CHAPTER 1.

CONCEPTS OF LEADERSHIP AND MANAGEMENT

MANAGEMENT

 concept and process that uses resources to meet specific goals efficiently
and effectively.
 Refers to activities carried out by those at the middle and lower levels of
management.
 It is saying what one wants to be done and then getting it done through
others
 Process of organizing and using human and material resources to achieve
pre-determined objectives.
 An integral process through which organizational goals are set and achieved
by means of people who work together within the system.
 management is a practice rather than a science or a profession so there is no
precise solution, and the ultimate test of management is achievement and
performance (According to Peter Drucker known as the management guru)
LEADERSHIP

 a social influence or a person’s ability to move other people to act

 influence processes involving determination of the group’s or organization’s
objectives
 motivating task behavior in pursuit of these objectives
 influencing group maintenance and culture
 the privilege to have the responsibility to direct the actions of others at
varying levels of authority and with accountability to both successful and
failed endeavors (Roberts, 1989)
 the process of influencing the activities of an organized group in its effort
toward goal setting and goal achievement (Stogdill, 1974)
 a means of persuasion and example by which an individual induces a group to
take action in accord with a purpose common to everyone (Gardner, 1993)
 a process by which one inspires others to work together for the achievement
of a common mission and goal, a social transaction (Merton, 1969)
 a vital ingredient which transforms a mere crowd into a functional and useful
organization. It can be taught and that it is a transferable skill (Adair, 1983)
LEADERSHIP VS MANAGEMENT
LEADERSHIP MANAGEMENT
Motto Do the right thing Do things right
Challenge Change/innovation Continuity
Focus Purposes Structures, process and procedures
Time Frame Future Present
Methods Strategies Schedules
Questions Why? Who, what, when, where and how?
Outcomes Journey Destinations/goals
Focuses on Potential Performance
 Human

LEADERS VERSUS MANAGERS

Do the right thing
Are interested in effectiveness
Innovate
Develop
Focus on people
Rely on trust
Align people
Emphasize philosophy, core values, and shared
goals
Have a long-term view
Ask what and why
Challenge the status quo
Focus on the future
Have their eyes on the horizon
Develops visions and strategies
Seek Change
Take risks
Inspire people to change
Use person-to-person influence
Inspire others to follow
Operate outside of organizational rules,
regulations, policies and procedures
Take initiative to lead
Do things right
Are interested in efficiency
Administer
Maintain
Focus on systems and structure
Rely on control
Organize and staff
Emphasize tactics, structures and systems
Have a short-term view
Ask how and when
Accept the status quo
Focus on the present
Have their eyes on the bottom line
Develop detailed steps and timetables
Seek predictability and order
Avoid risks
Motivate people to comply with standards
Use position-to-position (superior-to-
subordinate) influence
Require others to comply
Operate within organizational rules,
regulations, policies, and procedures.
Are given a position

B. LEADERSHIP THEORIES
1. EARLY LEADERSHIP THEORIES
a. Trait Theory
 Traits are earlier thought to be inherited but later research indicates that traits could be
obtained through learning and experience
 Leadership traits are: energy, drive, enthusiasm, ambition, aggressiveness, decisiveness, self-
assurance, self-confidence, friendliness, affection, honesty, fairness, loyalty, dependability,
technical mastery, and teaching skills
 Common traits of Leaders
 Positive Traits – Leaders who have positive traits bring people to progress. They
transcend their own traits to people who will become positive leaders themselves. They
are cheerlful, forgiving, intelligent, and good looking men and women among others.
 Negative Traits – Leaders who have negative traits take people to destruction. They
destroy rather than build. They are not able to grow good leaders but followers who go
after each other. They are bitter, aggressive, loud-mouthed, sullen, and ugly people.

These common traits are easier to remember than cultivate. It takes time to
consistently choose to deal with people positively. For example, consistently
greeting co-nurses upon arriving at the nurse’s station; saying “thank you” and
“please” whenever necessary.
  Other common traits:
o Leaders are more intelligent than the group that they lead
o Must possess initiative, ability to perceive, and start courses of action not conceived by
others
o Creativity and originality
o Emotional maturity with integrity
o Adequate communication skills

a.1 “Great Man” Theory

 The great man theory indicates that a few people are born with the necessary
characteristics to be great.

 This theory assumes that the capacity for leadership is inherent, that great leaders
are born, not made.
 This theory often portrays great leaders as heroic, mythic and destined to rise to
leadership when needed.
 As a male quality, especially in terms of military leadership

a.2 Individual Character Theory

Under this theory, traits determine whether or not a person can be an effective
leader. These people have innate character that made them great leaders.
b. BEHAVIORAL THEORIES
Behavioral theories were concerned with what leaders do and act than who the leader is.
The actions of the leaders and not their mental qualities or traits make them leaders. The focus moved
from leaders to leadership. Behavioral theories are based upon the belief that great leaders are made,
not born. People can be taught to become leaders through experience and observation.

b.1 Kurt Lewin (1890 – 1947) = an eminent psychologist who proposed that the
worker’s behavior is influenced by interactions between the personality, the structure
of the primary work group and the socio-technical climate of the workplace (Miner,
2005).

He categorized leadership styles as (1) authoritarian, (2) democratic, and (3)

laissez-faire. These leadership styles are still relevant today but should be carefully
chosen to adapt to the people involved and the situation.

He also developed the “Field Theory of Human Behavior.” Lewin believed Kurt Lewin
that people act the way they do depending on self-perceptions and their environments.
Lewin (1951) proposed that change undergoes three stages: unfreezing, actual
change and re-freezing.

1. First Stage: Unfreezing. It involved overcoming inertia and dismantling existing “mind set”.
Defense mechanisms have to be bypassed. Replace the previous culture learned with the
new one.
2. Second Stage: Change Occurs. This is typically a period of confusion and transition. Old ways
are being challenged but there is no clear picture to replace them with yet may be ready to
accept new role.
3. Third Stage: Re-freezing. The new mindset is crystallizing and one’s comfort level is
returning to previous levels. This is often misquoted as “refreezing”. Have internalized new
roles and can adapt to new environment and culture.
b.2. Chris Argyris (1923 - ) = an organizational psychologist who sought to study
the way people in organizations act and react with each other.

He also studied the patterns of reasoning that explains one’s behavior.

These patterns cam get one into trouble if individuals do not reflect and
understand why one does and thinks the way they do. But with proper training,
one can become more aware of one’s mental models and how they Chrisoperated
Argyris
(Argyris, 1957).

b.3. Alvin Toffler (1928 - )

Alvin Toffler is a futurist known for his works discussing the digital
revolution, communications revolution, corporate revolution and
technological singularity. He examined technology and its impact to the
world and the reaction of and changes in society. He also categorized the
changes in cultural behavior and civilization in terms of ‘waves’ such as the
First Wave, Second Wave and the Third Wave (Toffler, 1971). Alvin Toffler

“Society needs people who take care of
the elderly and who know how to be
compassionate and honest. Society needs
people who work in not just cognitive;
they’re emotional, they’re affectional.
You can’t run the society on data and
computers alone.”
-Toffler
He believed that in the Third Wave, i.e., the post-
industrial society and age of information and
knowledge, aging societies will be using new medical
technologies from self-diagnosis to instant analysis of
ailments to self-administered therapies that will be
delivered by nanotechnology instead of doctors and
nurses. This will affect the way the whole health
delivery system works.

“The illiterate of the 21st century will not be those who cannot read and write,
but those who cannot learn, unlearn, and relearn.”

-Toffler (Rethinking the Future)

b.4. Rensis Likert (1903-1981)

Likert is best known for his development of the Likert Scales and the
Linking Pin model.

i. The Likert Scale is a five (5) scale measurement tool to determine the
level of agreement and disagreement of a respondent to a set of
questions that could be objective or subjective in nature. The format of
a typical five-level Likert item is:
Rensis Likert
1. Strongly disagree
2. Disagree
3. Neither agree nor disagree
4. Agree
5. Strongly agree

ii. The Linking Pin Model, on the other hand, is a concept of the ideal work relationship of
workers in an organization
c.SITUATIONAL OR CONTINGENCY THEORIES

Another approach to leadership is the situational approach. Under these theories, different
situations demand different types of leadership. A situation, within this context, is a “set of values
and attitudes with which the individual or group has to deal in a process of activity and with regard
to which this activity is planned and its results appreciated. Every concrete activity is the solution of
a situation.”

It is also called contingency theories because the leadership style would be dependent on
the situation that a leader is faced at the moment.

c.1 Paul Hersey & Kenneth Blanchard

Leaders should adapt their style to follower development style or

(‘maturity’), based on how ready and willing the follower is to perform
required tasks. Their readiness depends on their competence and motivation.

There are four leadership styles (S1 to S4) that match the
development levels (D1 to D4) of the followers. The four styles suggest that Paul Hersey
leaders should put greater or less focus on the task in question and/or the
relationship between the leader and the follower, depending on the development
level of the follower.

S1: Directing/Telling Leaders

The leader defines the roles and tasks of the ‘follower’, and supervises
them closely. Decisions are made by the leader and announced, so
communication is largely one-way.

S2: Coaching/Selling Leaders

Ken Blanchard
The leader still defines roles and tasks, but seeks ideas and suggestions
from the follower. Decisions remain the leader’s prerogative, but communication is much more two-
way.

S3: Supporting/Participating Leaders

The leader passes day-to-day decisions, such as task allocation and processes, to the
follower. The leader facilitates and takes part in decisions, but control is with the follower.

S4: Delegating Leaders

Leaders are still involved in decisions and problem-solving, but control is with the follower.
The follower decides when and how the leader will be involved.

Of these, there is no one style that is considered optimal or desired for all leaders to possess.
Effective leaders need to be flexible, and must adapt themselves according to the situation. However
each leader tends to have a natural style and in applying Situational Leadership she must know her
intrinsic style.

c.2 Fred Fiedler (1922 - )

Fred Fiedler
 Fiedler (1967) developed his theory around the premise that leaders’ personal
characteristics are stable and, therefore, so is the leadership style.

The Fiedler Contingency Model is a leadership theory that moved from the research of traits
and personal characteristics of leaders to leadership styles and behaviors (Fiedler, 1967).

Fiedler believed that there is no single approach that could provide an adequate solution for
the various management problems. His model focused on the personality and relationship between
the leader and group members, programming of group’s assignment and positional power of the
leader.

c.3 Victor Harold Vroom and Yetton

Vroom and Yetton suggested that the selection of a leadership style will determine decision-
making. The effectiveness of a decision procedure depends upon a number of aspects of the
situation (Vroom, 1973), such as the:

1. Importance of the decision quality and acceptance;

2. Amount of relevant information possessed by the leader and subordinates;
3. Likelihood that subordinates will accept an autocratic decision or cooperate in trying to
make a good decision if allowed to participate, and;
4. Amount of disagreement among subordinates with respect to their preferred alternatives.

c.4 Robert House

Robert House proposed the Path-Goal Theory of

Leadership. He said that the leader can affect the performance,
satisfaction, and motivation of a group through rewards, clarification
of paths to goals and removal of obstacles in work performance. To
do this, the leader adopts a certain leadership style as described.
Robert House
Directive leadership: Specific advice is given to the group and ground rules and structure are
established. For example, clarifying expectations, specifying or assigning certain work tasks to be
followed.
Supportive leadership: Good relations are promoted with the group and sensitivity to
subordinates’ needs is shown.
Participative leadership: Decision making is based on consultation with the group and
information is shared with the group
Achievement-oriented leadership: Challenging goals are set and high performance is encouraged
while confidence is shown in the groups’ ability.

2. CONTEMPORARY LEADERSHIP THEORIES

Contemporary leadership theories include transactional, transformational, servant

leadership, emotional intelligence driven leadership and quantum leadership.

a. TRANSFORMATIONAL LEADERSHIP
 The most effective and beneficial leadership behavior to achieve long-term success and
improved performance is transformational leadership. The transformational leadership style:

1. Promotes employee development

2. Attends to needs and motives of followers
3. Inspires through optimism, influences changes in perception
4. Provides intellectual stimulation and encourages follower creativity
5. Uses role modelling
6. Provides sense of direction and encourages self-management

A person with this leadership style is a true leader which inspires her team constantly with a
shared vision of the future.

b. CHARISMATIC THEORY
• The charismatic leader inspires others by acquiring emotional commitment from
followers and by arousing strong feelings of loyalty and enthusiasm.
• Charismatic leaders tend to have a strong conviction in their own beliefs, high self-
confidence, and a need for power. They tend to set example by behavior, communicate high
expectations to followers and express confidence in them, and arouse motives for the
group’s mission.
• Followers of a charismatic leader tend to trust the leader’s beliefs, have similar
beliefs, exhibit affection if the leader, and are emotionally involved in and believe they can
contribute to the mission.

3.MOTIVATIONAL THEORIES

It is believed that an employee’s motivation is somehow related to his productivity, job

satisfaction, absenteeism, and job turnover. However, the exact nature of these relationships has
not been clearly established.

a. REINFORCEMENT THEORY/OPERANT THEORY

B. F. Skinner’s operant theory suggests that an employee’s work motivation is
controlled by conditions in the external environment rather than by internal needs and
desires.
According to Skinner, human exhibits two types of behavior – respondent and
operant. Respondent behavior occurs as a result of direct stimulation.
When operant behavior is followed by consequences is considered a reinforcer. A
positive reinforcer is a consequence that increases the probability that the behavior will be
repeated. A negative reinforcer is a consequence that, if removed would increase the
probability that the behavior would be repeated.

b. EXPECTANCY THEORY
Expectancy Theory basically states that a person behaves the way they do because
they are motivated to select that behavior ahead of others because of what they expect the
result of that behavior to be.

As managers, Expectancy Theory can help one to understand how individual team
members make decisions about behavioral alternatives in the workplace. One can then use
this information as an input for creating motivated employees.
 • Victor Vroom’s expectancy theory of human motivation indicates that an
individual’s attitudes and behavior are shaped by the degree to which he or she finds those
attitudes and behavior effective in obtaining valued outcomes.
• Porter and Lawier (1968) modified expectancy theory by suggesting that a worker’s
job effort outcomes and his evaluation of expected rewards.

c. EQUITY THEORY

Adam’s Equity Theory, also known as the Equity Theory of Motivation, was
developed in 1963 by John Stacey Adams, a workplace behavioral psychologist.

Adam’s equity theory of motivation suggests that workers continuously compare

their own work inputs (skill, effort and time) and outcomes (status, pay, and privileges) with
those of other employees.

Equity Theory is based on the idea that individuals are motivated by fairness. In
simple terms, equity theory states that if an individual identifies an inequity between
themselves and a peer, they will adjust the work they do to make the situation fair in their
eyes. As an example of equity theory, if an employee learns that a peer doing exactly the
same job as them is earning more money, then they may choose to do less work, thus
creating fairness in their eyes.

d. GOAL SETTING THEORY

In 1960’s, Edwin Locke put forward the Goal-setting theory of motivation. This
theory states that goal setting is essentially linked to task performance. It states that specific
and challenging goals along with appropriate feedback contribute to higher and better task
performance.

In simple words, goals indicate and give direction to an employee about what needs
to be done and how much efforts are required to be put in.

C. MANAGEMENT THEORIES

1. EARLY MANAGEMENT THEORIES

a. THEORIES EMPHASIZING ORGANIZATIONAL STRUCTURE
a.1 Scientific Management Theory
a.1.1 Frederick Taylor (1856-1915), an American, developed the Theory of Scientific
Management in order to address the growing need to improve industrial production.
The central premise of the theory is that management and labor both want
to increase productivity, and that is possible to find “one best practice” through
which the worker is able to get the most work done for the least energy spent. The
idea was that management would train workers in this “one best practice” and that
it would replace worker’s indiscretion (Taylor, 1911).

The Basic Components of this theory are:

1. Analysis and synthesis of the elements of the operation through time and
motion studies;
2. Scientific selection of workers;
 3. Training of workers;
4. Proper tools and equipment; and
5. Proper incentives and payment.

a.2 Systematic Management Theory

Henri Fayol (1841 – 1925), a Frenchman, called the father of

Systematic Management devised the traditional operational school of
management.

He came up with the theory that by guiding behavior in each

management situation with appropriate principles made management
more effective.
Henri Fayol
He introduced management principles with the aim of setting up a
structure that would both promote order and raise worker’s morale, thereby improving
efficiency and accountability in the system.

Principle of Management

Management principles serve as guides for managers for effective and efficient practice.

1. Authority. The right to give orders and the power to exact

2. Specialization of labor.
3. Discipline.
4. Unity of command.
5. Unity of direction.
6. Subordination of Individual Interests
7. Remuneration.
8. Centralization of authority.
9. Chain of command (line of authority)
10. Decentralization of authority
obedience.
Specialization encourages continuous
improvement in skills and the development and
improvements in methods.
No slacking, bending of rules. The workers
should be obedient and respectful of the
organization
Each employee has one and only one boss to
give instruction or assignments
A single mind generates a single plan and all
play their part in that plan but only one person
is in-charge of the group’s activities.
When at work, only work things should be
pursued or thought about. The needs of the
patients must take precedence over the staff
nurse’s personal needs in the same manner
that a leader should be concerned with the
needs of the unit patients and subordinates.
Employees receive fair payment or compassion
for services, not what the company can get
away with.
Consolidation of management functions.
Decisions are made from the top. This produce
uniformity of action, utilizes experts and
reduces risks of errors in the performance
tasks.
Formal chain of command running from top to
bottom of the organization, like the military.
Focuses on importance of human elements.
Increases motivation of nurses at lower levels
 since they are asked to participate in decision
making.
11. Material & social order All materials and personnel have prescribed
value & places, embodied in the institution’s
policies and regulations, and they must remain
there.
12. Equity & Justice Fair & just treatment (but not necessarily
identical treatment; no favoritism
13. Personnel Tenure. Limited turnover of personnel. Lifetime
employment for good workers. Granting
security of tenure or permanent status after a
satisfactory performance.
14. Initiative. Thinking out a plan and do what it takes to
make it happen.
15. Scalar chain. Interconnectedness of people within the
organization from top to bottom.
16. Hierarchy. Line of authority.
17. Motivation of personnel. Nurses are rational beings and must be allowed
to work their minds in problem solving and
decision-making.
18. Esprit de corps. Harmony, cohesion among personnel. To
promote esprit de corps, the principle of unity
of command should be observed and the
dangers of divide and rule and the abuse of
written communication should be avoided.

a.3 Organizational Theory

Max Weber (1864-1920), of Germany, known as the father of the

Theory of Social and Economic Organization, propounded similar principles
of management, although what he advocated was a complex form of
bureaucracy based on specialization of function.

The responsibilities and rights of the workers in Weber’s system

were governed by very specific rules rather than individuals. Organization of
workers based on their individual competencies.
Max Weber
b.THEORIES FOCUSED ON HUMAN RELATIONS

Social Process

b.1. Mary Follet (1868-1933) = an American conceived of management, as a social process

focused on the motivating of individuals and groups alike towards achieving a common goal.
The idea was based on collaboration and cooperation, rather than the exercise of
the manager’s power and authority, and particular attention was devoted to what motivated
the worker.
Under the theory, the manager did not give orders to the rank-and-file employee,
but rather worked together with him to study a given situation and take the best action
based on the specific needs present in such situation.
 b.2 Elton Mayo (1880 – 1949) and Fritz Roethlisberger (1898 – 1974)

Mayo and Roethilisberger, meanwhile, tested the assumptions of

the scientific management theory through studies called the Hawthorne
effect.

To find out the effects on a worker’s productivity of different

elements, they studied the effect of physical environment, participation in
decision making, arriving at the conclusion that productivity was affected Fritz Roethlisberger
by both the physical and social environment, including:

1. The ability or opportunity to participate in decision making with the

administration, and
2. The recognition from administration.

The Hawthorne effect refers to a momentary change of

behavior or performance in response to a change in a worker’s
environment, the response usually being an improvement.
Elton Mayo
Changes in environmental condition such as brighter workplace,
lighting, cleaner work areas, clearing out pathways in the office and even relocating some
work stations actually resulted in a brief increase in productivity. Thus, the term is used to
identify any type of brief spike in productivity, and the theory is that, at least momentarily,
people are more productive when they feel appreciated or when watched.

2.CONTEMPORARY LEADER-MANAGER THEORIES

a. MANAGEMENT BY OBJECTIVES

Peter Drucker (1909 – 2005) is the father of modern corporate

management, which is a consensual process where both management and rank-
and-file meet in order to understand and agree on the organization’s objectives.

One example given by “Management by objectives works if you

Drucker (1954) was the first think through your objectives.
emphasis on profit, and he Ninety percent of the time you haven’t.”
believed that multimple - Peter Drucker
Peter Drucker
objectives in line with this goal
could organize and explan the
whole range of business phenomena.

His approach involved joint efforts between supervisors and subordinates, and a breakdown
of their respective responsibilities, goals and objectives, to be used in the operations. Drucker
believed that with carefully devised objectives and a good system for their attainment, other
concerns will fall into place.

b.MANAGEMENT AS DECISION MAKING

Herbert Simon (1916 – 2001) posited the view that in hospitals and other
service institutions, decisions are made by employees at all levels of organization,
forming a network of decision-makers.

Herbert Simon
 He named optimizing and satisfying as two disting approaches to decision-making.

Optimizing meant the search for the best alternative possible, an approach used by Simon’s
“economic man.”

Satisfying, meant using the first workable solution and was applied by Simon’s
“administrative man.” If one approach went with what was best, this one went with what is enough
to work out.

In any case a three-step process is usually followed for arriving at the best ultimate decision,
such as:

1. Listing alternative strategies for resolving the problem;

2. Determining the consequences that would follow each alternative; and
3. Comparative evaluation of these consequences

c. MANAGERIAL ROLES

Henry Mintzberg (1975), names three basic roles of the typical manager,
namely interpersonal, informational and decision-making roles.

His interpersonal role, is that of a figurehead, a leader and a liaison inside and
outside the organization.
Henry Mintzberg
His informational role involved monitoring the organization, sharing
information observed and finally serving it as a spokeperson.

In his decision making role, the manager is all at once an entrepreneur, disturbance handler,
negotiator and allocator.

MOTIVATIONAL THEORIES

As a manager, one must know the reasons why one would do something in exchange for
what one wants her to do. In this light the motivational theories of Abraham Maslow, Ferdinand
Herzberg, Douglas McGregor and William Ouchi became popular as it tried to explain the motives of
your individuals.

ABRAHAM MASLOW’S HIERARCHY OF NEEDS

Abraham Maslow (1908 – 1970), father of humanistic psychology theorized

that man’s various needs for a hierarchy starting with their more basic needs.

Maslow’s theory of hierarchy is in the shape of a pyramid. The basic human

needs such as biological needs form the ‘base’ on which other needs like psychological
and emotional needs are ‘built’.
Abraham Maslow
In a nursing management setting the relevance of such a theory is that the
nurses should first look to a patient’s basic needs, e.g., food, clothing, water, shelter, and sleep,
before she can take care of his other needs. This makes for more efficient and effective operation in
the organization.
FERDINAND HERZBERG’S MOTIVATION HYGIENE THEORY

Ferdinand
Herzberg (1959) came
up with the Two Factor
Theory, which posits
that two factors
influence people:
Herzberg's Motivation-Hygiene Theory
hygiene factors and
motivation factors.
Hygiene factors are those which can negatively influence people while motivation factors can result
in their satisfaction and psychological growth.

Typical hygiene factors include: working conditions, pay, and status in the organization, co-
workers, and security among others. Typical motivation factors are: achievement, interest in the job,
growth, and recognition of responsibility for work to name a few. Management must ensure that
both sets of needs are met, directly or indirectly by creating most conducive possible work
environment.

Hygiene Factors & Motivation Factors

HYGIENIC FACTORS MOTIVATION FACTORS

Adequate salary
Appropriate supervision
Good interpersonal relations
Safe and tolerable working conditions
Satisfying meaningful work
Opportunities for advancement and
achievement
Appropriate responsibility
Adequate recognition

DOUGLAS MCGREGOR’S THEORY X AND Y

Douglas McGregor developed the Human Relations School of Management. He developed

two theories dubbed Theory X and Theory Y, which worked on two different sets of assumptions.

Theory X proposes that man is:

1. Lazy,
2. Unmotivated,
3. Irresponsible,
4. Unintelligible, and
 5. Not interested to work.

Because of these characteristics, they will only work properly to fulfill the organizational
goals when controlled, and threatened.

People prefer to be directed, hope to avoid responsibility and are more interested in
financial gain than personal growth. Ultimately, theory X presupposes that people naturally dislike
work and will avoid it whenever possible.

Theory Y, on the other hand, makes completely different assumptions about human nature.

Under this theory, man is:

1. Responsible,
2. Creative,
3. Self-possessed,
4. Self-directed, and
5. A problem-solver.

Exerting physical and mental effort is second nature to him. This theory encourages workers
to develop their potential as they are able to learn under proper conditions to seek and accept
responsibility.

WILLIAM G. OUCHI’S THEORY Z

Japanese sociologist William G. Ouchi (1981) expanded and enlarged Theory Y

with a so-called Theory Z.

This humanistic nature focuses on finding better ways to motivate people in

order to increase worker satisfaction and therefore productivity.

Ouchi expounded on the 7 basic criteria that characterized the Japanese’ William G. Ouchi
“Seven S”:

Hard “S”:

1. Superordinate goals, or those which hold the organization together;

2. Strategy or method of doing things;
3. Structure – concern with the physical plant and facilities; and
4. Systems – coherence of all parts of the organization for a common goal.

Soft “S”:

5. Staff – concern for the right people to do the job;

6. Skills – developing and training people; and
7. Style – the manner of handling peers, subordinates and superiors.

Theory Z has the following important elements.

1. Collective decision making

2. Long term employment
3. Slower but more predictable promotions
4. Indirect supervision
5. Holistic concern for employees