JILPT Research Report No.194
Research on Identifying and Developing Next-Generation Executives:
Focusing on Manufacturing Companies with Global Expansion Strategies

March 31, 2017

Summary

Research Objective

Since “training, developing and upgrading / next-generation management personnel” has been cited as a notable issue in human resource management, the aim of this research is to clarify how next-generation executives are identified and trained by manufacturing companies with global expansion strategies, and to propose corporate personnel management policies based on the findings obtained.

Research Method

Literature survey, interview survey, research group meetings

Main Findings

  1. In each case, efforts were being made to create better schemes for in-house recruitment. However, the priority targets were somewhat different. Companies could be divided into three types, namely, (i) the type that places emphasis on both domestic and overseas recruitment and is pursuing system reform (manufacturing companies A and B), (ii) the type that places greater priority on domestic recruitment and is in the process of system reform (manufacturing companies D and E), and (iii) the type that places priority on overseas sources and is in the process of system reform (parts manufacturer C).
  2. All the cases examined on the content of system reform, had formed a group of future executive candidates (both male and female) and showed endeavoring to train them. However, there were also slight differences in the way they formed those candidate groups. There were three methods of doing this, namely, (1) the people-focused method, whereby a group of candidates is created by finding seemingly talented or promising people internally and regarding them as a potential group, (2) the method focusing on positions (posts), whereby successors to a post are made the potential group, and (3) the method based on the candidate group on employee categories and qualification grades. In some cases, more than one of these methods were being applied concurrently. Manufacturing companies A and B are cited as examples using both methods (1) and (2), but placing more focus on method (1). The overseas arm of parts manufacturer C and manufacturing company E are examples mainly focusing on method (2), while the domestic arm of parts manufacturer C and manufacturing company D are examples mainly focusing on method (3). Of these three, (3) could be seen as the older style while (1) and (2) have emerged more recently.
  3. Each case had created a pool of talented people -- future executive candidates, albeit using different methods and to different degrees. A trend shared by all of them was that they narrowed down the targets to form a single cluster, and attempted to provide preferential training opportunities to that cluster. This was the same for both the position-focused and the people-focused methods.
  4. Another trend shared by these different methods of developing candidates was that the companies had established long-term plans in their attempt to train potential talent. When the focus was on people, as in companies A and B, employees who seemed capable of extending themselves up to the top tier of the organization as their highest potential position (future executive class) were discovered, and trainings were given (or were due to be given) so that they could actually reach that highest potential positions. Those focusing on positions, as in the case of company E, were also trying to train human resources by widening the targets to the after the next generation 10 years into the future. Thus, these would appear to share common patterns in that they made plans, etc., and were attempting to train human resources over the long term. Another common trend would appear to be that the use of human resources was pursued not only by the main company but also by the corporate group.
  5. Several signs of change to existing promotion structures can be gleaned from the case studies. Findings from the cases in relation to promotion practices and permeation of a company’s way of thinking will now be discussed. First, initiatives based on people rather than on positions, which do not depend on employee category or qualification grade, seem intended to change companies’ existing promotion practices. Second, on the permeation of a company’s way of thinking, human resource development in Japan has been likened to a process of dying the white cloth of a graduate in the company’s color through in-house training – the so-called “white cloth hypothesis.” This kind of practice has been described as an efficient way of forcing through a company’s way of thinking. In connection with this, several of the surveyed companies were making serious attempts to utilize non-Japanese personnel locally hired overseas as executive candidates overseas. This trend could also be seen as an attempt to procure executive personnel positively through channels other than new graduate hiring. A characteristic seen in this process is that efforts to homogenize new recruits to the company’s existing employees. In their business location overseas, on the other hand, attempts to train human resources who had a heterogeneous character were being made and were not completely dyed in the company’s own color, among core employees who were future executive candidates. Considering the above points, it would seem that attempts to train human resources who, though sharing the company’s color, are not completely dyed in that color.

Policy Implications

The implications for corporate personnel management are as follows. First, a key point in identifying talent is how broadly various insights are included into process of selecting talented personnel. When looking for talented personnel, a vertical approach by the head of a division should not be the only viewpoint applied. In both divisions and personnel, it is important to remain mindful of excellent strata that do not become visible in personnel evaluation alone. Companies A and C even considered selecting candidates who showed inconsistency in personnel evaluation. Company B also took an additional viewpoint of what they expressed as “a person who have the air of a big shot” into account when selecting potential talent. Rather than just a system of deducting points, efforts should be made to identify talent based on an element of positive points as well.

Second, when it comes to the implementation of internal transfers, things do not go so well, though there might be agreement in theory on training through OJT based on internal transfers. Setting up meetings to discuss matters related to training could be cited as one possible measure. What is important with this is to make this opportunity for moderate peer pressure among coworkers. Normally, when transfers are not implemented successfully, it is thought largely because successors have not been trained. For example, if such meetings provide opportunities for coworkers to apply pressure to employees who have not developed successors, it could lead to internal transfers being pursued with a focus on training. Holding meetings aimed at personnel exchanges is another possible measure. Setting the condition that employees on the same level are exchanged could stimulate transfers among distinctive human resources. This method opens the way to promote personnel exchanges without one of the parties losing the efficiency of daily operations, by making it possible to establish detailed specifications and make accurate comparisons between employees. There is also the risk, however, that establishing detailed specifications will not only increase the labor involved in negotiations between the parties, but will also result in a failure to reach agreement. Transfers and reassignment that achieve a good balance between the effects obtained from the system and non-monetary costs such as negotiations arising in the process could be seen as desirable.

Third, efforts involving the whole company are considered vital in order to train personnel by identifying talent and implementing internal transfers. Regardless of whether the target is the company as a whole or just a specific division, efforts involving the company’s top management are thought to be important.

Policy Contribution

Providing basic data related to the effective and efficient promotion of labor policy.

Main Text (only available in Japanese)

Research Categories

Project Research: “Research on companies’ employment systems and personnel strategies, improvement of the quality of employment through development of employment rules, and realization of decent work”

Subtheme: “Research project on corporate management and human resource strategies”

Research Period

FY2014-FY2016

Authors

Itaru NISHIMURA
Researcher, JILPT
Hideki TANAKA
Lecturer, Aomori Public University
Hiroyuki AOKI
Professor, Kagawa University

Related Research

  • JILPT Research Report No.158, “Research on Personnel Management of Diverse Regular Employees” (2013)
  • DP16-03, “A study on transitions in personnel and wage systems, and future research issues” (2016)

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