The Concepts of HR Management in Japan - Research Paper Example

The Concepts of HR Management in Japan Executive Summary HR management is the fastest growing management department in organizations that focusing on the broader strategic issues associated with managing people in organizations. This report has discussed concepts of HR Management in Japan. It discusses Japanese perspectives on employment systems and their role that their closer alignment with business strategy characterizes and sustains ability of performance management. Introduction There is a core shift in the responsibilities of the manager to the professional HR manager in Japan. Managers whose main job is HR, and who are abided in a HR department, are progressively more focusing on the broader strategic issues linked with managing people in organizations. HR managers, for instance, might be foreseeing the organization's enduring hiring needs based on demands of company growth and proficiency requirements. Or they might be increasing organization-wide human resource information systems that trail all of the information concerning employees that used to be stored on paper in file drawers. Or they can be bench marking company HR practices against industry competitors (Konrad, A.M., and Linnehan, F., 1999). All these are big, protracted jobs, and they do not leave HR managers much resource sagging to deal with the fundamental tasks (e.g., hiring, firing, and training etc.) that used to be the restricted area of the HR department. In Japan, there are different concepts concerning the continued viability of concepts of HRM, shushinkoyo is among those popular concept in large Japanese firms. Kobayashi of Aoyama Gakuin University believes that the three foundations of Japanese human resource management shushinkoyo, nenko joretsu, and kigyo-betsu rodokumiai (long-term employment, seniority system, and enterprise-based unions) are crumbling and that there are most important changes ahead (Kilburn, 1994:45 ). Kobayashi points out that while major corporations can still retain much of the substance of long-term employment by off-loading excess employees to subsidiaries or associates, few now see this as more than a stopgap solution. Noguchi of Hitotsubashi University states that white-collar employees require to get used to the idea that they can lose their jobs (Rosario, 1993:22 ). Noguchi believes that it is a long-term trend that will not go away when the economy picks up. It is not just employers who are having subsequent thoughts about shushinkoyo. More and more employees themselves have an aspiration to seek new opportunities outside their present company. In Japan a term borrowed from English ‘u-turn’ refers to the trend of leaving big city jobs to go to smaller towns so as to enjoy a better life-style or freedom from the constraints of working in a large company. The number of employees opting for the ‘u-turn’ saw a considerable increase from the mid eighties. Fundamental HR activities in Japan are progressively more being decentralized and handed off to managers like line managers working front-and-center. That is a good thing, for the most part. After all, you are the one who is working with your employees’ day in and day out. Pucik and Hatvany (1983) summarize Japanese HRM strategies as: (1) the development of an internal labor market, (2) company philosophies that stress strong ties between the company and employees and (3) an exhaustive socialization process that emphasizes co-operation and teamwork. The first strategy, the development of an internal labor market, requires the practice of shushinkoyo. As, the Japanese firm recruits fresh graduates with the intention of employing them during the foremost portion of their productive lives. The subsequent strategy is implemented by taking advantage of collectivist tendencies and creating a strong bond between the employee and the company through socialization and the way benefits are structured. The third strategy is achieved by the encouragement of a group-oriented mentality. HR in Japan is an essential part of management stratagems with labor operation approaches imitating production and marketing main concern. The edifying term matching to include such an approach to HRM. They center on HRM as strategic integration. The myth that all workers in Japan are assured employment for a lifetime at one company is as invalid as the myth that workers in the US constantly change jobs and companies viciously cut their workforce at the first sign of an economic downturn. There are several large successful companies in the United States where a considerable number of employees spend most if not all their working years. Additionally, the mandatory retirement age in the US tends to be higher than that of Japan. In fact, a relative study of Japanese and American managerial practices and attitudes, found that the proportion of Americans wishing to stay with the same company until retirement is, as in Japan, high (Baba, 1984:133). The major distinction between the US and Japanese firms is that at US firms layoffs have tended to be much more common. Furthermore, in the US there is not the same extent of stigma as in Japan associated with changing companies so there has been greater labor mobility. Therefore, shushinkoyo is distinctive to Japan only in the sense of the particular role it has played as part of the Japanese human resource management system, but not in terms of employees simply working all or most of their life at one firm (Baba, 1994). Thus HR is a perspective on employment systems, characterized by their closer alignment with business strategy’. The elements of the corporate strategies that dominate the HR strategy vary. Certain organizational forms will find it virtually impossible to adopt strategic HRM, while foreign companies are more likely to adopt it. Sector and type of organization are the determining factors, with public sector and large, high visibility organizations further probable to take on strategic HR practices. HR as choosing the right people, developing people, providing interrelated support systems, and keeping the best people for forming a talented workforce. Riotous changes have happened in the business environment, with excellence constantly considered one of management's most competitive priorities and requirements for provisions and growth. Quality is a competitive prospect, not just a dilemma to be solved. Therefore, managers require stopping thinking about quality merely in relation to production process control and starting thinking about it thoroughly in relation to consumers' demands and preferences. Customers focused organizational culture, with aligned HR strategies and practices, are the means to successful strategy accomplishment. Human Resource Management and Organization Strategy The Japanese HR management comprises key issue for business. As the notion of HR contain two core meanings. First, strategy of HRM focuses on the link between organizational strategies and HRM as a central theme. HRM has or does not have in the overall process of strategic decision making in the organization. Secondly, HRM can contain a strategic orientation of the HR function, i.e., the functional areas themselves (Ghoshal, S. and Westrey, D. E., 1993). Consistent with Woodd's (1997) viewpoint that HRM should be the guardian of ethical values in employment, it used to be assumed that HR had a strong role in EEO as it was believed that this function inherently upheld desirable social justice values (Trice, Belasco, & Alutto, 1969). HR was always involved in selection processes, but, increasingly, together with the devolution of many HR responsibilities (Torrington & Hall, 1996), this role has assumed less importance; it has either been forgotten or thought to be unnecessary. A number of authors may still view HRM as having a role in compliance with employment law and EEO/AA legislation. Certainly, on the positive side, research has found that the human resource function is the main driver of change on equity issues (Cattaneo, Reavley, & Templer, 1994), and even where there is support from senior managers, it has been found that diversity initiatives (the follow-on from EEO), have been driven by HRM (Miller & Rowney, 1999). Moreover, it has been argued that one of the most significant effects associated with AA has been the elaboration of the HRM function (Konrad & Linehan, 1995). http://www.ifsam.org/2002/human-resource-management/bennington%20PUB.htm The pressures that environment creates do not bode well for those who believe that it is the role of the HR Manager to promote, if not ensure, compliance with the relevant legislation, especially if senior managers do not share the same views. Yet, as Mello points out, the literature is “conspicuously silent concerning any examination or study of this potential conflict of interest” and goes on to quote the Code of Ethics of the Society for Human Resource Management which states that the HR Manager is “to make fair and equitable treatment of all employees a primary concern while simultaneously stating expectations to maintain loyalty to the employer, even while upholding all laws and regulations relating to the employer's activities” (2000: 12). In the U.K., Collinson and Collinson (1996: 240) report that: “Attempts by personnel managers to ensure that recruitment practices were formal, consistent, and lawful were frequently undermined by divisions and conflicts based on function (between personnel and line): space (corporate/local); hierarchy (senior line manager/subordinate personnel); age; gender; and managerial ideology.” http://www.ifsam.org/2002/human-resource-management/bennington%20PUB.htm HRM in Japan is conveyed into the organizational strategy some relation to a formal forecast and prepares mode of strategy formulation, it makes two additional assumptions: formerly that this is solely a management concern; and secondly that, in spite of the debate about the role of line managers, the HR experts bring HR concerns into the strategic discussion. HRM participation can take many forms, from full association of the Board to the plan of achievement tactics for the delivery of strategic goals. The presence takes HRM issues into the strategic level discussions of linking one-third and one-half of the Board being legislature of the employees. In many organizations in these countries the HRM role is basically confined to a managerial role. In other cases, the presence of a legally requisite Works Counsel on which employee legislature have considerable power, or invasive unionism, means that in practice the interests of the employees characteristic in all main operational decisions. The more traditional notions of strategy show high users are more likely to have a HR presence on the main decision making body of the organization, to have written organization strategies and written HR strategies in Japan (Jurgens, U., Malsch, T. and Dohse, K. 1993). The idea of strategy is far from simple or basic and needs to be treated with caution. Actually there is no precise point of determination of strategy and no straight link to implementation. A viewpoint that presumes that there is and that takes no account of the effects of actors’ processes and relative conditions, will lead inexorably to a verdict of absence of strategy. Formulation of strategy does not have effect it is much less overt, cognizant or planned than that entails. The development of strategy is indeed a multifaceted, interactive, incremental and constrained process, so that classifying a point at which the corporate strategy can be is complex ‘completed’ adequately to permit the ‘HRM strategy’ to be formed. HR roles in Performance Management Performance management is frequently asserted to be the area of human resource management which can make the greatest impact on organizational performance (Philpott and Sheppard 1992). The use of performance management systems to execute strategy has also been viewed as a significant part of the strategy progression. The role of HR management in overall Japanese organization performance has received transformed stress in current years, chiefly due to escalating competition, which has forced organizations to examine in detail the involvement of diverse parts of the business (Storey and Sisson 1993), and to extensive reformation initiatives, used to line up organizations more intimately with the marketplace, which have implicated devolution to business units and profit centers. In such conditions, responsibility and measurement become critical to effective operations. The persistent recession of the early nineties in Japan reflects major deficiencies in the economy, and the engine that drove Japan's success is in need of a major refurbish. A single-minded focus on production and process technology worked well for the Japanese for forty years. Now the fight has shifted to white-collar functions, where no such advantages survive and certainly severe disadvantages exist for Japanese companies. Japanese companies should focus on improving the productivity and innovativeness of white-collar workers with the similar fervor that they did the manufacturing process. Single minded attention to market share and neglect of costs has finally caught up with the Japanese. though IBM and Hitachi have sales revenues of the same order of magnitude, Hitachi's profit is almost one fifth that of IBM, a characteristic common to such comparisons of U.S.-Japanese firms. Simply export-led industries such as electronics, autos, semiconductors, and consumer electronics have been really successful in global competition. The other 80 percent of the Japanese economy wage competition almost totally within the confines of Japan's insular and protective market, which has made it difficult to impossible for foreign companies to challenge Japanese companies in Japan. As a consequence, these companies have become complacent and unproductive. Japan's high prices, cartelized market structure, and lack of global competition have permitted many mediocre domestic companies to survive. Japanese food labor productivity declined by 50 percent relative to U.S. productivity between 1975 and 1989. Most of Japan's domestic service sector requires or tolerates levels of employment which would be considered unusually high in other countries (Elashmawi, F. 1990). Japan has the most competent factory floors and most inefficient offices in the world. This reflects Japan's cultural obsession with the role of human relations in business. Japanese managers, and even CEOs, are expected to drop everything to attend the funeral of an employee's parent. Executives feel that they have to deliver monthly bills to their main customers and subcontractors in person. This is caused by poor white collar performance and a distended overhead structure. It appears the choice has already been made. This process has already started in the form of at-home work and early retirement; termination of new recruits, voluntary retirement with incentive programs; implementation of annual salary reviews and performance management, management by objectives (MBO) and merit pay; and greatly expanded salary ranges. Other practices include a freeze on new hiring, incentives for early retirement, encouraging young women to marry and stay home, and redistributing workers (Beechler, S. and Yang, J. Z. 1994). Japanese companies are in the process of eliminating entire layers of senior management, merging research labs, and reassigning personnel. The Japanese companies have a saying for this practice: "Close the front door" (not hire new hires) and "open the back door" (attrition and encouraging seniors to leave). The Japanese government is trying to prevent sackings through an employment subsidy fund run by the labor ministry: It pays half the salary of an unwanted worker sent home or to a training course, and in small companies it pays up to two thirds. Previously, instead of sacking workers, Japanese companies cut costs by reducing overtime and bonus payments. This kept lifetime employment probable and as a consequence kept up consumer spending in previous recessions. This has worked in the past, but now the drag may be too much (Dale, P. N., 1986). Performance management has acknowledged significant attention in the human resource management field, though less so in the strategy field, despite calls for increased study in the area (Simons 1994). The theoretical assistance can be classified into three broad areas. First, performance management is viewed as a key integrative means, concerning individuals' goals and responsibilities to the objectives of the business, and assimilating major interventions assessment, rewards, training, and development in that way assisting strategically fit. Moreover, performance management has been recognized for enhancing organizational control over employees, raising a constant statement of managerial expectations, and endorsing a unitarist vision of the firm. Moreover, performance management is held to be a significant driver in shaping valuable outputs, such as employee assurance. Recognition by employees with the organization about observance to its values, goals, and desired behaviors is implicit to cause a strong culture and be favorable to organizational success. The demands on performance management systems to appraise precisely the contributions of employees are probable to boost substantially. The major component of the performance management system: goal setting, evaluation, rewards, and training and development. According to goal-setting theory, goals are effectual in as far as they specify a level of performance that is explicit, realistic, challenging, and enviable. In competitive environments, goal specificity is somewhat challenging because the constancy and stability of the external environment, and often the nature of the work, are indistinct. In competitive environments it is expected to see goals slackly specified and open to many revisions. Employees in their goals also expect it there to be greater partaking setting, since managers can appraise the changing demands of a particular employee's work (Latham and Locke 1991). They have distinguished performance appraisals as having two main aims that are auditing employee performance, and recognizing opportunities for training and development (Snell and Dean 1992). In firms working in moderately stable conditions, where goals and job metaphors are constant, and where there is a good deal of routine to the work of employees, the auditing constituent of an appraisal is much more to the forefront (Snell and Dean 1992). In the competitive environments, though, where what happened in the past might prove a variable guide to what may happen in the future, one would anticipate appraisals to have a greater prominence on development, with the aspiration of supporting creativity and continuous improvement, somewhat than monitoring divergences from the norm (Snell and Dean 1992). Another significant part of appraisal disquiets the input the appraisee has in the process. Usually, they have seen performance appraisals as extremely formal, non-participative events (Storey and Sisson 1993). In organization, it is expected that employees to have a large say in their appraisals. The varying demands of work and role, and the prominence on development needs, seem to need some strong ideas from employees, given that the information unevenness between manager and employee will be greater in fast changing circumstances. With organizations assuming team-based working and group-oriented output, relying on just the instantaneous manager's ideas into the appraisal might reduce the competence of the process, as important information might be lost due to derisory review of the employee's activities. Therefore, in cases where work is more interdependent, that multiple participation into the performance appraisal would be used. As tasks become moderately fluid and jobs more complex to define in organization environments, we would expect less prominence on formal evaluations and more on informal meetings and greater ongoing assessment (Gomez-Mejia and Welbourne 1990). In HRM, the reward process is projected to support employees with organizational strategy by giving incentives for employees to act in the firm's interest and execute well over time. Expectancy theory carries an apparent message that employees should feel confident that their effort will affect the rewards they receive. Perceptions of equity are consequently crucial in an employee's decision to remain and produce valuable work. Equity is a multidimensional put up, taking on external equity the extent to which a firm pays employees the rate they would get in the external labor market, internal impartiality the extent to which a firm distinguishes pay between employees on the base of performance in similar jobs, and individual impartiality the extent to which employees are rewarded proportionately to their individual performance (Dean and Snell 1993). As of the changing demands of performance on employees in companies, discernment of equity in its three forms might become perplexed, as job roles and job interdependence become more diverse and flexible. Since employees would imagine that as their job changes, so will their rewards, planning reward systems in environments presents a major challenge to organizations. In organization environments, a finest is placed on individuals who are capable to operate in indistinct circumstances who are competent to take benefit of loose job descriptions given by their employers. In Organizations, it is expected, that there is emphasis on individually evenhanded rewards as a means of recruiting and keeping highly competent employees would be required. Rewards can be categorized under three broad heading: performance reliant rewards, which overtly reward through performance outputs; job-contingent rewards, where pay is conditional on job classification; and person-contingent rewards, in which pay is reliant on the competencies a person has ( Dean and Snell 1993). As both output orientation and job classification might be complex to measure precisely in high-velocity conditions, the viewpoint of person-contingent rewards, which might support the values of learning, flexibility, and originality, may be best suited to rapid changing conditions. Training and developments are major interventions made so as to address skill deficiencies, to add value to the stock of human capital (Snell and Dean 1992), and to promote a learning organization. What is underlined in training and development can also strengthen the change process by refocusing skills and understanding within the organization. A main issue for organizations environment is that they need flexible, resourceful employees who require training and development to keep and boost their knowledge base and skill levels in line with varying environmental circumstances. But the environment of training and development, with its somewhat long 'lead times' together through the time taken for its benefits to filter through, renders problematical the prospective of training and development to fit deliberately within an organization. Conclusions and Summary Though, in Japan HR managers’ focus has transformed in those organizations where HR is a full business partner. Most dramatic is the improved attention to a cluster of activities with planning, managerial design, and organizational improvement. Investigation of dissent shows that the focus on these activities has augmented more in those organizations in which HR is a full partner evaluated to those in which it is not. Likewise, the consideration to employee development activities, and particularly to career planning and management development, has increased drastically more in the companies that are full partners. Although there has been some enhancement in the focus on some of the more established HR functional activities such as recruitment, selection, compensation, and benefits, these changes are not statistically more prone to occur in businesses that are strategic partners. Being a strategic partner goes hand in hand with splurging more time on organization planning, design, and development, and spending more time fitting the development actions of the organization to the business needs of the organization (Jackson, S., Hitt, M., & DeNisi, A. 2003, Gibb, S., 2000). HR being more of a strategic partner, or whether the reverse holds; that is, once HR as a full partner it is asked to do more organizational design and development work. Our belief is that both possibly occur. 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