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WHAT IS THE JAPANESE-STYLE HUMAN
RESOURCE MANAGEMENT?
JONGWON WOO
PART 1
TYPICAL PRACTICES OF JAPAN
A FACTORY IN CHINA:
ON THE WALL, THERE IS A SHEET TO
ANNOUNCE SOMETHING TO WORKERS.
A FACTORY IN JAPAN:
ON THE WALL, THERE IS A SHEET TO SHOW
SOMETHING TO WORKERS.
WHAT IS THE “SKILL MATRIX” SHOWING?
able to do the job
with support
able to do the job
without support
able to teach
the j...
TOYOTA PRODUCTION SYSTEM (TPS)
OR TOYOTA WAY (TW)
http://www.toyota-
global.com/investors/financial_data/high-
light.html
LEAD TIME OF PRODUCT DEVELOPMENT
 The read time of Japanese automakers is the shortest.
 They cleverly make use of simul...
“SIMULTANEOUS ENGINEERING”
 For simultaneous engineering, it is critically needed that
the related departments like devel...
ROLE OF SKILLED WORKERS IS CRITICAL
Foremen at every
workplaces shorten the
operation time and
rewrite the operation
stand...
THE ECONOMIC EFFECT OF KAIZEN IN
TOYOTA:
TOTAL EFFECT IS 1,670 BILLION YEN
DURING 12 YEARS FROM 1992 TO 2003
WAGE SYSTEM AT TOYOTA
 The total amount of compensation depends on the “ability”.
 White collar workers are granted from...
JIT (JUST IN TIME) NOT ONLY IN THE
PRODUCTION BUT ALSO IN THE SUPPLY CHAIN
Provided by “lot”:
A few parts are in stock.
Pr...
THE STRONG POINTS OF TOYOTA
[PRODUCT]
 Speedy and flexible development of new product
 “Lean Production”: continuous Kai...
PART 2
WHAT KIND OF HRM SUPPORTS THE
COMPETITIVENESS OF JAPANESE
FIRMS?
LONG-TERM EMPLOYMENT SUPPORTS THE
EMPLOYEES’ COMMITMENT TO THE COMPANY
AND THEIR ‘FIRM-SPECIFIC’ SKILLS
 As of the length...
THE PRACTICE OF HIRING NEW GRADUATES AND
TRAINING THEM SUPPORTS EMPLOYEES’ STRONG
COMMITMENT TO THE COMPANY AND THEIR FLEX...
THE SENIORITY BASED WAGE SUPPORTS THE
INCENTIVE OF EMPLOYEES TO DEVELOP THEIR
‘FIRM-SPECIFIC’ SKILLS AND/OR KEEP THEIR
ROY...
JAPAN’S SENIORITY-BASED WAGES
STRENGTHEN EMPLOYEES’ INCENTIVE TO
DEVELOP THEIR CAREER IN THE COMPANY
 As of the service y...
INTERNAL TRAINING, ESPECIALLY “OJT” IS
SUPPORTING JAPANESE WORKERS INTERNAL
CAREER
 Q) (Asking firms) What type of traini...
TO MAINTAIN THE INCENTIVE OF EMPLOYEES,
JAPANESE FIRMS RESTRAIN THE
IMPLEMENTATION OF “FAST TRACK”
 There is not so many ...
THE “SLOW PROMOTION” SUPPORTS
EMPLOYEES’ MOTIVATION ON ONE HAND, THEIR
COOPERATION ON THE OTHER HAND
Timing of Promotion
(...
CAREER CONTINUATION IN JAPAN HELPS
WORKERS MORE INCORPORATED TO THEIR
COMPANY
ProvidesbyProf.TeiichSekiguchi
NO COLLAR LINES BETWEEN REGULAR
MEMBERS IN A FIRM
 There is no formal collar line within regular
employees. The same comp...
RANKING SYSTEM BASED ON “ABILITY” SUPPORTS ALL
OF THE JAPANESE HRM: AN EMPLOYEE CAN BE
PROMOTED EVEN IF THERE IS NOT A JOB...
THE COMPREHENSIVE ASSESSMENT OF
EMPLOYEES HELPS ALL OF JAPANESE HRM
WORK SMOOTHLY
 Workers are evaluated according to “pe...
NOT INDUSTRIAL UNION BUT ENTERPRISE
UNION MORE HELPS EMPLOYEES COMMIT TO
HIS/HER COMPANY
ProvidesbyProf.TeiichSekiguchi
THE UNION PUT TOGETHER BY WHITE AND
BLUE COLLAR WORKERS MAKES THEIR
COOPERATION EASIER
ProvidesbyProf.TeiichSekiguchi
ENTERPRISE UNIONS SUPPORT THE
COOPERATIVE RELATIONS BETWEEN LABOR
AND MANAGEMENT
 As for the number of days not worked be...
“WHITE-COLLARIZATION” OF BLUE
COLLAR WORKERS IN JAPAN
 In Japan, there is no clear distinction between
salaried employees...
PART 3
“JAPANESE-STYLE MANAGEMENT” IN
THE VARIETIES OF HRM/IR
OUTLINE OF JAPANESE-STYLE
MANAGEMENT (1)
 Smooth School-to-Work Transition: Young people
almost could have had their jobs...
OUTLINE OF JAPANESE-STYLE
MANAGEMENT (2)
 The HR Development is supported by related HR
practices/institutions as below:
...
“JAPANESE-STYLE MANAGEMENT” AND
VARIETIES OF HRM/IR
 Job based HRM
vs. HRM based on Personal Factors
 Market-oriented Un...
REFERENCES
 Freeman,R.B. and J.L.Medoff [1984]. What Do Unions Do?, New York: Basic
books.
 Fujimoto, Takahiro [2003] No...
THANK YOU FOR LISTENING!
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Japanese-style human resource management

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The lecture of Professor Jongwon Woo - Doctor of Economics (The University of Tokyo) put an emphasis more on the aspect of Japanese - style human resources’ management. This undoubtedly would come in handy for lots of attendees in the seminar given the fact that a rising number of Japanese companies have invested in Vietnam in the recent year, which leads to higher demands for the recruitment of Vietnamese staffs working for them. Therefore a good grasp of typical Japanese human resources’ mechanism is likely to give an edge to the students who have it in mind to applying for these firms.

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Japanese-style human resource management

  1. 1. WHAT IS THE JAPANESE-STYLE HUMAN RESOURCE MANAGEMENT? JONGWON WOO
  2. 2. PART 1 TYPICAL PRACTICES OF JAPAN
  3. 3. A FACTORY IN CHINA: ON THE WALL, THERE IS A SHEET TO ANNOUNCE SOMETHING TO WORKERS.
  4. 4. A FACTORY IN JAPAN: ON THE WALL, THERE IS A SHEET TO SHOW SOMETHING TO WORKERS.
  5. 5. WHAT IS THE “SKILL MATRIX” SHOWING? able to do the job with support able to do the job without support able to teach the job able to do problem solving
  6. 6. TOYOTA PRODUCTION SYSTEM (TPS) OR TOYOTA WAY (TW) http://www.toyota- global.com/investors/financial_data/high- light.html
  7. 7. LEAD TIME OF PRODUCT DEVELOPMENT  The read time of Japanese automakers is the shortest.  They cleverly make use of simultaneous engineering. http://ocw.u- tokyo.ac.jp/lecture_files/eco_02/9/notes/ja/J _ba2_9.pdf#search='%E9%96%8B%E7%99 %BA+%E3%83%AA%E3%83%BC%E3%83 %89%E3%82%BF%E3%82%A4%E3%83% A0+%E6%AF%94%E8%BC%83'
  8. 8. “SIMULTANEOUS ENGINEERING”  For simultaneous engineering, it is critically needed that the related departments like development and production keep close communication and cooperation each other. http://webhotel2.tut.fi/projects/caeds/teksti t/PDM/PDM_CE.pdf#search='Concurrent+ Engineering+Figure'
  9. 9. ROLE OF SKILLED WORKERS IS CRITICAL Foremen at every workplaces shorten the operation time and rewrite the operation standard sheets. Not only foremen but also seniors at every workplaces tackle the operational problems and accomplish the Kaizen.
  10. 10. THE ECONOMIC EFFECT OF KAIZEN IN TOYOTA: TOTAL EFFECT IS 1,670 BILLION YEN DURING 12 YEARS FROM 1992 TO 2003
  11. 11. WAGE SYSTEM AT TOYOTA  The total amount of compensation depends on the “ability”.  White collar workers are granted from 7 to 1 ability grade, and blue collar workers are granted from 9 to 1 ability grade, respectively. White collor workers Blue collar workers Individual wage based on ability (50%) Basic wage based on ability (50%) Individual wage based on ability (30%) Basic wage based on ability (30%) Wage based on productivity (20%) Wage based on seniority (20%) SUGIYAMA,Naoshi[2014]
  12. 12. JIT (JUST IN TIME) NOT ONLY IN THE PRODUCTION BUT ALSO IN THE SUPPLY CHAIN Provided by “lot”: A few parts are in stock. Provided in the “order”: Suppliers deliver parts in sequence.
  13. 13. THE STRONG POINTS OF TOYOTA [PRODUCT]  Speedy and flexible development of new product  “Lean Production”: continuous Kaizen of QCD (Quality, Cost, and Delivery) [ORGANIZATION]  Flexible work organization  Close cooperation between sections  Smooth communication between engineers and operators [HUMAN RESOURCES]  Flexible placement of employees  All round skilled workers  Strong commitment to the growth of company
  14. 14. PART 2 WHAT KIND OF HRM SUPPORTS THE COMPETITIVENESS OF JAPANESE FIRMS?
  15. 15. LONG-TERM EMPLOYMENT SUPPORTS THE EMPLOYEES’ COMMITMENT TO THE COMPANY AND THEIR ‘FIRM-SPECIFIC’ SKILLS  As of the length of service year, the average of Japan is about 12 years, longer than that of USA or that of Great Britain.  However, no longer than those of some European countries like Germany, France, and Italy. JILPT(2014)"DatabookofInternational LabourStatistics"
  16. 16. THE PRACTICE OF HIRING NEW GRADUATES AND TRAINING THEM SUPPORTS EMPLOYEES’ STRONG COMMITMENT TO THE COMPANY AND THEIR FLEXIBLE PLACEMENT  As of unemployment rate of 15-24 years old, Japan is one of the countries where it is the least.  This is related with the hiring practice of Japanese firms. JILPT(2014)"DatabookofInternational LabourStatistics"
  17. 17. THE SENIORITY BASED WAGE SUPPORTS THE INCENTIVE OF EMPLOYEES TO DEVELOP THEIR ‘FIRM-SPECIFIC’ SKILLS AND/OR KEEP THEIR ROYALTY TO COMPANY
  18. 18. JAPAN’S SENIORITY-BASED WAGES STRENGTHEN EMPLOYEES’ INCENTIVE TO DEVELOP THEIR CAREER IN THE COMPANY  As of the service year and wage profile, the wage of Japan, especially that of male is sharply increasing in proportion to the service years.  This is called the seniority-based wage. JILPT(2014)"DatabookofInternational LabourStatistics"
  19. 19. INTERNAL TRAINING, ESPECIALLY “OJT” IS SUPPORTING JAPANESE WORKERS INTERNAL CAREER  Q) (Asking firms) What type of training do you think important?  A) 73.5% of firms answer OJT is important. MLHW(2014)"SurveyonAbility Development"
  20. 20. TO MAINTAIN THE INCENTIVE OF EMPLOYEES, JAPANESE FIRMS RESTRAIN THE IMPLEMENTATION OF “FAST TRACK”  There is not so many “fast tracks” in Japan as in the US or in Germany.  The chances of promotion are granted to the majority of employees. ProvidesbyProf.TeiichSekiguchi Existence of Fast Track 5.4 38.4 28.2 89.9 49.5 51.9 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Japan US Germany N. A. No Fast Track After Several Years Experience From the Entry Level
  21. 21. THE “SLOW PROMOTION” SUPPORTS EMPLOYEES’ MOTIVATION ON ONE HAND, THEIR COOPERATION ON THE OTHER HAND Timing of Promotion (Average Length of Service at the Promotion to the Current Positions Ocuurered) 0 5 10 15 20 25 30 HRM - Dept. Head (BUCHYOU) HRM - Section Chief (KACHOU) Sales - Dept. Head (BUCHYOU) Sales - Section Chief (KACHOU) Accoounting - Dept. Head (BUCHYOU) Accounting - Sectrion Chief (KACHOU) US JAPAN  The length of service necessary for the promotion to the department/section chief in Japan is almost double of that in the US. ProvidesbyProf.TeiichSekiguchi
  22. 22. CAREER CONTINUATION IN JAPAN HELPS WORKERS MORE INCORPORATED TO THEIR COMPANY ProvidesbyProf.TeiichSekiguchi
  23. 23. NO COLLAR LINES BETWEEN REGULAR MEMBERS IN A FIRM  There is no formal collar line within regular employees. The same compensation and appraisal system and rules have been applied to both white collar and blue collar employees, regardless of their current job assignment or specialty.  The difference of annual earning levels of top level white collar workers and lowest level blue collar workers is far smaller in Japan than firms in the Western countries.
  24. 24. RANKING SYSTEM BASED ON “ABILITY” SUPPORTS ALL OF THE JAPANESE HRM: AN EMPLOYEE CAN BE PROMOTED EVEN IF THERE IS NOT A JOB VACANCY  In this case of Nippon steel corporation, employees are graded according to the “job” on one hand (left side), and to the “ability” on the other hand (right side). TAGUCHI,Kazuo[2004]
  25. 25. THE COMPREHENSIVE ASSESSMENT OF EMPLOYEES HELPS ALL OF JAPANESE HRM WORK SMOOTHLY  Workers are evaluated according to “performance”, “ability”, and “morale and attitude,” respectively.  The results are reflected in wages, bonuses, and promotion. Ability Morale and Attitude Performance
  26. 26. NOT INDUSTRIAL UNION BUT ENTERPRISE UNION MORE HELPS EMPLOYEES COMMIT TO HIS/HER COMPANY ProvidesbyProf.TeiichSekiguchi
  27. 27. THE UNION PUT TOGETHER BY WHITE AND BLUE COLLAR WORKERS MAKES THEIR COOPERATION EASIER ProvidesbyProf.TeiichSekiguchi
  28. 28. ENTERPRISE UNIONS SUPPORT THE COOPERATIVE RELATIONS BETWEEN LABOR AND MANAGEMENT  As for the number of days not worked because of labor dispute, they are very small in Japan.  It shows that the relationship between labor and management in Japan is very peaceful.  This is related with the characteristics of enterprise unions. JILPT(2014)"DatabookofInternational LabourStatistics"
  29. 29. “WHITE-COLLARIZATION” OF BLUE COLLAR WORKERS IN JAPAN  In Japan, there is no clear distinction between salaried employees and wage earners.  Everyone is a “Salary Man” and earns his compensation in a single category “Kyuro”.  The level of consciousness and behaviors of blue collar employees are very close to those of white collar employees.  Generally, Japanese blue collar employees are earnest to acquire skills and knowledge.  Also, they show strong commitment and loyalty to their firm.  “Kaizen movement” and “QC circle” are typical examples of their commitment.
  30. 30. PART 3 “JAPANESE-STYLE MANAGEMENT” IN THE VARIETIES OF HRM/IR
  31. 31. OUTLINE OF JAPANESE-STYLE MANAGEMENT (1)  Smooth School-to-Work Transition: Young people almost could have had their jobs immediately after graduation.  Intensive OJT: After entering a company, they have been trained by intensive, long-term OJT.  Cooperative Relationship: Workers are trained by their higher-ups and/or their seniors in the atmosphere of cooperation.  Problem Solving: The goal of internal training is that not only the core workers but also the majority of workers have the capability of problem solving.
  32. 32. OUTLINE OF JAPANESE-STYLE MANAGEMENT (2)  The HR Development is supported by related HR practices/institutions as below:  Seniority Based Wage/Promotion: Their wages and positions have been raised step by step with their seniority.  Job Security: Their jobs have been guaranteed until the mandatory retirement.  Enterprise Union: They have been the members of enterprise unions which bargain/consult with the management about the conditions of “life-time commitment.”  Government’s HRD Policies Valuing ILMs: Japanese Government traditionally has not supported workers who hopping for jobs, but supported management who bring their employees up.
  33. 33. “JAPANESE-STYLE MANAGEMENT” AND VARIETIES OF HRM/IR  Job based HRM vs. HRM based on Personal Factors  Market-oriented Unions and Industrial Relations vs. Organization-oriented Unions and IR  Market-mediated Employment Relations vs. Internalized Employment Relations  Scio-economic IR System vs. Voluntary IR System
  34. 34. REFERENCES  Freeman,R.B. and J.L.Medoff [1984]. What Do Unions Do?, New York: Basic books.  Fujimoto, Takahiro [2003] Noryoku Kokiku Kyosoj: Nippon No Jidosya Sangyo Wa Naze Chuyoinoka, Chuo-Koron-Shinsya.  Huselid, Mark A. [1995]. “The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance”, Academy of Management Journal 38(3) 635-672).  Kato,T. and M.Morishima [2002]. “The Productivity Effects of Participatory Employment Practices: Evidence from New Japanese Panel Data”, Industrial Relations, Vol. 41(4).  Koike, Kazuo [1999] Shigoto No Keizaigaku, Tokyo: Toyo-keizai-shimpo-sya.  Sugiyama, Naoshi [2014] “Toyota Ni Okeru Chingin Seido No Tenkai”, Chukyo-Keiei-Kenkyu, Vol. 23, No. 1-2.  Taguchi, Kazuo [2004] “Shin-Nippon-Seitetu Ni Miru Chingin Seido No Sengo Shi”, Kikai-Keizai-Kenkyu, No.35.  Tsuru, Tsuyoshi, and Kentaro Nakajima [2012] (Discussion Paper Series A No.559) “Seihin Achitecture To Jinzai Management: Kigyo Enquête Chosa Ni Motozuku Nicchukan Hikaku”, Institute of Economic Research, Hitotsubashi University.
  35. 35. THANK YOU FOR LISTENING!

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