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 employerafter leaving school and continue with thatemployer until retirement age

• About 80% of Japanese companies aretrying to observe lifetime employment

• It´s merely a custom and is not prescribedby law


• Is strongly tied to promotions and payraises

• Salaries in Japanese companies arerelatively low for younger employees, butrise when the employee reaches his/her mid-thirties

• Many companies do not recognizeprevious work experience when workersswitch jobs (so far few people changejobs)

Lifetime Employment System


Lifetime Employment

•Advantages–Increases mutualunderstanding and trustbetween employer and employee–Long-term projects are no problem (= high economicgrowth)–Makes sure that layoffsare the last way of dealingwith managerial difficulties

•Disadvantages–Difficult to let people go–Budget for salaries isstretched if the companyhas a lot of middle-agedand older employeeswith high salaries–Makes it difficult to find talented people (mid-career employment isdifficult)


Western HR Management

• Employees in a Western corporation canbe 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-termmanagement planning difficult


Problems with the LifetimeEmployement System

• In the economic slowdown some companieswere forced to dismiss longtime employees whohave high salaries

• In some cases older employees were forced intoearly retirement

• Employees` attitudes changed too. More thanhalf of Japanese employees are willing to change jobs if the situation called for it


Seniority (Wage) System

• Under the seniority wage system salariesand positions rise with the length of service within the company.

• Many companies promote simultaneouslyfor the first 15 years after employees enterthe company

• The basic idea is that people who workedfor the same amount of time make thesame contribution to the company


SenioritySenioritySystem System


Seniority System•Advantages

–Balance between younger and older workforce–Stable workforce, becauseyounger employees first earn verylittle–Little animosity betweenemployees–Employees do not worry aboutdemotions and salary reductions–Employees can calculate income

•Disadvantages–Not very competitive, does notnecessarily motivate employees–More effective when thecompany is in a field with littlevariety in work contents–Does not allow much flexibilityin increasing the number of employees (older employeesare very expensive)–Motivation problems


Recent Changes

• Some companies are trying to introduceachievement based salary systems(14.6% of Japanese companies have doneso already, 20% are considering it)

• In the future more and more companiesare expected to introduce output-orientedsalary systems


Personnel Training

• Japanese human resource management isalso famous for its company training

• Universities only take a limited role in training future managers, companies areexpected 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 certaintechnologies and to improve specialized skills)

• Educators are the older employees and senior managers

• Training happens via Japanese knowledgemanagement styles creating highly skilledgeneralists– kôhai-sempai– On-the-job training (OJT)– Job rotation


Recent Changes

• Changes in industrial structure (employeesneed more specialized trainings)

• Less employment of graduates and moremid-life recruitment and recruitment of temporary employees

• New educational methods are needed


In-House Unions

• 22% of Japanese workers (60% of publicemployees and 54% in large utility companiese.g. electric and gas) are members of laborunions (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 sameindustry)


In-House Unions

• In Japan a union covers the needs of all types of employees in one organization

• Employees of a small company do notform their own union and can join a unionunder the trade union system

• Japanese union have the power to stopthe work processes through strikes (butthis rarely happens)


Particularities of Japanese Labor Unions

• Former executives in labor unions can becomepresidents of companies (is suppossed to lead to smooth negotations)

• Labor unions executives are elected by other unionmembers. At the same time they are employees of the company and get promoted in the senioritysystem.

• When employees reach the management level, theyretire 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 isdwindling– 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 workersand part-time workers (not only inhouse unionsany more )


Changing Employment Patterns

• Increasing number of part-time employeesand temporary employees (94% of whichare women)

• Working patterns have also changed (e.g. flextime, core time work and free-timesystems )

Recruiting & HR

Keio university class 6 human resource management in japan