Japanese HRM is more than meets the eye

Japanese HRM practices are slow to change

By Oscar Johnson When it comes to Human Resource Management much adieu has been made in recent years over the comparison between East and West. That comparison usually boils down to Japanese HRM practices that are slow to change in the face of increasing global competitiveness and their more adaptable U.S. counterparts. Optimists even laud that Japan is finally showing signs of "catching up." However, experts say too often this comparison is oversimplified. Take, for example, a study lead by Markus Pudelko of the University of Edinburgh Management School last year. It confirms that the "seniority principle" for which Japan's traditional HRM model is famed is waning more than any other principle and will likely continue to do so. It even echoes a 2002 study conducted at the University of Melbourne, which also notes that while surveyed firms were undergoing changes in HRM only one in four could be considered transformative, according to the Australian Human Resource Institute. While the Melbourne study raises questions about what specific changes lie ahead for Japanese firms adopting more performance-based promotion and compensation systems, Pudelko's suggested that whatever changes are made in this area they should be suited to a Japanese context. Others agree, not only regarding promotion and compensation, but also for broader aspects of Japanese HRM. Needless to say, they also raise questions about which specific HR practices in Japan need changing. While it's generally agreed that more emphasis on performance than seniority and a more equitable assessment of employees could go a long way to improve morale and competitiveness, little has been offered in the realm of revamping Japanese HRM. "The perception that Japanese companies have to become more like U.S. companies to survive in this global environment isn't born out by fact," Sanford M Jacoby, author and professor at UCLA Anderson School of Management told Veritude newsletter in 2005. A survey of Japanese and U.S. firms he coauthored found when it comes to HR, while some Japanese companies are more likely to hire mid-career staff, have boards made up primarily of outsiders and use financial incentives like their U.S. counterparts, they are still in the minority. In fact, Jacoby's study shows that some U.S. companies are looking a bit more like Japanese firms, though they also are a minority. Some, especially those more insulated from financial markets, are viewing HR as an essential "resource-based" asset for business strategy and pay close attention to human assets or intellectual capital. They invest heavily in training and retention and their HR executives play a major role in grooming executives for senior posts - much as firms traditionally have done in Japan. The implication, counter to conventional wisdom abroad, is that's a good thing.

It is wise for HR executives to position themselves much in the same way that CFOs have in the past two decades to further this, according to Jacoby. And in that respect Japanese HRM, which continues to play a central role ranging from performance assessment and overall training to strategizing and senior promotions (even before Enron and the Sarbanes-Oxley act helped cast doubt on outside executive hires as a panacea) may have as much to teach as learn. What seems to be missing from the typical Japan-U.S. comparison is recognition that HRM and other business models naturally change over time and each has its pluses and minuses, Jacoby says. Just as the shareholder-value model gave rise to the excesses that led to Enron and WorldCom, he notes, Japanese firms such as Canon and Toyota have done well by the traditional Japanese model. As Japanese companies turn more toward other Asian nations for trade - especially bourgeoning China - pressure to adopt western HR models may decrease, affecting the trend to succumb to such pressure. And as Japan's government continues to spearhead regional HR development through Official Development Assistance (ODA) and the Employment and Human Resources Development Organization of Japan (EHDO), it may in the long run do as much exporting of HRmanagement models as importing. It's a possibility that extends well beyond Japanese governmental aid. In the private sector, just last year Japanese HR giant Recruit Co., Ltd. tied up with its Chinese counterpart 51jobs.com to collaborate on the development of 51job's products and services in China. The deal allows Recruit to buy up to a 40 percent stake in the firm and it will be sharing its management experience as well as technical expertise, according to ChinaTechNews.com. It would seem prudent for those working in Japan's HR industry to learn, as well as look, before they leap especially if they are eyeing future prospects elsewhere in the region.