36 Japanese Management
Pooja Malhotra
1. Learning Outcome:
After completing this module the students will be able to:
• Understand the concept and origin of Japanese Management
• Understand the features of Japanese Management.
• Describe the difference between Japanese Management and traditional management system.
2. Introduction
Management is an important function of an organisation. The success or failure of business depends upon the effective management philosophy and system adopted by it. Amongst the most successful management systems is Japanese Management System. Japanese Management system has its origin from western system of management. It has improved over time. It has shown significant changes during the period of 1960-76. The main focus of Japanese management is to serve the society and the nation. Service to mankind is the force behind the success of Japanese Management.
3. Features of Japanese Management
The features of Japanese Management System can be divided into two categories:
• People related Features
• Work or Operations related Features
The People related Japanese management practices mainly focus on human resources management aspects like the life-time employment, the seniority wage system, training, employee involvement and employee welfare practices on the other hand, the work or operations related management practices includes practices like just-in-Time, subcontracting, Quality control.
4.1. Human Resources Management (People Oriented) Practices:
The main focus of the human resources management or people related practices of Japanese companies is towards people and their development. Following are the practices followed by Japanese companies towards people development:
4.1.1 Lifetime Employment:
The Japanese companies provide lifetime employment to employees. They are given full life security until they themselves want to retire. This system also provided work commitment from the workforce to the management.
4.1.2 Seniority based promotion and wage system:
Under this system, the promotions from lower to higher levels is based on number of years worked i.e. seniority based. Hence, it provides a long term loyalty to the organisation. Similarly the wage system is also based on seniority.
4.1.3 Recruitment
The system ensures that the companies hire the cream, i.e. the employees with higher levels of educational qualifications.
4.1.4 Training
Japanese Management system provides continuous training to the core employees so as to keep them updated with the present systems.
4.1.5 Equal Treatment
The differences between blue and white collar are irrelevant for organisational development under Japanese System. The focus is to ensure team spirit among the employees. Hence, top level managers are also trained on the shop floor for some time, having same facilities as are given to shop floor employees. Shop floor employees also share common benefits as are given to top level employees so as to remove differences.
4.1.6 Employee Involvement
Under this system, employees are motivated to participate in decision making process. Employees are encouraged to give suggestions to improve the efficiency and productivity at shop floor.
4.1.7 Employee Welfare
Japanese companies provide welfare practices for their employees like goods at lower price, accommodation at lower rates, loans at lower rate, health care practices etc.
4.2 Work or Operations Related Management Practices
The work or operations or production related management practices of Japanese companies have some specific features which focus on pursuing efficiency in work. Following are the practices followed by Japanese companies for achieving Operational efficiency:
4.2.1 Ownership Structure
Most of Japanese companies are not family owned. Financial institutions and the affiliated companies are the owners of these companies.
4.2.2 Corporate Structure
The corporate structure shows the relationships at different levels of operations. The Japanese companies hire a few of its directors from outside; otherwise, it promotes its directors from inside competitive employee force.
4.2.3 Communication System
Japanese System follows two way communication system allowing communication both sides upward as well as downward.
4.2.4 Just-In-Time
Just-in-time approach focuses on elimination of wastes. Under this system, minimum or a very low amount of inventory is maintained which is absolutely important for the production. It believes in purchasing inventory at the time when it is required. Though, it requires uninterrupted supply of materials. In similar way, the approach includes producing the goods only in accordance with sales so that adjustments can be made as per change in demand. Hence this practice ensures better quality and high productivity.
4.2.5 Subcontracting
To ensure regular supply of parts and materials, large companies, particularly in manufacturing sector, rely on a regular subcontracting system. Hence, this eliminates the competition between large and small companies. The relationship lies on mutual trust. In this way the companies can utilise the competencies and guidance of the subcontracting companies.
4.2.6 Quality Control
Better quality is the objective of the Japanese management. The Japanese companies focus on continuous improvement in its production or service capacity, products or service specifications as per customer’s requirements, delivery times and costs of production. All members of the organisation concentrate on improving continuously on each aspect and ensure high productivity and sustainable growth.
Overall, the Japanese system of management can also be summed up as Total Quality Management system covering both its aspects, people related as well as work related practices. The main objective of the system is to provide the consumers the products or services as per their requirements in an efficient and effective manner.
5. Japanese Management system Vs. Traditional System
The Japanese management system can be compared with the Traditional or Western management system in the following ways:
1. Japanese Management system focuses on companyism which includes its practices towards maximising the value of the company including all stakeholders, on the other hand traditional approach is based upon capitalism which focuses mainly on maximisation of profits.
2. Traditional system works for shareholders satisfaction, while Japanese system works for customers satisfaction
3. Priority is given to shop floor under Japanese system while top level is given priority under traditional approach.
4. Human development is the focus of Japanese system while traditional system lies on systems development.
5. Communication is both way in Japanese system while it is one sided particularly top to down in traditional system.
6. Employee involvement is there in Japanese system while only top management takes decisions under traditional systems.
7. Traditional approach is result oriented while Japanese system is process oriented.
8. Continuous improvement in quality is the focus of Japanese system while traditional system is typed one.
Summary
The Japanese management system has made Japan as a super power economy. Japanese system works on the theory of human development for the overall development of its organisation as against the traditional approach of management. Many countries are adopting Japanese management system for quality and productivity improvement.
References:
• Abegglen, J. C. (2006). 21st-Century Japanese Management New Systems, Lasting Values,Palgrave MacMillan, New York.
• Jackson, K. and Tomioka, M. (2004). The Changing Face of Japanese Management, Routledge, Taylor and Francis group.
• Firkola, P. (2006), Japanese Management Practices Past and Present, Econ. Journal of Hokkaido Univ., Vol. 35, pp. 115-130.