What is New in the Japanese-Style Management System? An Analysis of HR Policy Processes in Japanese Companies

Author Name UMEZAKI Osamu (Hosei University) / YASHIRO Atsushi (Keio University)
Creation Date/NO. March 2019 19-J-009
Research Project Reform of Labor Market Institutions
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This study analyzes changes in the HR policy of Japanese corporations led by Nikkeiren (the Japan Federation of Employers' Association), based on the Nikkeiren reports and oral history documents that we created by interviewing former staff. The study focuses on the "New Japanese-Style Management System—Direction and Concrete Practices that Should Be Attempted," which was announced in 1995, and examines the novelty and continuity of its HR policy. The results revealed the following four findings:

(1) During the 1970s and 1980s, HR policies were primarily ability-based systems. The job-ability-based grade system and pay-for-job-qualifications systems caused problems, such as having excess numbers of qualified people and a lack of open positions. Internal professional systems were introduced to overcome such issues.
(2) New Japanese-style management has been criticized as the origin of the "employment portfolio" and associated with reductions in labor costs and unstable employment after the collapse of the bubble economy. However, employment portfolios applied to two categories of human resources (i.e., "flow" human resources and "stock" human resources) during the economic bubble in the late 1980s.
(3) New Japanese-style management practices were positioned such that they should have inherited a long-term perspective and emphasized human resource development in a similar fashion to the HR policies of the 1970s and 1980s.
(4) The novelty of new Japanese-style management as an HR policy lies in the fact that it further separated the two categories of human resources to include the new category of "employment portfolio" (resulting in three categories) human resources. Advanced, professional skills-oriented groups that were supposed to be short-term employees were different from the internal professional systems in vogue until the 1980s. This new category of employment portfolio—personnel that created high added value—was embodied within the HR policy of integrating outside talent. However, a debate remained regarding whether the threefold classification system of categories of human resources should be maintained as opposed to the twofold system. Moreover, no confirmation of the increase in advanced, professional skills-oriented groups was provided until the early 2000s. In other words, it was presented as an HR policy but was not put into practice. Discussions on how advanced, professional skills-oriented groups should be developed still continue to this day.