January 16, 2018 [No.47-2017]
Hiroshi Kitani, Professor
Graduate School of Business Administration
Prefectural University of Hiroshima
Part 1: The strength of Japanese companies, underpinned by homogeneity
Workstyle reform is currently very popular among Japan’s business community. The government is promoting the dynamic engagement of all citizens as one of the key pillars for Japan's growth strategy. This reform is probably driven by the idea that workstyles must change for companies to be able to unleash the potential of all their employees. This four-part series of articles points out that the ongoing workstyle reform should enable a diversity of personnel to shine in society, before going on to explain why the task is a major challenge for Japanese companies, which have traditionally derived their strength from a homogenous labor force.
2. The strengths of Japanese companies
As James C. Abegglen and other researchers have pointed out, Japanese-style management played a core role in the development of Japanese companies and served as a driving force for the country’s post-war economic miracle. According to the common definition, Japanese-style management depended on lifetime employment, a seniority-based wage system, and company unions that organically worked together in the country’s unique culture and economic environment. Simply put, this is efficient management based on the supply of a homogeneous labor force with an open-ended commitment. Japan, on the eastern tip of Asia, is a rare country in that it has suffered almost no invasions, only brief occupation, and as such has maintained its independence. This island nation with almost a single ethnicity shares virtually the same language and lifestyle country-wide. Such a miraculous homogeneity is what makes Japan so unique. Moreover, the gender-based division of roles has enabled Japan's business community to be driven by healthy Japanese male workers with an open-ended commitment, that is, who willingly devote most of their time and energy to their work.
The personnel management enabled by the seniority-based wage system or ability-based grade system in homogenous Japan applied the group administration method and minimized transactional costs in management, thereby raising the country to the height of prosperity in the global economy. Whereas the performance-based wage system imported after the bursting of Japan’s economic bubble wound up failing. Even today, when workers are no longer free from other commitments, Japanese companies have trouble casting away the model of success that relied on a labor force with an open-ended commitment. Indeed, female employees struggle to balance their responsibilities at home and in their communities with their desire to excel at their workplaces. Non-regular workers cannot become regular workers or do not seek regular employment because of other commitments. The elderly desire to continue working after the age of 60, although some are compelled to do so by necessity. People with disabilities yearn to actively participate in society. Foreign employees may not even be aware that they are being employed by Japanese companies. Patients with cancer, depression, and so forth may want to work while undergoing the necessary treatment. So-called parallel workers juggle their main jobs with other multiple jobs. However, Japanese companies unfortunately almost completely fail to harness such a diversity of talented people who have other commitments.
3. Intent of proper work-life balance
Meanwhile, in December 2007 representatives of the government, employers, and employees convened at the Top-level Public-Private Council. The meeting prompted the government to establish the Work-life Balance Charter and the Action Guidelines. The charter defines that a society with the right work-life balance “enables all citizens to choose their lifestyle from diverse options according to their respective stages of life, including parenthood, middle-age, and age of maturity, to play their roles at work, home, and in their local communities with a sense of purpose and fulfillment.” The guidelines set forth specific numerical targets, for instance, to encourage workers to take the entirety of their annual paid leave and increase the percentage of men who take childcare leave from 0.5% in 2007 to 10% by 2017. Some questioned the effectiveness of such numerical targets given the moves by economic organizations concerned with the government-imposed regulations, as well as the absence of any penalties for failure to achieve the targets. Fortunately, the Work-life Balance Charter as well as the Act on Advancement of Measures to Support Raising Next-Generation Children had earlier laid down accelerated initiatives for striking a proper work-life balance in Japan.
During the past ten years since the establishment of the charter, some achievements have been made as the principle of work-life balance took root to an extent in society and among companies. Meanwhile, many issues have been pointed out, including death caused by overwork at a leading advertising agency. In response, in September 2016, the government made a fresh move to establish the Council for the Realization of Work Style Reform. The government launched the workstyle reform as a measure for promoting the active engagement of diverse personnel. This initiative may be the sign of the government’s acknowledgement of the limitations of past measures for promoting a proper work-life balance. As Prime Minister Shinzo Abe stated, workstyle reform involves the radical transformation of Japanese corporate culture, which is grounded on open-ended commitments by employees, which in fact urges a revolution both in terms of lifestyle and working attitudes among Japanese people. No doubt, everyone will need to brace for the arduous path ahead.
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