Free «Article Summary: The Japanese Style of HRM» Essay Sample

Japan experienced massive economic growth between the post World War II period and the early 1990s. It has significantly contributed to establishing the style of Japanese Human Resource Management in Japanese Multinational Corporations. To maintain their competitive advantage in the global market, Japanese MNCs transferred their domestic practices to foreign countries where Japanese MNCs were operating. Tomoki, Froese, and Iguchi (2016), contend that due to the collapse of the economy in the late 1990s and global economic trends, the level of admiration for the Japanese HRM style has drastically decreased. The Japanese MNCs have experienced challenges in finding ways to respond to HRM challenges on the global arena. Matsuda (2013) admits that MNCs are successful in the internationalization of operations and production, but are not successful in the internalization of their management. It makes it hard to achieve an expected level of economic prosperity. The Japanese companies significantly aggravated this challenge, as they were reluctant to transfer from an ethnocentric style of management to some other. According to Froese and Kishi (2013), the ethnocentric management style and traditional Japanese HR practices have made it hard for the Japanese MNCs to attract and retain global talents (Froese & Kishi, 2013). Due to the inefficiency experienced by old Japanese MNCs in the management, the newly emerging firms are trying to adjust to be at par with other MNCs in the world.

Research Aim

To provide a comprehensive understanding of the nature of Japanese IHRM and the challenges faced by Japanese MNC.

Objectives

1. To determine the challenges faced by the Japanese MNC in their Human Resource Management.
2. To identify the current changes made by Japanese MNCs to improve their IHRM.

Literature Review

In the 1960s and 1980s, Japan MNCs did well in the international market due to their high-quality products and lower cost defeating their western competitors. The Japanese style of HRM contributed to this achievement. The style focuses on providing long-term management and development, seniority-based compensation and promotion, enterprise unions and teamwork. It enabled the companies to become very competitive in the international market.

Today, the Japanese MNCs face internal and external challenges that affect their IHRM including the demographic decline, which according to Kemper, Huldish and Froese (2016), resulted to smaller consumer base and talent shortage. It has lead to a decline in the sales in the global market. Secondly, most of the consumers are from overseas. Asakawa and Westney (2014) claim that companies have been forced to tailor their operations to meet customer demand (Asakawa & Westney, 2014). MNCs had no option other than to relocate their technical and managerial functions abroad. Thirdly, there has been a problem of integrating foreign subsidiaries at the global stage. It has made it impossible for them to compete at the global arena. Iguchi (2012) argues that Japanese MNCs lag behind their western counterparts as they still rely on their centralized R&D facilities in Japan (Iguchi, 2012). Japanese MNCs needs to develop a global talent pool. Lastly, they have been pressured to respond to their competitors at home and abroad. Nikkei (2013) claims that the low-cost production and supply chain functions of Japanese companies operating abroad are no longer sufficient to sustain their competitive advantages over newly emerging competitors (Nikkei, 2013). Due to this, their neighbors such as Korea and China have outperformed them in the global market.

The problems of Japanese IHRM that have made it ineffective include the following. Traditional Japanese HRM tries to separate between Japanese and non-Japanese employees. Peltokorpi, Allen and Froese (2015) argue that the Japanese are considered major workforce developed in the long-term, based on seniority and job rotation and can take managerial positions while non-Japanese workers are viewed as peripheral, therefore, being given minor staff work. It demoralizes non-Japanese employees. The challenge leads to current trends in Japanese HRM suggesting that non-Japanese cannot take part in decision-making, facing language barriers in the companies, while management responsibilities, knowledge and job roles are not defined clearly, which forces non-Japanese employees to learn them with the help of supervisors and workmates and this is what makes some of them quit (Tomoki, et al., 2016). Again, traditional Japanese HRM is incompatible with global HRM trends. Many non-Japanese employees are less attracted to the seniority or long-term development and are likely to leave the job earlier than their counterparts from Japan. Lastly, senior management positions in foreign subsidies are dominated by Japanese expatriates.

To curb the problems in the system of the Japanese HRM, the Japanese companies have increased the number of non-Japanese employees at home. Employees are recruited from Japanese and overseas universities. Maki, Ebisuya, and Sekiguchi (2015) found that non-Japanese employees working in traditional Japanese companies perceive long-term based employment system and job rotation as attractive (Maki, et al., 2015). It attracted many non-Japanese to work in the corporations. To improve the IHRM of Japanese MNCs, it has to improve its global talent pool comprised of Japanese employees to enhance their international skills through the language and culture. As for other countries, the Japanese MNCs are trying to develop IHRM through localization efforts, utilization of ‘bridge’ individuals and training and development.

Discussion

The Japanese style of HRM has been the primary reason for the downfall of the Japanese MNCs. Many Japanese MNCs are trying to solve the problems through internationalizing and externationalizing their HRM. Some have opted for a combination of the two strategies while others have chosen only one approach. The newly emerging companies tend to use the combination of the two approaches as this enables them to compete with their competitors in the global arena. The traditional MNCs have been reluctant to change (Tomoki, et al., 2016).

Many Japanese MNCs have incorporated the polycentric approaches of IHRM that aim to minimize the division between Japanese employees and non- Japanese employees. The strategy has made it possible for non-Japanese workers to take up top positions in foreign subsidiaries while the Japanese take up positions at headquarters (Tomoki, et al., 2016). This approach will make the Japanese MNCs achieve efficiency to be in a position to compete in the global market.

Managerial Implications in UAE

In modern competitive world, many firms are forced to deal with national and international employees with diverse cultural backgrounds. Multinational Corporations has been affected by the diversity of cultures most of all, thus there is a need to rethink the Human Resource Management to achieve efficiency in the global market. To generate a global talent pool, many MNCs in the world have devised different strategies in their HRM to avoid discrimination based on culture or nationality of employees especially expatriates. Recently, the UAE countries have achieved an enormous economic growth contributed by various MNCs in oil companies; thus, there is a need for the human resource in different MNCs. It has posed various managerial implications for the UAE Human Resource Management strategies. The paper will further discuss these managerial impacts in the UAE.

The UAE business environment has a strong sense of culture, religion and ultimate centralized power. It also has a robust cross-cultural management where its staff can work comfortably with the non-UAE team workers. It is carried out to ensure the firms attain a higher level of productivity as compared to the Japanese MNCs where non-Japanese employees are discriminated. The Arabic influences manager tends to use the paternalistic style of leadership rather than authoritarian one. The following are the managerial implications for the HRM in the UAE Multinational Corporations.

The support provided to staff by the management at work and the staff’s private lives facilitates confidence in one’s work for the firm. Many oil companies in the UAE have applied this practice even to expatriates, which makes them feel satisfied with the environment. The employees end up dedicating their efforts to the firm resulting in a high level of production and this has contributed to the increased economic growth in the United Arab Emirates countries over a few years.

The managerial style of leadership in the UAE Multinational Corporations being embedded in Arabic culture and religion results in the employee satisfaction. Fida, Hulb, and Randall (2013) argue that the employee satisfaction encompasses such aspects as pay, benefits, promotion, work conditions, supervision, organizational practices and relationship with the co-workers. Employee satisfaction with the company enables them to put extra effort at work through long-term sacrifices and undertake tasks beyond their duties. The satisfaction with the place of work in many MNCs in the UAE is influenced by the amount of salary, communication, especially for expatriates, and supervisory support. It helps both the domestic and international employees to feel part of the company and thus be determined to achieve and support the firm’s goals.

The consultative style of the management enhances the employees’ commitment to the Multinational Corporation. The employees end up identifying with the company’s goals and values, and their involvement in the company is revealed through endless efforts and loyalty to the business. Due to the principle enshrined in the long-term development of employees, the employees remain in the company until they retire as compared to Japanese Multinational Corporations where non-Japanese workers are considered peripheral and leave the employment earlier as compared to their Japanese counterparts due to the dissatisfaction with the work environment.

One of the significant managerial implications for MNCs Human Resource Management lies in the centralization of power whereby top management makes most of the decisions. It makes the work challenging and strenuous for the managers. Again, subordinates cannot carry the burden of their mistakes, but the managers are responsible for that. In such a case, the managers can find themselves in a hard situation due to the nature of decisions made by the subordinates. In western cultures, the HRM is designed in a way that subordinates carry the burden of their mistakes and are answerable to the managers positioned above them in the hierarchy. It has made MNCs in western countries thrive as subordinates take responsibility for their actions resulting in the high production that creates significant competition regarding their products in the international market.

The UAE Multinational Corporation currently recruits foreign expatriates mainly in construction and oil companies. Many UAE residents shun blue collar jobs preferring public sector jobs where the salaries are higher along with a higher level of security as compared to MNCs that can withdraw from the country anytime. Lack of qualified local citizens has resulted in the recruitment of the foreign expatriates. Most of the UAE nationals do not have the experience, qualifications or traits needed for the position. Almazrouei and Pech (2015) argue that the expatriates feel comfortable working in the UAE Multinational Corporations (Almazrouei & Pech, 2015). The expats would prefer working for the UAE’s MNCs as compared to Japanese Multinational Corporations. The HRM strategies in the UAE are designed to engage everyone whereby long-term development is encouraged. Minimization of cultural shock significantly contributes to the expatriates’ success in the UAE. In the end, the expatriates’ country benefits through the submitted remittances that could otherwise remain in the country.

Management’s acceptance of the incorporation of western culture in the Arabic culture of leadership has led to the establishment of an authoritarian style of leadership in the UAE Multinational Corporation. Some Construction Multinational Corporations have embedded in the strategy leading managers to being rude with employees. It can result in the lack of morale among employees leading to inefficiency and high employee turnover as they seek to find a job in other firms.

Internalization of HRM is possible in the UAE because the system of HRM in this country encourages polycentric approaches of the HRM. Again, the language allows the expatriates to be satisfied with the system because it embraces the use of verbal communication as compared to the written communication and they get absorbed in culture quicker as compared to the Japanese HRM.

Finally, the managerial implications of the UAE for HRM have impacted positively and negatively on the UAE’s HRM strategies. The support provided by the management encourages confidence among staff. It has led to the recruitment of expatriates to work in the UAE’s MNCs, which benefits the expatriates’ countries. Employers are satisfied with the job and the companies they work for, resulting in the higher productivity and lower turnover.

Conclusion

Japanese HRM was a global economic legend until the 1990s. The failure to respond to the global demands diminished its importance. The ethnocentric approach has dominated the Japanese IHRM and this has led to the global competition for talents. Newly emerging companies are shifting towards a polycentric approach of IHRM. The future of Japanese MNCs lies in the internationalization and externationalization strategies. With globalization of MNCs, it is crucial for all MNCs, from Japan, UAE or even the West, to embrace polycentric HRM strategies, which promote job satisfaction among employees. The failure of MNCs to embrace and appreciate global workforce and foreign talents, as opposed to local, is a reason for failure. Therefore, the argumentation of Tomoki, et al. regarding the managerial implications for the UAE is applicable, since the MNCs should appreciate the global workforce, especially in the conditions when the UAE depends on expatriates. The MNCs should treat talents and skills appropriately regardless of the nationality or ethnicity of the employees to attract and sustain talented and qualified workforce in the competitive global arena.