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Rebick, M. (2005)
‘CHANGES TO THE EMPLOYMENT AND
TREATMENT OF REGULAR EMPLOYEES’
RESULTS FROM SURVEY OF LITERATURE
Main areas               Changes                                    Reasons
Employment security:
                         •Incr. with age, except for 20-24 [2003]   •Education, dismiss ones with shorter tenures
i. Tenure,
                         •Similar, flatter in favour of young       •PT workers, conc. stockholding
ii. Mobility
Career structure:
                         •More demand for training                  •Highly specialised industries, finance and IT
i. Skills,
                         •Less formal recruitment ceremonies        •Breakdown of annual hiring patterns
ii. Corporate culture,
                         •Scarce managerial positions;              •Opportunism, observability, cooperation
iii. Career ladders
                         ↑average age for promotion;                breakdown; deal with aging workforce by
                         ↑fast-track promotion                      motivating younger employees
Compensation
                               Defined benefits plan  defined
                         i.                                         Incr. complexity of determination of pay;
                               contribution plan                    Flattening of age-wage profile;
                         ii.   Seniority- to performance-based      Change of incentive from loyalty to personal
                               wages; rise of individualism         reward
Hours of work            Decline based on surveys,                  Pressure for long-hour culture: be noticed, be
                         but increase in unpaid/unreported work     heard, SURVIVE;
                         hours                                      PRP induced behaviour.



Main empirical changes:
o Age of mandatory retirement increased from 55 to 60
o Flattening of age-wage profile o Less managerial posts held by high-schoolers
o Higher education attainment    o Lower employment for middle-school graduates
CONCEPTUAL PROBLEMS WITH SURVEYS
Multiple career tracks:
 Problems in documenting trends towards specialist careers

 Difficulty in distinguishing title between seniority and expertise

Unreported, unpaid long hours are not on record
Complex PRP system implies difficulty in mapping its effect on productivity
Causality issues: age-wage profile and use of payment systems


IMPLICATIONS: X-EFFICIENCY
The weakening of the following X-efficiency values:
 Security that encourages investment in supplying firms?

 Trust that encourages rapid flow of information?

 Emphasis on quality?
CONCLUSION: WHY HAS JAPAN CHANGED?

 Why is there a decline in employment, change in career
   structure and compensation?
  Changes in structural constraints:

     Prevalence in „Shukko and Tenseki practices‟ =
      shock-absorbing mechanisms by using redeployment
      to avoid redundancies
     Baby boomers reaching middle-age, extension of
      retirement age = “age-wage profile”
  Results in pressures to reduce employment, thus
   weakening traditional „three pillar‟ system
FURTHER QUESTIONS

      Do we see a shift from organisation-centred to a
  
      market-centred employment system in context of
      the „three pillars‟ system?

      Why does Rebick conclude that “there has not
  
      been great change in the nature of standard
      employment in Japan”? How does this statement
      cohere to his findings?
Inside Japanese Companies Today




                  Jacoby
              
HR

  Key element in Japanese system was

  headquarters HR department
 Today Japanese companies are experiencing
  pressure to conform to U.S style corporate
  governance & to adopt market-oriented
  employment practices that would weaken the
  corporate HR Function.
 Is this actually happening?
SURVEY
    Survey & analysis of 7 Japanese companies


    Looks at companies that are both diversified and

    specialised
    Looks at companies which are both centralised and

    decentralised.
CHANGES
    Headquarter Reorganisation


    In all organisations, efforts to make headquarters smaller, focused and more efficient.


    HR not singled out; economic measures made across the board and no disproportionate

    negative effect on HR.

    Corporate Governance


    Reforms undercutting shareholder approach by giving more weight to shareholders and to

    finance-driven decisions – weakening central HR in corporate hierarchy.

    Trade Unions


    Unions are becoming weaker and reducing the perceived relevance of corporate HR

    departments.

    Employment Practices


    Both employment practices and social norms underpinning them are gradually becoming

    more market-oriented. Lead to erosion of HR influence in corporation.
CONTINUITY
    Re-organisation


    Despite re-organisation, no divisional HR units – preservation of central HR unit.


    Belief in using central HR to realise cross-unit synergies and to sustain a strong

    companywide culture that can hold the company‟s diverse pieces together.
    Corporate Governance


    Recent legal reforms have made permissible a variety of U.S. Style corporate-governance

    practices, Japanese companies have changed far less rapidly than the law.
    Trade Unions


    HR relies heavily on the union as a routine part of the employee relationship despite

    eroding of managerial support.
    Employment Practices


    HR still firmly in command of recruitment.


    HR has key role in identifying rising stars.


    HR required to handle the practice of shukko and chuto saiyo.

CONCLUSION

    Corporate governance is changing slowly


    Decline in union power has been a long and slow process taking place

    outside large companies
    Changes in employment practices are nothing more than incremental

    changes, and are sometimes nothing more than symbolic changes.
    Means that core features of Japanese corporate system are adapted to

    changing environment and thereby preserved.
    For HR, this means while it has lost power it still occupies a privileged

    position.
    Organisations in Japan are moving towards a hybrid system – there is

    no convergence with the US but emergence of something new.
QUESTIONS

    Is the Japanese employment system simply

    remodelling itself to cope with a changing economic
    and demographic environment?
    To what extent is employment in Japan converging

    on the Anglo-Saxon Model?

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Week 13 Student Presentation G1

  • 1. Rebick, M. (2005) ‘CHANGES TO THE EMPLOYMENT AND TREATMENT OF REGULAR EMPLOYEES’
  • 2. RESULTS FROM SURVEY OF LITERATURE Main areas Changes Reasons Employment security: •Incr. with age, except for 20-24 [2003] •Education, dismiss ones with shorter tenures i. Tenure, •Similar, flatter in favour of young •PT workers, conc. stockholding ii. Mobility Career structure: •More demand for training •Highly specialised industries, finance and IT i. Skills, •Less formal recruitment ceremonies •Breakdown of annual hiring patterns ii. Corporate culture, •Scarce managerial positions; •Opportunism, observability, cooperation iii. Career ladders ↑average age for promotion; breakdown; deal with aging workforce by ↑fast-track promotion motivating younger employees Compensation Defined benefits plan  defined i. Incr. complexity of determination of pay; contribution plan Flattening of age-wage profile; ii. Seniority- to performance-based Change of incentive from loyalty to personal wages; rise of individualism reward Hours of work Decline based on surveys, Pressure for long-hour culture: be noticed, be but increase in unpaid/unreported work heard, SURVIVE; hours PRP induced behaviour. Main empirical changes: o Age of mandatory retirement increased from 55 to 60 o Flattening of age-wage profile o Less managerial posts held by high-schoolers o Higher education attainment o Lower employment for middle-school graduates
  • 3. CONCEPTUAL PROBLEMS WITH SURVEYS Multiple career tracks:  Problems in documenting trends towards specialist careers  Difficulty in distinguishing title between seniority and expertise Unreported, unpaid long hours are not on record Complex PRP system implies difficulty in mapping its effect on productivity Causality issues: age-wage profile and use of payment systems IMPLICATIONS: X-EFFICIENCY The weakening of the following X-efficiency values:  Security that encourages investment in supplying firms?  Trust that encourages rapid flow of information?  Emphasis on quality?
  • 4. CONCLUSION: WHY HAS JAPAN CHANGED? Why is there a decline in employment, change in career structure and compensation?  Changes in structural constraints:  Prevalence in „Shukko and Tenseki practices‟ = shock-absorbing mechanisms by using redeployment to avoid redundancies  Baby boomers reaching middle-age, extension of retirement age = “age-wage profile”  Results in pressures to reduce employment, thus weakening traditional „three pillar‟ system
  • 5. FURTHER QUESTIONS Do we see a shift from organisation-centred to a  market-centred employment system in context of the „three pillars‟ system? Why does Rebick conclude that “there has not  been great change in the nature of standard employment in Japan”? How does this statement cohere to his findings?
  • 6. Inside Japanese Companies Today  Jacoby 
  • 7. HR Key element in Japanese system was  headquarters HR department  Today Japanese companies are experiencing pressure to conform to U.S style corporate governance & to adopt market-oriented employment practices that would weaken the corporate HR Function.  Is this actually happening?
  • 8. SURVEY Survey & analysis of 7 Japanese companies  Looks at companies that are both diversified and  specialised Looks at companies which are both centralised and  decentralised.
  • 9. CHANGES Headquarter Reorganisation  In all organisations, efforts to make headquarters smaller, focused and more efficient.  HR not singled out; economic measures made across the board and no disproportionate  negative effect on HR. Corporate Governance  Reforms undercutting shareholder approach by giving more weight to shareholders and to  finance-driven decisions – weakening central HR in corporate hierarchy. Trade Unions  Unions are becoming weaker and reducing the perceived relevance of corporate HR  departments. Employment Practices  Both employment practices and social norms underpinning them are gradually becoming  more market-oriented. Lead to erosion of HR influence in corporation.
  • 10. CONTINUITY Re-organisation  Despite re-organisation, no divisional HR units – preservation of central HR unit.  Belief in using central HR to realise cross-unit synergies and to sustain a strong  companywide culture that can hold the company‟s diverse pieces together. Corporate Governance  Recent legal reforms have made permissible a variety of U.S. Style corporate-governance  practices, Japanese companies have changed far less rapidly than the law. Trade Unions  HR relies heavily on the union as a routine part of the employee relationship despite  eroding of managerial support. Employment Practices  HR still firmly in command of recruitment.  HR has key role in identifying rising stars.  HR required to handle the practice of shukko and chuto saiyo. 
  • 11. CONCLUSION Corporate governance is changing slowly  Decline in union power has been a long and slow process taking place  outside large companies Changes in employment practices are nothing more than incremental  changes, and are sometimes nothing more than symbolic changes. Means that core features of Japanese corporate system are adapted to  changing environment and thereby preserved. For HR, this means while it has lost power it still occupies a privileged  position. Organisations in Japan are moving towards a hybrid system – there is  no convergence with the US but emergence of something new.
  • 12. QUESTIONS Is the Japanese employment system simply  remodelling itself to cope with a changing economic and demographic environment? To what extent is employment in Japan converging  on the Anglo-Saxon Model?