JAPANTHE LAND OF RISING

SUN

HRM in Japan: Practices, Issues & Challenges

Quick Facts

Area: about 378,000 sq. Km.

Population: over 127 million people.

Language: Japanese spoken by 99% of population.

Religion: Buddhism and Shinto.

Longest overall life expectancy rate in the world.

National Culture

collectivism masculine endurance indebtedness absence of horizontal

social groupings observance of social

status harmony high uncertainty

avoidance

HRM and other employee related values and practices

• Enterprise-based trade unions, cooperative relationship between employees and company, avoidance of open conflict

• Emotional and dependent relation between company and employees

• The Japanese are experts at the "soft S's" of management: staff, skills, and style.

• Ringi method: collective decision making

• Implicit discrete performance appraisal

• Teamwork: multi-skill work teams, team appraisal and reward

nenko: life-time (or long-term) employment for regular core employees

seniority-based pay and promotion

process-oriented

discrimination against women

employee-oriented leadership style

job-rotation

job-flexibility

Kaizen- continuous improvement

Kanban or just-in-time production

(1,000 persons,%)

Source:United nations, world population prospects: the 2010 revision, OECD, labor force statistics, statistics bureau, ministry of internal affairs and communication, Japan, current population estimates 2009, labor force survey.

Population, Labor force, and number of unemployed (2010)

Population 2008

Labor force

Labor force

participation rate

No. of unemploy

ed

Unemployment rate

Japan 126,536 62,210 81.6 3,320 5.0

USA 310,384 153,886 77.3 14,822 9.6

France 62,787 28,379 71.0 2,643 9.3

Germany 82,302 41,783 77.9 2,949 7.1

Italy 60,551 24,972 63.2 2,103 8.4

UK 62,036 31,365 78.4 2,432 7.8

Korea 48,184 24,749 70.3 921 3.7

Four pillars of Japanese HRM Long term employment Seniority based promotion and compensation Company-driven employee training programs Trade/labor unionism

Japanese vs. western HRMHR practices Japan West

Nature of employment

•Long-term (if not lifetime) employment •Paternal approach

•Strong long term talent pipeline

•Employment- at-will

•Individual responsibility

•Short to mid term talent pipeline

Compensation Pay for age or experience(seniority based pay)

Pay-for-performance (value based)

Training •Company responsibility•generalist focus

•Personal responsibility•Specialist focus

Union relations •Cooperative•Passive

•Confrontational•Aggressive

Functions of

Recruitment and Selection Recruitment at entry level (Hiring from

universities) Lateral hires, independent contractors for

special tasks, recruiting agencies, and temporary employees (currently)

Hiring time Mid-career hiring

• Advertisements in newspapers, through web sites, employment agencies and through special seminars and meetings

• Hiring on the basis of reference

• Internship system• Selection criteria

Training and development

Traditional Japanese training styles On-the-job training Off-the-job training Job rotation/multitasking

Training and development (cont’d)

Occupational skills are valued over firm-specific skills

Support employees to improve technical skills and to acquire qualifications.

Creates generalists than specialists

Compensation and benefits• Wage system based on seniority• Automatic Pay rises and promotions• Monthly salary comprises of only base pay and allowance. • Frequency of Pay reviews• Annual salary for the lateral hires

Compensation and benefits (cont’d)

Retirement benefit Bonuses are tied to the broader performance

of the organization. Bonuses frequently comprise a significant

portion of take home pay. Many companies are now reviewing this

system to prepare one based on performance. Growing numbers of companies are explicitly

weighting ability and performance over tenure and age in salary decision.

Performance management:

Appraisal and evaluation policies Based on an employee's performance Interviews with superiors once or twice a year Management By Objectives (MBO) Companies make a team assessment by project.

Career management

• Promotion system distinct from that of the West.

• No clear demarcation between the white collar and the blue collar.

• The rise to the senior level managerial post.

• Japanese follow the late selection criterion mixed with simultaneous and divergent promotion.

IHRM practices of Japanese MNCs

Reasons for Staffing o factor for international

staffingo more PCNs than HCNs

and TCNs

Selection methods

Selections criteria

Training

Pre-mature return and failure

Ethics:• Japanese business ethics are a direct product of Japanese culture and

religion.

• The Keidanren Charter-Charter for Good Corporate Behavior clarifies ten principles

• Punctuality and work ethics

Corporate Social ResponsibilityMay 2009, the CSR ranking in Japan • SHARP-ranked at the first place-supports more than 500 environmental

education classes with nongovernmental organizations for elementary school students.

• TOYOTA, the second highest ranking company is famous about hybrid car PRIUS.

• “Ecology” is the most important key word for the CSR activities in Japan.

• Panasonic follow it in a respective order

• Other highly ranked companies are renowned manufactures, except NTT DOCOMO, the largest mobile phone carrier in Japan.

• Kyoto Protocol and low emission vehicles such as hybrid cars andlow-fuel consumption cars are the subjects of lowering tax rates which offers the 50-100% of car purchasing related taxes

ISSUES & CHALLENGES

Workplace Diversity

• Gender Diversity• Example of IBM Japan– ratio of female employees

improved from 13 percent in 1998 to 20 percent in 2010

– the number of women in management increased from 1.8 percent to 11.6 percent by 2010

• Diversity in employment structures

Equality• Equal Employment Opportunity Law (EEOL)• Women occupied no more than 10 percent of

management positions in 2005• A 2000 Labor Ministry survey showed women held only

1.6 percent of positions equal to director• Japan ranks as the most unequal of the world’s rich

countries, according to the United Nations Development Program’s “gender empowerment measure”.

Convergence towards Western HRM practices

• Convergence debate at the centre of Japanese management research.

• Convergence toward Western HRM practices.

• Convergence to the extreme i.e. end of Japanese-style HRM.

Other Issues and Challenges• The aging population has clear implications

for corporate HR practice. • For many employees in Japan, the move

away from traditional employment practices constitute a violation of the psychological contract.

• Increasing ‘Suicides’ due to overwork. In the fiscal year ending in March 2010, the Japanese government found about 100 ‘karoshi’ deaths. It also ruled that 63 suicides were caused by overwork.

• Reducing overwork and long working hours

Rate of the employees who work more than 50 hours per week in 2000

NetherlandsSwedenBelgium

ItalyDenmarkGermany

FranceUK

AustraliaUSA

New ZealandJapan

0 5 10 15 20 25 30

Reforming Japanese HRM:

Turning away from lifelong employment, flexibility of recruitment, release of personnel and change of employer

Managers-externally recruited and can be laid off again more easily

Increased formation of specialists and turning away from the formation of generalists.

Japanese managers - more concerned with the decline of the seniority principle: “performance orientation”, “result and objective orientation”, “performance and result oriented remuneration” and “turning away from the seniority principle”.

New Japanese ModelNew Values Reasons

1) introducing flexible HR systems 1) economic recession & changing State policy since 1992

2) more merit-based approach 2) mismatching HRM & business needs

3) emphasizing new HRD strategies 3) changing attitudes of young employees

Conclusion