory

American psychologist Frederick Herzberg is regarded as one of the great

original thinkers in management and motivational theory. He set out to

determine the effect of attitude on motivation by simply asking people to

describe the times when they felt really good and really bad about their

jobs. What he found was that people who felt good gave very different

responses from people who felt bad.

The results from this inquiry form the basis of Herzberg’s Motivation‐

Hygiene Theory, sometimes called Herzberg’s two‐factor theory (1968),

which hypothesized that two sets of factors govern job satisfaction and

job dissatisfaction: hygiene factors, or extrinsic motivators, and

motivation factors, or intrinsic motivators.

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Hygiene factors, or extrinsic motivators, tend to represent tangible, basic

needs like those noted in both the existence category of ERG theory and

in the lower levels of Maslow’s hierarchy of needs. Extrinsic motivators

include status, job security, salary, and fringe benefits. It’s important for

managers to realize that not providing the appropriate and expected

extrinsic motivators will sow dissatisfaction and decrease motivation

among employees.

Motivation factors, or intrinsic motivators, tend to be less tangible. They

are tied more to emotional needs like those identified in the relatedness

and growth categories in the ERG theory and at the higher levels of

Maslow’s hierarchy of needs. Intrinsic motivators include challenging

work, recognition, relationships, and growth potential. Managers need to

recognize that while these needs may fall outside the traditional scope of

what a workplace ought to provide, they can be critical to strong

individual and team performance.

The factor that differentiates two‐factor theory from the others is the

role of employee expectations. According to Herzberg, intrinsic

motivators and extrinsic motivators have an inverse relationship. Intrinsic

motivators tend to increase motivation when they are present, while

extrinsic motivators tend to reduce motivation when they are absent. This

is due to employees’ expectations. Extrinsic motivators (e.g., salary,

benefits) are expected, so they won’t increase motivation when they are

in place, but they will cause dissatisfaction when they are missing.

Intrinsic motivators (e.g., challenging work, growth potential), on the

other hand, can be a source of additional motivation when they are

available.

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If managers want to increase employees’ job satisfaction, they should be

concerned with the nature of the work itself—opportunities for

employees to gain status, assume responsibility, and achieve self‐

realization. If, on the other hand, management wishes to reduce

dissatisfaction, then the focus should be on the job environment

—policies, procedures, supervision, and working conditions. To ensure a

satisfied and productive workforce, managers must pay attention to both

sets of job factors.

McClelland’s Acquired‐Needs Theory

Psychologist David McClelland’s acquired‐needs theory splits the needs

of employees into three categories:

• achievement

• affiliation

• power

Employees who are strongly achievement‐motivated are driven by the

desire for mastery. They prefer working on tasks of moderate difficulty in

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which outcomes are the result of their effort rather than luck. They value

receiving feedback on their work.

Employees who are strongly affiliation‐motivated are driven by the desire

to create and maintain social relationships. They enjoy belonging to a

group and want to feel loved and accepted. They may not make effective

managers because they may worry too much about how others will feel

about them.

Employees who are strongly power‐motivated are driven by the desire to

influence, teach, or encourage others. They enjoy work and place a high

value on discipline. However, they may take a zero‐sum approach to

group work—for one person to succeed, another must fail. If channeled

appropriately, their motivation can positively support group goals and

help others in the group feel competent.

The acquired‐needs theory doesn’t claim that people can be neatly

categorized as one of the three types. Rather, it asserts that all people are

motivated by all of these needs to varying degrees. Also, needs do not

necessarily correlate with competencies; it is possible for an employee to

be strongly affiliation‐motivated, for example, but still be successful in a

situation that doesn’t meet that employee's affiliation needs.

McClelland proposes that people in top management generally have a

high need for power and a low need for affiliation. He also believes that

although individuals with a need for achievement can make good

managers, they are not generally suited to being in top management

positions.

Process‐Based Theories

Next, we will discuss three process‐based theories of motivation: equity

theory, expectancy theory, and reinforcement theory.

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Equity Theory

In contrast to the need‐based theories we have covered so far, process‐

based theories view motivation as a rational process. Individuals analyze

their environment, develop reactions and feelings, and respond in

specific, predictable ways.

Equity theory attempts to explain relational satisfaction in terms of

perceived fairness: That is, people evaluate how fair or unfair distribution

of resources is within their interpersonal relationships. Regarded as one

of many theories of justice, equity theory was first developed in 1963 by

John Stacey Adams. Adams, a workplace and behavioral psychologist,

asserted that employees seek to maintain equity between their inputs

and rewards from a job, and the perceived inputs and outcomes of others.

Equity theory proposes that people value fair treatment, which motivates

them to maintain a similar standard of fairness with their coworkers and

the organization. Accordingly, equity structure in the workplace is based

on the ratio of inputs to outcomes.

Inputs are the employee’s contributions to the workplace. They include

time spent working and level of effort but can also include less tangible

contributions such as loyalty, commitment, and enthusiasm.

Outputs are what the employee receives from the employer. They can

also be tangible or intangible. Tangible outcomes include salary and job

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security. Intangible outcomes might be recognition, praise, or a sense of

achievement.

A Workplace Example

For example, let’s look at Ross and Ayla, who both perform similar

jobs for a large magazine publishing company. If Ross received a pay

raise but saw that Ayla was given a larger raise for the same amount

of work, Ross would evaluate this change, perceive an inequality, and

be distressed. However, if Ross perceived that Ayla was being given

more responsibility and, therefore, more work that matched the

salary increase, then he would see the change as fair and would not

object to it.

An employee will perceive treatment as fair if the ratio of inputs to

outcomes seems equivalent for all of the employees who are being

compared.

Primary Propositions

Equity theory includes the following primary propositions:

• Individuals will try to maximize their outcomes.

• Individuals can maximize collective rewards by evolving accepted

systems for equitably apportioning resources among members. As a

result, groups will evolve such systems of equity and will attempt to

induce members to accept and adhere to these systems. In addition,

groups will generally reward members who treat others equitably

and punish members who treat others inequitably.

• When individuals find themselves in inequitable relationships, they

will become distressed. The more inequitable the relationship, the

more distress they will feel. According to equity theory, the person

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who gets “too much” and the person who gets “too little” both feel

distressed. The person who gets too much may feel guilt or shame.

The person who gets too little may feel angry or humiliated.

• Individuals who discover they are in inequitable relationships will

attempt to eliminate their distress by restoring equity.

Compensation

When employees compares their input/outcome ratios to other workers’,

they will look for others with similar jobs or skill sets. For example, Ross

would not compare his salary and responsibilities to those of the

magazine company’s CEO. However, he might look outside the

organization for comparison. For example, he might visit a job search

website to check salaries for positions like his at other publishing houses.

Pay, whether hourly or salary, is a central concern for employees and is

therefore the cause of equity or inequity in most, but not all, cases. In any

position, employees want to feel that their contributions and work

performance are being rewarded with fair pay. An employee who feels

underpaid may experience feelings of hostility toward the organization

and perhaps coworkers. This hostility may cause the employee to

underperform and breed job dissatisfaction among others.

Subtle or intangible compensation also plays an important role in equity.

Receiving recognition and being thanked for strong job performance can

help employees feel valued and satisfied with their jobs, resulting in

better outcomes for both the individual and the organization.

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Equity theory has several implications for business

managers:

• Employees measure the total of their inputs and

outcomes. This means a working parent may accept

lower monetary compensation in return for more

flexible working hours.

• Different employees ascribe different personal values

to inputs and outcomes. Thus, two employees of equal

experience and qualification performing the same

work for the same pay may have different perceptions

of the fairness of the deal.

• Employees are able to adjust for purchasing power and

local market conditions. Thus, a teacher from

Vancouver, Washington, may accept lower

compensation than a colleague in Seattle if the cost of

living is different, and a teacher in a different culture

and environment may accept a totally different pay

structure.

• Although it may be acceptable for more senior staff to

receive higher compensation, there are limits to the

balance of the scales of equity, and employees can find

excessive executive pay demotivating.

• Staff perceptions of inputs and outcomes of

themselves and others may be incorrect, so

perceptions need to be managed effectively.

Expectancy Theory

Key Points

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Expectancy theory, initially put forward by Victor Vroom at the Yale

School of Management, suggests that behavior is motivated by

anticipated results or consequences. Vroom proposed that a person

decides to behave in a certain way based on the expected result. For

example, people will work harder if they think the extra effort will be

rewarded.

According to expectancy theory, this process begins in childhood and

continues throughout life. Expectancy theory has three components:

expectancy, instrumentality, and valence.

Expectancy is the belief that effort will lead to the intended performance

goals. It describes a person’s belief that “I can do this.” Usually, the belief

is based on an individual’s past experience, self‐confidence, and the

perceived difficulty of the performance standard or goal. Factors

associated with a person’s expectancy perception are competence, goal

difficulty, and control.

Instrumentality is the belief that meeting the performance expectation

will result in a desired outcome. Instrumentality reflects the person’s

belief that, “If I accomplish this, I will get that.” The desired outcome may

be a pay increase, promotion, recognition, or sense of accomplishment.

Having clear policies in place—preferably spelled out in a contract

—guarantees that the reward will be delivered if the agreed‐upon

performance is met. Instrumentality is low when the outcome is vague or

uncertain, or if the outcome is the same for all possible levels of

performance.

Valence is the unique value an individual places on a particular outcome.

Valence captures the fact that “I find this particular outcome desirable

because I’m me.” Factors associated with a person’s valence are needs,

goals, preferences, values, sources of motivation, and the strength of their

preference for a particular outcome. An outcome that one employee finds

motivating and desirable—such as a bonus or pay raise—may not be

motivating and desirable to another (who may, for example, prefer greater

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recognition or more flexible working hours).

Expectancy theory, when properly followed, can help managers

understand how individuals are motivated to choose among various

behavioral alternatives. To enhance the connection between performance

and outcomes, managers should use systems that tie rewards closely to

performance. They can also use training to help employees improve their

abilities and their belief that added effort will lead to better performance.

A Note of Caution

It’s important to understand that expectancy theory can run aground if

managers interpret it too simplistically. Vroom’s theory entails more than

just the assumption that people will work harder if they think their effort

will be rewarded. The reward needs to be meaningful and take valence

into account. Valence has a significant cultural as well as personal

dimension, as illustrated here:

When Japanese motor company ASMO opened a plant in the United

States, it brought in many Japanese workers but hired American managers

to oversee operations. The managers, seeking to motivate the workers

with a reward system, initiated a costly employee‐of‐the‐month program

that included free parking and other perks. The program was a huge flop,

and participation was disappointingly low. Why? The program required

employees to nominate their coworkers to be considered for the award.

Traditional Japanese culture values modesty, teamwork, and conformity,

and to be put forward or singled out for being special is considered

inappropriate and even shameful. To be named Employee of the Month

would be an embarrassment—not at all the reward that management

assumed. Especially as companies become more culturally diverse, the

lesson is that managers need to get to know employees and their needs—

their unique valences—if they want to understand what makes the

workers feel motivated, happy, and valued.

Reinforcement Theory

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The basic premise of the theory of reinforcement is both simple and

intuitive: An individual’s behavior depends on the consequences. It’s

cause and effect: If I work hard today, I’ll make more money. If I make

more money, I’m more likely to want to work hard.

Operant Conditioning

Reinforcement theory is based on the work of B. F. Skinner in the field of

operant conditioning. The theory relies on four primary inputs, or aspects

of operant conditioning, from the external environment: positive

reinforcement, negative reinforcement, positive punishment, and negative

punishment.

The chart Operant Conditioning shows the reinforcement and

punishment pathways. Each one may include positive and negative

stimuli.

Operant Conditioning

Types of Reinforcement

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Positive reinforcement attempts to increase the frequency of a behavior

through rewards. For example, if an employee identifies a new market

opportunity that creates profit, that employee may receive a bonus.

Negative reinforcement, on the other hand, attempts to increase the

frequency of a behavior by removing something the individual doesn’t

like. For example, an employee demonstrates a strong work ethic and

wraps up a few projects faster than expected. This employee happens to

have a long commute. The manager rewards the employee’s progress by

allowing work‐from‐home days.

Reinforcement can be affected by various factors:

• satiation—the degree of need. If an employee is already wealthy, a

bonus may not be motivating or reinforcing.

• immediacy—the time elapsed between the desired behavior and the

reinforcement. The shorter the time between the two, the more

likely that the employee will correlate the reinforcement with the

behavior. If an employee does something great but isn’t rewarded

until two months later, the connection to the behavior may be

unclear. The reinforcement loses meaning and power.

• size—The magnitude of a reward or punishment can have a big effect

on the degree of response. For example, where satiation is not a

factor, a bigger bonus often has a bigger impact.

In managing employees, reinforcers include salary increases, bonuses,

promotions, variable incomes, flexible work hours, and paid sabbaticals.

Managers are responsible for identifying the behaviors to promote and

those to discourage, and for carefully considering how the behaviors

relate to organizational objectives. Implementing rewards and

punishments that are aligned with the organization’s goals helps to create

a more consistent, efficient work culture.

Incentive Programs

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One particularly common positive‐reinforcement technique is creating

incentive programs to encourage specific actions, behaviors, or results

during a defined time period. Incentive programs can reduce turnover,

boost morale and loyalty, improve wellness, increase retention, and drive

daily performance. By motivating staff, businesses can increase

productivity and meet goals.

Let’s look at an IT sales team, for example. Its goal is to sell a company’s

new software to larger businesses, so the manager offers a 5 percent

commission reward to team members who gain clients of 5,000 or more

employees. This reward reinforces the behavior of closing big contracts,

motivates team members to work toward the goal, and likely will increase

the number of big contracts closed.

To maximize the impact of reinforcement, every feature of an incentive

program must be tailored to participants’ interests. A successful incentive

program contains clearly defined rules, suitable rewards, efficient

communication strategies, and metrics for measuring success. By

adapting each element to fit the target audience, companies are better

able to engage employees and enhance the program’s efficacy.

Punishment

Positive punishment is a straightforward form of conditioning: identifying

a negative behavior and providing an adverse stimulus to discourage

future occurrences. A simple example would be suspending an employee

for inappropriate behavior.

Negative punishment entails removing or withholding something. For

example, an employee in the IT department prefers to work

unconventional hours, from 10:30 a.m. to 7 p.m. However, this employee

has been performing poorly. A negative punishment would be to revoke

the right to keep the preferred schedule until performance improves.

The purpose of punishment is to prevent future occurrences of an

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unacceptable or undesirable behavior. According to deterrence theory,

awareness of a punishment can prevent people from engaging in a

behavior, whether by punishing them immediately after the behavior, or

by educating them about consequences to discourage them before they

even engage in the behavior. Punishment tools can include demotions,

salary cuts, and terminations.

In business organizations, both punishment and deterrence play vital roles

in shaping workplace culture and in avoiding conflicts and negative

outcomes—both internally and externally. If employees know exactly

what they are not supposed to do, and they understand the possible

repercussions of violating expectations, they will generally try to avoid

crossing the line. Prevention is a much cheaper and easier approach than

waiting for something bad to happen. Therefore, preemptive education

about rules—and the penalties for violations—is common in business.

Theory X, Theory Y, and Theory Z

Next, you’ll learn more about three different managerial styles and their

impact on employee motivation. As you read, see if the descriptions fit

anyone you have worked for.

Perspectives on Motivation

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The idea that a manager’s attitude has an impact on employee motivation

was originally proposed by Douglas McGregor, a management professor

at the Massachusetts Institute of Technology during the 1950s and

1960s. McGregor (1960) proposed two theories of how managers

perceive and address employee motivation. He referred to these opposing

motivational methods as theory X and theory Y management. Each

theory assumes that the manager’s role is to organize resources, including

people, to benefit the company. However, beyond this, the attitudes and

assumptions they embody are quite different.

Theory X

According to McGregor, theory X management makes the following

assumptions:

• Work is inherently distasteful to most people, and they will attempt

to avoid work whenever possible.

• Most people are not ambitious, have little desire for responsibility,

and prefer to be directed.

• Most people have little aptitude for creativity in solving

organizational problems.

• Motivation occurs only at the physiological and security levels of

Maslow’s hierarchy of needs.

• Most people are self‐centered, so they must be closely controlled

and often coerced to achieve organizational objectives.

• Most people resist change.

• Most people are gullible and unintelligent.

Essentially, theory X assumes the primary source of employee motivation

is monetary, with security being a strong secondary motivator. Under

theory X, one can take a hard or soft approach to getting results.

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The hard approach relies on coercion, implicit threats, micromanagement,

and tight controls—essentially an environment of command and control.

The soft approach is to be permissive and seek harmony, hoping that

employees will cooperate when asked. However, neither of these

extremes is optimal. The hard approach results in hostility, purposely low

output, and extreme union demands. The soft approach results in a

growing desire for greater reward in exchange for diminished work

output.

It might seem that the optimal approach to human resource management

would lie somewhere between these extremes. However, McGregor

asserts that neither approach is appropriate, since the basic assumptions

of theory X are incorrect.

Drawing on Maslow’s hierarchy of needs, McGregor argues that a need,

once satisfied, no longer motivates. The company uses monetary rewards

and benefits to satisfy employees’ lower‐level needs. Once those needs

have been satisfied, the motivation disappears. Theory X management

hinders the satisfaction of higher‐level needs because it doesn’t

acknowledge that those needs are relevant in the workplace. As a result,

the only way that employees can attempt to meet higher‐level needs at

work is to seek more compensation, so, predictably, they focus on

monetary rewards. While money may not be the most effective way to

self‐fulfillment, it may be the only way available. People will use work to

satisfy their lower needs and seek to satisfy their higher needs during

their leisure time. However, employees can be most productive when

their work goals align with their higher‐level needs.

McGregor makes the point that a command‐and‐control environment is

not effective because it relies on lower‐level needs for motivation. In

modern society, those needs are mostly satisfied for most employees, so

they are no longer motivating. In this situation, one would expect

employees to dislike their work, avoid responsibility, have no interest in

organizational goals, resist change, and this easily creates a self‐fulfilling

prophecy. To McGregor, a steady supply of motivation seemed more likely

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to occur under theory Y management.

Theory Y

The higher‐level needs—esteem and self‐actualization—are ongoing and,

for most people, never completely satisfied. Employees can best be

motivated through these higher‐level needs.

In strong contrast to theory X, theory Y management makes the following

assumptions:

• Work can be as natural as play if the conditions are favorable.

• People will be self‐directed and creative to meet work and

organizational objectives if they are committed to them.

• People will be committed to quality and productivity objectives if

rewards address higher needs, such as self‐fulfillment.

• The capacity for creativity spreads throughout organizations.

• Most people can handle responsibility because creativity and

ingenuity are common traits.

• Under the right conditions, people will seek responsibility.

These assumptions suggest that personal and organizational goals can be

aligned by using the employee’s own need for fulfillment as the motivator.

McGregor stressed that theory Y management does not imply a soft

approach. He recognized that some people may not have reached the

level of maturity assumed by theory Y and may initially need tighter

controls. These can be relaxed as the employee develops.

If theory Y holds true, an organization can apply the following principles

of scientific management to improve employee motivation:

• Decentralization and delegation. With decentralized control and few

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levels of management, managers will have more subordinates and,

consequently, will need to delegate some responsibility and decision

making.

• Job enlargement. Broadening the scope of an employee’s job adds

variety and opportunities to satisfy ego needs.

• Participative management. Consulting employees in decision making

taps their creative capacity and provides them with some control

over their work environment.

• Performance appraisals. Having the employee set objectives and

participate in the process of self‐evaluation increases engagement

and dedication.

This type of environment can increase and continually fuel motivation as

employees work to satisfy their higher‐level personal needs through their

jobs.

Ouchi’s Theory Z

In the 1980s, the United States experienced a surge of demand for

Japanese products, particularly in the automotive industry. US consumers

clambered for cars, televisions, stereos, and electronics from Japan

because of their high quality and low prices. The Japanese competitive

edge came from how workers were managed. Japanese employees were

engaged, empowered, and highly productive.

Management professor William Ouchi (1981) argued that Western

organizations could learn from their Japanese counterparts. Born to a

Japanese American family and educated in the US, Ouchi spent a lot of

time in Japan studying the approaches to workplace teamwork and

participative management used in Japanese organizations. The result was

theory Z: a development beyond theory X and theory Y that blended the

best attributes of the management practices Ouchi studied and observed.

Ouchi claimed theory Z would reduce employee turnover, increase

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commitment, improve morale and job satisfaction, and drastically increase

productivity.

Theory Z stresses the need to help workers become generalists, rather

than specialists. It views job rotations and continual training to increase

employees’ knowledge of the company and its processes, while building a

variety of skills and abilities. Since workers are given much more time to

receive training, rotate through jobs, and master the intricacies of the

company’s operations, promotions tend to be slower. The rationale for

the drawn‐out time frame is that it helps develop a more dedicated, loyal,

and permanent workforce, which benefits the company. The employees,

meanwhile, have the opportunity to fully develop their careers at one

company. When employees rise to a higher level of management, it is

expected that they will use Theory Z to “bring up,” train, and develop

other employees in a similar fashion.

Ouchi’s theory Z makes certain assumptions about workers. One is that

they seek to build cooperative and intimate working relationships with

their coworkers (i.e., a strong desire for affiliation). Another is that

workers expect reciprocity and support from the company. According to

theory Z, people want to maintain a work‐life balance, and they value a

work environment in which family, culture, and traditions are considered

just as important as the work. Under theory Z management, not only do

workers have a sense of cohesion with their fellow workers, they also

develop a sense of order, discipline, and a moral obligation to work hard.

Finally, theory Z assumes that given the right management support,

workers can be trusted to do their jobs to their utmost ability and look

after their own and others’ well‐being.

Theory Z also makes assumptions about company culture. If a company

wants to realize the benefits described above, it needs to have the

following:

• A strong company philosophy and culture. All employees need to

understand the company philosophy and culture, and employees

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need to believe in the work they’re doing.

• Long‐term staff development and employment. The organization and

management team need to have measures and programs in place to

develop employees. Employment is usually long term, and promotion

is steady and measured. This leads to loyalty from team members.

• Consensus in decisions. Employees should be encouraged and

expected to take part in organizational decisions.

• Generalist employees. Because employees have a greater

responsibility in making decisions and understand all aspects of the

organization, they ought to be generalists, even though they have

specialized responsibilities.

• Concern for the happiness and well‐being of workers. The

organization needs to demonstrate sincere concern for the health

and happiness of its employees and their families, in part through

programs to foster happiness and well‐being.

• Informal control with formalized measures. Employees should be

empowered to perform tasks without being micromanaged, but with

formalized measures in place to assess work quality and

performance.

• Individual responsibility. Within the context of the team, the

organization should recognize individual contributions.

Theory Z is not the last word on management, and it has limitations. It

can be difficult for organizations and employees to make lifetime

employment commitments. Also, participative decision making may not

always be feasible or successful due to the nature of the work or the

willingness of the workers. Slow promotions, group decision making, and

lifetime employment may not be a good fit for companies operating in

cultural, social, and economic environments where these practices are not

the norm.

References

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Herzberg, F. (1968). One more time: How do you motivate employees?

Harvard Business Review, 46(1), 53–62.

McGregor, D. (1960). The human side of enterprise. McGraw‐Hill.

Ouchi, W. G. (1981). Theory z: How American management can meet the

Japanese challenge. Addison‐Wesley.

Licenses and Attributions

Chapter 10: Motivating Employees (https://courses.lumenlearning.com

/wm‐introductiontobusiness/chapter/introduction‐to‐need‐based‐

theories/) by Linda Williams and Lumen Learning from Introduction to

Business is available under a Creative Commons Attribution 4.0

International (http://creativecommons.org/licenses/by/4.0/) license.

UMGC has modified this work and it is available under the original

license.

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