Philippe Debroux - Human Resource Management in Japan: Changes and Uncertainties - A New Human Resource Management System Fitting to the Global Economy

A New Human Resource Management System Fitting to the Global Economy

Philippe Debroux
Soka University, Japan

First published 2003 by Ashgate Publishing

Reissued 2018 by Routledge
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Copyright Philippe Debroux 2003

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A Library of Congress record exists under LC control number: 2002074461

ISBN 13: 978-1-138-71580-6 (hbk)
ISBN 13: 978-1-315-19736-4 (ebk)

Bunshaka Intra-organizational externalisation

Cho Excess

Chukan shoku/Jun shoku In-between track

Hoshu Compensation

Ippan shoku General track

Jirei Short document telling employees they have been recruited

Kacho Section chief

Kakaricho Sub-section chief

Karoshi Sudden death at work

Keiei kyogikai Management committees

Keiretsu Business group

Kekkashugi Evaluation and reward based on quantitative outcome

Kigyobetsu kumiai In-house company unions

Kihonkyu Basic pay

Kinbensa Diligence

Kyochosei Cooperative spirit

Kyuryo Salary

Mukanshinzo Indifferent, non-concerned

Naibu kokuhatsu Anonymous divulgence to police

Nenko joretsu chingin Seniority-based pay

Seikashugi Evaluation and reward based on individual performance

Sengyo shufu Full-time housewife

Senmon shoku Special track

Senmu/Jomu Managing director

Shinkaku yakuin Director

Shokaku Promotion (ranking)

Shoshin Promotion (associated to occupation)

Shushin koyo Lifetime employment

Sogo shoku Management career track

Tanko Multi-skilled workers

Tanshin funin Business assignment away from the family

Yoyakuken Single system of stock options

Zaiseki shukko Temporary transfer

The success of Japanese companies relying on apparently new models of economic and management development in a number of key industries stimulated broad international debate around the end of the 1970s. A number of economists and sociologists making comparative analysis of market economies and business organizations sought to explain the rapid growth of the Japanese economy and Japanese companies' fast rise to prominence after World War II. They claimed that the success of the Japanese business model had shown that Western management theories and practices were not as universally applicable as had been assumed (Abegglen, 1973; Aoki, 1984; Dore, 1973; Whitley, 1992). Standard theories of the company, based on neo-classical economic analysis were shown to be inadequate to explain the model of the Japanese company. In the Japanese economy, the motivations, mechanisms and institutions that govern demand, supply and stability, seemed to differ radically from the neo-classical tradition. Japan had created an apparently successful modern management system that was not purely centred on individuals. The preferences of a number of groups and associations took precedence over what individuals in the West would normally regard as falling within their own private domain. This could be observed at all levels of Japanese society from households, schools, local communities, volunteer organizations, working-groups, companies, commercial associations and interest groups, to civil servants and politicians.

The system did not entirely eliminate the laws of supply and demand or the need for economic equilibrium. However, selective adjustments were sufficiently significant to affect the performance defining characteristics, and potential of public and private organizations. The Japanese organizations did not try to maximize profits in a system based on competition and market forces. Of course, new companies were created and projects launched; companies innovated, invested in research and development, recruited and trained their promising staff. Their infrastructure and equipment were regularly modernized, variable input costs including finance and advertising were cut back when necessary and prices were set and products sold to generate appropriate revenue. Nevertheless, shareholders' participation in the decision-making process was restricted and none of these activities ever had the single objective of maximizing their profit (Rosefielde, 2000). Corporations generally focused on two objectives: first, to ensure long-term survival, stability, and growth for the sake of all stakeholders and, second, to provide opportunities for status achievement and income growth to the regular employees. Company unions acting in co-operation with management played a crucial role in the system in order to assure the effectiveness and efficiency of the internal market. The system integrated the other stakeholders into exchange mechanisms that, in several respects, did not operate according to individual-utility maximization principles of the neo-classic pattern.

The success of the Japanese economy not only in terms of growth itself but also in the improvement in the standard of living of a growing segment of the population was remarkable. Despite the apparent sacrifice of key elements of the market infrastructure, Japan's accomplishment seemed to have vindicated the idea that business systems and social institutions are linked and organizational structures and strategies cannot be contemplated in isolation from their institutional context (Granovetter, 1985). Different business environments shaped by specific institutional contexts induce distinct managerial structures and practices that may prove equally effective in global markets. Business systems, while having their own dynamics, are embedded in social structures and systems of social relations which themselves are derived from the basic values of the society in which the economic actors operate. Competitive advantage follows from a correlation between the company characteristics most appropriate for the relevant industrial sector, and the environment in which they operate. This includes government-business relations, academic institutions, labour institutions, customer associations, and general social norms and expectations, at the regional or national level (Sorge, 1991). The Japanese "communalist" multiple stakeholder system and the ad hoc, non-transparent and implicit income-transfer schemes of the post-war period may seem to have prevented the optimisation of economic input. The plethora of complementary institutions in financial, labour and goods markets that are characterized by long-term relational contracts, internal reward structures and decentralized control over operations in large companies, may have distorted the normal function of the labour market in their anxiety to protect certain categories of the population. Nevertheless, until recently the business system taken as a whole, seemed to work efficiently in defiance of accepted norms.