Keio university class 6 human resource management in japan

Copyright © 2007 Keio University
Human Resource Management
in Japan
Class 6

CLass 6Copyright © 2007 Keio University ｜ 2
Quotes of the Day

This Lecture
• Life-time employment (shushin koyo 終身
雇用)
• Seniority based promotion (nenko joretsu
年功序列)
• Personnel training (jinzai seiiku 人材育成)
• Japanese trade unions (kigyo betsu rodo
kumiai 企業別労働組合)

Lifetime Employment System
• Employees take jobs with an employer
after leaving school and continue with that
employer until retirement age
• About 80% of Japanese companies are
trying to observe lifetime employment
• It´s merely a custom and is not prescribed
by law

• Is strongly tied to promotions and pay
raises
• Salaries in Japanese companies are
relatively low for younger employees, but
rise when the employee reaches his/her
mid-thirties
• Many companies do not recognize
previous work experience when workers
switch jobs (so far few people change
jobs)
Lifetime Employment System

Lifetime Employment
•Advantages
–Increases mutual
understanding and trust
between employer and
employee
–Long-term projects are no
problem (= high economic
growth)
–Makes sure that layoffs
are the last way of dealing
with managerial difficulties
•Disadvantages
–Difficult to let people go
–Budget for salaries is
stretched if the company
has a lot of middle-aged
and older employees
with high salaries
–Makes it difficult to find
talented people (mid-
career employment is
difficult)

Western HR Management
• Employees in a Western corporation can
be laid off easily in times of trouble
• They can also attract the right people at
the right time paying them the right
salaries
• However, individual career strategies of
Western employees make long-term
management planning difficult

Problems with the Lifetime
Employement System
• In the economic slowdown some companies
were forced to dismiss longtime employees who
have high salaries
• In some cases older employees were forced into
early retirement
• Employees` attitudes changed too. More than
half of Japanese employees are willing to
change jobs if the situation called for it

Seniority (Wage) System
• Under the seniority wage system salaries
and positions rise with the length of
service within the company.
• Many companies promote simultaneously
for the first 15 years after employees enter
the company
• The basic idea is that people who worked
for the same amount of time make the
same contribution to the company

SenioritySeniority
SystemSystem

Seniority System
•Advantages
–Balance between younger and
older workforce
–Stable workforce, because
younger employees first earn very
little
–Little animosity between
employees
–Employees do not worry about
demotions and salary reductions
–Employees can calculate income
•Disadvantages
–Not very competitive, does not
necessarily motivate employees
–More effective when the
company is in a field with little
variety in work contents
–Does not allow much flexibility
in increasing the number of
employees (older employees
are very expensive)
–Motivation problems

Recent Changes
• Some companies are trying to introduce
achievement based salary systems
(14.6% of Japanese companies have done
so already, 20% are considering it)
• In the future more and more companies
are expected to introduce output-oriented
salary systems

Personnel Training
• Japanese human resource management is
also famous for its company training
• Universities only take a limited role in
training future managers, companies are
expected to provide training for new hires
(taking a long-term perspective)
• The recession had little influence on this,
companies still invest a lot in training

Personnel Training
• Mostly managers are trained (to develop certain
technologies and to improve specialized skills)
• Educators are the older employees and senior
managers
• Training happens via Japanese knowledge
management styles creating highly skilled
generalists
– kôhai-sempai
– On-the-job training (OJT)
– Job rotation

Recent Changes
• Changes in industrial structure (employees
need more specialized trainings)
• Less employment of graduates and more
mid-life recruitment and recruitment of
temporary employees
• New educational methods are needed

In-House Unions
• 22% of Japanese workers (60% of public
employees and 54% in large utility companies
e.g. electric and gas) are members of labor
unions (14% United States, 30% United
Kingdom)
• There are 74 000 unions in Japan
• Most unions are in-house unions (in other
industrial countries unions are horizontal
relationships between employees in the same
industry)

In-House Unions
• In Japan a union covers the needs of all
types of employees in one organization
• Employees of a small company do not
form their own union and can join a union
under the trade union system
• Japanese union have the power to stop
the work processes through strikes (but
this rarely happens)

Particularities of Japanese Labor
Unions
• Former executives in labor unions can become
presidents of companies (is suppossed to lead to
smooth negotations)
• Labor unions executives are elected by other union
members. At the same time they are employees of
the company and get promoted in the seniority
system.
• When employees reach the management level, they
retire from the union
• A chairman of a union can so become president of a
company

Recent Changes
• 25 years ago about 33% of the employees in
Japan were union members, but support is
dwindling
– Young employees do not profit from membership
because of the seniority wage system
– Part-time and temporary workers can not join
• Recently a new labor unionism has appeared,
because many companies are trying to lay off
middle-aged workers (attention goes from wage
to job security issues)
• There are also unions now for foreign workers
and part-time workers (not only inhouse unions
any more )

Changing Employment Patterns
• Increasing number of part-time employees
and temporary employees (94% of which
are women)
• Working patterns have also changed (e.g.
flextime, core time work and free-time
systems )

Keio university class 6 human resource management in japan

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