Strategic Personnel Management Activities Undertaken by Japanese Firms

Recruit's Work Institute conducted a survey of the top 8,000 companies in Japan ranked according to their paid-up capital, number of employees, and turnover in 1999 to determine the type of strategic personnel management activities conducted by Japanese firms and the future direction such activities will take. The Work Institute received responses from over 500 companies.

According to this survey, the average Japanese firm:
1. Regards the hiring of new graduates as important, expects these new employees to work long-term, and places the greatest priority on their loyalty to the company.
2. Emphasizes monetary benefits, takes account of corporate performance in short-term benefits, does not determine promotion based on years of work, but takes account of performance and results when determining wages.
3. Protects employment as much as possible, even if corporate performance takes a downturn, but will cut personnel development expenses.
4. Believes that the ultimate responsibility for skills development rests with the individual.

These firms have also implemented or introduced the following personnel development reforms in the last 10 years (in order of programs undertaken or introduced):
1. Offering assistance or giving priority to employee self-improvement activities
2. Paying work duty and responsibility allowances
3. Hiring non-regular, non-full-time employees as full-time employees
4. Offering assistance or giving priority to employee skills development
5. Introducing discretionary work or "flex-time" systems

The firms also indicated that in the future, they would like to introduce reforms to the system by which monetary benefits are paid out to existing employees. Other reforms cited include promotion of young people in their 30s to positions of greater responsibility and introducing personnel evaluations and wage systems that take into account employee competencies.

This survey showed that Japanese firms are working hard to disassociate themselves from the seniority wage system and establish a system in which salaries are paid according to each employee's contribution and results.

Japanese companies have, over the last ten years, been exploring various ways through trials and errors, in which they could implement this transition. While the results over the last twenty to thirty years show that no easy solution will be found to make this transition, looking at the progress that has been made (including recent efforts to reform salary payments to public services employees), it is clear that Japan has reached a real turning point.