Japanese irate at performance pay
schemes By Suvendrini Kakuchi
TOKYO - Hiroo Nishimura, 57, head of
dining-room services with a large restaurant
chain, is bitterly opposed to moves by the
management to adopt a salary system that is based
on performance rather than seniority.
"I
started work as a waiter with a small salary and
then worked hard for 27 years to achieve my
current position," said Nishimura. "No way am I
going to allow younger staff to get paid better
than I am."
Nishimura, say experts,
represents a growing number of people in Japan who
are unhappy with the adoption of US-style,
performance-based salary systems that are
replacing the
traditional seniority-based
approach that has long been linked to job security
in Japanese companies.
They explain that
the opposition displayed by workers like Nishimura
is a result of high unemployment rates for
middle-aged men - currently more than 10%. High
unemployment for this sector of society emerged
after companies adopted merit-based pay to stay
competitive and cut costs.
"Japanese
workers are not yet ready to enter the struggle
for advancement under the performance principle.
There is now the danger that performance-based
salaries are driving a wedge between them and
management and posing a threat to corporate
profits," said Toru Nishida, head of the
wage-policy section at Rengo, Japan's largest
trade union.
"Our basic position now is
that employees should not be judged solely on
their working ability. Rather, management should
adhere to human-resources policies that develop a
trustworthy relationship with the employee that
will benefit both parties," Nishida said.
For decades, Japan followed a model of
corporate governance where the interests of
shareholders were balanced against those of
employees and other stakeholders, distinct from
the United States, where shareholders' interests
have historically been considered supreme.
Japanese companies would invest in employees,
providing them with training and other
opportunities for advancement and offering them
"lifetime employment".
But in the past
decade, as Japan's "bubble economy" collapsed,
those practices have gradually given way to
US-style employee relations. Nishida referred to
new polls that show 60% of Japanese companies
having performance-based wage systems that are
supposed to boost competitiveness and worker
morale, but are in fact reporting mixed results.
These surveys show that companies are now
realizing that one of the most important sources
of competitiveness is the ability to attract and
keep top-notch talent, and that this could mean
developing a special Japanese-style management
system that incorporates both traditional job
security and global competitiveness.
A
leading figure in the search for an effective
human-resources strategy that reflects this goal
is Fujio Mitarai, head of Canon Inc, the
well-known maker of cameras and precision
instruments, who also is chairman of the Japanese
Business Federation, Japan's main business
lobbying group. Since taking office last month,
Mitarai has spearheaded a campaign that supports
lifetime employment and has said publicly that a
corporate official who fires employees as a way of
slashing fat should be seen as a failure.
Mitarai and his predecessor, Hiroshi Okuda
(outgoing Toyota Motor Corp president), are
calling for reforms in management where the focus
does not rigidly follow age-based wage-hike
systems and stresses unity between management and
labor.
"The emerging new management model
is marked by [a] strong market orientation based
on the assumption that a company cannot survive
without support from the consumer, capital and
labor markets," the Nikkei, Japan's leading
business newspaper, said in March.
Professor Koichi Ishiyama, a business
expert at Tooin University, argues that as Japan
faces increasing competition in the global market
there is definitely going to be a marked shift to
performance-based hiring as companies struggle to
stay afloat.
"Teamwork is highly valued in
Japan, but this style will be hard to maintain for
companies that need to make profits a priority.
Against this backdrop, now is the time for a
management style that also allows enterprising
individuals to earn more than others even if they
work in a team," he said.
Indeed, surveys
carried out by the Japan Productivity Center on
new recruits hired in May showed young people
leaning toward a teamwork mentality even more than
their predecessors. More than 70% of those polled
replied that they wanted to work in a place where
the achievements were shared among team members,
the highest percentage since 1997.
Hideharu Sekizwa, spokesman for Hakuhodo
Research Institute, a prestigious private
think-tank, explains that younger Japanese are
keen to have jobs that both accommodate their
ambitions and provide some security.
"There is a growing feeling that Japan
should look more closely at the European model
where jobs are not slashed [as readily as] in the
United States. With domestic issues such as a low
birth rate and the emerging income gap, there is a
search for an answer that is based on an overhaul
in management that respects its traditional
emphasis on teamwork but also encourages
individualism to a certain extent," Sekizwa said.
