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Japan's economy continued to grow slowly in 2007. GDP is expected to grow 2% for the year, compared to 2.2% in 2006 (IMF figures). Unemployment also stayed relatively steady, at 3.8% in November 2007. However, competition for skilled employees and graduates of top colleges has intensified significantly. In addition, a combination of new laws and changing attitudes among employees is changing the human resources landscape in Japan.
Basically the control system of a manpower in Japan is similar to the American. The Japanese corporations operate the employees so that the last worked as much as possible effectively. For achievement of this purpose the Japanese corporations use the American techniques of personnel administration, including effective systems of a wages, the analysis of the organization of work and workplaces, certifications of employees, etc.
But there is also a big difference between the American and Japanese management. The Japanese corporations use fidelity serving to the companies more. The strong identification of employees with corporation creates strong morals and conducts to high efficiency. The Japanese control system aspires to strengthen this identification, leading up it even to sacrifice to interests of firm.
Core characteristics of the respective human resource management
The Japanese companies almost always establish a policy on compensation, privileges, and working conditions on the basis of all company, instead of in separate labour contracts. HR policies are outlined in general in a number employee rules which must be submitted with the government for all workplaces with more than 10 employees. Besides, though the contract is not required according to the law, the employee must be "clearly notified" concerning its or its wages, bonuses, a vacation, etc. during hiring that usually called the Employment Notice.
Contracts though not common, are used when employing people for fixed terms which can simplify end. Contracts with the fixed term cannot be stretched any more than 3 years.
What rules concern creation of a policy of a workplace? Basically, the Japanese law transfers under the mandate 40-hour working week and the 8-hour the working day for the majority of industries. Overtime payment is established in on 25 % above a regular payment. As to practice, however, many companies expect that their employees will work considerably on that limit, without an overtime payment. Recently, Ministry of Health, the Labour and Wellfare (MHLW) finished with this practice, intending for thousand companies and ordering, that they have paid overtime wages.
Japan has 14 national holidays, and the requirement of 10 additional days of the paid vacation, gradually increasing by 20 days after 6Â½ years of service. Some companies also give to their employees all first week of May away ("Gold Week"), because of three consecutive national holidays on May, 3-5rd.
The recent legislation has established the new norms covering treatment of employees which are pregnant or have children. 12-14 weeks of a maternity leave (not paid, with the governmental insurance upon the illnesses, providing the grant), are compulsory, and it is illegal to dismiss someone because of pregnancy. Inquiries about not paid holiday to care of children it is necessary to give also, in certain frameworks
Fidelity of employees and their identification with corporation
The Japanese employee very closely identifies itself with the corporation which has employed it. Both the higher officials, and ordinary executors consider themselves as representatives of corporation. Each working is convinced of Japan that it - the important and necessary person for the company and that its destiny lies on his shoulders. Usually the Japanese works much for the company is one of displays of an identification of with firm. Other display is that the Japanese worker in reply to a question on its employment names the company where it works. Asking this question is satisfied with the answer as in such cases wish to learn the company name. In ordinary consciousness of Japanese a word "trade" is identified with work, and practically means the organization (firm) where they work.
Employees of the Japanese companies seldom take day of rest. Even if they are a little unhealthy, they continue to work. As they seldom take the day off for themselves or for a family, absenteeism (the absenteeism relation to total number of the working days in a year in percentage) much more low, than in other countries. The Japanese worker agrees with the order of administration on overtime work without the previous notice on it, probably, without hunting, but without hesitation as he feels responsibility and necessity of it.
Theoretically, the longer the person works in the organization, the its identification with it should be stronger. The Japanese corporations guarantee the employee work and use the system of compensation based on the seniority to prevent leaving of the worker in other firm. The longer the person works in the company, the above its wages and a post. Passed in other company loses the seniority and makes a fresh start. The employee of the large Japanese company receives wages annually growing to pension (usual pension age-60 of years). Thus, older employees receive the big wages.
Promotion depends first of all on number of years of service in the company (though sometimes and from age). Promotion depends not only on the seniority, but also from abilities and performance of duties. Though the wages of the employee raise annually, promotion occurs not automatically. To reach posts in the top management, the employee is obliged to show abilities and it is good to carry out the duties.
However promotion still depends on the seniority. The young man who has shown the big abilities, cannot be advanced in the top management before achievement of certain age. Many large corporations limit promotion by age: for example, usually for the manager it is 30 years, for the senior manager - 35 years etc.
The Japanese corporations consider that the modern system of advancement based on a combination of the seniority and successful performance of duties, is the best means of achievement of the purposes of the company in the Japanese social climate.
In Japan the companies employ every year many graduates directly from high schools and universities. The Japanese firms seldom employ people of advanced age because it contradicts the described system of payment according to the seniority. Transitions of workers from one company in another are rare. The usual employee works in the same company from leaving school and to pension.
Other method of strengthening of an identification of workers with the company is encouragement private and direct communications. There are some systems relations. Many Japanese corporations hold official meetings: morning meetings, shop meetings and meetings of small groups (circles of quality and ritual groups).
Meetings usually pass every morning (in some companies ones in a week) before work. Usually the higher managing director addresses to employees with a statement of a policy of the company or concerning ethics of business. After its speech the morning gymnastics, and in certain cases a meeting is often spent comes to an end with the general shouts: Â«we will work tensely!Â»
After morning meeting workers can visit workshop meeting. To each worker it is said that should be made this day, and some is given necessary for performance of work the information. After questions and answers are spent that discussion how to perform any work. The main objective of business meetings, of course, consists in transfer of orders by the chief of shop by worker. But the corporation, besides, intends by means of such contacts to become more rallied and effective.
The Japanese corporations often spend ceremonies of celebrating of opening of new office or factory, the beginning of new year or the service beginning of for life employed persons, outstanding records in an appearance for work etc. Every autumn the companies hold sports meetings and one or two times in a year group tourist trips. All expenses on carrying out of sports meetings and half of expenses on tours are paid by the companies. Some Japanese corporations have amateur teams on baseball, football, Rugby football and to an ice hockey. When play commands of two companies, attendance of games by workers of the companies very high. It increases unity of the personnel of the company, its moral spirit, an identification of the personnel with the company.
The wages in Japan are defined first of all by seniority system. More senior persons receive the big wages, despite abilities or performance of labor duties. But recently Japanese companies have entered system of so-called effective wages, or wages system according to labour qualification. The wages in Japan consist of monthly wages and payment of bonuses twice a year. Usually the bonus is paid as compensation when the company gets the big profit. The bonus sum is defined by the labor contract, and the Japanese workers consider a bonus as wages part.
The large Japanese corporation gives to workers side benefits. For example, it often pays expenses for road to the enterprise. Hospitals for employees and their families are not the unusual phenomenon, and the company pays the most part of hospital expenses.
Apartment houses also are given by the companies under the low price. If it is not enough such houses, the company tries to rent the house under the usual price, and hands over to its hired workers on lower.
For purchase of houses loans are given. As the percent rate in commercial banks and other financial institutions (except the state organizations) is rather high, the company takes the loan banks and gives to its employees under more low interest (usually about 4-6 %). The corporation guarantees the loan.
Rotation of posts
Labor rotation (or rotation of posts) is norm in Japan. Except the higher personnel, employees are translated from one work on another time in five years. Sometimes rotation occurs in the same working group. For example, the seller replaces the seller, but is translated from one marketing establishment in another. But the rotation connected with another comes from work, is typical, especially for the candidate on a supervising post. The typical candidate for the higher operating link is translated, for example, from financial department in accounts department, in department of a manpower, marketing, in planning department etc. Rotation and advancement often occur simultaneously.
Formation and training
The Japanese companies train and educate the employees. The training purposes consist in development of abilities, strengthening of skills of heads and loyalty increase. The general is improvement of professional skill on the job, on workplaces. The direct chief or the instructor learns how to perform work in a real reality situation. But theoretical formation also is important. The Japanese corporations send serving in the educational centers, on seminars out of the company, to universities etc.
2. Collective bargaining in Japan
Collective bargaining is conducted at enterprise level in Japan, but it is co-ordinated by federations in higher level. Every spring the enterprise unions represent requirements to payment increases - known as "spring approach." The response of employers is influenced though not defined by the central organization of the employer, Nikkeiren. When the agreement is reached in the main enterprises in one of influential industries, it is established by the sample who quickly and is close accompanied though there can be deviations depending on circumstances, and smaller enterprises of the average size though it is less directly involved in a spring round of negotiations on the salary, will be under the influence of its result and will adapt payment levels as corresponding. The area of collective agreements has been expanded to cover a wide range of problems in addition to wages and hours, Including such affairs as safety, conditions of a seminar and well-being, recruitment, transfer, encouragement, discipline and unloading.
Incorporated advisory committees exist in 60 percent of all incorporated enterprises, and in more than 70 percent of the bigger enterprises. Besides, even in the enterprises without formal advisory committees, employers have legal obligations to consult. There is a difficult and thin relationship between collective bargaining process and joint consultation. In certain cases, the purpose consists in reaching the incorporated decision through advisory process, but in others, consultation takes the form of previous discussions to collective bargaining. Opinion of the majority - that incorporated advisory committees served both parties extremely well. They have matured into an institution which works effectively and as means of incorporated consultation and as a preliminary stage in the course of collective bargaining process.
Joint consultative committees have extended quickly at enterprise level in the last decade, adding the earlier development of joint consultative committees at level of factory and finding something similar to development of collective negotiations of all enterprise. There has been a clear tendency for joint consultation at the enterprise level to involve discussions of the main corporate business and the production decision, and this tendency, possibly, will develop further. With this development in mind, the Japan Productivity Center recently has offered one way to reach the Japanese system participating codetermination: the introduction of a joint management policy council made up of representatives of trade union and management who would discuss the same issues as the board of directors and function as an advisory body to the higher executive management. A Joint management policy council of it "shadow board" type has been experimentally entered in many big firms in recent years.
Despite divergent attitudes in various groups, there is a wide measure of the agreement in Japan on three future directions:
The joint consultative committee system should be improved to increase value of participation of the worker and influence in the main corporate decisions.
This development should be encouraged by the voluntary agreement, instead of according to the legislation.
To satisfy requirements which can arise in the further prospect, some new established measures should be entered to provide representatives of the worker on a board of auditors or some other bodies of the higher executive management.
The system of relations between businessmen and workers in Japan, at least in big and firms of the average size, develops to the sample made of elements of collective bargaining, consultation and codetermination. The institutions and processes are growing from cultural, economic and the social factors specific to Japan, but they are being influenced by the events which are taking place in other place. System of trade unions insistently focuses on the enterprise in Japan and the basic force of the basic attachment to responsibility of group and to the harmonious decision of the conflict, except where it is definitely authorized by clearly understood and accepted rules, possibly, will strengthen the identified tendencies.
It is strongly clear that the increased participation and the substitution of the decision-making based on the consent for traditional antagonistic systems do not itself provide the automatic decision for such problems as low productivity, cost inflation or inadequate capital accumulation and investments. Participation can perpetuate local problems in industrial relations systems - such as the tendency for the unions and the enterprises to develop bureaucratic features. On the other hand, there is a lot of evidence which has increased participation reduces alienation toward work, although there is a small evidence that it actually increases productivity. The evidence assumes that well set up systems of the direct and representative participation connected with system of collective bargaining system, are the important means of underpinning managerial legitimacy and of winning supports for change. Wide participation can lead to slower decision-making, but against it, it seems possible to make decisions which technically above and carry them out, even when they involve essential changes, without the bitter conflict often feature of more authoritative systems and the systems based on institutionalization of the conflict. In the sum, participation - imperfect process, but we believe that it offers employees, managers, trade unions and the governments means to reach more useful service life, and to satisfy expectations of workers and their unions.
Recent trends in Japanese Human Resource Management
Laws and government activity
January, 1st 2007, new tax rates have come into force in Japan. Though there was no pure change in norms, including the local taxes, regulating change expanded definition of the permanent resident in the tax purposes. Before, the tax right considered the foreigner in Japan as the permanent resident after residing there within five years continuously. Now, the foreigner becomes the permanent resident if they live in Japan within five years from ten continuously. The law intended to stop practice by some expatriates periodic departure and returning of Japan, to avoid to receive the status of the permanent resident and consequently not due to pay taxes to the foreign-sourced income.
The Japanese government often changed the system of pension to make quickly growing old Japanese population. According to the new governmental project, Monthly national Pension (NP) payments should increase by the whole 25 % from current 66 000 yens (approximately 577 USD $) to 83 000 yens (approximately 725 USD $). Other bill has offered expansion of the Employee Pension Insurance (EPI) system, which receives now contributions both from employers and from employees also to include "freeters", or the workers, occupied incomplete day of work.
Discussion should adjust also in a realization stage an overtime spent by employees to guarantee that incidents "karoshi", or death from overtime work, can be reduced or eliminated. The average overtime worked in soaring of Japan approximately 2 000 hours annually, with small recent change. If the law is accepted, the companies would be obliged to increase an overtime payment from existing 1.25 times of a regular payment to 1.5 times when an overtime exceeds 80 hours per month. However, even if the bill is accepted, many doubt that the dugout situation of Japan of long hours and not paid overtime can be corrected easily.
The equal Law on Possibility in the field of employment of Japan (EEOL) which originally transfer in 1985, in the big degree has been reconsidered, effective April 2007. 1985 law was often mentioned as "a toothless lion" because he has forbidden discrimination and prosecution in the theory, but actually did not establish legal penalties for them. The current law really gives concrete penalties which will force it to have more practical effect for managers of HR. It also forbids "indirect discrimination," which addresses to methods of employment which seem neutral, but are effectively discrimination. The example of indirect discrimination would demand, that the prospective employee has agreed on possible national transfers which is difficult for women with families to accept. Besides, before it only protected women in general, but now it also protects men, pregnant women, and women with newborns from discrimination and prosecution.
At last, the government slips support of education of children to encourage working mothers to come back to a labour. The government has suggested to lift the monthly grant to women in a maternity leave from 40 % to 50 % of their salaries, just as other programs. The original auxiliary program of education of children, entered in 2005, has made it obligatory for the companies with more than 300 employees to design a plan of action with the numerical purposes for support of education of children. Stream changes to the program intend to make small to firms of the average size more friendly to working mothers also.
Hiring and HR trends
During the long recession of the 1990's, many Japanese companies significantly cut back their hiring of new college graduates. Now that the economy has improved, college hiring has also picked up. (At the same time, the use of part-time and contract employees in addition to regular employees has become prominent.) Interestingly, in higher-ranked colleges, with increased competition, more graduates are reportedly turning down jobs from traditionally prestigious companies such as banks, large manufacturers, and securities brokerages. Students' reasons for turning down jobs extend beyond factors such as salary, company reputation, or fringe benefits. They include poor prospects for future advancement, negative impressions during a job interview, or work/life imbalance.
Foreign HR managers should understand that some younger Japanese more and more with separate customs in comparison with generation of "consent" of the parents. A considerable quantity of methods of hiring of the Western style, such as the reference to interests of beginners and ambitions cannot be neglected. Initiatives of "quality of a life" also are more and more popular. According to the centre of Productivity of Japan of Social and economic Development, in 15 % of the companies employing 5 000 or more employees now, there are programs of work from the house in a place, and starts similar programs every month more. Focused by a family on initiatives grow also, with Corporation Soft Bank, huge Japanese communication group, recently declaring that she will pay its employee to 5 million yens (approximately 42 700$) to have children.
At the same time, the foreign companies have possibility to employ talent which could neglect the local companies. For example, more than 2.5 million university diplomaed experts in Japan now work in time or a partial employment over low salaries as the companies did not employ when they have graduated. Than longer they remain "freeters", or the aimless workers, occupied incomplete day of work, especially difficult it for them to find completely occupied workplaces in the traditional Japanese companies. The occupied positions corresponding completely can address very much to them.
Women - also rather thrown category of the qualified employee. According to bureau of the Equality of sexes of Japan, in 2005, women have occupied only 10 % of positions of management in Japan (above on 1 % with 1995), in comparison with 32 % to Germany and 42 % in the United States. Ambitious members of this association of talent of development it is frequent - good elections, employing employees for the Western companies in Japan. Many the foreign companies have started to send the most promising serving in educational seminars and executive programs of training to help women to join following generation of leaders.
HR Professionals in the Western companies in Japan should struggle with many challenges, including the governmental preparations for Japan nearest, ageing crisis, moving social relations on work, and increasing competition of work and mobility. At the same time, as the Western companies are less going tradition, they also more in a condition to exploit these changes, employing new kinds of employees and offering innovative measures of a workplace. Innovative measures of a workplace include a payment for work and not lifelong employment
Japan - the especial country unlike on one another; and those uncountable receptions that are actively developed and applied by experts in scientific personnel administration in shops, offices, shops represent no more than a superstructure over the powerful base, developing throughout centuries and including besides industrial and marketing spheres such links of public organization, as a family, school, the state.
Efficient control the personnel admits today the major factor of competitiveness of the companies and achievements of economic success by them; at the heart of efficient control the personnel the thought over strategy of use of "human resources", based on market principles of managing lies; personnel services in firm possess the high status and large powers for complex system management of a manpower.