Japanese management

1
Japanese management its impact on the West

• Week 1

2
Overview Japanese business environment

• Business conglomerates
• Zaibatsu
• Single family controlled
• Central holding company
• Pyramid structure
• In 1930s 4 Zaibatsus controlled 25 of Japanese
  business
• Zaibatsus dissolved in 1947

3
Keiretsu key management

• "Big Six" enterprise complexes (Mitsui,
  Mitsubishi, Sumitomo, Fuyo, Sanwa and Daiichi
  Kangyo)
• Horizontal Type diversify in many fields
• Typical structure -
• stable vertical crossshareholding relationships
• horizontal affiliations reaching diverse markets
• possession of largescale economic resources
• often close managerial ties
• executives sit on boards for several companies
• regular presidents meetings

4
Keiretsu key management

• Common trait to all Big Six within complex is
• central city bank
• general trading company
• insurance company
• In 1992 Big Six members represented only 0.007
  of registered companies but controlled
• 19.29 of capital
• 16.56 of assets
• 18.37 of sales

5
Vertical Keiretsu

• Vertical type large manufacturing company
  groups held together by capital ties
• Typically umbrella format
• Examples
• Matsushita
• Hitachi
• Toshiba
• Tokyo Electric Power
• Toyota

6
Vertical Keiretsu

• Commonly held together by
• capital ties
• longterm contracts
• financial and technological support
• Frequently spin off divisions to become separate
  companies linked to parent
• 1995 estimated suggested largest 30 groups were
  comprised of approximately 12,577 subsidiaries
  and affiliated entities

7
Business related Keiretsu

• Business related - companies tied to groups by
  business relationships
• E.g. assembler supplier relationships

8
Highly protectionist activities

• Congressional Research Service report (1994)
  raises several international trade issues
• Keiretsu tend to buy from within their groups and
  may discriminate against other exporters to Japan
• Allegedly Big Six made 68 of their purchases
  from companies in which they had at least a 10
  equity interest and bought only 5 from foreign
  unrelated companies
• Official figures are 15 inter-company purchases

9
Highly protectionist activities

• Japanese transplant automakers, in particular,
  have relied heavily on their traditional Japanese
  suppliers who have followed them to their U.S.
  plants
• Keiretsu ties may provide an advantage to
  Japanese companies in developing new technology
  or in long-term planning
• Keiretsu distribution systems may discriminate
  against foreign producers in reaching the retail
  Japanese consumer
• Keiretsu stockholding patterns make the buying
  and selling of Japanese companies, let alone
  hostile takeovers, nearly impossible

10
Keiretsu trading links

• All Keiretsus have the support of a Trading
  Company (Sogo Shosha)
• These provide range of goods and services
• It is essentially the marketing operation of the
  Keiretsu
• But provides
• Links to financiers
• Customer and product intelligence

11
Management features - 1

• Lifetime employment (shushinkoyo)
• Rigorous selection
• Recession has caused changes
• Temporary work
• Short-term contracts
• Job Rotation
• Increases motivation
• Makes workers more efficient
• Gives full insight

12
Management features - 2

• Seniority based promotion (nenko joretsu)
• Strict hierarchical relationships
• Decision making process (Ringi)
• Nemawashi sounding out at all levels
• Ringi Seido deliberations at same level
• Just in Time (JIT)
• Maximum efficiency
• Cost reduction
• Efficiency
• Supplier relationships

13
Management features - 3

• Total Quality Control
• Quality is built into every process
• Inherent not external
• Quality Circles
• Groups of employees meet voluntarily to identify
  and solve work-related problems
• Provides
• Commitment
• Sense of ownership
• Improved communications
• Motivation
• Is a myth (Sheldon Kleiner 1990)

14
Management features - 4

• Kaizen the key to competitive success
• Constant improvement
• Customer oriented
• Suggestion system
• US import
• Pervades all areas of work environment
• Not just cost

15
Are there downsides to Japanese management?

• Is productivity improvement the result of cost
  cutting?
• Decision making processes impede creativity
• Once performance improvement techniques are made
  public all companies adopt them
• Japanese business culture is not transferable to
  western organisations
• Attempts to impose some of the cultural
  expectations on workers in UK plants owned by
  Japanese companies can cause friction

16
The dark side of Japanese management in the 1990s

• Christopher B Meek 2004 Jrnl of Managerial
  Psychology
• High commitment low satisfaction
• Increase in
• Karoshi death through overwork
• Ijime - bullying

17
Incidents of Karoshi in Meek (2004)
18
Japanese worker job satisfaction

• Whitehill Takezawa (1968)
• asked about how central or important their
  commitment to their employer and their work was
  in comparison to other possible life priorities
• Statement, I think of my company as the central
  concern in my life and of greater importance than
  my personal life,
• 9 percent of Japanese respondents agreed
• 1 percent of American respondents agreed

19
Japanese worker job satisfaction

• Statement, I think of the company as a part of
  my life at least equal in importance to my
  personal life, 57 percent of Japanese
  respondents agreed
• 22 percent of American respondents agreed
• only 8 percent of the Japanese agreed that they
  thought of their company as strictly a place to
  work and
• separate from their personal life compared to 23
  percent of the Americans

20
Potential reasons

• Ganbatte willingness to work hard unceasingly
  under extreme conditions
• Family oriented dependence one looks to the
  family first for comfort
• Socializing effect that the outside world is to
  be feared
• The importance of not appearing foolish in front
  of others
• Company in the role of family lifetime
  employment

21
Fatally Flawed Management?

• Did Japanese management work because economically
  Japan was working?
• Incidents of karoshi and ijime increased at time
  of Japanese economic downturn
• Greater pressure on management to get more from
  workers
• Workers socialisation led them to accept
• To a point
• Is western thought affecting worker conscience?
• Are attitudes changing?

22
Karoshi in context?

• 37 year old engineer died of a stroke at work in
  1987 quoted in Meek
• My husband worked for an automobile company where
  his job was designing engines. For more than
  three years. . . he would leave home before 7
  oclock . . . and not return home until about
  200 a.m. He worked on holidays as well . . .We
  got no workers compensation from the company
  whatsoever because, although he died at work, he
  died of stroke and the workers compensation
  applies only to cases of loss of limb while
  working with machines. Lately, when I think that
  if he hadnt had to work so hard he would still
  be alive today and my children would still have
  their father, I cant help but blame the company.
• Seeing our children grow up without a father is
  too much for me to bear. Our eldest son said
• Dad was stupid! He worked too hard all the time

23
The great management myth?

• Is Japanese management just a set of production
  techniques?
• Is management in Japan simply an application of
  societal norms transferred to the substitute
  family (ie the workplace)?

24
Interview with head of KenwoodEconomist March
2004

• Mr Kawahara is quick to stress that there are
  some tasks at which Japanese firms excel.
• Above all is a manufacturing philosophy that
  emphasises highly-trained workers, continuous
  efforts to eliminate defects, and lean production
  that minimises waste.
• In Japan's high-growth years, this was a world
  beater, so the country's management shortcomings
  did not matter much.
• Alas, he says, because of this success, business
  leaders "never needed to learn how to manage".

25
The China Syndrome?

• If there was a Japanese management style that
  could work outside Japan
• Where would it be?
• China?
• Increasing academic interest in Japanese
  manufacturing plants in China

26
Early thoughts

• In Japans Reluctant Multinationals Trevor
  (1983) divided up Japanisation process into
• hard and soft systems
• Fukadas (1995) study of transferability suggests
  some transfer of techniques taking place.
• This looked at Japanese plants in China

27
Taylors work - 1

• Taylor (1999) studied production practices in
  Japanese manufacturing plants in China
• Plants represent Japanese manufacturing practices
  to reasonable high degree
• No common management practice
• No overall pattern in 20 cases
• We cannot meaningfully speak of Japanisation
• Production methods are adapted profitably - to
  local and parent company circumstances

28
Taylors work - 2

• Looking at personnel practice in Japanese firms
  in China - Taylor (2001)
• The main findings were
• despite claims of cultural similarity (!!)
  between China and Japan, personnel management
  practices were generally not transferred from
  Japan to the plants in China
• practices that may appear as Japanese inspired
  were often informed by local practices
• there was diversity in the forms of practices
  used, indicating neither sophistication nor a
  singular recipe of management methods
• Hofstede scores
• Individuality Ch 15 Ja 46
• Power Distance Ch 80 Ja 54