Is the Japanese 'Theory Z' really a management acme?
Boston — American corporate executives have been bowing deep to Japanese-style management lately.
They have bought William G. Ouchi's book, ''Theory Z: How American Business Can Beat the Japanese Challenge,'' in sufficient droves to put it on the best seller list. Management and business magazines are full of articles about the wonders of Japanese business.
It has become a ''fascination,'' says James W. Begun, a young assistant professor at Cornell University's Graduate School of Business and Public Administration. But, he maintains, the value of Japanese-style management has been oversold.
Japanese management usually incorporates several features. Employees are hired by a corporation for their working lifetime. They don't bounce from company to company, as in the United States. Japanese executives tend to use ''implicit control'' -- suggesting action to subordinates -- rather than ''explicit control'' -- demanding action. Promotion and evaluation are infrequent. Salaries tend to rise only with seniority. Decisionmaking is generally collective, as is responsibility. A management group talks over a corporate challenge together and decides on action by consensus. Career paths for individuals are mostly nonspecialized. An accountant might spend some time on the sales staff or managing a plant, for instance. In the US, an accountant would usually remain in the accounting department. Japanese management is concerned with the ''whole man,'' not just his corporate activities.
All these elements, the enthusiasts say, make Japanese employeers happier and more productive.
Enough US companies have tried ''Theory Z'' management (basically, Japanese-style management) that there are by now a number of turnaround cases of improved employee morale and productivity.
Professor Begun, however, raises some questions.
First, he says, when a company is in bad shape, a dose of old-fashioned ''Theory A'' American-style management, in which a tough new boss comes in, fires brass, knocks some heads together, and takes other drastic measures, might also improve productivity, putting the company in such better shape that morale will rise.
Second, many of the Japanese management techniques were first developed by leading American management experts two or more decades ago, he notes. They were part of the ''human resources school'' in organizational theory. They developed, for instance, theories of ''participative management'' and improved job design. The Japanese quickly adapted the theories in their corporations. American executives were slower to introduce the new-style management ideas -- but faced now with Japanese competition, they're reconsidering. People like author Ouchi have done an ''excellent job of marketing,'' Mr. Begun says.
Some companies, however, have used many of the new management techniques. Begun mentioned IBM, Hewlett-Packard, Eli Lilly, and Procter & Gamble.
Begun figures other factors besides management partly account for Japan's business success. These include the nonadversarial relationship between business and government; the high rate of capital formation (22 percent in Japan; 7 percent in the US); the centralization of banking and finance (a group of companies will have its own bank); unions that serve one enterprise (vs. industrywide or craft unions in the US); a strong centralized control of national industrial policy, sometimes resulting in strategic decisions on export markets for an entire industry; considerable protection from foreign competition; and a low defense burden.
''The fascination with Japanese-style management is out of kilter with reality,'' the Cornell University professor concludes. ''Theory Z gives us something easy to hang on, to try, and to do. It gives managers an illusion of control. It fails to recognize the vulnerability of organizations to external forces.''
Mr. Begun finds most of the goals of Japanese-style management unobjectionable, however, and, in fact, often desirable. It is better to have happy workers than sad workers, for managers to be sensitive rather than insensitive to the problems of their employees.
He's afraid, though, that should the fascination of American executives with Japanese-style management not boost productivity as desired, they will reject the many positive elements of a more humane management style. Thus Begun wants managers of US corporations to have a more balanced view of Japanese-style management.
''Japanese organization is romanticized in the literature,'' he says. Yet it includes elements of racism, sexism, paternalism, resistance to change, innovation or deviation, the crushing of individual expression, and an inability to make quick decisions.
Japanese employees, he noted, are expected to put company before family. They have a derogatory term for those who act contrariwise -- ''wife-lover.''
Oddly, younger Japanese are now insisting on the greater individuality that is normal in the US. ''Things should be less Z-like in the future in Japan,'' says Begun. ''Young people are demanding a full life outside of work.'' Management styles are already changing in fast-moving high-technology firms.
So, US management may become more Japanese-like, and Japanese management more American-like. It is hoped the cross will be as healthy as hybrid corn.