Japanese corporations increasingly shifting to Western-style management

BBC News : Remodelling Japan Inc

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Originally Posted by BBC News

Nissan and Mitsubishi, two of the world's most famous car companies, have both stared into the economic abyss in the last five years.

But while one has gone on to become Japan's most profitable automaker, the other remains in deep trouble.

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Nissan managed to regain competitivity and even become Japan's most profitable car-maker, thanks to its take-over by the French car-maker Renault, who appointed Brazilian-born Carlos Ghosn as Nissan's new CEO.

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Originally Posted by BBC News

Both companies have suffered as a result of potential flaws in the traditional management model.

The first of these is the system of "keiretsu" - companies bundled together to promote each others' business interests.

This system means that companies are often propping up less profitable partners, and can also breed a false sense of security.

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These keiretsu (formerly callled zaibatsu), are centered around the group's bank. Nowadays Japan only has 3 major banks, all keiretsu's : Mitsubishi-UFJ, Mitsui-Sumitomo and Mizuho (which includes the former Sanwa and Dai-itchi Kangyo keiretsu banks).

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Originally Posted by BBC News

The other defining quality of the archetypal Japanese company is what has been described as a "silo mentality" - employees only concentrating on their narrow responsibilities within their own department.
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Mr Ghosn introduced something called "cross-functional team working". This encourages dialogue across departments and divisions, engendering what Nissan's Toshiyuki Shiga terms "healthy conflict". It also enables the ideas of younger employees to get heard.

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Originally Posted by BBc News

So who does the average Japanese corporation resemble most - Nissan or Mitsubishi?

Seijiro Takeshita, director of Mizuho International PLC, said that Nissan is rare in its radical solutions. He said most companies had the Mitsubishi "gene", although the increased presence of foreign shareholders was forcing them to change, at least in part.

This means that they are reducing consensus management and increasing meritocracy.

But Mr Takeshita argued that the core characteristics of the Japanese model - weak shareholder influence, and a lack of clarity of responsibilities - had not changed.

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Originally Posted by Maciamo

Nissan managed to regain competitivity and even become Japan's most profitable car-maker, thanks to its take-over by the French car-maker Renault, who appointed Brazilian-born Carlos Ghosn as Nissan's new CEO.

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I want to comment on one thing. Renault has a 44% stake in Nissan and Nissan has a 15% stake in Renault. However Nissan is still a Japanese company.

Japanese style corporation management still works very well-see TOYOTA

Their life employment guarantee policy gave benefits for corporation performence.
Sometimes I think western corporation management (especially American style) is kind of ruthless and its only positive on the company to make short term profit.

It might be worse for companies to make long term plan or respecting workers.

respecting shareholder influence is great to make stock market get activated but its sometimes can prevent the corporation from making long term plan.

There are pros and cons in everything.

EDIT:American corporation management is very different from the continental Europeans. But close to English or Irish as my humble knowledge works.

Please correct me if I am wrong.
Thank you.

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Originally Posted by stupidumboy

Japanese style corporation management still works very well-see TOYOTA

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Yes, of course, some companies are still doing well. But is it due to a remarkable management or to being first on the very protected Japanese market, and have special agreements with countries all around the world to export these cars ? Toyota sure can get advantageous deals with other countries.

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Their life employment guarantee policy gave benefits for corporation performence.

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Life employment is far from being guaranteed nowadays, even at Toyota.

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EDIT:American corporation management is very different from the continental Europeans. But close to English or Irish as my humble knowledge works.

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Indeed US and English management styles have some similarities, but regarding the rest of Europe, I'd say there is little ressemblance between the egalitarian Scandinavian style, the ultra-hierarchical French style, and the compartmentalised "everyone is a specialist" German style. Not to mention other countries (what about the slightly chaotic Italian style where personal relations matter more than hierarchy).

the days when Japanese carmakers were protected by government policy just all passed away long time ago in 1980's.
But yes there are still many industrial sectors in Japan that protected by government policy such as paper manufacturing,finance,agriculturals etc.

Toyota IS now competitong with other imported carmakers on every equal position in domestic and oversea market and they successfully got on the second largest car producer this year just above on the Ford.

The CEO of TOYOTA company-Okuda Hiroshi(奧田碩) is still strongly belive the life time employment can bring the benefits to the company management.
Its one of his vital philosophies that will never be changed untill he'd pass away.

I don't know if this company still gives guarantees of life time employment for all of the employments today but I read a column written by him(Mr Okuda) that he would
prove his policy and position are right direction for the company management-he wrote that column to give retort to an American credit rating company's decision so called moodys that downgraded TOYOTA's credit rate.

about your additional explnation for European company management style-
Thank you for your valuable information.

What I know is that German and Swedish have striking similarities in both of large companies and trade unions play defined roles alongside the government as partners in the economic and political system and both countries put high value on labours speciality and welfare system.

Maybe Swedes can give the Germans good example of reforming because Germany want to preserve valued social institution but decreasing public spending under control.
They are both so called social democratic countries.


what about Dutch,Belgian,Spanish?
Do French labour union love ultra -hierarchical management style which looks pretty opposite of their usual philosophy?

Thank you.

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Originally Posted by stupidumboy

What I know is that German and Swedish have striking similarities in both of large companies and trade unions play defined roles alongside the government as partners in the economic and political system and both countries put high value on labours speciality and welfare system.

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There may be similarities in the mentality (inflexibility) and working style (clear separation of professional and private, methodical, structured environment), but a striking difference is that Swedes are very egalitarian with very little hierarchy, and favour oral communication (phone over letter), while Germans are notoriously bureaucratic with all the hierarchy that implies and prefer putting things down on paper rather rather than contending themselves on oral agreements.

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They are both so called social democratic countries.

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That is correct that both countries favour strong social security, but so do most European states, including the UK.

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what about Dutch,Belgian,Spanish?

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Dutch are methodical, conformist and quite egalitarian.

Belgians are more hierarchical, but flexible and have a strong entrepreneurial spirit like the English. They are closer to the French and the English than the Dutch or German.

Not too sure about Spaniards, except that they like creating personal relationship with people before doing business, and are not famous for being good teamworkers (too proud ?).

Let me recommend you this book EuroManagers and Martians on European business cultures.

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Do French labour union love ultra -hierarchical management style which looks pretty opposite of their usual philosophy?

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What is their usual philosophy ? The French are among the most hierarchical and elitist people on earth. The Japanese and Indians are too, but in a different way. Japanese care especially about seniority because of Confucianism, and Indians about caste because of Hinduism. The French status is based especially on academic achievements, and the position reached in society (esp. politics, academics and business). About all high-ranking French politicians and big company managers have graduated from on of the ultra-elitist Grandes Ecoles. After graduating, it is usual to start a career at the government as high ranking bureaucrat (yes, they start from the top, as academics prime over seniority) then, when they have learned how the political world function, they are given a high managerial position in a big public (or even private) company. Few people start from the bottom and gradually reach the top like in Japan.

It's a bit like the system of Public Schools in Britain, where all the upper-class go, and all the top politicians and business people graduate from. The difference is that public schools are secondary education (usually leading to Oxford or Cambridge), while Grandes Ecoles are tertiary level.

@Maciamo,

Great answer-Thank you very much. :)

Sony gets a foreign Western CEO too.

Sony taps Stringer as CEO

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Sony Corp. on Monday named Howard Stringer, head of its U.S. operations, as its next group CEO, becoming one of the few major Japanese firms to have a non-Japanese at the top.

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Originally Posted by Maciamo

Sony gets a foreign Western CEO too.

Sony taps Stringer as CEO

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Yes, I read it some few weeks ago, and it is sure interesting. What is most interesting is that Stringer is the first Western CEO of Sony, and he can't speak Japanese nor is into Japanese management system.....

Japanese management systems are products of the Japanese society; thus any transplantation of the management system must be handled with much discretion.
Today, it is no longer just-in-time (JIT) production and total quality control (TQC), which explain the unique Japanese business characteristics. These have for many years been used in the Western world, too.

can someone feature out:

japanese management style in a table
western management style in a table

including WHO gains WHAT from it HOW.
please not an intellectual diploma work, short sentences.

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Originally Posted by alexriversan

can someone feature out:

japanese management style in a table
western management style in a table

including WHO gains WHAT from it HOW.
please not an intellectual diploma work, short sentences.

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sure, I can!!! However, I can't today as it is getting late over here.....I will later this week. :wave:

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Originally Posted by alexriversan

can someone feature out:

japanese management style in a table
western management style in a table

including WHO gains WHAT from it HOW.
please not an intellectual diploma work, short sentences.

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Japanese Management -------------Western Management
Keiretsu’s ----------------- multinationals
groups of industries ------------- gigantic firms

HR management:
Lifetime employment------------------Short-term contracts
Job rotation-------------------------Career development
Seniority promotion--------------------Promotion based

Recruitment:
Selected schools----------------------- Open market

Decision-making:
Consensus------------------------Democratic
Bottom-up (ringi)-----------------Participative
Group harmony--------------------individualism

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Originally Posted by Miss_apollo7

Lifetime employment------------------Short-term contracts

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I agree with all you wrote, except about life employment. In fact many European companies (maybe American too) guaranteed life employement until a few decades ago. In Japan, things have been changing fast in the last decade, so that life employement is becoming rarer than before. I personally know many Japanese who are job-hopping. i.e. changing job every 1 or 2 years, and I am not talking about part-time job or dead-end jobs, but career ones. So the system is the same in Japan as in the West. It just took longer to transit from lifetime employment to non-life employement for Japanese companies.

Note that life employement in Korea is more still like it was in Japan 10 or 20 years ago.

I also disagree that Western countries rely on short-term contracts. There are as many career jobs in Europe as in Japan (career is the opposite of contract, i.e. people are recruited without a time limit, until they resign or are fired). Then on a side note, if it's true that it is much easier to fire an employee in the US than in Japan, I'd say the the legislation in many Western European countries make it more like Japan than the US. The UK is the closest to the US in this regard, but Germany, France and Benelux countries are probably more like Japan.

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Originally Posted by Maciamo

I agree with all you wrote, except about life employment. In fact many European companies (maybe American too) guaranteed life employement until a few decades ago. In Japan, things have been changing fast in the last decade, so that life employement is becoming rarer than before. I personally know many Japanese who are job-hopping. i.e. changing job every 1 or 2 years, and I am not talking about part-time job or dead-end jobs, but career ones. So the system is the same in Japan as in the West. It just took longer to transit from lifetime employment to non-life employement for Japanese companies.

Note that life employement in Korea is more still like it was in Japan 10 or 20 years ago.

I also disagree that Western countries rely on short-term contracts. There are as many career jobs in Europe as in Japan (career is the opposite of contract, i.e. people are recruited without a time limit, until they resign or are fired). Then on a side note, if it's true that it is much easier to fire an employee in the US than in Japan, I'd say the the legislation in many Western European countries make it more like Japan than the US. The UK is the closest to the US in this regard, but Germany, France and Benelux countries are probably more like Japan.

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I just want to add some comments here.....
Although many Japanese find themselves new employment, rather than continuing at the same company their entire career, I must emphasise the fact that as a rule of thumb, Japanese Industrial Economic Organisation is based upon the system of lifetime employment.
According to Japanese case law, a company cannot, and may not, lay off a worker (developed just after the WWII). Thus, in fact Japanese are subject to lifetime employment this very day.
Having said this, of course there are a lot of Japanese workers, who decide to further develop their careers through different positions at different companies. This is a tendency which has increased heavily within the last decade, however, there are a few issues, which explain why lifetime employment is still important and relevant in Japan:
1. It enables the company to carry out exact estimates as to how much an employee will cost over the next X amount of years.
2. As an employee, you will get access to better conditions within the parent company´s associated firms (Since most larger Japanese corporations include banks, insurance companies, heavy industry-companies etc through the keiretsu system)
3. Given an employee is provided beneficial discount at the company bank when purchasing house or car, this gives both the firm and the employee an incentive to continue working at the same firm.

According to numerous scholars, no other country has the same kind of Industrial Economic Organisation as Japan - the most identical is Germany, which Japan based much of its activities upon during before and during WWII.
:wave:

Japan is creating East style management that is combined Japaness cuture with Westen-style management..this is globle economy.

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Originally Posted by Miss_apollo7

According to Japanese case law, a company cannot, and may not, lay off a worker (developed just after the WWII). Thus, in fact Japanese are subject to lifetime employment this very day.

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Yes, they can but it's more difficult than in most Western countries. They need to have a good reason, such as a "grave fault", illegal action, etc. They cannot sack an employee for lack of ability or poor relations with management fo co-workers though. But they can force them to resign (eg. by demoting them, making them work hard or give them all the menial tasks) or offer them an advantageous severance package. It is also easier for smaller companies to lay off personnel, as they can claim that they do not have the financial needs to support so much staff, which is also a good reason. That is why it is easier for a Japanese company to "restructure" than to fire an individual.

How soon can Japan Inc fully become modernized?

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Originally Posted by Maciamo

Yes, they can but it's more difficult than in most Western countries. They need to have a good reason, such as a "grave fault", illegal action, etc. They cannot sack an employee for lack of ability or poor relations with management fo co-workers though. But they can force them to resign (eg. by demoting them, making them work hard or give them all the menial tasks) or offer them an advantageous severance package. It is also easier for smaller companies to lay off personnel, as they can claim that they do not have the financial needs to support so much staff, which is also a good reason. That is why it is easier for a Japanese company to "restructure" than to fire an individual.

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Yes, you are partly right but...some scholars have written interesting articles on this particular subject.
Especially this one:
Employment Relations in the Asia Pacific, eds. Greg J Bamber et. al.
A link to a summary of the book: (source is from:http://www.allen-unwin.com.au)
"A companion volume to the hugely successful International and Comparative Employment Relations, this collection sets out to describe changing approaches to ER in the Asia-Pacific region.

There has been enormous economic development in the Asia-Pacific region since 1945. Employment relations policies have changed rapidly in both the older industrialised market economies and in the newly industrialising economies. It is particularly interesting to compare the various recovery strategies of different countries following the economic turmoil of the late 1990s. The Japanese appeared to continue their pattern of life-time employment. In Australia and New Zealand there have been attempts to discontinue the award-wage system to foster international competitiveness. In South Korea, companies have demanded more flexibility to make it easier to dismiss workers. There has also been much change in other countries, for example, moves towards deregulation in China, Indonesia and Taiwan.

This book considers human resource initiatives in the workplace and industrial relations reform from the perspectives of employers, managers, unions and academics, in particular in Australia, China, Indonesia, Japan, South Korea, New Zealand and Taiwan, and in the Asia-Pacific region generally.
A summary of the book (from
Employment Relations in the Asia-Pacific is essential reading for practitioners and students of industrial relations and human resource management at graduate and undergraduate levels, and for specialists in international business and economics, trade unions, employer associations and government."

That is simply because that the traditional closed system has backfired.

An examination on this is partially given in the following paper.

Japan & China: What's Really at Stake?

George Zhibin Gu
26 April 2005

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As the world's second-largest economy, Japan has both advantages and challenges. The biggest advantage is that Japan has hundreds of truly global companies that are well equipped to operate anywhere it is beneficial for them to do so. Its biggest challenge is at home, Japan has had a 14-year economic slump. Deep-seated problems, such as high costs, low efficiency in many industries, rampant overstaffing and a banking sector that is still recovering from massive bad loans made during the "bubble economy" period, are not likely to go away anytime soon. This tightly closed domestic market has backfired. Domestic stagnation virtually compels Japanese businesses to expand overseas - and China has been their overwhelming first choice.

A basic reality about Japan Inc is this: it needs to generate fat profits from overseas in order to sustain its declining operations, very often money-losing, at home. This compels Japan Inc to do even more overseas and in a hurry.

...
http://www.gurusonline.tv/uk/conteudos/gu6.asp