WHAT IS THE JAPANESE-STYLE HUMAN

RESOURCE MANAGEMENT?

JONGWON WOO

PART 1

TYPICAL PRACTICES OF JAPAN

A FACTORY IN CHINA:

ON THE WALL, THERE IS A SHEET TO

ANNOUNCE SOMETHING TO WORKERS.

A FACTORY IN JAPAN:

ON THE WALL, THERE IS A SHEET TO SHOW

SOMETHING TO WORKERS.

WHAT IS THE “SKILL MATRIX” SHOWING?

able to do the job

with support

able to do the job

without support

able to teach

the job

able to do

problem solving

TOYOTA PRODUCTION SYSTEM (TPS)

OR TOYOTA WAY (TW)

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LEAD TIME OF PRODUCT DEVELOPMENT

The read time of Japanese automakers is the shortest.

They cleverly make use of simultaneous engineering.

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“SIMULTANEOUS ENGINEERING”

For simultaneous engineering, it is critically needed that

the related departments like development and production

keep close communication and cooperation each other.

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ROLE OF SKILLED WORKERS IS CRITICAL

Foremen at every

workplaces shorten the

operation time and

rewrite the operation

standard sheets.

Not only foremen but

also seniors at every

workplaces tackle the

operational problems

and accomplish the

Kaizen.

THE ECONOMIC EFFECT OF KAIZEN IN

TOYOTA:

TOTAL EFFECT IS 1,670 BILLION YEN

DURING 12 YEARS FROM 1992 TO 2003

WAGE SYSTEM AT TOYOTA

The total amount of compensation depends on the “ability”.

White collar workers are granted from 7 to 1 ability grade,

and blue collar workers are granted from 9 to 1 ability

grade, respectively.

White collor workers Blue collar workers

Individual wage

based on ability (50%)

Basic wage based on

ability (50%)

Individual wage

based on ability (30%)

Basic wage based on

ability (30%)

Wage based on

productivity (20%) Wage based on

seniority (20%)

SU

GIY

AM

A, N

aosh

i [20

14

]

JIT (JUST IN TIME) NOT ONLY IN THE

PRODUCTION BUT ALSO IN THE SUPPLY CHAIN

Provided by “lot”:

A few parts are in stock.

Provided in the “order”:

Suppliers deliver parts

in sequence.

THE STRONG POINTS OF TOYOTA [PRODUCT]

Speedy and flexible development of new product

“Lean Production”: continuous Kaizen of QCD (Quality, Cost,

and Delivery)

[ORGANIZATION]

Flexible work organization

Close cooperation between sections

Smooth communication between engineers and operators

[HUMAN RESOURCES]

Flexible placement of employees

All round skilled workers

Strong commitment to the growth of company

PART 2

WHAT KIND OF HRM SUPPORTS THE

COMPETITIVENESS OF JAPANESE

FIRMS?

LONG-TERM EMPLOYMENT SUPPORTS THE

EMPLOYEES’ COMMITMENT TO THE COMPANY

AND THEIR ‘FIRM-SPECIFIC’ SKILLS

As of the length of service year, the average of Japan is

about 12 years, longer than that of USA or that of Great

Britain.

However, no longer than those of some European countries

like Germany, France, and Italy.

JIL

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THE PRACTICE OF HIRING NEW GRADUATES AND

TRAINING THEM SUPPORTS EMPLOYEES’ STRONG

COMMITMENT TO THE COMPANY AND THEIR FLEXIBLE

PLACEMENT

As of unemployment rate of 15-24 years old,

Japan is one of the countries where it is the least.

This is related with the hiring practice of

Japanese firms.

JIL

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THE SENIORITY BASED WAGE SUPPORTS THE

INCENTIVE OF EMPLOYEES TO DEVELOP THEIR

‘FIRM-SPECIFIC’ SKILLS AND/OR KEEP THEIR

ROYALTY TO COMPANY

JAPAN’S SENIORITY-BASED WAGES

STRENGTHEN EMPLOYEES’ INCENTIVE TO

DEVELOP THEIR CAREER IN THE COMPANY

As of the service year and wage profile, the wage of Japan,

especially that of male is sharply increasing in proportion

to the service years.

This is called the seniority-based wage.

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INTERNAL TRAINING, ESPECIALLY “OJT” IS

SUPPORTING JAPANESE WORKERS INTERNAL

CAREER

Q) (Asking firms) What type of training do you

think important?

A) 73.5% of firms answer OJT is important.

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TO MAINTAIN THE INCENTIVE OF EMPLOYEES,

JAPANESE FIRMS RESTRAIN THE

IMPLEMENTATION OF “FAST TRACK”

There is not so many “fast tracks” in Japan as in the US or

in Germany.

The chances of promotion are granted to the majority of

employees.

Pro

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Existence of Fast Track

5.4

38.4 28.2

89.9

49.5 51.9

0%

10%20%

30%

40%50%

60%

70%

80%90%

100%

Japan US Germany

N. A.

No Fast Track

After Several YearsExperience

From the Entry Level

THE “SLOW PROMOTION” SUPPORTS

EMPLOYEES’ MOTIVATION ON ONE HAND, THEIR

COOPERATION ON THE OTHER HAND

Timing of Promotion(Average Length of Service at the Promotion to the Current Positions

Ocuurered)

0

5

10

15

20

25

30

HRM - Dept.

Head

(BUCHYOU)

HRM - Section

Chief

(KACHOU)

Sales - Dept.

Head

(BUCHYOU)

Sales -

Section Chief

(KACHOU)

Accoounting -

Dept. Head

(BUCHYOU)

Accounting -

Sectrion Chief

(KACHOU)

US

JAPAN

The length of service necessary for the promotion

to the department/section chief in Japan is

almost double of that in the US.

Pro

vid

es b

y P

rof. T

eiich

Sek

igu

chi

CAREER CONTINUATION IN JAPAN HELPS

WORKERS MORE INCORPORATED TO THEIR

COMPANY

Pro

vid

es b

y P

rof. T

eiich

Sek

igu

chi

NO COLLAR LINES BETWEEN REGULAR

MEMBERS IN A FIRM

There is no formal collar line within regular employees. The same compensation and appraisal system and rules have been applied to both white collar and blue collar employees, regardless of their current job assignment or specialty.

The difference of annual earning levels of top level white collar workers and lowest level blue collar workers is far smaller in Japan than firms in the Western countries.

RANKING SYSTEM BASED ON “ABILITY” SUPPORTS ALL

OF THE JAPANESE HRM: AN EMPLOYEE CAN BE

PROMOTED EVEN IF THERE IS NOT A JOB VACANCY

In this case of Nippon steel corporation, employees are

graded according to the “job” on one hand (left side), and to

the “ability” on the other hand (right side).

TA

GU

CH

I, Ka

zu

o [2

00

4]

THE COMPREHENSIVE ASSESSMENT OF

EMPLOYEES HELPS ALL OF JAPANESE HRM

WORK SMOOTHLY

Workers are evaluated according to “performance”,

“ability”, and “morale and attitude,” respectively.

The results are reflected in wages, bonuses, and promotion.

Ability

Morale and

Attitude

Performance

NOT INDUSTRIAL UNION BUT ENTERPRISE

UNION MORE HELPS EMPLOYEES COMMIT TO

HIS/HER COMPANY

Pro

vid

es b

y P

rof. T

eiich

Sek

igu

chi

THE UNION PUT TOGETHER BY WHITE AND

BLUE COLLAR WORKERS MAKES THEIR

COOPERATION EASIER

Pro

vid

es b

y P

rof. T

eiich

Sek

igu

chi

ENTERPRISE UNIONS SUPPORT THE

COOPERATIVE RELATIONS BETWEEN LABOR

AND MANAGEMENT

As for the number of days not worked because of labor dispute,

they are very small in Japan.

It shows that the relationship between labor and management in

Japan is very peaceful.

This is related with the characteristics of enterprise unions.

JIL

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(20

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tabook

of In

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nal

La

bou

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tistics"

“WHITE-COLLARIZATION” OF BLUE

COLLAR WORKERS IN JAPAN

In Japan, there is no clear distinction between salaried employees and wage earners.

Everyone is a “Salary Man” and earns his compensation in a single category “Kyuro”.

The level of consciousness and behaviors of blue collar employees are very close to those of white collar employees.

Generally, Japanese blue collar employees are earnest to acquire skills and knowledge.

Also, they show strong commitment and loyalty to their firm.

“Kaizen movement” and “QC circle” are typical examples of their commitment.

PART 3

“JAPANESE-STYLE MANAGEMENT” IN

THE VARIETIES OF HRM/IR

OUTLINE OF JAPANESE-STYLE

MANAGEMENT (1)

Smooth School-to-Work Transition: Young people almost could have had their jobs immediately after graduation.

Intensive OJT: After entering a company, they have been trained by intensive, long-term OJT.

Cooperative Relationship: Workers are trained by their higher-ups and/or their seniors in the atmosphere of cooperation.

Problem Solving: The goal of internal training is that not only the core workers but also the majority of workers have the capability of problem solving.

OUTLINE OF JAPANESE-STYLE

MANAGEMENT (2)

The HR Development is supported by related HR practices/institutions as below:

Seniority Based Wage/Promotion: Their wages and positions have been raised step by step with their seniority.

Job Security: Their jobs have been guaranteed until the mandatory retirement.

Enterprise Union: They have been the members of enterprise unions which bargain/consult with the management about the conditions of “life-time commitment.”

Government’s HRD Policies Valuing ILMs: Japanese Government traditionally has not supported workers who hopping for jobs, but supported management who bring their employees up.

“JAPANESE-STYLE MANAGEMENT” AND VARIETIES OF HRM/IR

Job based HRM

vs. HRM based on Personal Factors

Market-oriented Unions and Industrial

Relations

vs. Organization-oriented Unions and IR

Market-mediated Employment Relations

vs. Internalized Employment Relations

Scio-economic IR System

vs. Voluntary IR System

REFERENCES

Freeman,R.B. and J.L.Medoff [1984]. What Do Unions Do?, New York: Basic

books.

Fujimoto, Takahiro [2003] Noryoku Kokiku Kyosoj: Nippon No Jidosya

Sangyo Wa Naze Chuyoinoka, Chuo-Koron-Shinsya.

Huselid, Mark A. [1995]. “The Impact of Human Resource Management

Practices on Turnover, Productivity, and Corporate Financial Performance”,

Academy of Management Journal 38(3) 635-672).

Kato,T. and M.Morishima [2002]. “The Productivity Effects of Participatory

Employment Practices: Evidence from New Japanese Panel Data”,

Industrial Relations, Vol. 41(4).

Koike, Kazuo [1999] Shigoto No Keizaigaku, Tokyo: Toyo-keizai-shimpo-sya.

Sugiyama, Naoshi [2014] “Toyota Ni Okeru Chingin Seido No Tenkai”,

Chukyo-Keiei-Kenkyu, Vol. 23, No. 1-2.

Taguchi, Kazuo [2004] “Shin-Nippon-Seitetu Ni Miru Chingin Seido No

Sengo Shi”, Kikai-Keizai-Kenkyu, No.35.

Tsuru, Tsuyoshi, and Kentaro Nakajima [2012] (Discussion Paper Series A

No.559) “Seihin Achitecture To Jinzai Management: Kigyo Enquête Chosa

Ni Motozuku Nicchukan Hikaku”, Institute of Economic Research,

Hitotsubashi University.

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