Human Resource
Abstract
Up to the 1980s, companies in Japan succeeded with individuals oriented in pleasant business settings. However, in the 1990s, in the intense global competition context, Japanese companies modified their human resource management systems to those based on performance. Debatably, the changes were not completely successful. The main purpose of this essay is to explore why the HRM systems or models of Japan are no longer relevant to companies in the contemporary business environment. Specifically, the paper explores why the strategic HRM models are not effective in the face of harsh global competition. Three HRM systems’ conceptual models are analyzed for the suitability between the business environment and the HRM system.
Introduction
The Japanese model of human resource management is no longer relevant to firms in the contemporary business environment (Yasmin, 2008). Most people and organizations recognize that quality human resources and HRM systems are a significant variable for companies to maintain a competitive benefit in the face of harsh global competition. According to classical contingency theory or model, a company should adjust its structure to the setting in which its operations are carried out in order to attain and maintain a competitive benefit. The model emerged and emphasized that a firm should not only adjust its organizational structure to the current current setting, but its management control system and organizational processes, as well (Yamanaka, 2004). An HRM model is not an exemption. As a result, firms are likely to experience challenges in adjusting their HRM models to the business environment in order to attain and maintain a competitive advantage.
Firms in Japan were quite successful for about 3 decades starting from the 1960s up to the 1980s. In this era, the management system of the organizations of was greatly respected and the practitioners and researchers from overseas called it “the Japanese management style (Yasmin, 2008)”. In fact, a majority of researchers emphasized that the lifetime seniority and employment based wage model led to the excellent performance of the Japanese organizations during that time. However, in the beginning of 1990s after the fall of the assets inflated the economy, Japanese firms reported high losses (Pudelko, 2006). In reaction to harsh business competition from new entrants form the global and domestic markets, companies in Japan were forced to reorganize their business operations and reengineer the processes and systems of management. The actions are represented in the immense accomplishments to adjust the HRM models to the latest environmental changes.
The purpose of this essay is to analyze how the companies of Japan adjust their HRM models to varying business surroundings. There is plenty of literature on how Japanese organizations have been changing their HRM models in the new environment of business since the beginning of the 1990s. There is, however, little written on the HRM model transformation trend, as well as, the results of the changes. The essay adds knowledge to this literature gap in a number of ways. It provides a conceptual framework that categorizes HRM models into three major forms. It also gives a brief history of Japanese companies’ HRM system. The paper explains why The Japanese model of human resource management is no longer relevant to firms in the contemporary business environment and finally recommends ways in which Japanese firms might reorganize or restructure and operate HRM models in the contemporary business world that usually features harsh global competition.
Conceptual framework
As a business system, HRM’s leading goal is to control individuals in companies in order for employees to be in a better position to assist in the accomplishment of organizational goals and objectives. The four main sub systems of an HRM system include an employment management system, a working condition management system, a reward management system, and an employee assessment management system (Yasmin, 2008). Employers must ensure appropriate working environments for workers to carry out roles efficiently and effectively. Employees should be rewarded appropriately to increase their motivation. Employees should be assessed on the basis of performance and result. The contribution of employees is the picture of the physical skills, knowledge, and power. These attributes largely depend on employees’ capabilities and motivation. The higher the motivation is, the higher the organizational (Yamanaka, 2004). Concurrently, this intensive commitment and stronger motivation is more likely to increase ability as learning knowledge and skills are related to performance of their functions. Employers, therefore, can improve this commitment or motivation with proper rewards, both monetary (wages, salaries, and bonuses) and non-monetary (promotion and recognition).
History of HRM system of Japanese firms
Manufacturing companies in Japan, particularly automobile producers, electric equipment producers, and electrical appliance manufacturers enjoyed a global competitive edge for three). After the plunge of the country’s asset inflation (known as the ‘economic bubble’) in the beginning of 1990s, however, companies in Japan lost their popularity. In agreement with the fall of the bubble economy of Japan, the style of management of Japan that foreign researchers or managers had respected lost recognition and popularity (Kambayashi, Morita, & Okabe, 2008). As a result, Japanese companies have been struggling to modify their HRM models. Up to the 1980s, companies in Japan succeeded with individuals oriented in pleasant business settings. However, in the 1990s, in the intense global competition context, Japanese companies modified their human resource management systems to those based on performance. Debatably, the changes were not completely successful (Pudelko, 2006).
Irrelevance of the Japanese model of human resource management to the contemporary business world
The change of HRM of Japanese firms from people to performance oriented had considerable consequences. These consequences have made the HRM model of Japanese firms irrelevant to the modern business world. In the recent times, an increased number of organizations have adapted the HRM model based on performance. According to a study carried out by Japan Management Association (JMA) in 2004 many companies that had adapted the performance oriented HRM model did not get the expected pleasant results. In fact, 70 percent of the firms that had introduced the model were evaluating the system to determine why the model did not work as desired (well) (JMA, 2005). There are a number of issues that arose with the change of the HRM model.
The main issue is that the senior management in most of these companies failed to sufficiently describe the aim of implementing the system. The employers openly explained something distinct from what they planned. They said that the system was implemented for organizational or managerial competitiveness, and that a worker who was dedicated must be rewarded accordingly depending on his or her work performance. However, this is not what employers actually planned. Their intention was to alter the cost of personnel from fixed to variable costs. Employers were not clear on the public aim of implementing the new HRM model that was based on performance of employees (Bidgoli, 2010).
In addition, the system of management by objective had systematic issues. At the core of this model is a framework of performance appraisal in which a worker is assessed depending on how much the individual will have attained in terms of the criteria used, which are developed at the start of the time of evaluation, although the attained results do not essentially relate to the degree of value added organization’s achievements (Bebenroth & Kanai, 2010). For instance, employees in an accounting department may perform an excellent work but may fail to earn value added because the added value amount generated is decided by the market where services and goods are traded. The added value’s monetary value earned in the market is the same as the value left after deducting the value of input from the price of services of goods earned in the markets. In this case, the price of services or goods is determined based on the demand and supply balance, and not directly linked to the job excellence accomplished by employees.
Another issue related to the system is that an objective is allocated to each worker. This means that each job has work is determined through looking at the goal of an organization step by step. Breaking the goal of an organization to an employee’s level without weakening the similarity between them is, however, not an easy role. Also, given definite objective, a worker tends to not do extra activities besides those given in the definite objective (Bidgoli, 2010). People seem to be reluctant to assist others as the assessment of a worker largely depends on individual performance. Consequently, these issues in the system lower teamwork morale.
Another problem in the model is in the employee assessment process. The main essential things in the process of evaluation include the consent and fairness of the employees to be assessed. A complete assessment instead of a relative one is crucial to assess workers fairly, gain their consent and keep workers dedicated to the organization. However, the employees were assessed relatively. Employers in Japanese firms normally established four or five levels in assessment and established the value of each rank in advance. Therefore, employers assessed the workers based on predetermined proportions. The reason why workers were evaluated relatively and the predetermined proportions used was because the finances to be given to them were because of the performances of the organizations (Bebenroth & Kanai, 2010). Consequently, some workers could not get acceptable assessments for excellent performance and thus, not adequate pay, and as a result, the employees lost their zeal and dedication and showed lower commitment to organizations. Another issue related to the process of evaluation was that some people in the management were not in capable of evaluating their subordinates as required since they did not have skills and experience of evaluation.
The other issue in the system is the informal opportunities extinguishment for training and education. In the decades that the human resources management systems was successful as it was dependent on a seniority basis, the younger individuals were trained and educated by the elderly workers on organizational work. The elderly persons were not worried about the fact that the younger fellows would take their place (Yasmin, 2008). Because the treatment of individuals in companies started being based on their work performance, a majority of the elderly personnel start seeing the younger ones as rivals since they would have to compete with them in the organizations, and the younger had the energy to work more and get more payments. Such thoughts made the elderly stop educating the young and this meant that the transfer of expertise, knowledge, and technology related to the firm became restricted (Bebenroth & Kanai, 2010).
Conclusion
Japanese companies are forced to compete in international markets. Harsh competition in the international markets implies that organizations are obliged to agree to high risks associated with the growth of market, as well as, the low industry rates of returns. The problem of how to control the human resources during the international competition era is a huge problem for management in Japan. In the three decades that had been successful for the companies, foreign and domestic market had been constantly expanding. During that period, employers in Japan offered long term job opportunities and workers were paid on a seniority basis that made them work even harder. The problems faced by the companies could be curbed if the above issues are addressed effectively and changed to suit the competitive environment. The system could be effectively operated to achieve positive results. Motivating workers for contemporary managers in Japanese is a major challenge and workers are threatened by the current HRM model due to risks of dismissal. Employers should ensure the security of jobs for employees and this will increase employees’ morale leading to increased productivity and profitability for the organization. The management has an important key to play in the motivation of its employees and ensuring that the HRM model is effective.
References
Bebenroth, R., & Kanai, T. (2010). Challengesof Human Resource Management inJapan. Hoboken: Taylor & Francis.
Bidgoli, H. (2010). The handbook of technology management. Hoboken, N.J: John Wiley & Sons.
Japan Management Association, (2005). News Release. A Survey on performance-oriented HRM. Available http://www.jma.or.jp. [2005, February 22].
Kambayashi, N., Morita, M., & Okabe, Y. (2008). Management education in Japan.
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