People Management Is What It’s All About

Japanese System – Readings on Contemporary Society and Political Economy

Stanford University Press. Edited by Daniel I. Okimoto and Thomas P. Rholen

Note: Thomas J. Nevins asserts in this article, which appeared in Look Japan in 1980, that Japanese companies differ most notably from those of the West in their use of manpower. He describes some of the features of Japanese employment and labor policies and their implications for business practices. Nevins is President of TMT Inc., a personnel consulting and executive search firm he founded in Tokyo in 1978, and the author of Labor Pains and the Gaijin Boss (1984).

The most important key to Japan’s strength is the way it effectively employs and makes the most of its people through good manpower, labor relations and personnel policies. Teamwork and organization is Japan’s secret. If you stop and think about it, people are really about all Japan has. Look at what it has done with people and people management.

Everybody’s in the Union Together

To put the system, which most Western businessmen are now quite familiar with, in readily identifiable terms, the Japanese enterprise union means that all employees, whether blue collar workers or white collar university graduates, are in the union together from the time they enter the company to their late thirties or early forties when they become kanrishoku (administrators) or reach a certain kacho (section head) class management level. Dues are paid directly to the enterprise union, and no national or outside industrial union representatives sit in on collective bargaining sessions.

The worker’s allegiance is to his company rather than to the trade or national union, because there is no such thing as a cross-company union hiring hall or union seniority to protect the worker should he lose his job with one company. Lack of strong outside union influence, trade-union-imposed seniority and work rules, and competing union jurisdictions within one company also makes for easy job restructuring to adapt to technological innovation or automation and rationalization of work process and methods.

Some might wonder why a person would work so hard if his job is guaranteed by lifetime employment.

When a Japanese enters a company directly after school, he knows that he is there for life. He doesn’t have the option of leaving, finding an equally good job and starting all over should he not handle his responsibilities or himself well. His fate becomes one and the same with his company’s prosperity, and every man’s contribution from the beginning reflects on his cash wages and future performance, the size of his lump-sum retirement allowance, and most importantly, his job security. Unlike Western companies, Japanese companies suffer no disincentive effect from bringing in management talent from the outside to block promotions and stifle ambition. From the beginning, the positions are there to be filled. An employee knows approximately when they will be filled and against whom in his “entering class” he will be competing.

Because supervisor and subordinate work within an arm’s length of each other and enjoy a constant rapport and healthy give-and-take exchange, there is also probably more polite disagreement and critical advice expressed by the Japanese subordinate than by his Western counterpart. There are decidedly fewer arguments and ruptures in personal and working relationships. Even company directors positioned on the board will rarely sit in their private rooms, preferring instead to take a desk in the big room that squeezes anywhere from twenty to two hundred people together.

Worker Participation in Small Groups and Quality Control

Within Japanese organizations, worker participation better mobilizes human resources and potential to contribute to and achieve organizational goals. The Japanese style is basically worker participation in shop-floor decision making, designed to create a degree of self-management and self-innovative capacity in the line departments and sections. A lot has been done with zero-defect programs, quality-control circles, workers independently setting targets or devising proposals and suggesting them to management, company-initiated MI (Management Improvement), campaigns to create brighter and better workshops, and JEL (Job Enlargement) assembly methods.

With Japan’s population aging even faster than populations in most other advanced industrial nations, a lot of trailblazing efforts taken with the cooperation of labor and management have been greatly successful in creating and establishing maintenance and service subsidiaries, or even whole factories, exclusively for the useful employment of the surplus of old and middle-aged workers.

Worker participation begun in the 1960’s had done much toward cutting defects, increasing attendance, enhancing the self-development of workers through acquisition and cultivation of leadership qualities, and boosting worker morale or a sense of worth in doing (yarigai) and a sense of fulfillment in living (ikigai). The great majority of Japanese companies have such programs.

When it comes to quality control, American management assumes that workers know where the defect or quality problems are and that only pecuniary rewards will draw out the information. Japanese management assumes that no one knows what the problems are and that they must be solved together. Nowadays there are very few full-time quality assurance personnel in Japan. Quality control is becoming the job of every employee.

These patterns and practices have elements of universality and could be transferred more conscientiously into the Western business context. (Real-time comment: In the last 20 years they were to the west and large manufacturing investments in cheaper wage Asia countries. In the meantime, other problems crept up on Japan) The enterprise union is not just a prototype that worked well in Japan’s special circumstances.

The creation of an internal labor market may be the model most appropriate in meeting the purposes of labor and management at our present advanced stage of capitalism.

In the modern capitalist countries, capitalists themselves have mellowed and overall social values and conscience are such that what was very real exploitation of the working man even thirty years ago will no longer take place. Institutions and regulations that did not exist or had not taken root earlier now check management and protect the workers. Management is more sophisticated. It knows that the earlier exploitation and blind, stubborn refusal to recognize unions or bargain in good faith merely was the fertilizer for equally unreasonable and uncooperative labor and an open invitation to hostile outside union organizing forces.

There would be tremendous benefits in bringing about a restructuring of the horizontal labor market into an internal labor market, with the bargaining unit limited to parties knowledgeable of, and sensitive to, the corporation’s profit picture and the specific conditions and needs of workers within a given firm.

With the more internalized labor markets of Japan and a more humanized approach and commitment to sustaining employment, employers are accustomed and willing to train the unskilled and will usually reap the benefits. In Japan, unemployment is generally said to be about 2 percent. More significant is that percentage of the workforce that is widely recognized to be underemployed. These underemployed, however, are not on public welfare doles requiring support with income and corporate tax dollars. They are at least partially productive and contribute to the economy as active consumers.