The Japanese Business Style
Japan’s invasion of western markets has received widespread publicity in recent years. Their activities have been viewed internationally with a mixture of admiration, envy, and fear. Working on the principle that “if you can’t beat them, join them”, the western business community has begun to study closely how the Japanese system works. This examination has revealed four elements which seem to create special attitudes and relationships in Japanese companies.
In most large companies, a policy of lifetime employment is practiced. It means that when people leave school or university to join an enterprise, they can expect to remain with an organization until they retire (usually at the age of 55 or 60). In effect, the employee gets job security for life, and can only be fired for serious misconduct. Even in times of business recession, he is free from the fear of being laid off or made redundant. One result of this practice is that a Japanese worker identifies himself closely with the company and feels intense loyalty to it. By working hard for the company, he believes that he is safeguarding his own future. It is not surprising that devotion to the company is considered a great virtue in Japan. A man is often prepared to put his firm’s interests over his family.
Promotion by seniority is the next pillar of the system. This policy means, first of all, that more import and responsible positions generally go to long-serving employees. For this reason, a young managing director is scarcely conceivable in Japan. It can take from 10 to 16 years for someone to reach even a middle-management post. Such a person is likely to be between 45 and 55 years old before reaching the level of department manager. Secondly, salary levels are geared to years of service rather than to the responsibility of the job. The longer a person has been in a company, the higher his salary and status will probably be. Therefore,
if two employees have joined the company at the same time, they will earn similar salaries even though their responsibilities in the company may be different. Because of this policy, employees will usually take on any work within their capacity; they do not object to training for new duties within the company since their salaries and fringe benefits will not be greatly affected. For the same reason, they are unlikely to resist technical change.
Lastly, the consensus method of arriving at decisions in Japanese enterprises. Their term for this is “ringi seido” which can be translated as “consultation system”. The essence of the technique is that many employees at different management levels participate in the process of making decisions. A second feature of the ringi system is that decisions evolve first from lower level management. They are not handed down from the top as in western companies.
Here is an example of how the system works. A junior executive in a trading company may draft a report recommending some course of action. This document is then passed to the deputy head of the department. He will annotate it, perhaps even revise it, then stamp it with his personal seal (the equivalent of initialling). Before the report goes up to higher management, all the relevant departments of middle management will examine it, and after discussions, make their own modifications. From this, it can be seen that acceptance of a course of action does not depend essentially on approval being given at a particular level in a company. The plan will be approved in a prescribed form, in sequence, at various executive levels.