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Internal Labor Market Structures in Japan
An Honors Thesis (ID 499)
by
Rebecca A. Ford
Thesis Director
Micheal Seeborg
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Ball State University
Muncie, Indiana
May, 1988
Expected Date of Graduation:
Spring/1988
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TABLE OF CONTENTS
I.
INTRODUCTION
II.
INTERNAL LABOR MARKETS:
III.
INTERNAL LABOR MARKETS IN JAPAN
IV.
CHANGES WHICH EFFECT INTERNAL LABOR MARKETS IN JAPAN
V.
LABOR MARKETS IN THE UNITED STATES
VI.
COMPARISON/ TRANSFER POSSIBILITIES OF JAPANESE PROGRAMS TO
THE UNITED STATES
VII.
CONCLUSION
BENEFITS AND COSTS
I.
INTRODUCTION
Since
World
War
II,
the
Japanese
improved
have
their
productivity and the quality of their products.
It has
since before
and poor quality
the 1960's
were synonymous.
this change,
plants and
that "made
Many factors have come into play to bring about
such as
being able to rebuild and replace outdated
equipment with
influence and
in Japan"
new, modern
national humiliation
facilities, the unifying
that defeat during World War
II inspired, and the characteristics and
people. In
not been
values of
the Japanese
response to these factors Japanese management created
unique internal labor market structures.
The Japanese
management system
is composed
of an internal
labor market structure (described later) which provides employees
with job security through programs such
and
in
turn
combined
allow
outcome
management
of
system
firm's
the
is
to
retain
various
increased
as life-time employment,
valued
factors
employees.
The
of
the
Japanese
productivity
and
employee
satisfaction.
This thesis will attempt to
and benefits
derived from
describe the characteristics
force and
1) Explain
the internal
and
values
the costs incurred
labor market system; 2)
of
the
Japanese work
company structures, within the context of the internal
labor market, which
allow
them
to
operate;
and
3) determine
whether the
Japanese management system, which relies extensively
on internal
labor markets
to
increase
productivity
can be
and
applied to
improve
1
labor
the United States
relations.
The
following section will define the construction
markets.
This is
necessary to
of internal labor
evaluate the Japanese structure
and its dependence on the internal labor markets.
II.
INTERNAL LABOR MARKETS:
BENEFITS AND COSTS
Two economists, Doeringer
market concept
two
and
Piore,
theorized
the dual-
that states that the labor market is divided into
essentially
primary/internal
distinct
and
sectors,
secondary.
which
they
termed
They formalized this concept
inductively using first-hand knowledge of different labor markets
rather
than
deductively,
using
former, primary, offers jobs
working
conditions,
process in the
chances
low-paying, with
advancement,
turnover."
Jobs
poorer
relatively
of
advancement,
of
work
in the
working
considerable
constructs.
with
administration
employment stability.
theoretical
high
and,
and
due
above all,
secondary sector tend to be
conditions,
instability
in
little
jobs,
chance of
and
a
high
(Reynolds et al., 1987, p. 149)
Internal labor markets
unit ... within
which
the
are
"defined
pricing
and
as
an administrative
allocation
determined primarily by a set of prescribed rules
impersonal
wages, good
equity
rules
"The
market
forces."
Internal labor markets
allow
(Marshall
firm's
to
et
of labor are
rather than by
al., 1984, p. 336)
minimize
hiring costs
while maximizing employee productivity since most jobs are filled
within the ranks of current employees.
The
outside hiring which
is done is heavily concentrated at the lower levels, or "ports of
entry".
Ports
of
entry
are
the
2
principle
point
of contact
between the
large.
firm's internal labor market and the labor market at
Promotion
and
internally, outsiders
upper
are recruited
is interested or qualified.
A
result
an
in
the
level
hiring
of
positions
are
filled
only if no present employee
vacancy on
a skilled
unskilled
level will
worker, since several
insiders will have moved up the ladder.
Internal labor markets
States during
World Wars
became
more
common
in
the United
I and II in response to labor scarcity
and government regulations, and during the 1930's, in response to
union pressure.
"Internal labor markets are also developed from
the supply side.
When a group of workers remain in the same firm
for
then
some
time,
a
set
of expectations, or customs, will
develop, which over time tend to be codified into a set of rules.
An example
are the
very structured
hiring and promotion policies
1987,
p.
147)
rules and norms that govern
in academia."
Development
occurred
(Reynolds
et al.,
in Japan as a method to
retain valued workers, when the labor supply was scarce.
Certain types of firms
labor
markets
than
are more
others.
training, which is defined
increase
worker
productivity
and perform well later on.
internal
labor
markets
only
to develop
stable, long-term
develop internal
Those which engage in job specific
as training
training, are most likely
ensure a
prone to
which gives
in
the
firm
internal labor
work force,
skills that
giving
the
markets to
which can learn quickly
The reasons for the attractiveness of
to
these
"allows the firm to observe workers
3
types of firms is because it
on the
job ... to make better
decisions about
which workers
will be
perhaps very expensive training.
attachment to
the firm
It
the recipients of later,
also
by its employees.
tends
to
The employees realize
they have an inside track on job vacancies and if
would lose this privileged position.
become long-term employees of
the
foster an
they quit they
This then motivates them to
firm."
(Ehrenberg
et al.,
1985, p. 143)
Some additional benefits of using internal labor markets are
that
the
long-term
encourages employers
relationship
fostered
by
rotated
into
a
system
to provide better training, workers in turn
identify more with the company and therefore are
be
this
variety
of
jobs.
more willing to
The advantage of using
current employees to fill vacancies is that the "firm knows a lot
about the
people working
for it.
Hiring
decisions for upper-
level jobs will thus offer few surprises to the firm.
feels that
the firm-specific
workers must have can best
over
the
turnover
years."
costs
ladders are
be
knowledge and training upper-level
obtained
(Reynolds
and
improved
well-defined, are
Management
et
by
al.,
worker
on-the-job learning
1987, p. 143)
motivation,
also achieved
Reduced
since career
with the use of an
internal labor market.
There are also costs associated with
which need
to be
mentioned.
internal labor markets
One cost concerns the "restriction
of competition for upper-level jobs to those in the firm.
Those
in the firm may not be the best employees available, but they are
the only ones the firm considers for these
4
jobs."
(Reynolds et
al. ,
1987,
p.
Other
143)
problems
occur when a firm faces
with
the
least
seniority
trained workers are
are
retained,
laid
and
maintained to the greatest extent.
push less
called
senior
workers
bumping.
to
"Extensive
several reasons.
First,
first so the highest
off
morale
and
lower-level
positions,
bumping
costly to a firm for
is
the demotion,
who shift jobs may have to learn, or
et
al.,
1987,
p.
recently begun an affirmative
productivity is
This causes senior workers to
even if
can be demoralizing to the workers involved.
(Reynolds
Workers
its workers.
declining demand and must layoff some of
only temporary,
Second, the workers
at least
148)
which is
relearn, skills."
Also, if the firm has just
action
program,
the minorities
hired to meet the programs requirements will be the ones with the
least seniority, and the first to
effect
counteract
the
goal
be
laid off.
This
will in
of the affirmative action program.
Yet most firm's feel the benefits of an internal labor
market or
seniority system far outweigh the costs.
III. INTERNAL LABOR MARKETS IN JAPAN
In the
early 20th
supply, and gangs of
themselves
out
at
century "semi-skilled labor was in short
workers under
favorable
an oyakata
rates
where
(big boss) hired
required.
As the
zaibatsu (Japan's
financial combines)
grew up,
retaining
educated
began and by around 1910,
better
employees
the practice of
both white and blue collar workers
were being
benefits
This induced oykata to become
members of
of
stable
one
employment.
company,
and
gradually
5
introduced to the
eliminated
the mobile
in the cases of part-time employees brought in at
laborer except
Greater incentives were
busy seasons.
remain
longer,
councils."
welfare
programs
offered for
were
introduced as were work
(Journal of Business Ethics,
high turnover
and short
Feb. 87,
solution
to
internal labor
the
and/or
was
refined
"Institutional arrangements
company to
market structure, a type of
the
from
allow
this
the
early
management
Japanese
The
management,
practices and
based
on
concept.
of
a parent
behavior outcomes."
systems utilized
internal
ideology, are all inter-related and employed
105)
is extended,
transfer and re-allocate its human resources within a
group of related companies.
by
The
employment problem.
modified internal labor market in that their system
evolved
p. 140)
supply of labor after World War II also
made this a very feasible
Japan's current
employees to
labor market
to achieve specific
(Human Resource Management, Spring 1986, p.
Some of the diverse objectives of Japanese internal markets
are to
achieve skill development; recruitment of school leavers,
sex discrimination, continuous on-the-job training, extensive job
rotation, and
work
open promotion
relationships;
Evaluation
seniority/ability based
early
retirement,
vacation;
While
organizational
from within;
Others to strengthen
of
total
persons,
wage and promotion, employment security,
systematic
others
overtime
are
related
commitment;
company
work,
to
and
low-level
better teamwork and
welfare
facilities,
information sharing, participation, and the enterprise union.
The behaviors which these systems and practices are supposed
6
to foster, some successfully, others not so successfully, include
such
items
as
skill
development,
organizational commitment,
discipline,
and
flexible job
labor-management
items mentioned are "common
companies
in
any
to
country.
achieve
but
satisfactorily attain."
p.
106)
Each
of
motivation, teamwork,
behavior, low turnover,
cooperation.
human resource
The
Japanese companies eagerly seek
wants
work
The first three
management goals for
other
items are either what
to achieve
or what
non-Japanese
any company
companies
fail
to
(Human Resource Management, Spring 1986,
the
items
in
the
previous lists will be
explained in greater detail and compared to the
United States if
applicable in later sections of the paper.
The
internal
labor
market
structure
in
Japan
is
most
prominent in the recruitment of school leavers into port of entry
jobs, and
ladder.
open promotion
Employees are
experience.
from within
hired straight
well defined career
from school
with no work
These new employees enter at the lowest rung of the
corporation
(i.e. ports of
entry)
corporate
ladder
while
gaining
training.
In the
open
promotion
and
the
supervisors,
classes
and
blue
system
a better
through on-the-job
employee's social
white
collar
workers,
and this allows relatively high
mobility between these classes.
than seeking
an
climb the
There is little distinction
collar,
management
gradually
experience
background is basically disregarded.
between
up a
"The
position outside
Japanese employee, rather
the company, works hard
and seeks to upgrade his ability through on-the-job
7
training and
to
gain
promotion
within
remains toward his
personnel
firm,
policies
the
not
The
outside.
reinforce
Thus his orientation
company.
organization and
(Human
this inward orientation."
Resource Management, Spring 1986, p. 108)
Sex discrimination is still practiced
order for
the internal
as a
employees.
workers
type of
absorb
shock absorber
unpredictable
protect the permanent position."
p. 32)
Women
in the
temporary workers
(women) and temporary
in
(Personnel
manpower needs to
Journal, Feb. 1987,
rarely inter into a lifetime
employment relationship or become regular workers.
temporary
employees
fired at will.
contents and
or
"If women
benefits are
se in
for the rest of a firm's
swings
labor force
per
and lifetime employment to
"Management uses many contract
to
Japan
Women and
recession.
function in periods of
are used
labor market
in
part-time
workers
do get
the same
Most are just
who can be hired or
job in
theory, its
somewhat different, and there is also
less likelihood of obtaining promotions since they are
integrated into the company."
(Woronoff p. 116)
not fully
Japanese female
employees also do not get on the same career ladder that leads to
future promotions.
In
fact, "in
more than
(52%), women are not given any chance at
half the companies
promotions."
(Woronoff
p. 119)
Other differences
as
opposed
universities
to
for
men.
male
are in the channels used to recruit women
Personnel
employees,
introduced by contacts or hired
officers
while
through
8
scout
the
best
women were often just
connections.
Men are
tested
at
least
partly
demonstrate their
subject to
on
charms and
closer scrutiny
also discrimination in the
the same
for men
men
women
and
companies,
ability,
as regards
(Woronoff p. 118)
no
and are also
their morals.
training process.
"The
There is
training is
in 19% of the companies, in 33% the
trained
is
there
the women have to
pleasing personality
and women
are
while
separately,
training
and
in
whatsoever
13%
for
of
females."
The training female employees do receive is in
direct contrast to that of the men's.
Their training is "full of
strictures on how one behaves, matters like presentation,
greet customers,
the
even how
how to
answer phone
polite
language.
to bow.
calls and
The
more
(Woronoff p. 118)
Special attention is paid to
stress is
solid
technical nature, or introduction
how to
placed on
elements,
to a
the use of
material
of
a
profession are limited."
Thus, their training can be considered more of
a "general" rather than "job specific" training which
is typical
of firm's with internal labor markets.
Recruitment
and
training
also
supporting the internal labor system.
specific
hired,
employee
the
qualifications
employee
retirement.
may
"Because
of
very
programs.
are
very
be
of
role
in
looks for
since, once
the
firm until
employment, the
dedication to quality,
in hiring decisions and training
To ensure the applicant
process often
with
permanence
meticulous
major
recruiting
necessity for teamwork and the unyielding
Japanese
a
An organization
when
well
the
play
includes interviews
9
is compatible,
the selection
with the applicant's family."
"Candidate
(Personnel Journal, Feb. 87, p. 34)
intended solely
to identify
technical skills
personalities that would clash with
company."
the
screening is not
but to
cultural
eliminate
norms
(SAM Advanced Management Journal, Summer 1986, p. 25)
"Because the selection process is an extremely rigorous
selected employee is psychologically uplifted.
company recognizes
candidates and
the outset."
27)
him as
being the
therefore he
one, the
He knows that the
most qualified
of all the
feels some gratitude and loyalty at
(SAM Advanced Management
Employees also
Journal, Autumn
1985, p.
are very selective in choosing a company to
work for since "one's status in society is determined to
extent by
senior
of the
the company to which one belongs.
Japanese
executive,
"To
choose
In the words of one
a
job
important as selecting a women for his wife.
important."
In
individual can
the
event
of
an
is
almost
as
In fact, it is more
inappropriate
always choose divorce.
a large
spouse, the
In the case of one's job,
however, it is difficult to quit and seek some position elsewhere
unless one sacrifices himself, both financially and status-wise."
(Journal of International
This in
turn keeps
Business
Fall
84,
p. 143)
the new employee focused on their respective
firms, wanting to prove that they
do not
Studies,
look externally
were worth
when improvement
selecting, so they
in position is sought.
In this way the internal labor structure is supported.
Emphasis is
employees to
placed
be as
on
training
since
knowledgeable as possible.
will be retained for long periods of time,
10
firm's
want their
If the employees
organizations will be
more
willing
employee and
to
train
and
develop them.
employer long-term
This gives both the
outlooks concerning employment.
The training process itself is continuous and integrated into the
life of the firm.
This is done through job rotation.
Job rotation is a system in
series
of
jobs
gaining
which employees
experience,
move through a
learning
organization's culture and structure, and making
the firm.
"Jobs are defined loosely so that employees will learn
diversity allow
them to
assist other
of time.
workers and
This
fill in when
Also, diversity in job tasks may prevent or limit worker
stagnation."
28)
the
contacts within
to do a variety of tasks over an extended period
needed.
about
(SAM Advanced
This helps maintain
work and
the firm
Management Journal, Autumn 1985, p.
employee
itself, which
satisfaction,
both
decreases the
with his
chances he will
look outside the firm for a better position.
Executives
also
must
pass
through
the
series
preferably gaining experience in line assignments.
through
important
rather than
positions
identifies
ensuring rapid promotion.
This rotation
promising
They opt for
of being helpful, supportive and emotional leaders
in a team environment.
They
are evaluated
and
also
on
performance,
relations.
executives
"The Japanese do not even
consider hiring or promoting individual superstars.
those capable
of jobs,
but
personality
not only
and
on ability
interpersonal
During the period of job rotations they are judged on
their ability
to cooperate - not on how competitive they can be.
Executives also do not
want
to
11
be
singled
out
as different,
better,
or
special.
embarrassment
and
To
causes
(Personnel Journal,
be
the
treated
recipient
Feb. 1987, p. 31)
differently
to
'lose
is
an
face'."
"An executive can also be
promoted to a high position without following the elite course of
job rotation.
main
This
For
rotation).
transferred to
is referred to as "sasen" (removal from the
instance,
a
the manager
Promotion is
executive
may
be
a line position as a manager of a minor branch or
promoted to head of the information
sign that
junior
Such a
move is a
become a top-level executive.
formality used
often a
organization for
will never
section.
to maintain
harmony in an
those who fail to remain on the main rotation."
(Harvard Business Review, Nov./Dec. 1984, p. 180)
The success of Japan's
depends
on
their
seniority/ability,
corporations
extended internal
practice
and
have
of
basing
lifetime
built
up
a sense
koyo seido (literally:
the manner
system."
the
labor
an
elaborate
value-system
human feeling
of
and human
for life-employ-system) which in terms of
of practice is best described as a "stable employment
This was developed directly out of the circumstances of
market
in
the
modern industrial
traditional institution."
1987, p.
"Japanese
of duty around the concept of shushin
revolution) from adapting a
creating a
wages and promotions on
employment.
girininjo, a syndrome of duty eliciting
feeling eliciting
labor market also
139)
early
20th
traditional
century (the industrial
value
achieved through
concept in a form that resembled a
(Journal
of
Business
Ethics, Feb.
The practice then became "widespread after World
12
War II, when the American occupying forces introduced
that
encouraged
its
eventual
labor laws
(Harvard
adoption."
Business
Review, Nov./Dec. 1984, p. 180)
The
benefits
derived
lifetime
from
employment
include
increased worker loyalty, better trained employees, lower
turnover costs, and a strong sense of worker commitment.
The incentive will be greatest where on-the-job training is
specific to the company and where transferability of skills
is limited.
There are also costs associated with lifetime
employment that need to be considered.
They include such
items as higher selection, training, and development costs,
profits will decrease initially as managers opt for long
instead of short term gains, and the possibility that the
prolonged commitment to one work environment may create
worker
stagnation
which
in
turn results in worker
dissatisfaction.
(SAM Advanced Management Journal, Autumn
1985, p. 26)
The practice
of lifetime
employment is applied principally
to employees of large corporations and is less prevalent in small
and medium-sized
companies.
full-time labor force.
lower
level
It effects "22 to 30 percent of the
Among
those
temporary
and
not
generally
workers.
covered are
Japanese
companies
aggressively pursue actions necessary to make lifetime employment
successful.
levels of
and a
Organizational
management are
Management
in
is
Journal,
contract exists
vested
tailored to
feeling of belonging.
that job security
under
the
a
top
Autumn
which
employee,
progressed to management)
eventually
lead."
policies
(Journal
philosophies at all
enhance corporate loyalty
Japanese managers outwardly profess
level
1985,
the
whose
was
and
priority."
p.
29)
A kind of "social
authority
well-being
vested
in
(SAM Advanced
the
of
management was
(as
he
system
himself
he would
of Business Ethics, Feb. 1987, p.
13
140)
off
In Japan it is socially unacceptable
certain
full-time
are also societal
pressures involving work and
its relationship
to an individuals
total
stigma
successful
"Japanese
This
social
application
workers
of
view
job
serious social disgrace.
admission of
the
has greatly facilitated the
lifetime
loss
employment
practice.
as a personal disaster and a
Because losing or quitting a job
inadequacy, any
individual to find another
job security.
and
company to lay
there
life.
employees
for a
is an
job loss makes it difficult for an
job of
comparable salary,
rank, and
The Japanese believe that an individual who leaves
a job lacks either the knowledge, skills, or ability necessary to
perform
required
motivation."
27)
job
duties,
(SAM Advanced
Therefore employees
be let
go.
the
required
Management Journal,
drive
and
Autumn 1985, p.
eagerly accept additional training and
development to make themselves
apt to
or
more valuable
Since job
and therefore less
mobility is almost non-existent,
this ideology helps enforce the internal labor market structure.
The seniority system,
lifetime employment,
which
is critical
operates
in
conjunction with
since if employees do not feel
they are rewarded for their commitment to one particular company,
their
motivation
promotions
are
incentives are
job mobility.
,-
to
based
remain
to
high enough
a
would
decrease.
Since wages and
large
extent
seniority,
to satisfy
on
the
the employees desire for
Japanese pay systems do not follow the
concept of
equal pay
for equal work, their compensation is based on various
factors.
"Japanese work
tradition considers
14
the whole person:
Schooling, age,
family financial
teamwork, and loyalty."
Two individuals
needs, years with the company,
(Business Horizons, May/June 1984, p.82)
working side by side may be paid rates that vary
50 percent or more if one is older, has more
company service and
a large
all employees agree
that
family.
the
The system
difference
maintained.
"The
is
works because
appropriate,
intention
of
mitigate employees' anxiety and
promotion
and
pay
raises.
the
so
internal
seniority
insecurity by
equity
system
is
is to
providing orderly
The system also enhances employee
(Harvard
morale and organizational harmony."
Business Review,
Nov./Dec. 1984, p. 180)
Another practice
labor markets
to
the Japanese
operate
employees involved
is
spots
it
has
open
employment refers
date through
early
with lifetime
flexibility the firm has in
for
to the
retirement.
follow in order for internal
retirement.
employment retire, the greater
times
of
and
the more
promoting younger employees.
Lifetime
span of
recession,
time from
the initial hiring
Since "compulsory retirement is at age
55 (which made sense when enacted in 1902
when the
expectancy
was
over
employment
is
companies
are
only
quite
policies.
42
it
short."
encouraging
lifetime employment
The earlier
now
(Woronoff,
older
"depends
is
on
70)
1983,
average life
the time of
p.83)
Many
workers to retire early since
the
discriminating retirement
They are being offered bonus packages as an incentive
to retire early.
Many employees do so because they know the next
time
package
the
bonus
offer
15
may
not
be so generous.
Some
-
retirees can
others are
continue
simply let
1984, p. 182)
those no
their
employment
go."
at
subsidiaries while
(Harvard Business Review, Nov./Dec.
Many corporations
transfer older
employees, or
longer on the elite rotations track, to subsidiaries to
make way for younger individuals making their way
while "saving
face" for
the older employee.
up the ladder,
Another reason for
firm's desire for workers early retirement is that
workforce it
was financially advantageous to pay seniority-based
wages because most of the employees were on
management.
Other factors
systematic
the market."
that contribute
overtime
organizations "underman"
work
much shorter
105)
1983, p.68)
and
low-level
vacation.
in order
and
build
Many
to avoid or
in overtime
vacations than those given their American
(Human Resource
Management, Spring
Firm's employ just enough people to allow them to
operate so that in the
"extra"
levels of
to the internal labor market
recession,
and European counterparts."
1986, p.
(Woronoff,
their facilities
minimize overemployment in a
work and
the lower
Now more are earning high salaries and companies are
pricing themselves out of
are
"with a young
people
that
face
will
of
a
need
overtime and shorter vacations
recession,
to
there
are fewer
be
laid off.
Building in
allow the
firm's to
produce the
number of items needed with as few workers as possible.
Through
the
evolution
of
lifetime
seniority system, various aspects of company
administered, in
employment
welfare came
order to hold on to its staff.
the wages, the company
often
provides
16
to
the
to be
"Over and above
dormitories
or housing,
housing loans,
medical care,
perhaps its own doctor and clinic.
It promises retirement payment or pension
the
company
is
over
and
sometimes
subsidizes meals in
the
expenses to
It often
work.
company
grounds, club rooms, and
the size
also
canteen
goes so
a
second
and
pays
far as
vacation homes.
career with
job.
It
for travel
to provide sports
The
frills vary with
and wealth of the company, but there are always special
advantages that
employer."
make
lives by
the
employee
(Woronoff,
occasionally take
a
The
1983,
special
"finding them
related company)."
140)
after the
cost
of
into
on the
companies
also
employees personal
payments."
retirement
end
Ethics, Feb.
1987, p.
welfare facilities are quite high,
percent
corporations
heavily
The
of Business
14 percent
Japanese
45)
interest
"representing as much as
for
more
a suitable wife or husband (ideally in a
(Journal
direct
p.
rely
up
of earnings
plus another 5
(Woronoff,
paying
quite
a
1983,
high
p. 49)
price in
exchange for diligent work and loyalty.
Japanese
maintaining
corporations
harmony,
organizational
labor
and
in
"The
allow
change;
2)
employees; and
prerogatives."
of
a
5) greater
(SAM
1)
of
greater
such
greater
acceptance of
strongly
spirit
in
and
that exists between
on-the-job
decisions,
goal
very
teamwork
harmony
for:
greater
greater trust in management
internalization
believe
enhancing
commitment.
management
technological
also
acceptance of
diligence
as
;
3)
promotions; 4)
productivity
by
all
managements rights and
Advanced Management Journal, Spring 1987,
17
p.28)
They strive to accomplish
information sharing
work because
best for
labor and
management have
is best
shared goals
developing
and
the practices of
and employee participation.
the company
rely upon
these through
shared goals
for all
employees.
and responsibilities
implementing
These practices
policy
decisions.
is
the
workers
to
elicit
management
actions,
involvement at the shop-floor level.
does not
firm."
The Japanese
among employees in
corporation is "attempting to achieve
for
- what is
What
consent
This form
the
of their
active
worker
of participation
interfere with management prerogatives in directing the
(SAM Advanced Management
Journal,
Spring
1987,
p. 30)
The authority vested in top management is not overwhelming, while
the amount of authority distributed to
is
large
compared
with
that
in
management refrains from exercising
in other
ranks are
those in
foreign
the bottom rank
corporations.
autocratic power,
and
understanding
communications; and
achieve understanding
the fact reduces
decisions.
work
groups;
improves
well,
and
why.
The
ability to
and support of management decisions before
time
spent
These practices
than insensitive dictators."
"Most
between
"It stimulates
allows a systematic, broad-based analysis of
what is working well, not so
34)
The benefits of
of worker involvement are innumerable.
cooperation
and those
given a voice appropriate to their standing.
(Human Resource Management, Spring 1986, p. 109)
this type
Top
important,
in
retracing
steps
and revising
also develop genuine leaders rather
(Personnel Journal,
perhaps,
18
is
that
worker
Feb. 1987, p.
involvement
harnesses the energy, enthusiasm, and ingenuity
of the company's
employees
This involvement
to
solve
the
company's
problems.
results in widebased support for decisions made by the company as
well as
in higher
levels of
self management
levels of improved quality.
committed workforce,
The
end
which directly
and its resultant
result
is
a
loyal and
supports the development of
internal labor markets, since the Japanese worker sees himself as
an integral part of the firm."
(SAM Advanced Management Journal,
Spring 1987, p. 30)
One
particular
quality circles,
A quality
of
which were
is
circle
creative and
method
participating
management
are
implemented in Japan in the 1960's.
defined
as
innovative power
" ... a
that lies
way
of
capturing the
within the workforce."
The circle
(SAM Advanced Management Journal, Spring 1987, p. 9)
consists of a small group of employees from the same work area or
who do similar work and who voluntarily meet on a
on
company
time
and
in
company
regular basis,
facilities,
propose solutions to problems in the workplace.
to identify and
Quality circles
are based on the concept that suggestions affecting the workplace
should come from those who perform
greatest
knowledge
benefits
obtained
improvements in
about
the
job.
tangible,
and
increased
19
and
There
who
have the
are "two types of
benefits
and lowered
improved
employee involvement,
interest and commitment,
work
measurable
quality, productivity,
intangible, consists primarily of
attitude, greater
the
employee
occur
costs;
in
and
morale and
increased levels of job
job
satisfaction among
others.
Companies who
are considering implementing a quality circle
program should also consider the
inherent
problems.
The most
frequently mentioned problem is not enough management involvement
or support.
If
management is
not 100
percent sold
on quality
circles, they may "exert too much control on the process, dictate
to
the
member
which
solutions, and
members.
the
problems
restrict the
Other problems,
readiness
communication
of
the
ensuring
although not
formal
that
the
positive re-enforcement as a
circle
recognition
and
opportunity
annual bonus
share
in
any
improvements.
successful.
Yet
not
focuses
for
all
horizontal
tool;
to
share
on long-term
and inadequate
a
participate
high level of
in
in-house
Japanese firms also have an
allowing
benefits
and
informal)
receive
to
Most
thereby
monetary
and
members
ceremonies.
system,
vertical
motivational
Japanese
and
deadlines
all inclusive, include:
company
planning.
conference
set
information available to the circle
(both
the
solve,
organizations
network
information;
to
deserving
resulting
Japanese
from
quality
employees to
productivity
circles
are
About one-third of the circles started in Japan were
doing well; another third were functioning on the borderline; and
one-third were making no contribution to the firm"
(SAM Advanced
Management Journal, Spring 1987, pp. 10-12)
Enterprise unions in
internal labor
market.
Japan
are
main
supporter
of the
The less turnover that occurs in a firm
they're representing, the less
politicking and
20
.~.
a
public relations
they have
the
to perform to introduce new workers to the benefits of
Japanese
unio~.
welfare of
management
its employees,
is
very
management
with the
and consider their human resources to
be their number one priority and asset.
Japanese
concerned
seems
to
The whole
support
this
structure of
ideology.
The
cooperation of the enterprise unions are essential to the success
of Japanese
companies since their management practices depend on
union support.
"the concept
Many companies do
of vertical
not have
unions though, since
relationships (internal labor markets)
also support lifetime employment and may inhibit the formation of
unions
on
a
horizontal
basis
across
different
Employees commit themselves emotionally to the
companies.
well-being of the
organization, which in turn looks after their welfare."
Business Review, Nov./Dec.
align themselves
more with
particular work they do or
factors increase
1984,
p.
174)
the company
profession
an employees
the internal labor structure,
Japanese employees
they work
they're
to
the
for than the
in.
orientation towards
than
(Harvard
All these
his firm and
external
"world of
work".
IV.
CHANGES WHICH AFFECT INTERNAL LABOR MARKETS IN JAPAN
Japanese
towards
company's
their
most
corporations
workers.
valuable
structure is set-up
to
also
They
asset,
take
elude
a
believe
sense of paternalism
the
employee
is
the
and as shown previously, their
advantage
of
this
belief.
The
Japanese also possess a Shinto belief that the innate goodness of
human nature provides a better basis
21
for a
work ethic
than one
based on
a belief
all they
can and
Business
Ethics,
that workers are going to do the least, steal
stay away
1987,
as much
p.
141)
as possible.
(Journal of
The
values
employee
and
characteristics also maintain this sense of paternalism, which in
turn
supports
Japan's
internal
characteristics
include
"interdependence,
feelings,
respect
maintenance
of
for
'the
harmony.
homogeneous
population
characterize
Japanese
from
primarily
individuality
to
themselves as
part of
face'
These
with
The
team
Japanese
strong
plus
an
familial
ethnically
behavioral
Japanese
sameness,
strength
comes
and willingness to subjugate
process.
a team
market.
space) of others, and
traits,
homogeneity
the
(and
enormous
lives.
their
labor
They
readily
(family, company)
identify
rather than as
individuals; Japanese workers do what's best for the company even
though they
may be
unhappy in their jobs."
(Personnel Journal,
Feb. 1987, p. 28)
Many of these characteristics and the
which
will
structure.
have
an
effect
on
Japan's new-valued
Japan's products
economy, are changing
Japan's
yen has
internal labor market
driven up
the price of
in foreign markets and angry trade partners are
causing "government officials to encourage the Japanese to become
more voracious
in.
consumers.
Sacrifice is out, self-indulgence is
The Japanese are being encouraged to
save less,
spend more,
This phenomenon is
Japanese
companies
and, while
called
are
they're at
Kokusai-Ka,
restructuring
22
work less,
play more,
it, buy foreign.
or internationalization.
in
response
to leaner,
meaner times.
Thus many firms have folded
gave workers
a guaranteed
generations is
generation to
also
a Me
There
is
as
willing
sacrifice one's life for work."
changes
to
The
"follow orders
no desire to
have
an
impact
summarized
as
follows:
demographic changes
more attractive early
rewards, and
(Woronoff, 1983, p. 21)
will
that
employment practices can be
result of
a We
from
an upsurge of individualism, preference to
work for palpable (rather than moral)
Future
evolving
(Time, April 1987, p. 40)
generation."
longer
nets that
The values between the
change
undergoing
younger generation is no
blindly.
job for life.
the safety
on
lifetime
1)
As a
companies will offer increasingly
retirement
programs
to
entice
the long
tenured employee; 2) the ratio of temporary to lifetime employees
will increase
will rely
to offset
escalating payroll
more heavily
economic growth abates
formal lifetime
on temporary
and
between employer
fluctuations
informal
and employee
will be
Advanced
much
acceptance.
4) a
offered to fewer
lifetime
employment pact
will significantly erode over the
average
term
of
lifetime employment
employment
Management
Journal,
will not
Autumn
with a
time,
once
a
rare
Japan's workforce
cease to exist."
1985,
hopping, if the work is not challenging enough
too
occur;
decrease; however, due to cultural factors impeding
drastic changes,
(SAM
economic
the
next ten years; and 6) the
company will
and part-time employees as
employment commitment
and fewer employees; 5)
costs; 3) companies
p. 29)
or if
Job-
it demands
phenomenon, is therefore gaining
is
23
aging,
which
causes payroll
costs to
escalate and steady career advancement to become almost
impossible,
workers
as
allow
mentioned
these
previously.
costs
to
be
reduce the organizational tendency
component of
temporary workers,
way into corporate boardrooms,
and
$500
female
college
annually.
is
on temporary
kept to a minimum and helps
to be
top-heavy.
The major
women, have begun to work their
and the
graduates
This
Reliance
salary gap
between male
just starting out was only about
a
drastic
change
compared
to the
treatment of female employees mentioned earlier.
Another component of change affecting Japan's internal labor
market is the effect of
often put
advances
stress
on
employees.
in twelve hours a day, six days a week.
in
office
rapidly than
automation
have
in the United States.
also
many
feel
crushed
when
Technological
occurred
much more
Employees are often expected
to spend evenings and weekends learning to run
and
"Most Japanese
they
fail
the new machines,
to master them.
Most
employees do not even take their allocated vacation time for fear
of losing
favor with their bosses.
This pressure can, and does,
cause a lot of stress to employees.
is
called
"the
holiday
syndrome.
A uniquely
II
A
Japanese disease
description
is
when
employees feel ill when away from the office, but feel completely
well when
back at
work.
Most major Japanese companies now have
psychiatrists on staff to counsel employees with mental problems.
Some companies
serious.
are seeking
to reduce
Some advise employees to
stress before it gets too
take aerobic
lessons, others
have built meditation rooms for workers, while others are sending
24
employees to Zen temples.
The
main reason
for the
increase in
stress is the lower growth rate, which means fewer promotions and
rewards, causing employees to
April 1986,
p. 53)
This
feel threatened.
(Business Week,
also threatens Japan's internal labor
market since if employees
feel
they
are
not
being adequately
compensated for their loyalty, they will no longer stay with just
one company for life as is the current practice.
V.
LABOR MARKETS IN THE UNITED STATES
Japan's internal labor market, compared to
in the
United States,
is oriented inward.
hand, is
is quite different.
the labor market
Japan's labor market
The United States labor market on
basically externally oriented.
the other
Employees in the United
States feel no loyalty towards their employer, and
identify more
with their profession than with the company they are employed by,
which is the opposite of the Japanese employees.
also
a
common
opportunities.
practice,
used
"Japanese
management-initiated
worker
Job-hopping is
to maximize an employees career
management
is
participation.
characterized
as
The emphasis is on
quality achieved through the efforts of the entire workforce, not
just quality
control inspectors.
is the assumption that
Japanese
willing to
quality.
strive for
At the heart of this emphasis
employees are
both capable and
Emphasis is also placed on the
importance of work groups opposed to individuals."
(SAM Advanced
Management Journal, Spring 1987, p. 28)
American
enlightened
strength,
in
self-interest.
contrast,
Americans
25
comes from diversity and
are
not
adverse
to
teamwork, but
they have to be convinced that what's best for the
team is also best
1987, p.
28)
for
themselves."
able
effectiveness
of
or
willing
the
solutions
to
by an
contribute
to
the overall
This down-grading of the
emphasis on
productivity
convinced that more involved
more productive.
to
organization.
workers role is evidenced
capital growth and
problems.
and highly
They are not
satisfied employees are
American managers are also more concerned with
short-term instead
are."
Journal, Feb.
"American managers also believe that the American
worker is not
technical
(Personnel
of
long-term
results
as
Japanese managers
(SAM Advanced Management Journal, Spring 1987, p. 28)
Japanese
strive
involvement,
to
create
holistic
alike.
and
economic
Japanese
workers' feelings and
corporate
concern,
integrates the social and
employer
a
personal
employee
needs
employers
lives,
culture
of
of
together"
a philosophy
almost
in
direct
are
interested in their
not
merely work-related
of "friendship,
contrast
philosophy of individual initiative."
that
employee and
achievements and capabilities as American managers are.
management has
mutual
security
the
The
to
Japanese
trust, and working
American
management
(SAM
Advanced Management
OF
JAPANESE PROGRAMS TO
Journal, Summer 1986, p. 23)
VI.
COMPARISON/TRANSFER
POSSIBILITIES
THE UNITED STATES
If American managers were to implement
of the
Japanese management
various aspects
structure, they would need to modify
them to fit their own labor market as described above.
26
One base
to follow would be to emulate the Japanese multinationals and the
manner in which they've modified their
ideology
of
their
American
characteristics the Japanese
include "community
own structure
employees.
to fit the
The
multinationals
attempt
following
to install
orientation, class egalitarianism, employment
security, and employee participation, all of which are considered
to
be
transferable.
If
the
Japanese
employment security, they should
practices
such
as
built-in
early retirement, and
internalized labor
time workers,
reallocate
scale,
well as
these
reallocations
They should,
redundant
to
workers
certain
all
be
in
in
slack
lines
and
periods, and
facing
and transfers
feasible
the extended
though, recruit part-
product
overtime work
will
not adopt Japanese
overtime work, sex discrimination,
market.
workers
demands, as
endeavor to
personnel
train
subsidiaries do offer
surging
on a moderate
necessary."
(Human
Resource Management, Spring 1986, p. 114)
In
order
for
American
managers
to
implement
the above
practices, they have to be more willing to consult employees when
dealing with problems.
important force
within the
to accomplish this
decision
The workforce
making
without
by
goals.
U.S.
company.
giving
carefully
activities of the workers
managers
-
face.
up
toward the
also
is an
their
"prerogatives for
and
guiding
the
attainment of organization
need
to
a
Team building
27
that it
Japanese managers are able
controlling
communication, such as reprimanding
individual losing
must feel
learn the art of subtle
subordinate
without that
is another process that
can result in
better
interpersonal
relationships
and,
in the
longer term, improved productivity.
Employee job freedom must be
given
commit
before
the
employees
will
to
productivity and the quality of their work.
over their jobs, employees are likely
management effort to improve.
the trust of their
the
union
in
Most
must
be
tied
system must
cooperation,
Japanese
reinforce
and
a
In
behaviors,
this
short,
because.it
does
"functional
possible
by
conditions,
feasible."
VII.
implementation
the
of changes in
involvement program
such
as
through
A reward
better performance,
orientation
towards
guaranteed
work.
The
employment
and
their incentive system rewards loyalty."
(SAM Advanced Management Journal,
lifetime employment
involvement of
appropriate incentive system.
long-run
accomplish
security.
and
the active
importantly,
an
into
resisting any
American management must also gain
planning
management systems.
their
Without some control
to continue
employees through
the
improving
Spring 1987,
pp.31-32)
While
would probably not work in the United States
not
have
equivalent
would
providing
laying
an
internal
be
to
employment
off
workers
labor
avoid
under
market,
a more
layoffs as much as
nearly
all
economic
only when no other solution is
(SAM Advanced Management Journal,
Summer 1986, p.25)
CONCLUSION
The
Japanese
internal
labor
costs to take into consideration.
employee
motivation,
and
market has both benefits and
Benefits such as low turnover,
inproved
restriction of competition and
training; and costs such as
employee
28
stress.
The programs
they utilize
within the
structure work
context of
together
satisfaction.
The
to
their internal labor market
enhance
Japanese
productivity
and employee
consider the human resource to be
their best asset, so it follows that it is also their number one
priority when decisions are made.
many steps
are taken
to ensure
integral part of the firm.
internal labor
Employee input
is valued and
that employees feel they are an
This assists in the
operation of the
market by maintaining an employees loyalty and/or
willingness to stay with one
firm
and
work
their
way
to top
management.
Various aspects
of the
Japanese management structure could
be implemented in the United States, but a
is
that
management
needs
employees
are
considered
Otherwise
the
necessary
basic
elements
extensive
such
training.
as
prerequisite for this
to
change
their philosophy so that
the
firm's
most
time
and
effort will not be put into
participatory
Without
valuable resource.
management
management
and
more
support the programs
previously mentioned which could be implemented in American firms
will never
before
be successful.
even
program,
or
considering
it
will
be
American
the
a
firms need to realize this
implementation
waste
of
of
a
"Japanese"
time and money from the
beginning.
The Japanese have developed
uniquely
designed
to
culture of the people.
and ideas
mold
into
a management
the
values,
structure that is
traditions, and
They experimented with different programs
until they found the combination that worked the best.
29
That is exactly what the managers in the
United States
must do.
It is not feasible to think that just because a program worked in
Japan, that it will produce the same results
the United
States.
The programs
adapted to best match
organization.
the goals
"Good
will need
to be modified and
and culture
of each individual
management
evolve, and long-term success
takes
and
the
hard
work.
Adapting
techniques used
in
America's
underutilized
most
Japan
may
when implemented in
systems are not imported, but
patience
and determination
management
lead
to
resource:
a
philosophies
new
its
Advanced Management Journal, Summer 1986, p. 27)
30
and
recognition of
people."
(SAM
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