A northern Illinois school district (School District 300), forced by budget cuts to curtail its teaching staff, used incentives and the decisionmaking methods of William Ouchi's Theory Z to reduce layoffs. The superintendent and the teachers' union leadership established a Transfer Council of six administrators and nine teachers to plan staff reductions and transfers for 1982-83. The Council's participatory, consensus-based process was tedious, but as with most Theory Z decisions its transfer plan was executed quickly and efficiently, and was well received. The following year, however, with additional school closings and consolidations, 52 tenured teachers had to be laid off, and 98 transferred. The 1983-84 Transfer Council surveyed teachers and administrators before deciding to base transfers on seniority. Then, to minimize disruption of employees' lives, the council designed an incentive program that encouraged teachers considering leaving full-time employment to do so by resigning, taking leaves of absence, or working part-time. Thirty-eight teachers took advantage of this program and with 10 additional resignations the district laid off only 4 tenured teachers. Although the program relied on the school environment, and thus cannot be directly transplanted, other school systems may use it as a general model. (MCG)