MATSUSHITA AND THE
CORPORATE WELFARE SYSTEM
James Van Staveren
Konosuke Mastsushita
-‘The god of management’
-‘The Father of lifetime employment’
THE BEGINNINGS
STARTING THE TRADITION
-CORPORATE WELFARE-
•Corporate Social Responsibility
•Participative management with collective wisdom
•Raise awareness of the successful management approach
•Post-Depression reaction-make employees sellers instead of firing
•Organization mission is sacred like a temple, or religion
•Humble merchant; simple, honest and frugal
•Strengthen autonomous management
“The company is its people”
Matsushita’s Business philosophy
Basic Management Objective:
" Recognizing our responsibilities as industrialist, we will devote ourselves to
the progress and development of society and the well being of people
through our business activities, thereby enhancing the quality of life
throughout the world.”
Company Creed:
" Progress and development can only be realized through the combined
efforts and cooperation of each employee of our company. United in spirit,
we pledge to perform our corporate duties with dedication, diligence and
integrity."
The Seven Principles:
http://www.1000ventures.com/business_guide/cs_biz_leaders_matsushita.html
THE SEVEN PRINCIPLES FROM 1930
A NEO-CONFUCIAN COMPANY
“If we cannot make a profit, that means we are committing a sort of crime
against society. We take society's capital, we take their people, we take their
materials, yet without a good profit, we are using precious resources that could
be better used elsewhere.”
-Matsushita
•Paternal management tradition, company=family
•Noblesse Oblige, obligation to help
•Not focused narrowly on shareholders, but people
•Help create a spiritually rich society with a high quality of life
•Is Konosuke Matsushita is a Philosopher King?
THE COMPANY TODAY
•A new generation of workers with more education and competition
•Offers Three types of salary, like Retirement Allowance Payment system
•Many different offers and contracts based on preference
•Focused less on long term employment
•Focused less on seniority and more on skill
WHAT'S HAS MATSUSHITA LEFT
BEHIND?
•Zaibatsu, Keiretsu
•Efficiency of capital, ICOR
•Social Stigmas leading to Karōshi, Karōjisatsu
•Company loyalty to employees- Syushin-Koyō “lifetime employment”
•Job recruiting- Shinsotsu-Ikkatsu-Saiyō “recruiting of new graduates”
•Romantic view of long labour hours
FORCES FOR GOOD IN ASIA
•Values
•Social capital
•Government roles
•Economic policies
SOCIAL CAPITAL
• How is the relationship between
employees/employers managed?
• How do values that spill over into the
home life?
• Is there individuality and creativity?
• Are the people trustworthy?
• Do they respect and obey the current
social institutions at play?
• What is the happiness of the
workforce?…society?
ZAIBATSU TO THE KEIRATSU
•The Original Big Four; Mitsubishi, Mitsui, Sumitomo and Yasuda
•1920 marketplace boom since the Meiji restoration
•Still a big corporation economy, with huge employee base
•Companies put employee satisfaction and employees enjoy benefits:
-company dorms/housing
-company outings/meals
-company sports and festivals
-company songs, collective identity
Soshikiryoku- “spirit, or togetherness”
INVESTMENT AND EFFICIENCY (ICOR)
• Total fixed capital investment as a
percentage of GDP
• Investment efficiency, Total
investment as a percentage of GDP
and price
For G5 countries, generally very similar
in wage ratios, so why the inefficiency?
http://blogs.ft.com/andrew-smithers/files/2014/03/Chart-three.-G5-investment-efficiency-1993-2013ICORs.jpghttp://blogs.ft.com/andrew-smithers/files/2014/03/Chart-three.-G5-investment-efficiency-1993-2013-ICORs.jpg
SOCIAL STIGMAS
Karōshi, KarōjisatsU
•1990’s international criticism of working hours led to significant reduction
since their 1980 levels, to Canada’s level of 1700 hours/year
•Karōshi, death from overwork
•Karōjisatsu, suicide from work pressure
•Trending higher working hours now, with intrinsic overtime
LABOUR PRODUCTIVITY
•The intensity and quality of labour-effort
•The creativity involved in innovation
•The relative efficiency gains from cooperative systems
•The productive effects of management styles on other labour
http://en.wikipedia.org/wiki/Workforce_productivity
WORKING HOURS CHANGE, 20 YRS
http://www.economist.com/blogs/freeexchange/2013/09/working-hours
DOWNWARD SLOPING
PRODUCTIVITY
http://www.economist.com/blogs/freeexchange/2013/09/working-hours
PRODUCTIVITY
Taxi Wage Study:
“When wages are high, drivers will reach their target more quickly and quit
early; on low-wage days they will drive longer hours to reach the target.”
“The man who works so moderately as to be able to work constantly, not only
preserves his health the longest, but in the course of the year, executes the
greatest quantity of works.”
-Adam Smith
http://www.economist.com/blogs/freeexchange/2013/09/working-hours
JAPAN VS THE WEST
•Employees of 30-44 with 5 years work experience
-Japan: 70% job retention in the 10 years following
-U.S: 40% job retention in same period and falling
• U.S. Employee now averages 4.6 Years at a job
-less spending on employee training
-less company benefits
•Primacy on the individual vs primacy on the corporation/state
http://academiccommons.columbia.edu/catalog/ac%3A146976
What’s Chaining them to the office?
•Company loyalty, family environment
•Low Productivity, some overtime 140 hours/month
•They don’t actually work, but stay long
•They are high stressed, can’t relax
•Fear of social humiliation
DOES THE SYSTEM WORK?
•In 2000, the average Matsushita employee worked 190 hours overtime- 2000
hours?
•Many workers have unpaid overtime built-in to the salary
•High life expectancy and very happiness quotient
•Two faces; public face and private face. How happy are they really?
-less time with kids
-less time with wife/husband
-less time on weekends at leisure
-starvation diet and lack of sleep
- very high stress lifestyle
http://www.japan-press.co.jp/2001/2247/matsushita-e.html
Marx’s Critique
•Specialized labour will alienate workers
•Capitalism is just a gateway to social reformation
•Capital is a “social, economic relation”
•Believe that the owners of capital exploit the workers
•The societal environment, not specialized labour, has created alienation
CONCLUSIONS AND
RECOMMENDATIONS
•Senseless romantic view on labour cannot continue
•The corporate welfare system in Japan worked well post-Meiji from
successful management leadership from men like Matsushita
•Work became a religion, but real productivity and real happiness suffer
•Big corporations should return to welfare traditions to maintain power
•The system is fortunate to have small demography- doesn’t prove system is
still better
•Still works only by chance and circumstance- but it is intrinsically flawed.
THANKS FOR LISTENING!
‘Peace’…..And good luck on exams
QUESTIONS FOR EXAM
•Describe the working culture in Japan and what some effects are on the
people and society as a whole. What would Karl Marx critique about such
culture, and what would he admire?
•Comment on the history of zaibatsu, through to Matsushita (Panasonic), and
the contemporary corporate welfare culture in Japan.
•Most economists would agree that the Japanese working culture is not in a
position to change. Do you agree with this? Elaborate on your reasons on
thinking so?