Japanese management style: A brand on the verge of extinction !

Abstract
Japanese management style is one of the most talked about style in management classes and boardrooms. During the booming days, Japanese products and Japanese style of management were one of the most talked about subjects in Western business circles. Today also Japanese management style is also a very common topic in B-schools case studies and corporate strategy decision making meetings but now discussion has shifted to whether is it actually the best and if so why now a day’s Japanese companies are hard to find in various sectors of the business where once they use to dominate. Analysis is done on how Japanese style of management has portrayed its effects on work values of different generations of workforce.
 
Japanese Management Style: The most desired management style of the past
To be successful in business world, companies have to gain market share. This translates to maximization of profit earned by a business organization, and maximization of sales. A business organization for its sustenance consumes resources from nature, society and the environment that surrounds it. Thus it is liable to contribute back the environment in some manner. This was the greatest merit of Japanese Management Style; contributing back to society through business.

What is Japanese Management Style?
Japanese Management philosophy talks about business ethics where the employees are loyal to the company and vice-versa. Business is not a means of only making profit for them. The employees show their loyalty by working for a single company throughout their life. The company provides job security to the employees and promotion on seniority basis.  The company and its employees work as a family. Job security, the means of livelihood for the employees, is one of the major means of contributing back to the society through business.
 
Japanese Management Style can be explained in two aspects:
1.Human Aspect
The employees are given life-time employment. Also the promotions are given on the priority of seniority or in other words, to an employee who has spent a longer time in the organization. This enhances teamwork and loyalty within the organization, but has a few drawbacks like high manpower cost. Also in today’s changing world, assuming more aged employees are to be more competent is no more valid.
2.Business Philosophy
Business should contribute to the society. By providing employment security, the harmony between the society and business is maintained. In return, loyalty to the organization is deeply imbibed in the employees. They expect promotions based on seniority rather than individual merit.
 
To summarize up, the Japanese management style covers three practices on a broad level:
i. Lifetime employment
 
ii. Promotion and wages employees as per the seniority
 
iii. Loyal to the organization
 
iv. The other positive attributes of this system are:
 
v. The training given to the workers are on the expense of the organization as it is known vi. that the employees are expected to work for the company for lifetime.
 
vi. The inter-dependency between the company and its employees avoids activities like labor strike or union formation as both require each other for survival. This helps in maintaining healthy productivity in the organization. Thus, the employees work together to compete against the other companies to increase their market share, by improving quality, increasing productivity and even accepting smaller wages.   
 
vii. The system of decision making was also quite prompt. The process was known as “ringi” and conducted through document called “ringisho”. The “ringisho” is circulated among the peers who places their “hanko” or takes a decision. Once all the peers review the decision, the peers’  manager reviews the “ringisho” and places his ”hanko” and this is considered to be final.
 
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The Japanese Management system came into existence after World War II when Japan needed to restore the economy, as a result there was more co-operation and compromise from the workers who were in need of a livelihood. Also they required job security and the company required steady labor force. Thus, it hired unskilled labor, trained them as per their future job requirement. Termination was not an issue as companies continually had a need for more workers. These conditions resulted in setting the fundamentals of Japanese Management Style. 
 
Analysis of the Work Values of Different Generations of Workforce and Effect
A research was conducted by Society of Human Resource Management to analyze the work values of workforce from diverse cohorts or generations. The report for the research conducted in the first quarter of 2009 was prepared and published as The Multigenerational Workforce. The table below lists down the unique traits of the workforce from different generations which was studied during the research:
 
COHORTS
STARTED CAREER
 CURRENT AGE
DOMINANT WORK VALUES
Socialists
1950-1980
55+
hardworking, loyal to the organization
Liberals
Early 1990s – 2000
Mid 40s to mid 50s
achievement, loyal to careers
Xers
2000-2005
Late 20s to early 40s
dislike of rules, want financial success, loyalty to relationship (family)
Millennials
2005-to present
Early 20s
entrepreneurial, want to get rich quickly, high sense of entitlement
 
SOCIALISTS
The Socialist entered the work force after World War II. According to the research it was found that the characteristic of the people who have entered the work force during that period was hardworking and loyal to the organization.  At that time, after World war job security was a very important aspect and people are loyal to those who provide job security as people had a sense of insecurity all the time (after war effects).So the Japanese management style was the most suitable for that work environment to get the best out of the people.
 
LIBERALS
The Liberals entered the workforce during early 1990s to 2000. According to the research it was found that the characteristic of the people who have entered the work force during that period was achievement oriented and loyal to careers. So here there was a shift in the thinking pattern of people where achievement started to take a very important place in people expectations. But it allowed the Japanese management style to function successfully as people also had a characteristic trait that they were loyal to their careers. On the other hand the practices such as the lifetime employment guarantee had discouraged innovation.
 
XERS
The XERS entered the workforce during early 2000 to 2005. According to the research it was found that the characteristic of the people who have entered the work force during that period was dislike of rules, want financial success, loyalty to relationship. For them financial success was a very big priority so they value performance and achievement more. But Japanese corporate promote employees based on seniority, rather than individual merit, as in the United States. So seniority played more important role than performance which make the people dissatisfied and they started to switch companies and moved to non Japanese corporations and globalization gave them an edge.
Japanese management encourages excessive zeal and long work hours. Little meaningful time is left to be spent outside of work. As a result, when a worker retires, he has neither friends nor hobbies. This type of culture is not suited for people who have loyalty to relationship (family). They prefer a culture of work life balance.
Japanese management style got hurt as it became very difficult to control people with this type of thinking pattern with Japanese management style.
 
MILLENNIALS
The MILLENNIALS entered the workforce during 2005 to present. According to the research it was found that the characteristic of the people who have entered the work force during that period was entrepreneurial, want to get rich quickly, high sense of entitlement. For the Millennials Japanese style of management is like a misfit as this style of work environment satisfied very less of their expectation. So majority of the Japanese corporate who have not changed their management style are suffering heavily like SONY, SHARP.
THE PROBLEMS CAUSED BY JAPANESE STYLE OF MANAGEMENT
1.The practices such as the lifetime employment guarantee had discouraged innovation.
2.The practices such as the lifetime employment had allowed some underperformers to survive.
3.As mangers are frequently rotated in their jobs (usually shifted from one department to other department in 3 to 4 years). As a result, they did not become expert in any particular field due to which companies failed to innovative their products. Example SONY failed to make a mark in smart phone market like APPLE.
4.Work life balance got disturbed.
5.Japanese corporate promoted employees based on seniority, rather than individual merit. This made to lose the performance driven mindset people who were highly productive.
CONCLUSION
Now even Japanese companies are trying to change themselves. Nissan hired a Brazilian to turnaround the company. Same is done by SONY when they hire an Englishman to turn around SONY. Even in 2012 ANNUAL REPORT Kazuo Hirai, president and CEO of SONY wrote “SONY WILL CHANGE.” And for that change they brought a concept ‘ONE SONY’. Japanese corporations are changing and trying to change as they have realized that with their old style it will be very difficult for them to survive in this globalized market. Perhaps it is too soon to say what how these changes will help them to revive or is it too late and damages are huge to recover. Time will only tell the answer.
 
[The article has been written by Sourabh Bhaumik and Ritwik Ray. They are presently pursuing their MBA from NMIMS, Mumbai. Prior to joining MBA, Saurabh has worked with John Deer whereas Ritwik worked with Accenture.]
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Japanese management style: A brand on the verge of extinction !

by Ritwik Ray time to read: 8 min
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