Japanese Management: Concept, Nature and Limitations

What is Japanese Management?

Japanese management, often referred to as “Japanese-style management” or “Japanese management practices,” is a set of management principles and practices that have traditionally been associated with Japanese companies. Due to the success of several Japanese firms in the years following World War II, these practices gained attention and recognition on a global scale. It is characterized by an emphasis on ongoing improvement, effective cooperation, and respect for hierarchy. Japanese management techniques are credited for enabling Japanese businesses to prosper in sectors including steel, electronics, and automobiles.

Japan has had incredible economic progress and prosperity in a short time and is now considered a super industrial power globally. As a result, the Japanese miracle gained special interest from both industrialized and developing nations. The success of Japan is frequently attributed to its unique management system. A lot has been said and published about the Japanese management system in recent years, including how well it can be applied to other socio-economic circumstances. 

Nature of Japanese Management

Following are some of the key characteristics of the Japanese management system:-

1. ‘Nenko’ Or Lifetime Employment: Freshmen from prestigious educational schools are employed each year under the Japanese management system. A person stays employed with a corporation after joining it. A person enters a company with the intention of retiring from it. Except for the seniormost executives, everyone retires between the ages of 55 and 60. Terminations are uncommon and only applied to serious criminal acts. The ‘Nenko’ system has several advantages. First, it prevents hostilities between rival businesses in the job market. The employee is committed to the business for life and works to ensure his future by ensuring the success of his employer. Second, hiring expenses and employee turnover are kept to a minimum. Thirdly, the development of a strong sense of devotion and loyalty to the company. The strong sense of patriotism among the Japanese people is possibly where this system originates. Job switching is frowned upon in Japan. A Japanese employee often loses all seniority and begins at the bottom if he leaves one business and joins another.
2. ‘Ringi’ or Consensus Decision-making: In the Japanese system, decisions are made by agreement among the managers at various organizational levels. After consulting with his coworkers, a younger manager is typically given the assignment of summarising a proposal into writing. Before the decision is adopted, this idea is then passed up the management chain from the bottom to the top through a complicated process. The idea may need to be approved by 60 to 80 people, and the process might take two weeks to two years. ‘RIN’ signifies presenting a suggestion to one’s supervisor, while ‘GI’ denotes consideration and judgment. There are several benefits to the Ringi system. The real decision-making is first distributed to lower levels of management. Second, it promotes workplace harmony and reduces conflicts. Thirdly, it permits contributions from lower levels of management. Fourthly, it strengthens commitment to carrying out choices. Lower-level managers are encouraged to take initiative and are given implementation responsibilities by the system.
3. Job Rotation or Non-specialized Career Paths: A typical employee in Japanese companies switches positions frequently during his career to experience a variety of fields of work. When he reaches the top of his profession, he has a sufficient understanding of all the key managerial areas. This system suffers from a lack of accurate specialization but this is overcome by gains through better coordination among different departments, wider interpersonal relationships, and adaptable staff. The perspective broadens when each employee understands the specific problems in different functional areas.
4. Slow Evaluation and Seniority-based Promotion System: Individual performance reviews are based on long-term contributions made by the individual.  An individual often receives their first performance appraisal after about ten years of employment. Employees are conditioned in the organization as they are hired throughout their early years. Long-term employment is supported through slow reviews and promotions based on seniority, which increases workforce stability and prevents short-term business profits. Standards for age and service duration that are impersonal and objective help prevent unhealthy employee rivalry and jealousy. These encourage a cooperative partnership in which the senior employee takes the lead on decisions. After several intra-organizational promotions, chief executives rise through the ranks. They, therefore, possess in-depth knowledge of the organization’s employees and capabilities. The Jomukai, or executive council, is the highest level of management in Japanese business. It is made up of the chief executive and a few strategically selected executive directors.
5. ‘Omikoshi’ or Collective Group Responsibility: Employees act, think, and work as groups rather than as individuals. A team or group approach reduces unnecessary practices while still giving each employee the freedom to use their initiative to decide how best to complete their tasks and make their job enjoyable.  They carry the company like a group of people carrying the portable shrine (Omi Koshi) which is a traditional feature of Shinto festivals. Although they follow a pre-determined route, they move along it in their own chosen way.
6. Paternalistic Human Concern: Both on the job and off, the organization shows a fatherly concern for its workers. Company housing, indoor and outdoor games, exclusive family allowances, parties and social gatherings, etc. are examples of how businesses show their concern for their employees. The senior and junior staff have a father-child (OYABUN-KABUN) connection. A company’s executive frequently finds a school for an employee’s child, arranges an employee’s sister or daughter’s wedding, or even arranges for the employee’s sick family member to receive medical attention. Such broad support for employees promotes their dedication and morale while easing the strain on both sides of the relationship. The team is secure and the organization runs like one huge family.
7. Profit-based Compensation System: Corporate performance is related to employee compensation. Every six months, bonuses add up and make up a sizable portion of the compensation. Every employee receives a bonus, which might be five or six times their income, equal to a portion of their yearly remuneration. When determining pay, group performance is taken into account rather than individual performance. The employees now bear more of the business risk since they are more invested in the success of the company. Employees are also given a sense of belonging through group bonuses.
8. Quality Control Circles (QCC): Quality is given the utmost priority in the Japanese work culture. A workgroup is established to find and address issues with productivity and quality. A firm could have many quality circles, each of which is led by a supervisor. It meets once a week to develop and put into action ideas to increase quality and output. Novel concepts are published in in-house publications and recognized with prize nominations. This obsessive commitment to quality is what allows Japanese businesses to thrive in the American and European markets, particularly in the automobile and electronics industries.
9. Egalitarianism: The workplace culture in Japanese business is egalitarian, i.e., democratic and easy, and rank differences are minimized. There are numerous ways that this equality is demonstrated. Everybody from the managing director to the sweeper is dressed in the same grey outfit. The concepts of hierarchy and caste are abandoned when everyone is forced to eat in the same cafeteria. Executives do not have private rooms since in Japan everyone sits down together. Everyone can see what is going on because of the open work tables in the hallway. In Japanese companies, being on time is considered sacred. Each shift begins with five minutes of preparation at the workplace. The two tea breaks are each exactly seven and a half minutes long while the lunch break lasts for a full thirty minutes. Other obvious examples of egalitarianism are shared restrooms, workplace anthems, etc.
10. Strong Emphasis on Training: In a Japanese company, character, upbringing, and family history are given more weight than experience and talent when selecting employees. Recruiting individuals at entry-level positions and providing them with training, promotes compliance. Through internal training programs, training is provided in both functional areas and the company’s ideology.
11. Focus on Self-discipline and Harmony: Japanese management practices discourage internal competition. It emphasizes harmony and collaboration, while social rejection deals with individual show-offs. The self-discipline that Japanese people learn to force upon themselves from an early age leads to obedience, dedication, and patience.
12. Company Unions: Unlike craft or industry-wide unions in the West, Japanese unions are often set up on a business basis. A framework for labour-management collaboration is provided by the corporate union, which offers both management and employees a sense of purpose. The management’s strategy towards unions is cooperative instead of hostile.
13. Ethical Conduct: Japanese businesses acknowledge their social responsibilities and commit to higher goals than just maximizing profits. The DOYUKAI (new managerial elite) philosophy of Japan acknowledges that the role of management in a modern organization extends well beyond the achievement of profit.
14. Symbolic Inter-organizational Networks: A network of companies or subsidiaries is frequently under the supervision of a large Japanese corporation. These business firms depend on the parent company for business, technical, financial, and managerial assistance. In most cases, their activities are merged with those of the parent company. The satellite businesses are either associated businesses or related businesses, depending on how close they are to the main company. In a linked business, the parent firm is either a significant shareholder or has management control. The associated company (KEIRES-TUGAISHA) is more closely related to the parent corporation. These are mostly connected via regular business connections. For instance, the majority of them work for the main company as subcontractors.
15. In-process Inventory Management: There are three types of inventories: raw materials, in-process items, and completed goods. Since raw materials are imported from far-off countries and the finished items are shipped to far-off regions, Japanese businesses have limited influence over the first and final categories. But the KANBAN system has a lot of control over inventory that is still being processed.
16. Long-term Corporate Strategy: Japanese managers view company strategy from a long-term perspective. The creation of new products, market share, and long-term expansion are the main priorities. Promotions based on seniority increase the need for development because an executive’s future depends entirely on the organization he works for. The number of posts available decreases as managers go up the hierarchy, while growth may open up more opportunities for promotions. In Japan, the majority of retired CEOs temporarily join smaller satellite companies. A larger corporation will be in a stronger position to force its suppliers and subsidiaries to recruit its retiring personnel. As a result, businesses place more focus on market expansion, market share, and research & development spending.

Limitations of Japanese Management

Every management system has flaws, and the Japanese system is no exception. The following list includes some of these restrictions:

1. The lifetime employment structure leads to discrimination against workers hired midway through their careers and other non-lifetime workers, such as temporary workers and female employees. Because it is impossible to change careers in the middle of a career, employees who are dissatisfied with their jobs must work in the wrong position. Lifelong employment has the additional drawback of making it challenging for businesses to implement and develop new concepts and technologies with the help of outside experts.
2. Delays in decision-making are a result of the RINGI system. The consensus mechanism might not function effectively in the presence of unexpected events. It is impossible to assign merit for bold choices or assign responsibility for errors.
3. Seniority-based promotion and compensation stifle individual initiative and creativity. However well they may perform in the social skills of harmony, employees lack originality and freedom. The exceptional worker loses motivation since he can’t hold out hope for unexpected career success. He could become stuck and get irritated if there is no advancement.
4. Values and individual independence are given up for the benefit of the group. About one-third of the workforce, who are temporary and part-time employees, is not entitled to the advantages of secure employment for life.
5. The mandatory retirement age of 55 is typically maintained. Due to inadequate retirement benefits and the loosening of family responsibilities, retired workers experience financial difficulties. Due to insufficient pension benefits, the retiree must work after retirement to support himself.
6. There has been a little decline in employee morale and corporate loyalty. Due to technological advancement and the centralized management style in Japan, this might lead to a loss of democratic participation that is so deeply rooted. Due to this, the traditional Japanese management style may lose some of its firmly established democratic contributions.

Japanese culture and history continue to have an impact on management in the present day. In Japanese businesses, collective cooperation and agreement are frequently valued more highly than individual achievement. Due to globalization and the growing impact of Western management techniques, Japanese businesses have also begun to adopt aspects of Western management approaches, such as a stronger emphasis on individuality, diversity, and innovation.