ihrm japan

7/30/2019 Ihrm Japan

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Traditional Japanese performance

management system (PMS)

Model Employers: Committed long-term employmentsecurity and offered systematized training programs andperiodic opportunities for advancement in status and wagesto employees

Model Employees: Developed their careers within onefirm and shared interests and goals with their employers

Employees were assessed and their pay and promotionsdetermined by a scheme called the skill-grade system

Firms rarely staffed higher-level positions with external hires Japan is rather unique in that even unionized production

workers are also subject to merit assessments conducted bysupervisors


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Drawback of the traditional PMS

Traditional PMS focused mainly on only the

input aspect of employee performance: Most

importantly, skills and abilities

Not much effort to measure and evaluate

employee output

Simply focusing on employees inputs does not

necessarily identify productive and effectiveworkers (More true for white collar employees)


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Key Factors Impacting PMS in Japan

Historical factors: Already Discussed

Legal Factor: Japanese courts (Evident from variousrulings) have made it almost impossible for employersto terminate or lay off their regular-status employees

without the employees' (or their unions') consent. Impact of Government: Both long-term employment

and employment security are explicit policies of theJapanese government

Role of Unions: Japanese unions' accommodatingattitudes in wage negotiations have beencomplemented by their strong insistence onemployment security for their membership.


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Key Factors Impacting PMS in Japan

Impact of Globalization, Ageing workforce &

changes in the competitive environment

many employers have begun to question the

effectiveness of current HRM practices

As a result, following two trends are visible in the

current context:

Output-Based Evaluation and Individual Differentiation:The introduction of competitive appraisal practices which

emphasize individual performance and output

The externalization of core, regular-status employees


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Recent Trends in PMS in Japan

Output-Based Evaluation and Individual Differentiation:Eemployees are now evaluated on the basis of bothperformance and ability/competence Fuji Research Institute Survey (1998): Suggested that firms

assigned approximately 40% of the weight to performance and

about 25 to 26% to ability/competence. Tsuru, Morishima, and Okunishi (1998): 54.0% of the firms had

some type of pay-for-performance schemes for at least somesegment of their workforce.

The proportions was even higher for larger firms (65.8% in the

employment >5,000 category) and among manufacturing firms(61.0%)

Japan Institute of Labour(1997): The proportion of firmsintroducing individual differentials after the cohort had beenemployed for 5 to 10 years, had dropped to 33.1%


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Externalization of Regular-Status, Core Employees :Some Japanese firms have started offering differentlevels of employment protection instead of traditionalLife Term Employment.

Japanese firms often use shukko and tensekito removeredundant workers from the company payroll

With Shukko, employees are temporarily lent to other companies

With Tenseki, their official employment status is permanentlychanged and they become employees of the receiving firms

Strategies to remove senior employees range from earlyvoluntary retirement to aggressive outplacementcounselling (called Katatataki)


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Rising Concern with Procedural Justice : Thepsychological contract between Japanese employees andemployers has shifted from Relational to Transactional

Relational :The employee-employer linkage that existed in the

learning centered system Transactional: The new emerging model

Why Employees have become increasingly more concerned with the

procedural equity which their employers performancemanagement system is operated

Employees now demand for procedural fairness in evaluationpractices


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Points to be taken in mind while

designing PMS for Japanese subsidiary

Standardization with Indian PM System

Management-by-objectives approach to PMS

Completely fair & transparent system

Comprehensive Assessor & Assessee training on thePMS

Formal Mechanism for handling appeals andcomplaints

Criteria for Employee Evaluation to be Disclosed

Open to continuous feedback & subsequentmodification

Adopting an Enterprise Performance ManagementSystem interlinking Indian operation with Japanese

subsidiary


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Enterprise Performance Management System


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Proposed PMS System Overview


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Performance Appraisal Discussion Flow

Chart


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13

Performance Plan

Performance Report

Implement of operations and measures

Feed back!!

PlanDoCheck!!


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Welfare and Benefit Program to

support employees life events

Compensation for Accident

Childbirth, Childcare and Nursing Care SupportSystem

Asset Formation

Long-Term Service Awards

Marriage, Childbirth and Funeral grants andDisaster Support

Leisure Activity SupportHome Loan, Transfer/ Home Removal Support

Retirement Pension Plan


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Key features of proposed performance

management system (PMS)

Focused on continuous employee and organizational learning &developing intellectual skills: Learning of new skills and acquisitionof knowledge to be supported and encouraged

Internal Training and HRD to be considered as pivotal HRMfunctions: Extensive in-house training

Compensation practices designed to reward both: employeeperformance and skill development

Progressive policy designed to systematically discourage andeventually eliminate "life time" employment, seniority wage &promotion, enterprise unionism

Promote seikashugi orperformance-ism: Individual performance

to be used as one of the major determinant of employeescompensation

Frequent job assignment changes to develop organizational skills(Ability to effectively work within a firm, across divisions,departments, teams, and individual workers)

Other key skills are Communication and coordination skills &Quality Focus & Improvement

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