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Theory Z was advanced by William Ouchi and is often referred to as Japanese management style. The secret to success, according to Ouchi, is not technology but a special way of managing people. This management style involves a strong company philosophy, a distinct corporate culture, long-range staff development, and consensus decision making. The result is lower turnover, increased job commitment, and much higher productivity.

A major aspect of Theory Z is trust. Organizations spend a lot of time developing the interpersonal skills needed to make effective group decisions. When a group makes decisions, group members are asked to place their fate in the hands of others. Each person has responsibility for some individual objectives set by the group. Team performance is critical to the accomplishment of objectives.

Ouchi has said:

“Perhaps the single most notable characteristic among those who have succeeded at going from A to Z has been an almost palpable character of integrity. By integrity I do not mean preaching morality to others; I mean an integrated response to problems, an integrated and consistent response to customers and employees, to superiors and subordinates, to problems in finance and in manufacturing. A person of integrity treats secretaries and executives with equal respect and approaches subordinates with the same understanding and values that characterize his or her family relationships. A person with integrity can be counted upon to behave consistently, even as organizational conditions change. Such a person can be trusted and can provide that key human capital from which others can draw in the process of change.”