Management Practices in Japan

by: Alice Sbrzesny

Table of contents

1. Introduction

2. History and cultural heritage

3. Japanese culture, beliefs and values

3.1. Traditional organisational structure
3.2. Values and their expression in form of language

4. History of management practices

5. Traditional human resource management practices

6. Changes within the society and economy

7. Toyota – example of a Japanese company

8. Changing management practices

8.1. Keiretsu – management on inter firm level
8.2. Management on intra firm level

8.2.1. Life-time employment
8.2.2. Middle aged and older employees in Japanese corporations
8.2.3. Recruitment
8.2.4. Payment systems
8.2.5. Incentives

8.3. Gender related issues

9. Conclusion

10. References

1. Introduction

Japan is known for its successful companies. One might only think about the automobile manufacturer Toyota. To perform successful, a company has to maximise profit. In contrast to Western companies, in Japanese companies, profit is maximised by increasing sales and maximising volume by increasing productivity and efficiency. The question that arises is how could the Japanese increase productivity that much? One possible answer is the Japanese management approach.

For some time now, the characteristics of Japanese management style have been a popular issue, mainly in Europe and in the United States. Have the qualities and values of society and of individual been a reason for Japanese success? Such issues as the business group, the seniority wage system, the lifetime employment system and the periodic recruitment of new graduates have been examined in diverse ways. A look at the actual operations of Japanese enterprises in Europe and the United States indicates that, there are changes going on concerning Japanese management practices. Japan is an island with almost total ethnic homogeneity, having been unaffected by Western influences for long time. Modern management practices are said to be rooted in the cultural and geographical traditions of the country. Emphasis in recent analysis has been put on how the Japanese management style has arisen and evolved historically, rather than on its typological characteristics. This paper makes the attempt to examine Japanese management characteristics with regard to historical influences, Japanese culture, Japanese social system as well as possible future needs.

Cultural and historical heritage will be presented first followed by a summary of Japanese values on which society is based. After that, management practices with regard to traditional and modern approaches are presented. Meanwhile, changes in management practices are examined.

2. History and cultural heritage

Most of Japanese society is underpinned with the philosophies of a Chinese philosopher, Confucius, dated around 500 BC. The Confucian theories were based on ideas of benevolent action, loyalty and filial piety. This gave rise to a loyalty to the state or the emperor, duty to parents, respect of elders, faith in friendship and it discouraged individualism. These values were upheld in society for hundreds of years.

In 1867/68 the Meiji Restoration took place and Tokyo became Japan’s new capital. The actual political power was transferred from the Tokugawa Bakufu into the hands of a small group of nobles. Meiji was able to convert the entire country of Japan from a feudal state into an industrialized world power in less than half a century. He constructed a modern state, overhauled the social systems and created a new economic structure in which industrialism and the world community as a whole assumed a key role

In order to transform the agrarian economy into a developed industrial one, many Japanese scholars were sent abroad to study Western science and languages, while foreign experts taught in Japan. The government directly supported the prospering of businesses and industries, especially the large and powerful family businesses called zaibatsu. These were heterogeneous companies clustered in a large ie. After World War II had ended, Japan was devastated. Japan basically lost all the territory acquired after 1894. In 1947, a new constitution went into effect. The emperor lost all political and military power, and was solely made the symbol of the state. Universal suffrage was introduced and human rights were guaranteed. After the Korean War the recovery of Japan′s economy flourished. The economic growth resulted in a quick rise of the living standards, changes in society and the stabilization of the ruling position of the Liberal Democratic Party (LDP), throughout the sixties and seventies Japan’s economy continued to expand and to grow at enormous rates. The 1973 oil crisis shocked the Japanese economy which was heavily depended on oil. The reaction was a shift to paper products. The 1980’s were characterized by great uncertainty. The Asian crisis in 1997 struck Japan’s economy hard. Until now, Japan is recovering.

3. Japanese culture, beliefs and values

There are may books giving tips how to negotiate with Japanese. The following set of tips is taken from the book “Hidden differences” by Edward T. Hall and Mildred R. Hall:¹

1. Be patient
2. Take the long-term view
3. Learn the language
4. Respect consensus and compromise
5. Pay great attention to detail.

Susumu Yoshida, who summarized these tips in her paper ”Agenda for Japanese business in the global economy” adds “relax and enjoy”. The following paragraphs attempt to clarify these tips by examining Japanese beliefs and values as well as traditional organisational structure.

3.1. Traditional organisational structure

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1 Cf. Yoshida (1997) p.116