Japanese Management Principles - Essay Example

Japanese management principles Management concerns with managing those resources of an enterprise that are required to produce the goods or servicesto be sold to consumers or other organizations. The balance of power has undoubtedly shifted to traditional management who now has more choice over how it conducts relationships with their employees and process. According to the definition management: "is the process of leading and directing all or part of an organization, often a business one, through the deployment and manipulation of resources (human, financial, material, intellectual or intangible" (Management, 2005). Management practices in UK and Japan are different because of differences in cultural, social and historical development of these countries. Wider social, political and economic conditions, incorporating enterprise unions, buyer-seller relationships, government support and economic structures cause the main differences between two models of management. In the era of globalization and internalization companies become dynamically evolving entities operating within a dynamically evolving environment, and some means of evaluation of the way in which the two interact has to be found to enable them to be better matched. Some contextual factors including local labour markets, industrial and HR relations mediate the transfer of "Japanese" management principles (Armstrong, 2003). The first group of principles includes industrial relations and manufacturing methods. The main techniques which was transferred include: Total Quality Control, Quality Circles, In-Process controls such as Statistical Process Control, Just-in-Time delivery and management systems and Continuous improvement. It should be noted that Japanese manufacturing techniques constitute the most tangible elements of the Japanese business system. They are essentially concerned with quality and efficiency and the improvement of competitiveness and thus it is unsurprising that it is these, more than any other aspects of Japanese management, which are now being adopted by UK firms. As increased global competition is placing more emphasis on local responsiveness, market segmentation, differentiation and product quality firms need to develop more flexible manufacturing systems and quality programmes to respond to the new demands. The manufacturing techniques were partially transferred taking into account cultural differences and strategy. Today, many companies tend to use a preventive TQM approach that overhauls procedures in every function from R&D to marketing and service to avoid errors, while cutting costs anywhere from 10% to 50%. The idea is to get products to a market faster, with fewer defects, and at a lower cost. According to Hill (1991) "top management determines quality priorities, establishes the systems of quality management and the procedures to be followed, provides resources and leads by example" (Hill, 1991). Manufacturing methods abound with references to teamwork and creative thinking. By focusing on the costs of poor quality, it saves money. It encompasses the notion of continuous improvement and, as such, it is essentially long-term. In Japan, TQM and Quality Circles are a core philosophy of a firm, but in UK they treats as management techniques. The industrial relations and manufacturing methods are not culturally based and serves as a useful methods of errors reduction and achieving customers satisfaction. Employee relations is another sphere of Japanese management principles. It should be noted that organisational structures are more ephemeral and difficult to replicate. They are reflective of family values and the country's national identity. It is often assumed that Japanese organisations are flat, with management being by consensus. Many Japanese organisations exhibit hierarchical characteristics, with decision-making coming from the top. Much resistance towards this principle has been displayed by UK employers in the adoption of employee involvement despite the apparent quality and productivity payouts. UK employers were constantly against this method, partly due to the fact that it seen as rejuvenation of union activity through the 'back door'. A "bottom-up" approach to management deals more with consultation and involvement than with lower level decision making. Many firms adopted that principle understands it as workers' participation in problem solving which have the potential to improve the quality of their work. Usually, UK companies have shown a limited propensity to involve employees in decision-making. The "Japanese" principle attempts to redress this situation and create a more harmonious relationship between management and workers. "The Japanese search for quality in manufacturing is unending because, no matter how good something is, there is always the possibility of doing it better. But the Western habit of critical thinking means that first we must find faults and then seek to put them right, so anything without faults is impossible to improve." (Russell, Patel, 1999). The "bottom-up" approach was adopted as teams work which also important for many Japanese organisation. It not only involves bringing people together to solve common problems and work on group activities, but manifests itself in common goals and commitment by every individual to the company's welfare. According to Rosow and Casner-Lotto (1998) teamwork is also fundamental to flexible manufacturing. Part of the teamwork ethos prepares individuals for a variety of functions within the workplace. Through cross training, workers can stand-in for absent co-workers and respond quickly to changes in models and production runs. Used in conjunction with flexible manufacturing technology (computer aided design and manufacture), firms employing a teamwork ethos have the potential to change product models more than a dozen times a day. Similarly, teamwork enables industrial relations initiatives by providing a forum for problem solving and continuous improvement. Introducing Japanese techniques is proving difficult because it cuts across cultural norms. Many firms are based on an individualistic rather than collective culture, which means teamwork is anathema to the underlying work ethic. Teams challenge individual power and authority and thus their introduction fuels resistance. For instance, personal leadership in Japan is regarded highly, and many leading Japanese companies have attained their position in world markets as a result of strong leadership (Liker, 2003). Equally, many UK firms have pursued a policy of cooperation and teamwork for many years and while they have not considered this to be directly similar to Japanese-style management, the effects are markedly similar. The entrepreneurial spirit of Japanese firms is encouraged as the tendency for individuals to compete against each other frequently gives rise to the development of new ideas. In the commercial organisation this means new products and technologies which have a positive impact on the national economy. Japanese personnel practices are based on co-operation. The concept of collectivism, which starts in the family, and is mirrored in businesses, relies on mutual interdependence and loyalty. Groups are based on strict hierarchical models based on seniority systems in which individuals respect and look up to their elders. Loyalty is promoted through involvement and consultation. Loyalty brings with it a sense of belonging, a common purpose, and high levels of motivation and commitment. These principles became core principles of many UK based companies. But, in fact, they were not totally adopted as most of these concepts coincide with the national HR principles widely used within UK firms. In Japan, this is also facilitated by life-long employment which gives individuals a sense of security and heightens their commitment to the organisation. This principle was not transferred to the UK companies. They have great concern for individual employees, who tend to be employed for their whole life in a single enterprise. When looked at closely, it appears that it is only the larger companies who have such a system of job security. Older employees have privileges because of their seniority, but this aspect also appears to be changing. A third aspect is that their unions are organized on a corporate rather than an industry or occupational basis (van Dijck, 1995). Proposals tend to be discussed carefully by various levels of employee. Such consultation takes time, but produces greater commitment and greatly assists the problems of communication. If the best of Japanese practices are to be adapted by other countries, a close analysis is needed. Japanese companies see their workforce as an asset. Core-workers are protected and nurtured and although they go through tough recruitment and selection procedures, in return they enjoy secure contracts and attractive remuneration packages. Nevertheless, profit-linked bonus schemes can result in broad differentials in pay between boom and slump periods. Although inter-firm collaborations are centred on the linked group business system, which is a product of Japan's historical development, the basic elements of the system are being replicated by Japanese firms within the UK through collaborations with local firms, but more importantly, with Japanese suppliers who have followed the lead of the major producers and located production within the UK. The success of these linked groups is prompting many UK firms to find new ways of working with their suppliers. Technical and business collaborations between suppliers and buyers for problem solving and the mutual development of components and inputs are becoming more prevalent within the UK as firms seek to capitalise on established business links to enhance competitive advantage. Japan places more emphasis on market growth and penetration and in these aspects they were definite leaders (van Dijck, 1995); but when measurement was made by accounting ratios (on profit margins and return on capital) the Japanese were not leaders. Japan has the benefit of a large domestic market but it appears that they also benefit from their emphasis on improvement in product quality and productivity. Cooperation between government departments and industry has not been introduced into practice. The government, through its identification of key industries and intention to 'back winners' in terms of technological development (information technology, new materials, biotechnology and energy) appear to be pursuing a system of industrial development based on managed growth. This is more in keeping with Japan's view of economic development than that which has characterised much of Europe in the past. Nevertheless, few systems have been developed to facilitate working linkages between the government and industry which begs the question of the overall effectiveness of the proposed intentions. Giving industrialists greater voice in the design of policies and strategies is the only way of replicating the kind of co-operation and mutual understanding apparent in Japan. Successful firms from individual countries do not have a monopoly over best practice they have simply derived a good fit between efficient business techniques and company culture. This means adapting systems and techniques to fit existing company values and norms. For instance, Nissan Corporation in UK is not based on Japanese style techniques, being a combination of the best of Japanese and British strengths to create a harmonious and productive working environment (Calingo, 1996). Nissan, for example, which for many years pursued strategies which have now been labelled 'Japanese' was described as following strategies exactly the opposite of the Japanese method (Thompson, Rehder, 1995). It is possible to say on the basis of Nissan's promotion of Individualism rather than Collectivism, which seemed to be in stark contrast to the Japanese ethic. The underlying intent of their strategic programme was improved efficiency and quality, and while they employed different means to the same ends, it is possible to argue that while processes may differ, ultimate outcomes are the same. Thus, while there may be some validity in the statement "Japanese and UK management is 50% the same and differs in all important respects". It is important not to lose sight of the fact the differences matter far less than the opportunity for learning. "But how can companies ensure that they have systems and mechanisms in place for acculturation and learning" (Rosow, Casner-Lotto, 1998). Recently, the literature has been awash with articles concerning the development of international managers who are able to operate across boundaries and who are adept at introducing change into organizations. In spite all the positive outcomes, some researchers note: "The Japanese model was strikingly successful for 20 years, but faltered at the first serious challenge; indeed it has become a major obstacle to recovery from Japan's present recession" (The Economist, 2001). It is possible to conclude that Japanese management, and prescriptions for its adoption in the UK, have tended to highlight the difficulties rather than the opportunities and have often tried to find mechanism for 'transfer' of techniques, rather than focus on learning opportunities. Their conclusions have frequently centred on the fact that it is impossible to replicate Japanese management practices as they rely on subtle ambiguities of culture, different ways of thinking and an acceptance of constant dynamism of processes. There are some organizations which successfully operates on the basis of Japanese model. Taking into account the specific criteria as organizational effectiveness, specified goals, specified quantified measures, stakeholder perspective, it was found that "Japanese" approach is more widely used in manufacturing because it allows to reduce the level of mistakes to a minimum. In line with intellectual capital theory, Japanese approach emphasizes that investment in people adds to their value to the firm of any sector, and collective decision making is so important as technological process. It was illustrated that "Japanese" approach is successfully used in car factories, but more seldom adopted by public organisations. In many cases, companies adopted the techniques and methods of "Japanese approach", but not a philosophical concept. Differences lie in approach rather than practice. References 1. Action agenda 21: The UK and Japan in the 21st century. (2005) Available at: http://www.mofa.go.jp/region/europe/uk/agenda21.html 2. Armstrong, M. (2003) Human Resource Management. Kogan Page. 3. Calingo, L. M., (1996), "The Evolution of Strategic Quality Management." International Journal of Quality & Management, Vol. 13, No. 9, pp. 19-37. 4. van Dijck, J., (1995) 'Transnational Management in an Evolving European Context', in Terence Jackson (Ed.) Cross-Cultural Management, Butterworth-Heinemann. 5. Hannagan, ., (1995) Management Concepts and Practices, Pitman Publishing. 6. Hill, T. (1991) Production and Operation Management: Text and cases, Prentice Hall. 7. Liker, J. (2003) The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer. McGraw-Hill Education. 8. Management. (2005) Available at: http://www.websters-online-dictionary.org/definition/english/ma/management.html 9. Rosow, J., Casner-Lotto, J. (1998), People, Partnership and Profits: The new labor-management agenda, Work in America Institute, New York. 10. Russell, D., Pater, A. (1999). Cost management - an introduction to Japanese management practices. Available at: http://www.accaglobal.com/publications/studentaccountant/43960 11. Thompson, K. Rehder, R. (1995) Nissan U.K.: a worker's paradox Available at: http://www.findarticles.com/p/articles/mi_m1038/is_n1_v38/ai_16791178 12. "Will the corporation survive" (2001). The Economist, Nov 1. Available at: http://www.economist.com/surveys/displayStory.cfmStory_id=770874 Read More