Important Features of Japanese Management

The culture of Japanese management is generally limited to Japan’s large corporations. These flagships of the Japanese economy provide their workers with excellent salaries and working conditions and secure employment. These companies and their employees represent the business elite of Japan: qualification for employment is limited to the men and the few women who graduate from the top thirty colleges and universities in Japan.

Placement and advancement of Japanese workers is heavily based on educational background. The students, who are not admitted to the most highly rated colleges, rarely have the chance to work for a large company; instead, they have to seek positions in small and medium-sized firms that cannot offer comparable benefits and prestige. The quality of one’s education and, more important, the college attended, play a decisive roles in a person’s career.

The problem is that few Japanese attend graduate school, and graduate training in business per se is rare: there are only a few business school programs in Japan and companies that provide their own training show a strong preference for young men who can be trained in the company way; in fact, the interest in a person whose attitudes and work habits are shaped outside the company is very low.

When young students are graduating from college, they start searching for a suitable employer, but this process is not simple at all; there are only few positions available in the best government ministries, and quite often the entry into a good firm is determined by a competitive examination, even if the situation is becoming less competitive, as the number of candidates is gradually decreasing.

Note that the Japanese strive for total professionalism in whatever they do. Any task is taken seriously and is normally done with careful dedication. Employees at all levels are expected to seek perfection and most try to do so. The general attitude is that there is only one way of doing a job properly and it will be followed. Zen Buddhism encourages this view, seeing the world in terms of either right or wrong. The high quality achieved in products such as motorcars, cameras, and TV sets is a manifestation of this dedicated approach. Training and education are highly valued as a quest for professionalism and perfection.

Companies expect their workers to voluntarily give up their evenings or part of the weekend to work or engage in work-related social activities and hardly any staff members seem to take all of their allotted annual holidays; in 2003, the Japanese worked longer hours than any other developed nation.

Since land is expensive, observing senior executives sharing an office is quite common. However, they will usually only share with someone of the same status; the all-pervasive hierarchical view of society prevents those above dealing equally with those below. It is common to see several vice-presidents in one tiny area, whereas in the West, each would probably insist on having his or her own rather splendid office. This sharing of working space has the benefit that people know what their colleagues are doing and information passes quickly and easily between people.

Life-time Employment

One of the prominent features of Japanese management is the practice of permanent employment. Lifetime employment traced its origins to corporate welfare’s that emerged during the Interwar period; it is a product of dynamic interactions among labor, management, and government in response to changing environment, further reinforced by the formation of labor laws, state welfare system, and social norms in contrast to American business practices.

As a result, today’s Japanese lifetime employment is deeply embedded into complementary practices and institutions, ensuing its resilience and stability. The shift from spot labor markets to long-term employment was initially driven by efficiency considerations, whereby achieving greater productivity through higher human capital, it produced benefits to management in the form of profits and greater employment security. Moreover, following that the most violent labor disputes in Japanese history took place between 1949 and 1954, involving major companies, such as Toshiba, Hitachi, Toyota, and Nissan, where employers learned that such disputes could provoke high performance costs, they decided, through a collective agreement, to implement the employment of the life time.

Permanent employment covers the minority of the work force that work for major companies. Management trainees, traditionally nearly all of whom were men, are recruited directly from colleges when they graduate in the late winter and, if they survive a six-month probationary period within the company, they are expected to stay with the companies for their entire working career; employees are not dismissed thereafter on any grounds, except for serious breaches of ethics.

Permanent employees are hired as generalists, not as specialists for specific positions. A new worker is not hired because of any special skill or experience, but what are closely examined are the individual’s intelligence, educational background, and personal attitudes and attributes. When entering a Japanese corporation, the new employee will be trained from six to twelve months in each of the firm’s major offices or divisions; thus, within few years, the employees will know every facet of company operations and knowledge allowing companies to be more productive.

Gender Roles

Although the Japanese Constitution guarantees equality in gender roles, this does not in fact exist. Japanese males do not regard women as equals and most would subscribe to the view that “a woman’s place is home”.

In Japanese companies, women are known as “Office Ladies”. Their main function is to be young, decorative and well dressed in order to brighten up the men’s workday. In the evening they are expected to engage in mindless and frivolous entertainment, while at work they are only entrusted with minor tasks like making tea for the men and doing the photocopying.

It is assumed that women will marry and leave work by their mid-twenties and, in many companies, a woman must resign if she is getting married. It is difficult for the intelligent and earnest-minded professional woman to be taken seriously; many of them have to serve a lengthy period of time undertaking mindless repetitive tasks before they can start to rise in their career path. In order to succeed, women have to be a lot better than the men at their level.

In the business world, male networks are extensive and bonding activities are commonplace, normally being held after work hours or at the weekend. They include attending various sporting activities and going out for an evening’s eating and drinking. Women have no place here: this is a hidden but powerful brake on their advancement.

Men, on the other hand, are expected to be married by 35 years of age. The function of the male is to earn sufficient money to take care of his family, which involves working hard, spending long hours at the company, and gaining promotion. There is little feeling that he should be at home, share in family life, help raise the children, or even love his wife, although he is expected to sire children. Once that has been achieved, he is largely perceived as a mere breadwinner and status-earner for the family. In general, the Japanese males are not really comfortable with modern Western views about the position and progress of women, nor the career-mindedness of modern Western women; to many it seems both alien and threatening.

Such attitudes towards women are still the most common, although there have been some relaxation and changes since the 1980s. A shortage of skilled labour is slowly eroding the traditional view that women have to resign on marriage and especially if they have a child, and a small, but growing, number of women are developing a career path. Younger Japanese in particular are changing their attitudes and becoming less “Japanese” in their views about the proper roles of husband and wife but they can still find it difficult to alter things. Over half of Japanese women are in the work force, but in the main they still occupy the lower positions.

Reward System

Another unique aspect of Japanese management is the system of promotion and reward, whereby an important criterion is seniority. Seniority is determined by the year in which an employee’s class enters the company. Career progression is highly predictable, regulated, and automatic, and the compensation for young workers is quite low, but they accept a low pay with the understanding that their pay will increase in regular increments and be quite high by retirement. Compensation consists of a wide range of tangible and intangible benefits, including housing assistance, inexpensive vacations, good recreational facilities, and, most important, the availability of low-cost loans for such expenses as housing and a new car. Moreover, regular pay is often augmented by generous semi-annual bonuses.

The members of the same graduating class usually start with similar salaries and, each year, salary increases and promotions are generally uniform; the purpose is to maintain harmony and avoid stress and jealousy within the group.

Individual evaluation, however, does occur. Early in workers’ careers (by the age of thirty) distinctions are made in pay and job assignments and during the latter part of workers’ careers, another distinction takes place, as only the best workers are selected for accelerated advancement into upper management.

Those employees who fail to advance are forced to retire from the company in their mid-to-late fifties. Retirement, however, does not necessarily mean a life of leisure; in fact poor pension benefits and modest social security means that many people have to continue working after retiring from a life career. Many management retirees work for the smaller subsidiaries of large companies or within the large company itself, but at substantially lower salaries.

A few major corporations in the late 1980s were conducting experiments with variations of permanent employment and automatic promotion; they were rewarding harder work and higher production with higher raises and more rapid promotions. Nevertheless, most corporations retained the more traditional forms of hiring and advancement.

Japanese managerial style and decision making in large companies emphasizes the flow of information and initiative from the bottom up, making top management a facilitator rather than the source of authority, while middle management is both the impetus for and the shaper of policy. Consensus is stressed as a way of arriving at decisions, and close attention is paid to workers’ well-being.

Rather than serve as an important decision maker, the ranking officer of a company has the responsibility of maintaining harmony so that employees can work together and a Japanese CEO is considered as a consensus builder.

Seniority System

The system of seniority wages was originally based on valuable experiences and skills and on the assumption that living expenses would be greater for senior employees; the system became then firmly established and widespread in the period of sharp inflation. However, this structure has being challenged by younger managers, including the Japanese transnational firms and an increasing numbers of shinjinrui, the new breed of young people, who reject the traditional system of seniority wage and promotion system.

A recent survey conducted by a Japan’s business newspaper, found that 80% of top managers at 450 major Japanese corporations wanted the seniority promotion system abolished. “Japanese management philosophy cannot just continue as it has for the past 40 years” says Shotaro Watanabe, vice-president of Kao Corp, Japan’s leading maker of detergents, toiletries and personal care products.

Takuma Yamamoto, chairman of computer maker Fujitsu, affirms that the seniority promotion system has actually been losing ground for several years. Today, the technological innovation is changing the Japanese style of management; the focus of education and training within the company is shifting from the newly recruited to the middle and higher level layer of employees to ensure their adaptation to the new technology. The seniority wage system has been combined with a system of wages based on job function, which itself is undergoing revisions amid rapidly progressing technological innovations. On other hand, life time employment and seniority system are interrelated to each other; therefore, even if some adjustments to the Japanese management system are needed, the whole system cannot be changed within 5 to 10 years because of deeply embedded structure.

Mini Case Study: The Toyota Case Study

Toyota is a multinational corporation headquartered in Japan and the world’s largest automaker by sales, net worth, revenue, and profits. Toyota employs approximately 320,808 people worldwide and it has been an industry leader since the being consistently more productive than its competitors. Therefore the company is worldwide recognized for the quality of its products and production systems.

Toyota first caught the world’s attention in the 1980s, when consumers started noticing that Toyota cars lasted longer and required fewer repairs than American ones. This is the result of a long lasting Toyota’s management philosophy which leads to the introduction of “Lean Manufacturing” and “Just In Time Production“.

The so called Toyota Way has 4 main components:

  1. Long- term thinking as a basis for management decisions.
  2. A process for problem-solving.
  3. Adding value to the organization by developing its people.
  4. Recognizing that continuously solving root problems drives organizational learning.

Toyota is aligned around satisfying the customer. It believes that a satisfied customer comes back and gives more business through referrals; therefore the long term goal of the firm is to generate value for the customer, the society and the economy.

One of the keys to success of Toyota is that it lives by the philosophy of self reliance and a “let’s do it ourselves” attitude. This can be best illustrated when it ventured into the luxury car industry. It did not but a company that already made luxury cars; rather it created its own luxury division – the Lexus – from scratch in order to learn and understand the essence of a luxury car.

Genchi Genbutsu means “think and speak based on personally verified information and data”. Toyota’s management pursue the idea that is important not to speculate on the basis of what has been heard or told by others, but, in order to have a better grasp of the situation, the employees should try to see things for themselves.

“Solve problems and improve processes by going to the root or source”. Toyota’s philosophy of promoting and acquiring mid-to-to-level executives within the company steams from the company’s belief that that are eliminating unevenness at the executive level.

Changing the culture every time a new leader comes in brings some confusion in the ranks and does not develop any real depth or loyalty from the employees. Toyota believes, in fact, that the leaders within the organization must live and understand the Toyota culture everyday.

Toyota is trying to become a learning organization through relentless reflection and continuous improvement, the so called kaizen. This means establish a process for continuous improvement and use it to find the root cause of inefficiencies and apply effective counter measures; create a process that requires the least inventory, making easy to spot wasted time and resources; protect industrial knowledge by developing stable employees, slow promotion and a very careful succession system.

The “Toyota Way” and, therefore, the success of Toyota in the last decades is a clear example of how the culture of a country can positively influence the economics aspects of a company.

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