Feb 28, 2010
An integrated management system: lessons from the Japanese experience (Hatvany and Pucik, 1981)
An integrated management system: lessons from the Japanese experience (Hatvany and Pucik, 1981)
“Japanese management is characterized by a focus on the maximum utilization of human resources…..These techniques can be adapted by businesses in other countries, and indeed some of them (e.g., long tenure, job rotation, consultative decision making) are in use in a number of top American companies.”
> A Model of Japanese Management
The essence of Japanese management is the importance of human resources.
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* Strategies
- Internal labor markets:
Males are hired after graduation from high school or university and will work their whole lives at the company. Female and part-time workers are temporary – their use adds flexibility, as does the practice of subcontracting. In this way, the company’s labor force is to some extent buffered from external demand and supply conditions.
Companies invest a lot in training and minimize turnover through seniority-based pay and non-transferable (company-specific) skills.
- Company philosophy:
Companies describe themselves as unique families. Wa (harmony) is stressed. Mutual commitment and responsibility.
- Hiring practices/Socialization:
Workers without prior experience in other firms are preferred because it is easier for them to assimilate into the company system. Basic criteria for employees includes moderate views and a harmonious personality. Socilization begins with orientation and continues throughout the working life through transfers and job rotation.
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* Techniques
- Job rotation and slow promotion:
Rapid promotion is not likely, horizontal job rotation is the norm. Even at the same heirachical level, positions vary in their importance (centrality) and thus status can be implicitly derived and opportunities for advancement can be offered or withheld.
- Evaluation of attributes and behavior:
Annual or semi-annual employee evaluations which look at both performance and personality/maturity traits. Mistakes by younger employees are part of the learning process. Group performance is also measured. Informal ties and networks are also important.
- Importance of the work group:
Many company policies are centered on the group. Tasks are assigned to groups, not individuals. Job rotation helps build a rounded knowledge of the company but also prevents groups becoming dependent on any one individual. Group autonomy is encouraged but bounded by company coordination, size, job rotation schedules and production requirements.
- Open communication:
Face-to-face communication is very important. Work spaces are designed to facilitate this – even high-ranking managers rarely have their own offices.
- Consultative decision making:
Research suggests that face-to-face communication does not translate to participative decision making. In general, middle managers circulate an idea (which is often suggested by top management) around peers and supervisors and when all are in the know, a formal proposal is presented and accepted. This is not the same as American-style ‘participative’ decision making, nor is it ‘bottom-up’, it is a “top-down or interactive consulting process”.
- Concern for the employee:
Informal communication is an important avenue for expressing management concern for employees on a personal level. Long tenure helps foster close relationships. Social and cultural events sponsored by the company also play a role, as do welfare systems (scholarships, credit, savings, insurance).
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> The Comparative Perspective
Linking the strategies and techniques above with positive outcomes such as comittment and productivity.
> Concern for Human Resources, Commitment, and Productivity
Lifetime job security does not limit mangerial tools for controlling employees and can be advantageous. It helps employees be open to change and increases commitment. High commitment results in lower turnover.
When this high commitment is paired with a strong articulation of company values and goals it increases productivity because it provides direction for individuals, and committed workers will do their best for the company. Such a company philosophy can be viewed as an ‘elegant’ control mechanism, but only if it is effectively communicated to employees and acted on by management.
Job transfers and rotation help employees find where they best fit, understand the needs of the company and what to do in a diverse range of situations. It also fosters and supports organization-wide communication and informal networks.
While promotion at a later age than is common in Western countries may be thought of as a demotivator, it can be viewed as having positive motivational results in that it promotes equality and prolongs competition for top jobs in the company.
Evaluation costs are low as they are based on regular informal and formal interaction.
Lifetime employment leads to better cohesion between company goals and and employee efforts, and, as it minimizes risk may encourage creativity.
Group-based evaluation increases trust, mentor/tutoring and cooperation – providing “direct instruction, by providing feedback about behavior, and by serving as models of appropriate behavior”.
> Constraints On Adopting The Japanese Model
In the U.S., market dominance may be necessary for firms to offer stable employment, and higher labor mobility may make it hard for firms to develop internal labor markets. Additionally, American employees are less dependent socially on their companies. Nevertheless, there may be a middle ground. Empirical evidence concerning the implementation of Japanese practices in subsidiaries shows that success is possible.
Original Text:
Hatvany, N. and Pucik, V. (1981). An integrated management system: lessons from the Japanese experience. Academy of Management Review, Vol. 6, No. 3, pp. 469-80.
