Japanese management puts less emphasis on merit as a basis for promotion and wages as a basis of incentives. The corporate model in Japan is the village dominant values are consensus and harmony. Japanese management practices include permanent employment, consultative decision-making and parental guidance of newly recruited employees.
The predominant characteristic of Japanese management is the permanent employment in large corporations. Life-time employment is expected to increase organizational commitment. The key ingredients of the Japanese formula include:
(a) Emphasis on completing projects on time.
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(b) Punctuality.
(c) Not remaining absent without reason and intimation.
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(d) Obsession with quality.
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(e) Use of calisthenics and group meetings for workers who are- expected to come fifteen minutes before change of shift for these activities.
(f) Obliteration of hierarchical differences through common workplaces and common canteens.
(g) Hierarchical thinking is kept out of the decision-making process by avoiding bureaucratic chain of a junior manager putting up his proposal to the manager who in turn takes it to the senior manager and so on {i.e., proper channel).
(h) Use of open offices with no cubicles. The directors and divisional managers sit in the open along with their subordinates. This makes communication easy and removes the element of secrecy and prevents the creation of an environment of conspiracy and intrigue in companies. Sharing of information and discussions are facilitated.
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(i) Everyone, fight from the Chairman and Managing Director down to the lowest paid employee wears the same uniform. The idea is that while authority will be exercised with reference to designation, all individuals must feel equal.
(j) The same set of rules applies to everyone.
(k) Weaker members are carried along in a spirit of teamwork.
(l) Upward movement on the pay scale does not automatically mean movement up the hierarchy. Similarly, movement on the hierarchical ladder does not mean a higher pay scale. This allows capable individuals to shoulder responsibilities even if they have relatively less experience.
Trist (1981) uses an umbrella term for these characteristics, viz., the new paradigm. The new paradigm is a response to rapid change, highly skilled workers, new technology and environmental turbulence, such as global competition. It represents an ideal blending of human values, organizational learning and continuous adaptation.
On the other hand, the traditional form exhibits a response to standardized technology and stable environments, where work is guided by the machine as the major resource, not people.
In a Japanese company, management philosophy and corporate culture typically translate into an emphasis on team work and clan socialization, where the norms of harmony and community predominate. According to Nakane (1973), in most cases the company provides the whole social existence of a person, and has authority over all aspects of his life, he is deeply emotionally involved in the association.
The model of Japanese management and organization by McMillan (1985) is described in the following figure:
There is a strong production emphasis in Japanese companies influencing decision-making. Strategic decision-making in a Japanese firm is very much a continuous stream of operational decisions.
The managerial structure emphasizes persuasion more than direction, implementation more than strategy formulation. Staff and advisory personnel are integrated into line departments thereby emphasizing a more comprehensive and through analysis of operational decisions.
There is no uniformity in wage structure in Japan. The more successful a firm, the higher the wages of employees at all levels. Permanent employment reduces employee turnover. Workers are hired for a career and not for a job. Hence, the employment relationship involves many dimensions, social as well as economic.
Both managers and workers recognize this and the consequences the relationship, especially the issue of job security. Managers commit themselves to worker security and life time careers. The pay differentials between white collar and blue collar workers are perhaps the lowest of all industrialized countries.
Besides, unlike the Western countries, there are no status differences in terms of private toilets, separate parking space, private facilities for meals, and three piece suits and so on in Japan except for very senior management.
Organizational status differences are usually acknowledged as being stemming from educational levels and qualifications acquired in a fair and meritocratic manner. A typical Japanese organization is administered more on the basis of consensus and expertise and less on the basis of formal authority rankings as defined by position and role.
Japanese factories combined an element of piece rate incentives to overall compensation scheme which was heavily weighted by job classification and seniority. However, very often, the piece rate system was based on group output rather than individual output.
This helps in mobilizing norms and expectations of the group. At the same time, in the post war period, most Japanese companies pursued manpower policies and administrative practices consistent with the precepts of scientific management which has taken a very strong root.
The process of decision-making in Japan, known as Ringi Seido, involves an elaborate circulation of ideas and tactical plans initiated at lower levels to reach a consensus. However, this procedure can be extremely slow and cumbersome. Also, it requires longer time to be effective.
It must, however, be mentioned here that such a system of decision-making is unsuitable for crisis or when conditions necessitate quick action by management.
The consensus approach reinforces and gets reinforced by other software management systems, such as diffused responsibility in the hierarchy and the emphasis on managers as being generalists and not specialists. The process of decision-making reflects social values and adoptive requirements of learning and information.
According to Vogel (1979), Japanese loyalty and patriotism are not inherited but constantly recreated by organizational practice, and perhaps no practice is more important than the shared search for more information and the optimal solutions to which it leads.