Plenty of Japanese companies went virtual, scaled back, cancelled or postponed their entrance ceremonies for new graduate recruits this year, because of COVID-19. Hitachi had already cancelled its entrance ceremony, however, and changed it to a Career Kick-off Session (which has also been postponed) to mark the radical departure it has made from lifetime employment and seniority based promotion.
Since its record breaking loss in 2008/9, Hitachi has moved away from simply cutting employee numbers to reduce costs and instead radically altered its business portfolio and introduced a new HR system. President Nakanishi was responding to the often heard concern in the company that “we don’t have any leaders who are effective globally” – a major problem when Hitachi was moving away from being a purely domestic supplier to Japanese energy companies to be more active globally in social infrastructure.
Japan HR as “just one of the regions”
In 2011 Hitachi tore down the 3 distinct layers of its old HR structure – Hitachi HQ’s own HR division, the HR divisions of the Hitachi group companies and the HR divisions of overseas subsidiaries. Now there is a global HR division, 30% of whose employees are non-Japanese. Each region reports into the global HR division, with Japan being one of the regions along with Europe, the Americas, Asia etc. The HR departments of the subsidiaries within those regions report into the appropriate regional HR division. This presumably means the group companies have far less autonomy and Hitachi HQ and Japan are just “one of” the regional or subsidiary divisions.
Hitachi also moved away from the “Shokuno” model much used by Japanese companies – where experience and potential of the employee are the key factors in deciding pay and grade to the “job” model – where each post carries a detailed job description and the pay is determined by the market rate for jobs requiring similar levels of skills and experience.
Toyota goes triangular
Toyota‘s President Akio Toyoda has also begun to have doubts about lifetime employment and seniority based pay. Last year, during the “Spring Offensive” when Japanese company unions negotiation with the directors on base pay, bonuses and conditions, Toyoda said “I have never felt such a distance between us as I felt this time”.
So in 2020 he introduced a new triangular negotiation structure – instead of unions and directors being face to face, he sat three groups around a triangle – the union, the management/executive officers and the board directors. From April of next year the use of evaulations in setting pay and bonuses will become much more widespread and automatic seniority based pay rises will cease. Differentials in bonuses will also become much wider from July of this year.
Get motivated, underworked uncle!
Similar changes are being made at LIXIL, Ajinomoto, Citizen, Sapporo Breweries and Eisai Pharmaceuticals. The end of lifetime employment and seniority based promotion is seen as mainly about trying to deal with the “hatarakanai ojisan” or “underworked uncle” – middle aged men who are in their management position and being paid accordingly largely because of the length of their experience in the company than the value they are adding.
The rest of the Nikkei Business special feature includes a handy worksheet for underworked uncles, to regain their motivation and revive their careers, with some case studies of career changers and encouraging words from recruiters. The recruiters say that middle aged employees are good networkers who can link their company to other companies and look out for new ideas, that they have good communication skills, a learning mindset and are good negotiators. Sounds like they are going to need all of these to succeed in the final 15 years’ of their careers, if they don’t want to end up gazing out of a window.
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